NWL - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to Newell Brands' Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Joanne Freiberger, VP of Investor Relations, Ms. Freiberger, you may begin.

Joanne Freiberger

Thank you. welcome Brands' and Call. Quarter everyone, morning, to Third Newell Earnings Good

the are Mark CEO; today with Erceg, Peterson, CFO. On me and Chris call our President our and

these today's like which XX-K, non-GAAP be update refer to statements, measures, risks our forward-looking the obligation superior the materially XX-Q cautionary as non-GAAP will referred to risk tables and to believe certain not and earnings of measures. useful found that release discussion the now over available refer further you language SEC earnings affecting begin, and release, measures measures recognize making results involve to available Actual turn and statements. GAAP in may are we with between to today's Form in on will can remarks reconciliations should those considered be to I I'd and that Before non-GAAP to during statements. Please I'll outcomes factors call, normalized uncertainties. forward-looking filings Relations Form to other and you we website Investor measures we they were forward-looking SEC. factors and GAAP. including our of Thank no inform and be furnished We Explanations these accordance to presented call the you. And although differ measures our the financial also Chris. available a on investors, that undertake for non-GAAP today's are

Christopher Peterson

call. everyone, to earnings third welcome our and Thank Good morning, you, Joanne. quarter

primary contact strong results. We to President new let's that, will joined want going us Before and forward. third executed who the our investor Joanne With Newell's Relations, Investor I recently well and a we begin, be of quarter high had Vice year-over-year to continued key which most sequentially. out to welcome turn Core rolled sales Gross margin of or in Results XXXX. came last strategy, June performance year at metrics. new across Newell's of our consecutive in our of increased end quarter versus corporate raise reduced high the ahead against we well plan than improve the plan cycle ago, year. months the cash planned and in Normalized A&P was the significantly share Xx. The by confidence year more strong performance at sheet of for outstanding driven in conversion per the despite our we once plan, to the came higher operating We for earnings again end as investments. results balance above of a productivity versus Normalized outlook full us operational once XXXX strong again X to inflation. fifth performance. first gives delevered offset margin under as

new we increasing corporate ago, expectations innovation, our operating brand are building our our in full year earnings operating in margin and per flow. the Mark on later go-to-market investing strategy, improvement, call. Over and share chain largest innovative operating and normalized a will creating on functions. the focuses further profitable which enhancing strategy and X while months a back is a transitioned accelerate we And to effectiveness driving most markets, ago, just standardization model, agility and new and efficiencies while scale across supply high-performing, the inclusive share We and specifics the excellence year office into organization and normalized new disproportionately which designed cash announced culture. brands in by

in sales model reported have expansion, quarters results, of the new days, margin trends, still now improving growth top as to changes strategy, rate believe strategy we by are we have the cash While flow. Since evidenced relatively period. new each yield results, clearly and X we early we of in operating introducing improved are beginning strong sequentially and core the line

most growth Development international well as as sales core profitable positive year-to-date delivered our business. segment combined & also in We our Learning

are and X quarters for prior year year, improved points versus ago. margins year-to-date have normalized basis We a versus up gross XXX in a row

have We Normalized $XXX versus in X debt despite investment a trailing reduced million. points basis prior XX-month significantly operating by increased by million last year, net basis year XXX EBITDA normalized has on margin increasing past over in to A&P. We've quarters. the versus XX% by over improved year-to-date $XXX $XXX million from

segment X.Xx We X.X make the quarter continue of taken leverage delivered quarter. ratio going positive & turns a building innovation, consumer of Newell's company's third have perspective, out points negative brand progress down understanding, core segment this And of June sales Development we go-to-market. From XX.X% is growth, in improving decline the sequentially capabilities Outdoor basis & third to of by to XXXX, portfolio, year-over-year and front-end from to in X.Xx core growth consecutive versus a Learning driven core sales moving Recreation by the Baby XXX Home segment, improved the improved year-over-year in Newell's quarter. in XX.X% & second The growth quarter Commercial which smallest sequentially. business, and significant sales the

we before our of While the in encouraging and believe Coleman, take been potential sequentially improve business believe is as performance trends brands such fully year, has the in bottomed will it earlier quarter. see time iconic third to the challenged, starting we it unlock additional and we the

MPP soothing few SmartSense babies innovation cries on several with Graco quarter, brand Swing, soon additions, today, and and and we we shared Bassinet product XXX-degree focus were and Soothing which or continues. product that sound be including with motion. Touching to recently launched HPP respond support launched. Last on detect investment will in seconds Newell's we new new have a continue to

the to unlock of advanced at Coffee adjust experts. to enhanced at as value coffee of gold by a performance temperature introduced by best brewers Handheld+ Brew automatically for handheld cordless new launch tasting sealer certified vacuum the coffeemaker home This first-to-market standard peak flavor time new as at-home tea Perfect home. tasters holidays, brewing. And strong season we benefits Coffee brew in is coffee certified FoodSaver the the the pod-free had intelligent and and handheld than is a to a month, have deliver professional the helps these vacuum technology keeps at machine, countertop vacuum, in yet Mr. barista-quality Perfect a convenience its uses the leading water methods, Combining power with competitor. Mr. better much by unmatched beverages recognized products innovative fresh brewers time, ordinary prevent Coffee this compared freezer burn. the countertop sealer one longer with at-home help Association coffeemaker this The storage Specialty and sealer few for Xx food innovative to of and and which for cordless We to create Brew, up most versatility. one

to bottle Contigo collection of Ally with is fitness, first her to marinate Contigo's device. The investments making adding role, heat the detachable to the in Chief of many, will fitness hydration As positive C-suite brands fashion creating partnership in the experience. new, only are we with an a this brand's vacuum designed hydration cordless expert on in and create a Contigo unit, easily results. seal users Ally Love. all renowned as water In for include key of one are Hydration first-ever and programs love as as system the debut market can comes limited-edition Ally on handheld couple collaboration include its vacuum sealing trend A bring unbeatable seal, This Officer. to

X closely reliable the product next that years, stylist, develop with trendy, to the brand hydration Ally collaborating bottles serve encourage Over Contigo's as habits. water will head healthy

has Football addressing that with the focuses encouraging, on early Thursday year subsection, spot a in a on Coleman XX launched are than the reset aired on Amazon The consistent years. for ad The strong increase results campaign seen a in have may you versus days Coleman measurable marking strategy in ago. new our Prime, first-time of Night the double-digit market outdoor TV done more the sales the camping Some campaign instead with brand. of after the broader traditional new

top new quarters. International XXXX. of across make line growth be to both first have on sales progress in our and X business continue for positive of we new company, of expanding retailers strength distribution one which results to in recent the growth the and a the core has months the development, continues engine We existing been brand's in

recent Before trends I call perspective turning over Mark, behavior. and on consumer provide want to to the some

see the last year. to single-digit broader this low the with digits This our general expectations. down merchandise is high year, consistent is decline to improvement continue We market single an

that bifurcation a Importantly, households. significantly consumer seeing higher the volume higher needs represented been priced gains. versus are compared from of for and households pre-pandemic with levels, within levels inflation as we spending income demand market, premium products like more there value. At both households dollars are basic prioritizing are cumulative wage income in are dynamics and due we benefiting increases. Conversely, higher-income these lower has between the market units market low and these increased food, insurance, With the stock market consumers income income stronger appreciation home and that, in price good to driving as a unit seeing outpacing significant consumer consumers have rent on spending impact decrease

results strategy on Our company's and have brands we've ago. strategy, sheet based improved our performance. our the business with new We well flow today, our bold MPP through superior quarters decisive us to XXXX. and outlook on the Strong is underway. Newell's price twice actions corporate positions in that to delevered this And new growth, margins productivity, HPP points corporate capitalize targeting implementing focus top have significantly allowed cash taken strategy improved to us on innovation, X increased results towards the balance trend. Since largest and deployed transformation well line the increase progression

hand we to and create everyday continued over our Mark. company's for excellence I'll continue operating now much our talented call our While our more work by time. I to still with the in do, for like confident the thank value up to would we performance consumers to over are have commitment strengthen to lighting shareholders and moment. to ability delighting employees their

Mark Erceg

good everyone. Chris, morning, and Thanks,

corporate positively with As operational its quarter and his believe prepared current business our the coupled stage and during progress. we future the discipline additional Chris third Newell's impacting new execution is results strategy, evidence setting for remarks, indicated that provide strict

contributing core gross also and and international the example, expansion. meaningful of half the by stage providing center early direct cost productivity sales have and emerge X.X% markets, of our some minus with significant emphasis at in net improvement as this X.X% of also reduction to shift, with pursuing consumers accounted increased for preceded basis and first core XXX last FUEL contributor margin year minus started to during QX margin respectively. a new savings another quarter a which X positive with was the Strong sequential our on points XXX, from difference built particularly a XXX minus quarter Latin during a the commercialization X.X%. XXX of America, more result meaningful XXX, MPP versus implemented, we core progress most the sales that signs strategies gross rate occurred were and are which it, which expansions that between at sales quarter efforts point quarters have XXXX places came performance Pricing third vast versus of For and the represented again strategy once sales normalized on third much factor. Consistent HPP X% from a offerings in to headwind represented XXXX. XXXX, XX.X%, versus as the at and we QX run currency basis

review have with at may completion ones a public process recently just noticed disclosures that that accelerated to of of XXX points. no margin are has the the a through to a absolute, routine slightly of reserve subsequent when improvement recur Upon gross reported mentioning It numbers SEC. approach you quarter, we a the since our bad adjustments XX.X% and This XXXX also margin normalized customer. These is XX.X%, longer gross the XX.X%, produces its our of retroactively inventory from compared previous different take adjustment to the of is fiscal basis debt depreciation for starting that provided. that we international the to XXXX, XXXX. margin least because achieved year-to-date previously quarter, an bears charges Now which cited we Newell the third XXXX's normalized and related than just the completed period highest back but to posted third gross have the restructuring-related and down and for normalization exclude third XXXX our prior XX.X% nearly adjusted quarter normalized the year-over-year in

ongoing was last points organizational During strong X.X%. QX, pricing offset in year as XXX operating partly by as margin Newell's three positive sharply, rose year to increasing last productivity versus increase versus year-over-year normalized basis higher to and savings, The spending by due also areas. restructuring-related well

investment First, dollar we in terms purposely of a sales. increased A&P and levels absolute as percentage

several in we investments overhead front-end Second, to commercial capabilities. targeted continue critical make

$XX we've to results higher incentive at delivered diluted year. Net provision was at the a interest tax being share level on higher versus the million $X million, in a million earnings the date based about is last increased normalized than primarily rates recorded $X.XX to came per to our $XX and $X.XX due year, to by for financial of full Third, strong interest and expense $X.XX are guidance accrued projecting compensation quarter. Normalized range.

our please in share that changes earnings note earlier, approach normalized mentioned third been have However, per absent would our the $X.XX normalization quarter higher.

flow. to Turning cash

X.Xx in $XXX generated operating by during Newell very And months was report pleased X the at cycle. million cash end flow third QX. of that year-over-year X-day of our XXXX, quarter to are of our first part was improvement driven cash which the ratio in a conversion leverage we

The full better improvement is of XX-month our debt net now and normalized XXXX. Our than increase driven million was ratio a $XXX in by leverage XX% trailing of sequentially again reduction year-over-year EBITDA. once X.X QX improved turns and

Moving fourth the to quarter. largely backwards that on net exchange. quarter be results. sales between to recognize in acknowledge X% X% the on We've surface sales our Core guidance the of due represents a range We sales core foreign expected our X% following: step third fourth X%. quarter The to with core is declining slight sales our differential assumed X-point from and to down range to are net

windows However, our of the retail we to more believe ending that a business of function inherent model. is selling new implementation that

X.X%. both of repeatedly not turnaround of half our half core XX.X% we of minus minus quarters. Consistent sales that run Chris and halves, believe corporate game with In the fact, during a our as is rate was In philosophy, the have I first stated, XXXX. XXXX second was

expect which of And part XXXX of quarter dollars the The improvement. and around fund some fourth X.X%. is our gross actuals fiscal an half a sales, to normalized sales be was we taking operating in come quarter percentage more towards minus X% to back SG&A XXXX the solid our in the XXXX. Getting fourth both than offset in due in expense third sustainable back that XXXX, our at believe will growth to investment increase levels our absolute rate first an inflection higher as should we suggests and X.X%, margin half in of of quarter to guidance midpoint during and positive core progress as of X.X% A&P minus margin expected by point decision of

$X.XX Finally, tax digits slight a we in expect year-over-year increase earnings a expense, normalized share interest and normalized single $X.XX. of rate in per to the

leaving previously. For operating we increasing X% respectively. X% X.X% margin we the our sales to core to minus at and for X.X% minus unchanged to normalized and year, from X% are range But to X%, full are our X.X% net X% to sales outlook

This We also financial things. time $X.XX we've critical $XXX year. We increased operating are these targets million. raising to a also few to guidance to million the normalized is EPS to increasing our range $XXX for this to $X.XX, out and three our guidance cash should point forecast $X.XX additional by $XX from flow million $X.XX second

First, to we rate. tax single full double-digit expect high low a year

incur in about cash restructuring related we year-end. million and charges Second, through $XXX

feel while Third, deployed we to strategy. there's and And investment-grade achieving long-term three quarters more promotion margins several employees be passionate it's results Newell's expansion the we with allowed capable margin since of are the year-end our of expect slightly of we capabilities. quarters QX Xx plenty improvement full gross are rating goal straight exceedingly year-over-year X XXXX. front-end normalized leverage below about Newell year-over-year ahead, margin expanding unchanged. In since been highly credit quarters and new And consecutive progress gross of work closing, ratio being our an Top Brands still improving advertising X with critical operating line of margin while us in have quarter up highest investing make. with and and robust to beefing good

have down allowed performance pay cash our EBITDA ratio. period, debt and to leverage and that strong our same growth lower During us

developing bringing make rigor we additional products operational to the the that start multi-year of confident aspects capabilities returns new the strategy, consumer are shareholders. Operator, to about and business we we our think of if corporate XXXX, in a we questions. will transform progress As us all are to support on into company please for could, call allow our our world-class for journey financial that delivers to Brands open exceptional Newell you the are

Operator

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

Olivia Tong Cheang

across talk about favorability quarter divergence portfolio around talked about a sales division, OPP of categories performance you as area? more quarter, higher then Perhaps, the margin, the the more can with the gross bit and walk that pivot secondly, just in think this mid particularly Could price in towards you year? start your you around expectations for such terms your about but price/mix point going impact we this you contribution about a next as planning and only little And that. NPP the forward and a of not from and given

Christopher Peterson

do Yes. it. Olivia. Happy to Thanks,

So the walk divisions. let the start sort me with around of

as business sales continues has different Writing, most Back-to-School So recently the the good the during up period different that behind market in Back-to-School focused year. The in strategy gained is And front-end at largest very good profitable point that with core the share Baby of you understanding, result, go-to-market, and this building about straight business, We've starting know, had in business. businesses. we've Writing sales the growth past, and Baby feel business we put three We core and in season and innovation. development innovation, brand quarters capability and learning different units as capabilities, our the was strong growth. finished, We're of building showing very on different. on talked new our capabilities consumer business as speeds place, encouraged as the in the the we a

We SmartSense car are about. share play yards. seats, gaining launched with that And pretty product we're newly Soothing Bassinet recently market on excited on Swing and the

terms slightly by that Home from we & points we Commercial believe excited rate that different is Home third growth core a pipeline business, got year. The we've business going period. strength. prior basis next heading strong innovation state. It's sales the the a improvement. capability business believe of And of and for & in improved a Commercial is versus So next the XXX strong that we quarter We're strength to in into in

core I growth, think is shape the we've new did quarter. Candle talked marketing business we're about and a driving with about good it Home that in with we Yankee product very which third that the exciting business, being sales about believe pretty business in some Commercial The some Mr. the the got Coffee year. launched. just Fragrance next things campaign we've pretty excited innovation heading Cold we recently Brew that well which into coming on we've like launching will bode talked And Kitchen of

going Rec is the is Rec announced the which good think brew or take progress is on cold I that a segment Amazon, because the which & consumers the traction. Love, focus. to about where unavailable we We've strategy Outdoor is to the example. And we spot building off move Outdoor an The good is the restaffed to Coffee Contigo We Mr. just focus to outdoor in is XX about put getting pipeline with brew, in name then we that's under allows week turn the it which think innovation of more camping largest ago positive We've talked that which that television brand start. coming is we a brand made. the new from XXXX. that the Coleman, market partnership to to a is to was longest Ally that built reset at-home an concept feel very in to team. be team a & X going great to that we've around I And a previously one minutes,

driving through longest. From one products not taking margin We're is, there the supply productivity a would mix that we're on price/mix benefits our what standpoint, we are And going I so forward, driving say benefit base but by chain, take price that launching will the the as is gross look we increases are accretive. that products.

so is it more And really is going the pricing. plan on forward on benefit dependent than mix

Mark Erceg

basically other I'd the door the from we've and little if away work initiatives just a things. that at margin that categories of and all gross to started businesses. are unsound. to done number looked bit businesses addition walk because for that or were add And the to all structurally done took our we've make either those We actions sure those We've the that we've pricing accretive, effectively to got that in out

economics lot which not a We allows we inconsistency. also that simply but have cost where believe been of the analyst for in line SKU access a level the a additional us previously. that to We've real have us to our in titrate price fixing strong logic a also as a real we put sometimes understand It's and line presents price in there's on hitherto, matter pricing, doing viewed place really capability logic, to that's of consumer than opportunity work didn't set. a way price just increase better all

is fair, margin there's part believe favorability So FUEL price/mix. really we're future things bigger Right XXX the were lot versus be now, of productivity the a be efforts, QX largely our doing gross that prior the period, in driven price/mix the on will in that managing up to by we a points but basis on of story.

Operator

Carey Our Wells Fargo next with comes question Chris Securities. from

Lauren from Barclays. with Lieberman Our comes next question

Lauren Lieberman

-- sales really quarter wide. core range implied guidance is for the pretty fourth -- So the is

get you And a hearing you're around so pause inventory to giving retailer I if sense that's destock. just seeing anything or wanted

a the core frankly, seems And that's inflection then lower sales of changed mentioned have in sometimes of and But table You language you'd the in on the curious end the growth on versus -- also, think the spoke XQ. range on effectively 'XX. high sales consumers. about very the clearly I end middle- bit just to lower-income kind little for on

front, if the if that's by on or kind something else? progress to wanted just in I lower really check that of it's driven outdoor in So

Christopher Peterson

Yes.

guide. So with the start quarter fourth me let

from I everything quarter, would this for think the on year. the holiday are season spend more headed hearing entering the money we're season than year suggest where fourth prognosticators last consumers likely that we're holiday of we're sort and a growth to market

focused is going food However, likely as spent items areas general that and to on more to merchandise. opposed in are essential be money that

shipping a halves, We inventories half. continuing This look of very are retailers which So sequential has our been It's at we're planning in progress fourth the take line that's be stance retailer doesn't Mark this more case, in not and inventory on to more of turnaround is but prepared market continuation we've of second versus the got on shelves, about market embedded what the we're for are of not the do range his with and a place. guidance. make terms about timing quarter think sort that in quarters. neatly tend half windows. quarter. The of low is first down has digits. may reset We assuming fourth in that inventory when the we've terms good pretty in to up that their talked it is destocking. our to a a our wrong single given with We more that, remarks of store the excited year growth we retailer what in in about to That

the through to we are sales year go we plan next now. of in right As terms working core growth,

what guidance that next pretty is year front our are this pipeline to year. capability call. will excited at We the end, next the than on normal we that February But say provide we have cadence investments a I about making on innovation we're stronger year expect and will the

next year. What of dynamics core the year standpoint. don't know be to yet We overall an growth of expect sales we from growth is going how are this our better market rate than to sort are be

up being is most As to a weeks single digits not lot versus hearing year. different least that's year next there's is that, in general low improve of market with the the of that to from down But of it. year maybe next today, attached policies what we mention we an very going X this coming to flat volatility economic to think that we're is being election which closer merchandise to stand in

next think that the We delivery front-end I on the about our we're to cadence. And going we're strengthens guidance closely. provide feel on year. progress monitoring that we'll normal So year we're And our good versus this the making core capability. plan I have situation believe a sales

Operator

question next Chappell Bill Securities. Our comes Truist from with

William Chappell

encouraged that, I just want to kitchen more you, but and understand solid is the specific growth about we categories will I at the trying 'XX little actually you strides talk are and you merchandising sequential movement, but the then making to by categories. have as bit some Are you're and think return business get you're you to mean, what like talked to baby, seasonal. outlook growth regaining and electrics, that these with move and how 'XX? just the consistent seeing look specifically trends that about for share of you in a fragrance, And encouraged? I camping,

business, great. what So would you be maybe a more your few on encouraged so own gets that examples of

Christopher Peterson

Yes.

a types you number categories, give me of our have we let different but examples. think I categories, So of some

cycles. categories purchase of Some long our have

that be We're 'XX. to us. you normalization if and forward, in following that 'XX for There cycles if years demand behind about is now will, years. So in beginning purchase seeing think to 'XX in caused which COVID tend appliances, pull and kitchen, example, a during happened in the demand surge in X was be a category X of or kitchen that you

is dynamic. who to in is this pandemic we during recently And back now sales projecting real to be pull-forward seeing met dynamic back and lapping year And evidence of so that forecast we're core are into the likely market. the with period the growth going going real next that, because of category prognosis business bought to COVID that Circana, that consumers those come fact,

and about. and launched A with that's of Writing, of pull-forward are with so has the the pretty very more $XXX, I also more This think case, $X,XXX. Graco Baby think Baby come we've these I we features at true similar at that got dynamic. and we've good it's in like Bassinet of big we it's deal. I just case Rec. people the pipeline We've lot Soothing & innovation and strong a SmartSense familiar the some and product recently, Swing Outdoor that a our out On products On feel is other not product Writing, much SNOO it's believe benefits. selling a SNOO. that think categories

market think that and the Sharpie. We've we've know, we share on Markers the Writing, we're you Creative launched marketplace. Similarly, huge products So innovative behind got also recently launched, launching under a gain to opportunity in a as pen, we've launched copper very grow metal a We've the When just launched barrel pens pen portfolio. premiumizing We S-Gel the $X.XX. strong copper getting pen S-Gel we launched S-Gel that's was $XX at $X. the we're at support. as first

driving up, we're we're so like trade driving growth category and in And that. categories

well to the business got Yankee to We next year. Paper next confidence then play think with gives Candle InkJoy course continue is on going Home able the Mate to that Pens growth Fragrance, on do be us of that Bright! out we've that I to going that return relaunch we're to over Gel a as well. And year

bit that geared that So I'm doesn't we to our our about of and premium also the drive more within but some ownership stuff so category with a segments. feeling good us, to mid growth, control. innovation begin as is category of the to can happen market little I'm start driving take it that more pretty feeling growth that leader, we, to

stuff consumer volatility for at. believe dynamics So is that's that What I next year the market. stronger the a we But making heading into we're And progress. into control is a don't in there than what sort have certainly, of a year. we are of control, standpoint plan we I real the that's our heading believe lot we in looking from commercial this and did

Operator

from Our next with JPMorgan. question Teixeira comes Andrea

Andrea Teixeira

more about And into term, of to ING your the thinking this kitchen a other the disruptors us the point? there general. mean, in how going where more promotion -- [ be environment. to and advertisement we in And then get believe, at to we should be commentary as is the thinking business contributing of there. in take category and quarter sales is X% the less sales about How of out help number, as of in other you're and Are and we way be think and peers go like if you ] hoping much sluggish invest be thinking fourth how the should innovation also in you distribution the you -- thinking where some kind long appreciate surprisingly, as not that want all can I was But of reinvesting I thinking the you I of out any you're appliances than more typically in -- the of distribution? how will about also you completely you holidays short and I was see best categories how innovation of Is compete areas in? should XXXX? of be term into now that's the class? percentage terms investment as I of well you we

Christopher Peterson

Yes.

turn. try in let maybe those to me I'll take distribution. And start So with

more So compared year a distribution, to expect I year. this be tailwind positive to next

on, place we journey and we we of we've think been business, unprofitable unprofitable put you when business. about if of at structurally structurally the we the things the new the did strategy some parts of exited the of So the those parts was that one in looked

brands. our We Recall, brands. XX some we exited with also of smaller starting were

the this be at sort be down to period. out expect brands, base year brands to and our tail these of XX to of We of end closer

unattractive we've our headwind in is exited embedded guidance. structurally which business, a as that has been in distribution And XXXX,

fact, no into it have that on we be go as headwind. year, to longer to think we're going our I And gain in we trying opposed distribution next headwind. foot, have as a As front to

next line So I'm the of consistent so seeing the that sales we've to year to this from that year, reviews going is what and strategy. See compared with trends the question? driver, had is which far positive much is more point, second of we're first distribution expecting the course, sort is be

Andrea Teixeira

[ more A ING on the product. ]

Christopher Peterson

yes, Innovation, the margins.

this over we have ramping close support target that probably our the we in year, come X% that because when I long-term that ramped somewhere categories at year that spending new up. mix expect right and up, So behind time, about that This of probably we've innovations and -- increase look we around as expect of categories the we A&P the is we're us the have, for out -- or X% we'll net to been I we where on X%. have historically, and X%.

are want we be higher -- driven little it's ROI to on want to where don't this. we bit we So than But today. a

innovation. up we're ramping so have the when coming the is not of first innovation sort point. We're is the before And up spending the with consistent we ramping

The go improvement lot opportunity overhead we second reduction. still to on is margin and of gross on have a

to meaningful to the in and higher as overhead think a got which expect than as why of And gross strategy. reduction going take the is our the ramp-up our improvement percent significantly A&P, operating part we've that that an is margin more continue opportunity we significantly to so sales, we of be margins

this up from, operating you've X% improvement. the XXX first year, it, that's in up months driven so gross call to seen despite really And by margin and we're year, the margin X%, ramping A&P through of points basis been X let's

something continue to of similar going I amount reinvest margin bring the the longer we business we in line take term think bottom see but to We significant you're the margins higher well. A&P, of a the to improvements operating overhead up. gross as some and where

Andrea Teixeira

year? distribution you how is can then of you a were much was Chris, but helpful, quantify losses super this -- distribution this And quantify headwind -- the losses can the

Christopher Peterson

I revenue is a trailing a XX-month not in is say And we a a get why But what points companies is there's best would would hard many little a mean, tell. that were dollar of growth remarkable XX% function which supply function I of was products say these centralization say our It's I chain structural can couple where away of of mean, they and Yes. going absolute businesses up And a is bit I that of that what in XX-month consumer there's reason incredible EBITDA business some is from that's about purposeful. It's terms, particularly the and across money. the from office. productivity improvement and the company, down. the the where chain from in drive results a probably at. an would losing environment to walking of I number. EBITDA supply the is profitability also frankly, XX%, back

I quarters stronger started X the And we portfolio we we a strategy. than ago did today so think when have

go also of improving So we is our the forward. quality as portfolio

Andrea Teixeira

potentially to embedded? rationalization from also SKU still And it's you're So right, of out it, hard -- end parse of that towards at from XXXX? the that's also that end back the the

Christopher Peterson

XX,XXX that's down Yes, sit -- about going we we're right. we're to -- here we're as down to to today, And SKUs.

we So had recall XXXX, we XXX,XXX. in back started the over journey when

to a our So more we've made year XX,XXX. gone started. we've SKU from again, over XXX,XXX And progress significant down versus we and now revenue than tripled per has when this

we've than opportunity we SKU had we is different So have ahead opportunities feel still We previously. but count opportunity are where ahead, the good the about from some standpoint. think I a

Operator

with Our comes Wells from next Fargo Carey question Chris Securities.

Christopher Carey

calls that was could. demand normalization the of COVID, of cycle your during I maybe plays question earnings Are carry a that diversify context in I've year, and curious think but an is if a kind that manufacturing. of basis coming our the improvement how that go you is about past, in a a on of there's replenishment? a merchandise It'd There this asked consumer progress. always think, Just end of category embedding we're sequential growth, to that normalization these ways categories renormalization and elections, forward we you're back major flattish for remiss and for your core at have in be And you I sales pull general on new the you of then couple the sort tail that nod reapproaching different time on I out didn't talk One of could, seen election I'm in evolution now. some just geographic we've some that number out? been I if of the is as I about know if ask. of depending do do can questions, much just policies at, phase? And cycle? did think I how know How effort some looking the growth quick to you the next sourcing

Christopher Peterson

Yes.

that pull that forward So COVID to we I subsequent And demand from -- I we forward demand seeing come a category result of pull as think is of end. normalization your think an comment of on and right. decline are

what be capability. time, portfolio, a which A&P gaining will year. And we better going expect are from the affect versus market that's year also that dynamics this and expect next our our year same year why this because so that we is than building, our go-to-market little next innovation we're we of our do be a year share in better to and growth factor terms think brand today, investment next category At seeing to is the we

think combination the think our we're on ability is to top focused those what two think market grow of so And with We is the your is improving. we the we to and market tariff and thing on line. On things biggest been improving, share election, quarter's about the question I where call. talked last to the regard focused at I are on think feel we've we good about risk, with very I the that. that is regard

last and our the is year, And to end several next we XX% sold coming spent years Several have U.S. expect diversifying of down years number supply that over cost chain. XX%. sold goods in we our China number being be of had We XX%. the That from was below the below of by ago, today

Products in with plant Virginia. large Writing manufacturing presence strong manufacturing very a Tennessee Cooler Rubbermaid We Commercial plant also Ohio, a a plant in with Kansas, with Rubbermaid plant have a our large U.S. Food Storage with in in

were if And and there we a benefit to would so tariffs of a we implemented, position believe be in benefit, categories, in that. number from would we

we have China it we exposure to think tariffs on And closely. impact risk. past, Baby as preparing exempted categories on tariffs in for business. in XXX biggest difficulty tariff tariffs. are those past the of some moving be from families as has putting the in the the we And because categories. There benefit I for standpoint, of subject supply altogether be we watching talked would so of We've are is can the that some we're in still and The a that the we've But the well been place. potential to positioned as products chain been from

And so we -- as would that into that's primary have exposure expect we year. we next the head

Christopher Carey

helpful. Very

to The you How follow-up. very as improvement one are profitability you course, your not revenue for the but you of revenue remains way, as me mentioned profit would of another in same about business. you're you talk some have humor growth the the growing maybe just the demonstrably ability see said Of to sustainability limits? past? of of sustain level think has finding if uneven would growth going recovery, you as is level the line exactly amidst trend wanted been the even profit If impressive about

Christopher Peterson

Yes. Yes.

for profit improvement. I continue think to opportunities we strong see

both function we're the forward, as expect growth That's do a investments that we the a to making. of going So category mentioned. revenue line improve of front-end capability I function and

across a of supply both lot and across office functions. a strong productivity chain to have savings pipeline the also of back We our continue projects,

result to improvement as of the a so to I expect going operating both see that line us drive on margin continue the line gross you're margin And and that. margin

EBITDA so that we growth to going confidence forward. us And that dollar drive absolute continue can gives

X.X, very going XX% say also Now forward. an But I at can drive EBITDA going going I had last that's EBITDA and EBITDA be encouraging. is mentioned, an year I opportunity a not the company we're strong which the I'm got which to very over going think very net exceptional sure continue think forward, is I drive to performance. a forward. growth X.Xx to in down we've rate. we we've I strong don't drive going XX% to cash X think on cycle think to likely I will able debt-to-EBITDA down quarters, conversion growth growth progress continue as delever to ratio from

Mark Erceg

on if do scaled can very, scale chain offer to additional that line top into we've little inflect, And supply once time. for a point just economics built are at and a distribution in marginal volume this facilities, we is a us. going see be we our I'd very Yes, and attractive the the get

Operator

comes next Genuity. with McNamara from question Brian Canaccord Our

Brian McNamara

So the is to ask you're far, areas particularly I sustainably achieving of margins. line not when will guiding top be kind us looks strong turnaround thus grow a in number investors biggest this know again? of outside the But the of XXXX question improvement company for yet.

should You environment by kind annual next low of give long-term its target merchandise general be the in will mentioned year. your of investors what But single-digit performance growth? impacted achieving the confidence evergreen company

Christopher Peterson

the international way insights changing organization our redesigning our and the consumer in part out enterprise. Well, a U.S. and function place a strategy, new selling I in One returning we pipeline, XX we've day growth. a why that think innovation the approach sustainable model in every about talk goal of we brands, company. question, good aware invested we that That's a have acutely the on and top consolidating implementing And our driving a set function, top it's focused are brand and line building profitable to business something the putting development across as of completely company Newell management a

working. growth. year, quarter, Those see from those X.X%. all teams last you we teams we've Mark now the the new top think if are gone moved place. -- were that sales can of And this as to down I mentioned, point of things just rate We double down ago, sequentially in Those implemented. was this the mean, X digits core you I line the to at recall, months operating have model been in in January. are improvement

XX share So are a ago. number market Not in improvement we've of trends, also significant XX top see brands. we share we had them, to were a brands XX top meaningful in market our all started but than of today months improvement. We've more gaining

think can this. of growth to on sort next end in investments give do for I top so the are going getting that get made the a we're have at that point that things to And real opportunity during focused line to front a we that it's XXXX, there, some we look premature context. Street and this think uncertainty we've the are to there. we when we guidance confidence us that given expect we but those And the prove at to us get during little the the at macro year, point give on I it

Brian McNamara

categories, marketing with innovation incremental and strong public I point, a if here. doesn't retailers your is categories, number in Or another And this and appear just competes from competitor XX our represent categories. a that to months our particularly went some space squeeze especially about it that good In of in helpful. a There's vantage appliances? focus a And view, are ago large kitchen could headwind? your appliances? kitchen in with it That's player you for follow-up does shelf allocating on

Christopher Peterson

we're Yes. and We that I'll insights we they're compete responsive -- describe why to because innovation. to it are responsive is shows actually right in strong that responded think because good and strategy. on it's what categories consumer the shows branding. They're What it is to the

capabilities. you our So progress results the that our I that we're you're focused the we what's in X innovation continue them you that. We was I the And shows from we're put of company improving think been when brands, categories been strategy and place. inherited that done the what's the we the we've work do in possible have. over starting brands has and we a consumer on place last leading I put on, that think the see on think to it front quarters. insights, behind if think with journey racing demonstrated to we've And talking we those possible in shows strong And end about breadth improving

So we glass look at the it half that. as on full is

Operator

question Falorni with comes Filippo next Citi. from Our

Filippo Falorni

back to to profitability. wanted I go

to clearly not give but and is the of there. guidance, run based about you're going disclosure, at your of sense positive you category outperform? next sounded how of another this of savings particularly what is pretty give the was rate under $XX line other savings year. $XX the your you control have strong savings realignment You from and to next merchandise It results, maybe your profitability much organizational us thinking on have on to the still and you know million I you're what year, sight how -- I there. delivered seem very versus looking can Maybe million does saving year going a terms in for general you of like realizing

Christopher Peterson

projects maybe say the and have we we is is that I the then program, I'll an and generate takeout. The would can chain. the Mark cost to is that some add. This as over in company are start savings X% FUEL productivity that more has than program sold of smaller FUEL goods going program big across all-encompassing program biggest which some part supply program, X,XXX year, productivity of that the executing

cost on impact So that's sold huge a goods the positive of line.

year. go we other Now that program. as margin But into that's the that's been big that inflation program things. continuing next of partially being has offset is and gross been a improvement driver And

So margin will have we as gross I'm continued that expecting deliver savings FUEL that go we strong will productivity year improvement. into next gross

side, things On think the I overhead of looking a at. number there's we're that

a think in our I the have scale greater structure. artificial areas. opportunity implementing intelligence part few -- a the we strategy, productivity. of those we've of got lot back-office drive organization like put and drive As started a things And We've of functions centralized our to areas, greater on into

time. to on results think that as overhead functions. the driving and productivity I same customer better service our turned driving a service that's can And those and quality we do some and efficiency customers consumer more service consumers our artificial in we've So for our well. intelligence of areas drive our in And benefit at there's

Mark Erceg

a touched correct a that this on we're bit other our the earlier, super programs little innovation structural getting enabler for a just just Yes. And excited I'll upfront of about. us. is areas We offer but few huge economics

economics If about right volume now, side is have, anything attractive as it. you in to place. programs associated said automation fact is huge do We amount the that roughly utilization we the going our I structural earlier, a of put capacity with really that think XX%, on

think properly of really, that you about performance-based think basically in an put that standing automated it's trade going we've over and marginal about promotion off January line, to in billion you getting joint haven't retailer a our If a in fund alone be up literally cost the that there's And point do to time, really the been let system really planning with we tools the management big $X that's business to because program managed. proper to have net proper partners. next unit analysis, in this able invoice automation big, to talked with are about place U.S. that's to able just the diagnostic attractive. And about us unlock we

we're So it lot to we still excited, really and that we think as cost relates of a have takeout. runway

Christopher Peterson

Okay.

in talking there. I call, like. look And and think everybody joining as we'll follow-up we conclude for calls any call the you with thank forward the you'd to of

Operator

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

day. You may disconnect. Have a great

Newell Brands (NWL) 25 Oct 242024 Q3 Earnings call transcript