Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Newell Brands' Fourth Quarter and Full Year 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. A live webcast for this call is available at ir.newellbrands.com.

I will now turn the call over to Sofya Tsinis, Vice President of Investor Relations. Ms. begin. may you Tsinis,

Sofya Tsinis

morning, Year to Earnings Good Quarter Brands' and Full Call. everyone. you. Newell Welcome Fourth Thank

On the newest call our executive CEO; with Mark me today Peterson, team, President; are our and our the Erceg, member the Chris of CFO. Ravi Saligram,

I'd and begin, you inform forward-looking and materially, may uncertainties. today's Actual to course forward-looking statements, and that be differ no update we results will like making the obligation we which of we Before during you Form statements. language available risk call, other refer involve to factors website cautionary undertake risks I to release, forward-looking the and of Relations filings affecting factors the earnings for statements. our our SEC discussion a on Investor available XX-Q in our Form further outcomes XX-K, and

accordance be will investors, recognize Investor in these to not between they including measures normalized that financial materials well Newell’s of measures, non-GAAP to remarks to we believe other are Thank be measures. measures website. superior We the also useful non-GAAP although earnings and today's GAAP available non-GAAP those are can measures certain -- refer as presented as these and in to and should available tables considered reconciliations measures refer non-GAAP today's on release as GAAP. you. Relations found with Explanations Please

And now I'll turn the call over to Ravi.

Ravi Saligram

categories expectations including as retail. by line our for joining be our year-end second to tough inventory consumer on with us call. a at difficult The brought Sofya. you, well merchandise for close business results and morning, continued operating reductions Good were quarter you Thank environment, general demand half. to impacted a in as thank everyone, Fourth slowing a and

in challenges. excellence strategic flow fourth remains on cash performance. the in They inventories quarter focused reducing navigating these Our our priorities drove and stronger a great job sequentially did team with executing while

categories offset sales in favorable sales The the Commercial growth year, exceeded growth soft pricing. a core to core Many company's domestic levels. than Outdoor a levels across Home of exceeded X%. as peak operating are declined Rubbermaid major XXXX, Elmer's delivered while Rubbermaid, very sales XX.X% showed results. X-year consumption of Writing Mate, from X.X% which heavily and growth such number year strength. core normalize volumes even anticipated XXXX, Products, ago as The of Despite tougher We the for comparison Paper and declined. much continuing Ball, focus progress more Sharpie, areas. stacked pandemic and against a Core and on in brands our Commercial Campingaz the tangible and XXXX company's For sales than environment macro weighed businesses in demanding made EXPO, other businesses

were for First, their many for recognized iconic innovations. brands

the Restraint Portable For Stand-Up award. was Propane and won Lab Gear Child example, Ball with Best by stack innovation screening Grill Graco Outdoor housekeeping Innovation and Graco for Grill organization recently Coleman in as [indiscernible]. Systems Award good and a the store XXXX. JPMA RoadTrip XXX ranked

Good received under Best Award. and Gear In Coffee new Mr. Coffee, U.S., innovation Best a XinX the Latte Housekeeping,

launched X begin Squishies, launch National over a with results. Squishies QX became XXXX. strong Elmer's very months, U.S. of exclusively major in Our retail across In sales late X:X. latest activity in top Writing, innovation slime outpacing Newell's will March at item it retailer in

allows repost them kitchen, their occasions target to and moments In to across consumer unique, connect media consumers, us approach launched take brands a efficient creative bring curated our new April annual followers. social 'XX, to that allowing own a of content to we and vehicle to like

Newell branded click-through Creative since We a creating website rate to have increase engagement a and seen live fourfold our Kitchen. in higher presentations our through XX%

next And earlier major to transforming margin step supply Ovid and announced the in our by excellence chain supply manufacturing, are global journey drive and year, improvement term. continue to expect chain which Second, Project we this build unifying long centralizing the to organization in meaningful as automation. we we we operational our across this the

made about SKUs over approximately XXXX to XXX,XXX compared progress with ending XXXX. in XX,XXX we complexity in XX,XXX XXXX reduction, as significant Third, and on

has Our revenue than tripled per versus SKU more XXXX.

We will SKUs reducing accelerate SKU productivity. continue and

Fourth, strong inflation. another high pricing of mitigate of in helped year to COGS actions headwind combination around at productivity we from which drove savings the X% with single-digit

further will efforts our We XXXX. productivity in accelerate

galvanize employee carbon least, be strengthened our Scope And engagement force to we for XXXX citizenship a X certainly portfolio. and emissions to good. first we and as advanced loans world-class to not our people by at One culture, our global neutrality committed maintain but last, corporate all strong X our agenda, continue We employees across Newell for

to brands that named pleased year, the I'm Admired World's by share second Newell XXXX Fortune's consecutive been has for Most Companies. also

business. actions are decisive we today, agile pressure also company navigate We've the have proactive taking the a we proud current for positioning While macros of achievements we and that success. our the to operational long-term environment, put considerable believe and more been much are the while effectively on recognize organization

a our to our announced cost to power structure that In operating significant the scale of more Phoenix savings. and drive late and and strengthen optimize operate a in expected January, Phoenix, major One is further will our efficiently. Project leveraging and evolution by program model company Newell we simplify restructuring

There Phoenix. Let Project key on shed more are tenets. light X me

into X commonalities. combine customer units will operating we segments First, consumer based on and business dynamics

X we Second, our top centralize for our will customers. efforts sales

clarity standardization centralize in international globally. will fifth, and reduced manufacturing we'll go-to-market capabilities, One Newell we to processes, Third, key Fourth, we'll drive measurements. enhanced strengthen of and key approach geographies. And and tools unify go duplication, road

umbrella, which Pisani] Home business and assumed Food, by has Officer to Operating Baby [Jim Lisa includes reporting Mike. Chief Development, Home led our Recreation Writing continue to of and and McDermott, [indiscernible]. business. Home Learning is Outdoor Commercial the Solutions role Fragrance, and will by led new lead Mike McCarthy one Appliances as segment the and CEO. under businesses Commercial a the bringing We're Home

businesses commonalities related our mobility. own and among consumer honor opportunities to Through we the and better this and scale and the our while will leveraging evolution, for unified customer differences nuances our internal enabling

every key in lives the U.S. a nearly of iconic brands role play Our household.

expect the unlock to the opportunities over business for time. new model We additional operating growth

We moments of major needs brands their will leverage their daily of occasions. life to meet homes consumers' through and in our the power out

international macro remains business significantly an important Our X.X%, International priority In geopolitical Newell. sales for for despite core pressures. North increased America XXXX, outpacing and

go-to-market This are LatAm, We're such fall, reduce profit trajectory of for and fragmentation, also international part accelerate of New and with key Project should moving Canada. increased evaluating works Japan fragmentation U.S. the Phoenix, businesses announced geographies employee international growth to reduce consultation breadth As in structure X-year as dramatically in last a time and and Australia we Zealand, to and as by approach our outside over the and franchise continuing councils Europe. depth

as experience I'm and wide, key strengthen centralizing Newell high, As relationships a to position built of that significantly deep partner. increasingly customers, a part in of for our with enduring also best-in-class we've we're partner. valuable Project top One model teams customers and simplify Phoenix proud perceived are several customer interaction, our moving strategic the our customer will these as U.S., and the improve

supply Newell, One unified success will of on Chris spirit Ovid chain elaborate later. global and are organization, of Project the on to moving which we the in Based a

close focus action new environment, work decisive the In consolidate Raton of to of estate. we on a we our campus. we hybrid the of announced discussing real As We offices Huntsville working. Deerfield Boca this our our year, optimizing on process of offices taking consolidation opportunity and our have corporate in ways cost in We're or just closure are structure, in actions. and earlier other South adopt the

result turn, Phoenix In approximately elimination is Project office in XX% expected positions. of to of

we transitions. a While to treat leadership made did doing likely, we our every effort was their colleagues are respect dignity. decision as team And take we and not all this very can departing with help a with we difficult and one, to

The a undertaking over continuation macro of to simplification are the the we've agenda the difficult years in environment. that driven actions X are response and last we

$XXX Phoenix strengthen company core, significantly not Phoenix is restructuring. in and range At our future. yield annualized about is for model prepare pretax to when expect our just implemented. its about savings the to about is $XXX It to We operating fully million scale. the the evolving leveraging million It

remain line is and As is in the working to hard prime his the flow near as margin $X our to conditions cash term focus growth, get know back Chris macro nickname unfavorable I top gross man. billion improvement.

morning, me. about we XX. bittersweet This shared Speaking on future. the This for retiring moment be a I'll is May also very that

and resilience forward look pandemic who strong miss be to a our implement that our [Lux], new including I'll brands. certainly to with ago, every loved family, over and weeks a day work. was my talented privilege by and we to and very born interest everyone last It's a years, so of spending employees, more just Newell distinct few my pursue at proud lead granddaughter first While been time company remain courageous. I our I've several passionate I'm the the at innovations working complexity and chain. strengthening more diligently and who The is leadership leverage advantage by Project journey honor in brands on is progress trends, executive transforming to reducing Phoenix major modern made launching team success. the building iconic are competitive new e-commerce a world-class company rejuvenate relevant, operating significant to make successful and model, segment-based omnichannel and our team supply the inspired our

the He's Newell. turnaround, well-deserved a skill right team congratulate on been with partner speed efforts to the to smooth respects Chris in right the I focus to transition to dexterity. [partnering] and accelerate on Chris level. next I'll new key our the momentum person execution CEO, Chris closely true a he the Newell and I and him right temperament and take leadership the and elevation ensuring successful I my to rallying know want organization believe me and is of the his to priorities. will to set international will with on and strongly to macro seamless with challenges Phoenix, support our overcome be Project deliver ensure

us. I'm experience also as a his CFO to to confident call to will Newell's leadership a add more Chris believe brands, value and Newell pleased I'm he be powerful and earnings forward. welcome first with I to and team its combination that significant will multiple Mark

macro headwinds the the optimistic Despite am of I Newell. about the company faces, future

that consumers love. have brands We great

We and prowess. have omnichannel e-comm built

driving sustainable, relationships excellent We and reigniting will customer passion profitable the growth in to return economy we the to have We favor. meaningful our drive innovation. once are turns believe processes and

are of days best us. ahead Our

to remarks. On now I loans brief and for turn and upwards, over Mark

Mark Erceg

Ravi, everyone. and morning, you, Thank good

first but consumer me now consumer and to to is at the last which to Over in weeks, reacquainted as [crane]. friend. undoubtedly technology. business like I I've and love, many transportation, of getting in believe, more share some Those where still was say the unique that to felt well my learning differentiated building with I've spending years ways, I XX operational innovation, with Brands, which come made at X during old years observations, I great and next the I like myself deal the a an circle ins luxury have creative insights, full of already organization. after returned And I the immersed because all the XXX-degree time, I'd brief I information first Newell excellence moment my products, health range XX goods time the truth true prepared business and learn, marketing, career of first spent I & experiences, products, Procter high-level care my deep and Gamble, in that you. outs

Ravi couple a to of the organization. under XX,XXX and First, within the to has bring it is last that a who each Newell years, me mission-driven guides clear culture the team Chris' strong built strive value dedicated business the Brands to of behavior over professionals great and day that leadership

taken simplify forward. our streamline us prerequisites have Second, were improve speed, to been agility financial steps which performance business, dramatic to and necessary the and for going

Project costs us years Third, business our the Phoenix believe organizational and very distribution as and create manufacturing, key across in will overhead customer bold actions recently scale the of enablers service well serve are and part and reduce transportation announced ahead. I to which

past these is all much perhaps most the more direction, importantly, there's actions current and needs company that entire that and recognition there are across Finally, be steps done. right in to the while broad work

grow of in which about humbled on have coupled portfolio should world-class the interactions sales excited part our Personally, shareholder me allow market honored generate share and a can expand doing Newell and positions year the because conclusion after company and us towards be the consistently levels robust led to margins journey. that consumer-driven so, meaningful journey of that innovation-led becoming that to total with I'm capabilities has continue a strong organization right My the leading future brands to year and of when excited, with is eager return.

to Chris. now I'll turn over call the And

Chris Peterson

Thank you, I echo to welcoming for time, P&G. Ravi's a other like the Mark to known worked and by long everyone. I'd sentiment at good together each Mark, and Mark have morning, team. having

a only to business. to what Mark have partnering here would next has the unlock also which Brands. thank become leadership and for CEO the years. past his already like of I'm and company's rest the commitment is and the see excited and are short been Although people-first time, can of his the he organization for to a look culture. team him and reinvigorated for I've the partnership infectious Ravi admired the fit I with mindset, and over several honored I potential leadership passion, to Newell the forward full great of

working and drive professionals the team, with of world through creation leadership value dedicated shareholder Newell's In execution to agenda. my our of our thoughtful all and look capacity, talented forward Board diligent and to new strategic the I around

operational results, to to into a the recently to we few jumping have I'd minutes company's strengthen foundation. taken talk like take initiatives some and the business Before key organizational of about

a key breakthrough before, of chain component cash standpoint, reliability to as value the scaled a of industry, aspiration predicated on service, from is in mentioned a our complexity. creation a partner retailer we've leader reduced creating our supply capability Newell terms to TSR As world-class of positions and in and leads margins, and choice that become

implemented Food X, where point as Ovid of in and reached we go-live and fully are was benefits, step go-to-market culture. can willingness omnichannel to Newell's across well Having the Rec Ovid leverage to to and and the February on categories wave change Project as remaining better that, the a excellence operational the transformation with this to we distribution the the a Outdoor undertake seamlessly across businesses. Commercial Project chain drive improve begin and an commit Writing, major Newell customer solutions Consistent we agenda milestone second and broad-based new now model journey, at service readiness in transportation demonstrating One organization. enable significant organization's integral a operationalize supply

this the into to as company's chain are manufacturing optimize Project part by we So on excellence. building supply of further operations center Phoenix a momentum of centralizing

This into will, us time, and a competitive create leverage advantage. turn for it to first and the allow manufacturing scale

significant become supply and improve a further not organization and and resiliency, materialize our us the chain technical do supply will of retail best-in-class supplier While to believe our scaled we this capabilities, overnight, partners. company's collaboration enhance chain that unified global general to drive culture will merchandise a efficiencies our strengthen connection customer position

move outlook declined unfavorable category due and results, quarter foreign core inventory as challenged and consistent our Net store of QX, to the impact cash due well in flow decrease general October, exits. quarter provided let's fourth well retail fourth sales consumer the to Top remain at billion for for with softer which business on sales to optimizing the were at as strong and in demand yielded on to of we exchange XX.X% retail $X.X the X.X% Now year-over-year a end categories. largely results. as the trends merchandise divestiture line the reductions CH&S as of certain focus

We expect near these term. persist to in dynamics the

and and contracted the the XXX inflation year absorption, fuel margin exchange from unfavorable offset reduced as tailwind foreign last of fixed to gross XX.X% savings. basis cost impact versus Normalized than points pricing more productivity

today's fourth inventory to certain financial LIFO I the numbers to to we the FIFO company's of statements during the single Newell's a referencing method in change are company's U.S. been inventory mention have and release this off impact elected inventory and in that accounting. the simplify periods, the from moving reflect method we prior to FIFO to conform entire Therefore, Before retroactively for year and of and change margin, current of accounting accounting gross adjusted. both the the should which and the quarter, in

cost sold was a to under would prior what it there For method. to QX million of the been specifically, increase have $X relative goods

the and XXX deleveraging Normalized top to year of last impact gross interest basis from expense margin $XX increased $XX points to margin X.X%, in as year reflecting difference pressure million last costs. million the by was tax operating with benefit ago benefits. $X driven year $XX declined SG&A in Net compared million an on tax discrete million to line normalized expense the period. largely a versus The increase

For the quarter, per diluted $X.XX earnings normalized $X.XX last compared year. to were share as

the operating generated performance QX. to by million impacted flow in took our XXXX source as the negatively in cash plans. Newell's quarter, began in fourth drag business the declined of on of to reflect The it we and to $XXX and from more QX than plan. cash meaningful supply despite our been a inventory the During considerably cash rightsize supply flow actions have demand a relative timing was QX which capital $XXX of pullback million Working payables, by improved

with elevated with results capital $XXX pullback plan company the cash supply flow Although back QX working that us will in proactive XXXX level million, bounce and cash confidence combination operating of our outflow ended in significantly cash operating give in the of XXXX. an

the on navigate leverage as Despite environment. we cash a debt XXXX ratio strong X.Xx in through with snapback this we ended to took tough short-term flow, of

sure I'm commentary the the in easily and laser-focused X attached to hear you going into about our the numbers time, to tables consolidating of model near to implementing we Note we usual sales release; is the term, our in with interested reasons: the fiscal a remain Therefore, our first, years press everyone XXXX. can segments second, to company's comments be ahead. the these dispense I'm QX, pressured find interest high-level for expect segment leverage the and X we operating on X. sheet effective While in that and previous ratio new are strengthening in operating balance

Newell XXXX for a for company quickly acted Newell's XXXX, in we've In capabilities performance impact we improve. foundational X back, decisively external profitable can core success the macros long as that was the we and and return improvement to the we while ensure strategically driving to major to stabilize are of and step a financial over challenging term. identified clearly priorities sustainable Newell, so investing Taking growth the mitigate year but headwinds position

trends and to so evolving process strength First, the continuing cash the sheet in customer consumer agile remain by managing forecasting balance close we planning. rightsize in carefully can and inventories, and staying flow to

further Second, operationalizing drive distribution internationally by improvement greater currency fuel initiatives, accelerating innovation. benefits, Project our Ovid and transportation margin advancing new productivity automation gross instilling pricing product and discipline for surrounding savings, financial

Third, normal drive bottom-up to next impact savings faster SKU structure a Phoenix through count Fourth, approach incentive SKU controls to Project new tight white enable the levels to inflation. enable the reduction. progress. of phase of progress overhead and spending and wage and sheet reset initiate compensation offset transformation to continued reduction company

decisive follows: energy are and in strengthening challenging performance, and inflation be power influenced remain consumers with uncertainty Despite due food, company's our modeling assumptions the housing the spending on high expect actions under consumers' U.S. macro feeling in to XXXX. we taking the the assuming pressure has front disposable than greater stress will proactive these as external to The in landscape of Europe we level in

macroeconomic are both reducing likely categories levels. Retailers categories. for also general and home merchandise outdoor to expect categories normalization open-to-buy of We to from dollars in consumer continue environment pandemic remain demand soft peak merchandise and to demand general due

year. Foreign exchange a remain for the is headwind expected to

continue of single move peak in prices transportation pressures single and to as to for to digits high commodity their continue digits supply and pressure to levels. off inflationary moderate XXXX down ease from the expect to We COGS, chain low

to our company structure. ensure prudent Since a half improvement in cost to second we the in are and we heightened of and bias flow capital Newell's experienced headwinds working 'XX expect focus XXXX, setting optimization cash persist a demand plans the when many on generation, supply maintaining of the of

from Normalized Within with and outlook X%. of Yankee billion We're [Campbell] core billion offset overheads. declining operating down category flat be business, basis headwind to stronger to X.X% sales net margin closed contemplates certain sale foreign X% this points the to is CH&S margins and are financial year the context, versus to the to gross a our $X.X store QX which by sales of at to exits XXXX expected end last of last assuming XX.X% X% exchange, nearly year. $X.X XX as

above-average more new offset pricing drive and to pricing U.S. expect combination from savings, should outside carryover We productivity inflation. the in the impact which than with

million tight $XXX this maintain of spending to that Project unlocks million about Phoenix are controls planning savings $XXX We're and assuming pretax to year.

to by wage these expect investments. we in select capability reset, and terms benefits fully inflation dollar incentive offset However, compensation be

normalized and of share in $X.XX earnings We per expect tax the we to expense are significant $X.XX forecasting a year-over-year rate. interest as increase

the tax of currency to return digits a high tax X.X% earnings in more midpoint per as a assuming that on range, we the assuming normalized XXXX. normalized rate and low declined compared range a are are We basis. share the to teens double constant in At

We flow guidance expect in from payables cash XXXX million $XXX ahead to cash our a of flow significant to $XX expenditures about $XXX free Phoenix. from forecasting Project million including bounce back We're timing on cash XXX% range, with and purchases at million million the cash $XXX midpoint flow the inventory operating in of range. productivity of in well

core to sales category CH&S XX% the $X.XX assumes XX, on certain and billion, sales a including exchange of Candle net Yankee and store XXXX, XX% to Our outlook March sale $X.XX billion a first of foreign quarter headwind business the from decline of exits. following: the X%

XX.X% margin fixed X.X% are last below inflation exchange to We and due year normalized operating forecasting deleveraging X.X% pressure. significantly foreign cost of to

interest and normalized smallest We benefit. expense to modest share loss depressed of $X.XX. tax quarter step-up seasonality year margin expect a pressure, a significant from company's the a perspective of The $X.XX a reflects the per in in earnings per share

discretionary half currency with business more challenging cycles spending more a the top year. back through first being products of the carryover reductions assuming from whereas benefits relative half half from half headwinds the be loaded. constrained to first year expect tougher inflation to clearly back inventory on comparisons the weighted, line Project much will more the also expected and front-half that of are and retailer We Phoenix as persist We're

first sales the As the second expect stronger versus year in such, core be to half. the we growth half of

taking decisive the are backdrop company investing return through a across to and we while sustainable We successfully believe to difficult control within which core all this capabilities for that profitable our growth. areas building are position and actions navigate macro will in

Operator, let's open now Q&A. up for

Operator

[Operator with Instructions] And the Bill first our question line comes of Chappell Truist. from

Bill Chappell

And congratulations everyone. to

about what in First the a do kind this of that already mean this from there and X what even you have lot prior on before lot the How over cost have decade. a question X is Obviously, Like Project it Phoenix. multiple years, seems that projects, I really a X gotten haven't tenures, of before been see the divisions X confident the done, savings been big X said, from your different? to change? makes past gets it's I that attempted you to since of and projects consolidation you times you. of how

Ravi Saligram

reside occasions life thinking group because do of you consumer they the reside same and this the really as consumer germinated consumer was a me it kick we and really basis. So standpoint, and driven started let Bill, kitchen. from do "Hey, not it saying, customer and how the about approaching the integrated and the businesses?" idea notion are customers first off. think The these we Food the that is the merchants were Look, it moments business. and on an where were And the and we Appliance business at when And I is, whole in was same, and looking

businesses of and we approach of next phasing, So evolution X that. to Newell you a taken our for in the is geared the as the bit more know, last of leverage to years, from us, This times. back unifying were of the a decentralization centralization sort front we holistic But having in for just have scale.

Home makes said, in taught hub. that also [indiscernible] the hey, the COVID home. And is it we so really us sense,

that So sense bring to businesses. those made then

shares The was commercial really piece [indiscernible] -- the brand. it

key it, because CFOs us for helped jobs the create et we let's us that of HR The control, helped was so has we has span improve people together. this different bigger bring businesses. had said, This each the for And reduce cetera. and of

I doing historic as about integrated year international is this very fragmentation. Second, lot there's of a some more on think been because one

Newell you feel is market that think that better approach, think, shoring our going don't leverage be amazing. there's hey, help decisions you just supply I do think I on globally. approach, gross we've ever to We Do So total for And of I globally, One go-to-market chain margins. we manufacture? long unified we the source? up, near term footprint which are will think quite

as then I So -- look you at there's companies fronts, separate and a those these the of, past. when lot in company think, a because all were

One and to lot that learned standardizing keys we've of getting from in and did the a we to processes, systems. then which Ovid, common measurement

for It the So just how I take it. about just out strategic cost out. think was sake we it would create a, a went of hey, let's not more this cost was efficient company in and very so

Bill Chappell

follow I'll on up Okay. that.

happen the in you're expecting then The consumers where year? are demand, are seeing the we you're of seeing move areas if second due question biggest pressure points? from is terms there as if former, the if And to through environment that trying to consumer recessionary or to just you just pullback understand where meaningful

Ravi Saligram

well, X One, I points. just think I'll from XXXX we levels overall. One, are pandemic the reiterate. about

and acceleration clearly, are of as encouraging. that is as there But was the The forward years X on several well that's categories phenomena. that, standpoint. a that consumer businesses occurred to the having growth a from due So stimulus couple pandemic said is stack One X%.

For now have a in you low-income left burning lot the were lot. COVID prime brought fold. where instance, a the probably stimulus during the of a And is people without [candles] had you Then candidate. brought client the like phenomenon of consumers, we that

categories. former So which a are the different in destocking, even recession, before that consumer the acceleration you couple impacts, there are of are are seeing retailers [cured]

think the you when look those things first in half. are persisting take So are into that, we I a that those the trends seeing

Operator

question Olivia [Operator James. Tong from with Raymond Instructions] comes Next

Olivia Tong

year fiscal single-digit what at your the sales core to expectations midpoint. QX]? we revenue this [than it of pressure talk growth imply wanted for half see sort QX because a And second is low the and I sales to going would in your combing about assume that similar outlook core

provide year? destocking? exit outlook the this you can retailer the begin on some view of the your your on views or second you and shelf So space half as as color full reflects in growth you terms of And your what is period in of year to on lap think destocking trends category underline losses the what you

Chris Peterson

Yes. Thanks, Olivia. I'll take that.

our mentioned outlook, of on One trends our the that's businesses, return sort I the and outlook. to we're inform prepared So Outdoor that or to particularly a where that levels, think COVID X really remarks normalization our the going of continuing as category impacting there's -- peak X and revenue categories pre-pandemic from levels. see is in are I Home on

categories is pressure housing, which and on Second consumer is discretionary taking share a food of because wallets. greater of inflation consumer in

talked impact on largely and cost as a Third also finally, is seen then categories that XX% is inflation, retailer putting input and almost last we've we've the from pressure but we've standpoint. the for that destocking over priced years, X volume

the fair that give expect QX. sales uniquely to during look We're think QX. of growth for is at in I to that, because continue don't you guidance, not XX% minus think comparison. to we're quarterly a XX% but trend we say core of QX the negative do going I it's the guiding in to year, If that that assumption

If at almost X-year that comping. QX, you on XX% we're the look or XX% it's stack

So toughest is comp. the it

QX. assumption be in QX don't do than much as mentioned be expect is that remarks, half to to think we to the as down we the but the front the As half, it's right going better I think back

Olivia Tong

Chris, first. congrats move another into view position, you at there think think in have, strategic I term? for get review in, the your you're Got terms the wanted is you a the you of as it. potential about then categories brands CEO longer the how for that you whether And to look

Chris Peterson

environment or made different put the is about that I'm talked, is company's turnaround is the it think at opportune macro forward. now Sure. years in today I the think about I we've to think I an turnaround strategy place we've we've X that was plan time progress Yes, way going we made think, significant the And than the as thinking place I progress on that. then. a relook that because But X And ago. of and that

we'll with I the revolution evolve And expect strategy. team. that going but the strategy, to to that a take we're it's think the that will intend want I to don't we have likely so do I leadership the time But in I ready also take understand to that that us the [confer] team as and of through, to I and leadership share current as get the through soon something process. to get will sort months we several be with expect environment.

Operator

[Operator Instructions] next Grom Our question with Peter UBS. from comes

Peter Grom

top But kind retrenching kind into that XX business consumer of of mentioned get through the taking kind single maybe the as term really the your digits. sales sales one normalization partners kind and Chris, in to quite item. the ability over or learned consideration, a or a step I long-term quick kind so, months back, bigger there all. target guess, in But then then, and of this the kind just just of that's Ravi, -- period at impact you've bit past largest Chris, housekeeping of back going news Maybe is few And you Mark, outlook of year line guidance retail to a it top to just the any Does deliver been your picture, potential something any impact disruption? what's years. confidence bit core congrats target of your on you over mean has longer taking past changes the line on embed we are the of changed pressures. low one a bringing from of recently? here. I And that

Ravi Saligram

I'll And in terms first just very affecting us. particular do no. quickly. the The of any retailers answer issues one is

Chris? So

Chris Peterson

Ravi's Yes. Maybe on answer one. just to the first build on

partnership. And the represent retailer at business. there, it likely less collaboratively with part in I of we about company's is think a kind company's significant of go-forward are revenue. than Bath working you're very the it win-win I'll of them the Bed talking Beyond. terms of leave a & is X% not but They

low digit, goal us getting single change core sales don't evergreen to long-term there's the of to anything getting -- model consistent, in causes that On or long the the I to sustainable think algorithm, growth.

that line target. we evergreen so are still top to as our And committed

impacted very we've but we been a Obviously, can. us this the we as quickly get of we've year, off lot trends has for talked that to hard working which by that about, of possibly much there are back as

Ravi Saligram

look so We've things, supply thing years, pandemic X.X Look, constraints, just last of cetera. we've the you then inflation, these exchange, had of one I'd think right? war many had I Ukraine, add back. sort et the foreign when

Grail here. brands really And was Holy know going Should it are as the strong. X%. in that level. I me, next the and take were up fact we versus XXXX XXXX, really 'XX the the stack our remains and team -- is Chris growth to the still the to So base to

they turns, model have intact. I So still economy do a I think feel green and Chris the once that espoused I that is

Peter Grom

this the answer, Great. given Chris, the up But for the be new tends be in, outlook when current initial to a to success. come we've -- uncertainty kind might somewhat to team of the environment. And just just CEOs set then of hard conservative question seen

kind upside kind of it move the be and can confidence the through there deteriorate of Do so is the or could you would guidance in year? as this here, I we get embedded today? feel could of should a the how or inflation your either demand you kind better, characterize consumer to worst guess things further Just you've confidence enough flex from get from things of balance like from that FX? the And this earnings perspective

Chris Peterson

Yes.

is the our best get a to the realistic back. you guidance. the and And year. to that, just headwinds because want tried above year flow our be And a take had this focus to in of overbuild current I'll environment. we knew we to that average and reflect an not ensured demand manage tried is we wanted flow year. for in we sort the think and inventory, is in to answer tailwinds cash high-level cash plan prudent back supply did that way bias on to this give sales business go-forward flow I we core conceptual we on about We Everything way based a which the to the cash know get to what

seeing are, we from in X.X% long-term the going a We normalized rate, rate, terms kind is to remarks, operating which as in headwinds is significant mentioned teens prepared of rate. which of high our the tax

versus And interest $XX about this expense up year. exchange reset we've be seeing is got addition comp the headwinds, going as and year million to are in of the probably to sales last mentioned, We deleveraging. we incentive core foreign

assumptions our Ovid we We've flip this feel about benefits good productivity, built to the side, that sold Ovid productivity and cost goods this well for of for above X% generate. very On going is gross the our cost year. are of

So that's with gross pricing. it's of along a in automation. fuel and the step embedded and our Ovid, in the guidance because of productivity carryover savings Phoenix up talked, we've we as embedded overhead program productivity pricing because And international in,

we today. about are good based feel where sort of what I we know so And on

Operator

question next Kevin Our Jefferies. Grundy comes from with

Kevin Grundy

think not of certainly it for a on but on my echo difficult this, that was may way, company a that to it while, so In followed well. than the a congratulations congrats as that. the place environment this lot I call just merger, it's post in have And seem folks Great. better a like yard

same along was the could. change many But in Phoenix drive It to result coming is and a seems on dynamic start, it's organization And potential follow-up. with cases, Jarden Project perhaps more to should why handling we organization, out have change at Ovid a efficiencies on least not which risk just of in and term? in complex and we decentralized the the inherently challenging reduce a and another I merger. Question worried in at if of time, to how like be a what's complexities environment. the about very to you near lot Can comment all then step this

Ravi Saligram

norms recall Kevin, would here, us a much. Yes, engagement -- you that's could in up XX went year last world-class to years X We have we done November. XX. and much when X maintained And for scores our may take told when so we Chris I Look, consultants And years, in this we to got I ago. did say we absolutely to that there started have it you XX not about thank question. us XX years and great

employees. this Newell whole could culture their is competitive what strong, organizations but So imbued One idea and a and of advantage the very they in is absorb it

there way We was it, we and And planning. handle started Phoenix the idea the process. meticulous

systematically on in them people over working July to give and of started ownership. we So it brought through layers time

and were Our communication understood has had finally, And doing people we truly been sure we respect. outstanding why the that enormous make exit, people to treated to we them it. with dignity

a much be sharing if go to for take back what so so you exited even to And who succeed. our LinkedIn though and and look, Newell able

to courage see very strong, centralize to has this. the great whether we a all That manufacturing the sales Chief to was it's And test been Ovid to successful. I that Look, understand Officer. was why and our put gave think need we culture do very that us centralize So under journey. people I distribution think could Customer

very people the to organization We've about think reaction make as the I behind this. they're far, sure actually positive. been of so So embracing concerned has the been left

The made of part has clarity, also is it other because there sure of previous role been our duplication. history, reduce we've

So people I think even are more empowered. feeling

say of succeeding So are I'd this the high. very chances

Kevin Grundy

be pass on cycle. past this so a original of for floors business look it volume out this the that I'll XX% a of given Currently, EBITDA have the have sort as sort since you've that cetera. just probably benchmarks. sort of potentially forth have view? term, think Project you Is Chris, margins, in et step that Ravi. Is that on. Excellent. you Ovid, make we longer-term Or and programs where to cannot here. not of now with just then, and now terms trees XX% then as reason kind announced? missing for of that And of deleverage back I you it is dealing there's thinking lot versus that sure the to volume we we're we just expectations? in superior some the Phoenix, margin no the longer But anchor commentary cost, But the of with longer margins Project has FUEL, FX should your come still investors to term been deleverage, even

Chris Peterson

Yes.

for that think in higher versus I where we have no are think time margin are business. we this shooting there's much we that a today. drive over I question And opportunity to that profile the

guidance XX%. a sites to to start our focused taken fixed of variety very think cost that year benchmarking, on a margin series deleveraging And original EBIT to turn margin of But up ought a positive. for we get long-term think are steps backward mid- sort XX% thought we of think much the gross et I and for our We've with company's in we've did margin, very EBITDA to gross to this to that. inflation, margin to is I that driving reasons targeting associated teens So move be that cetera. we is trend, When as -- high the I or talked. gross we

our And year, overhead -- the is that then have some right believe towards XX% this although level XX% deleveraging well. we effect down XX%, as we continue we that thing believe that may getting to

continues think are that, of I I that to control. margins that can that in lot stronger than our where we are think much So yield be And today. a

which term we said not seen to going I've to be line, short the macro a are in many the straight means before. subject as we've as Although it's trends, times

Operator

question with Teixeira our JPMorgan. next And comes from Andrea

Andrea Teixeira

morning, and congrats Good operator. you, Thank all. everyone, to

I speak bridge inventory did compensation us the can our on and Phoenix. the call with negative probably December, you area on gone the [PEF] you're the some lower what's of I and that Can you views external year, compensation on metrics. also compensation the help this XXXX. a And clarification how normalized later the since levels? a announced step adjusting or of the sounded November XQ conservative think materially the think out management about the the of when Project adjusting results more ahead you bit -- can on worse retailers a guess earnings this took I sound to higher ones that -- with factors in I think the consumer in not commentary about most year? perhaps little on I within as you

So despite labor see everything the that Project to if Phoenix, savings gave, management those with inflation want can that to in we I the offset company. much you commentary pretty you just and will bridge

super components helpful. If you can bridge be those will those that --

Ravi Saligram

Let And -- variable last there's me to compensation performance-driven well. answer first, this final question part. the our and is the your LTI look, great Essentially, very quickly. year, component an as

was obviously, our So really affected very our didn't make component XXXX, STI we numbers, we and LTI. low the -- for because it also

start at when 'XX, look the target will and that assumption with we normalized we So be the you numbers. it assume

So was that is plus offsetting that. a we big, Phoenix the big jump, said [indiscernible] is that why the inflation. And

Chris Peterson

first November. perhaps because when the there a Relative the we want for And guidance we call is -- from the -- from in a is on I time because reason of variability standpoint lot Okay. And I give gave the a and guidance think environment have there's it are of this uncertainty the we've the change macro think what given clearer forecasting on this first this we've year. seeing guidance don't -- why time we're we to visibility for a lot difficult macros. a is in to range.

as we last inform on the this guidance off the we January we've we as that sales saw line saw in growth felt visibility QX continuing few think over and year. how seen to as top got I macro in, for core we we helped more where our as started came the trends like forecasting, months

I up this and fuel still year. a be to that are think be from expecting comments we're year we result, applicable. above-average of year as made automation, of program, do the the as a margin result gross many gross this significantly expect Ovid We benefits a productivity productivity, to

deleverage because really the think that's of anything standpoint a from top really margin is else. and rate rate piece offsetting the line more than overhead the that's I that

making we which Phoenix comp because are Our the are inflation, we're select the savings. dollar mentioned, that flat overhead investments as relatively total incentive terms costs in wage and offsetting capability in of the

expense gone before. obviously, the of So standpoint, And Fed as tax moved sort tax then rates I as with borrowing full rate, for up. rates has -- and has short-term planning -- on mentioned rate operational raised we're has a and a interest the from

Ravi Saligram

Can consumer look acceleration, had of what forward but I being recession. full we've retailer or softened. you bit then 'XX think imminent impending the of that, happened. I an has something? at [indiscernible] they're And really which just repetitive, all all it's add When a the forces at environment, that consumer and year of Look, really, to look destocking, a

I being prudent that. So we're just about think

inherently brands strengthen -- Our brands. to are we're continuing our

get at look has important, and of very just that focus cash would clear major been that flow I back. very XXXX really to Chris So is that the

Operator

And come our with of line Barclays. from question will Lieberman the Lauren last

Lauren Lieberman

Great. Thanks. years. in Mark, hi again,

Just quick missed you’re possible. question I ask if consumption? it, but If year. great, this to earlier it was talked about the like one be for you destocking on the outlook when just clarity thinking wanted you’re How versus looking apologize at in that about still lingering call, activity would

A –Chris Peterson

retailer Yes. year. I some say be the we It’s that of do lingering good question, the expect complete first to would we expect half destocking, that in Lauren. largely, And

there And if difference is underlying retailer down our are much. you where clearly, QX trends at POS core guiding so to we sales the And look XX% not of guidance, XX%, the we’re down seeing part destocking. that

back what we’re what of year, over retailers hearing expect, do be largely what that’s made retailers I what that but entirely, major on destocking we’re of half for, complete yet. progress we view would predict half that’s that last – first from hearing from it’s our in believe that will with We hearing that planning the don’t we’re interact we’re year, the fully by significant say we destocking today. and from the that’s but to the the the retailer what although hard we’re and

Ravi Saligram

half. we slightly we be better When than think second half would why just the first

Operator

call. for at your today concludes Thank today's you company's of will later conference website today's participation. available This call the A replay be ir.newellbrands.com. on

great a You may now Have disconnect. day.

Newell Brands (NWL) 10 Feb 232022 Q4 Earnings call transcript