• Core Sales Growth: 3.4% decline for the full year 2024.
• Normalized Gross Margin: Improved by 460 basis points to 34.1% for the full year 2024.
• Normalized Operating Margin: Increased by 210 basis points to 8.2% for the full year 2024.
• Operating Cash Flow: Nearly $500 million generated in 2024.
• Leverage Ratio: Reduced to 4.9 times by year-end 2024.
• Net Debt Reduction: $175 million reduction in 2024.
• Normalized Diluted EPS: $0.16 in Q4 2024, above guidance range of $0.11 to $0.14.
• Debt Refinancing: $1.25 billion refinanced into two new tranches with a blended rate below 6.5%.

• Warning! GuruFocus has detected 6 Warning Signs with NWL.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Newell Brands Inc (NASDAQ:NWL) reported strong margin improvements, with normalized gross margin increasing by 460 basis points to 34.1% for the full year 2024.
• The company successfully implemented its new corporate strategy and operating model, which has been rolled out across all business segments, regions, brands, and functions.
• Newell Brands Inc (NASDAQ:NWL) achieved significant progress in cash flow and balance sheet improvement, generating nearly $500 million in operating cash flow and reducing debt.
• The company has made strides in reducing complexity, including consolidating its ERP environment, reducing brands from 80 to about 55, and rationalizing almost 2,000 SKUs.
• Newell Brands Inc (NASDAQ:NWL) has a strong innovation pipeline for 2025, with new product launches across various segments, including Baby, Writing, and Kitchen businesses.

Negative Points

• Despite improvements, Newell Brands Inc (NASDAQ:NWL) experienced a 3.4% core sales decline for the full year 2024, indicating ongoing challenges in returning to sustainable growth.
• The company faces a dynamic macroeconomic environment, with lower-income consumers under pressure from inflation and potential impacts from tariffs and trade regulations.
• Newell Brands Inc (NASDAQ:NWL) has a significant exposure to tariffs, with about 15% of its cost of goods sold sourced from China, although efforts are underway to reduce this to less than 10% by year-end.
• The Outdoor and Recreation segment is not expected to return to core sales growth until 2026, indicating a delay in recovery for this part of the business.
• The company anticipates a challenging first quarter of 2025, with a projected core sales decline of over 2% and a normalized loss per share, partly due to foreign exchange headwinds.

Q & A Highlights

Q: Can you elaborate on your expectations for core sales growth in 2025, particularly in the Outdoor and Recreation segment? A: We guided core sales growth for 2025 to be between -2% and +1%, with the first half expected to be down low single digits and a return to positive growth in the back half. We anticipate categories to be flat overall. The Outdoor and Recreation segment is expected to improve sequentially in 2025, but significant growth is unlikely until 2026 when new innovations are launched. Christopher Peterson, CEO

Q: How does the recent debt refinancing impact your interest expense guidance for 2025? A: The refinancing of $1.25 billion in debt was successful, with rates slightly higher than previous debt but still attractive. Our guidance includes the projected refinancing of the remaining $1.25 billion in 2025, so there should be no incremental headwind from interest expense. Mark Erceg, CFO

Q: With the potential for tariffs, do you see this as a net positive or negative for Newell Brands? A: While it's hard to predict, there is potential for tariffs to be a net positive due to our significant U.S. manufacturing base, which could provide a competitive advantage. We are actively discussing with retailers about shifting to U.S.-made products to mitigate tariff impacts. Christopher Peterson, CEO

Q: Can you provide more detail on the expected impact of pricing and FX on core sales in Q1 2025? A: Pricing contributed about one point to Q4 core sales, mostly in international markets. We anticipate more pricing actions in Q1 due to increased FX pressure, particularly in international markets, which will have a larger impact in Q2. Christopher Peterson, CEO

Q: How do you plan to achieve a return to core sales growth, and what are the key drivers? A: Key drivers include improved category growth, a ramp-up in new product innovation, positive net distribution, and sharper mix and pricing strategies. We expect these factors to contribute to a return to core sales growth in the back half of 2025. Christopher Peterson, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.