Newell Brands (NWL) Q2 2024 earnings summary

Executive summary

• Q2 2024 results were at or above plan, with sequential improvement in core sales and gross margin for the fourth consecutive quarter, driven by productivity, innovation, and restructuring initiatives.

• Net sales for Q2 2024 declined 7.8%-8% year-over-year to $2.0-$2.03 billion, reflecting soft global demand, distribution losses, and product line exits, partially offset by pricing actions.

• Gross margin improved to 34.4% (reported) and 34.8% (normalized), the highest in five years, driven by productivity gains and lower restructuring charges.

• Net income for Q2 2024 was $45 million, up from $18 million last year; normalized EBITDA increased to $284 million from $258 million.

• The company raised its full-year outlook for core sales, normalized operating margin, EPS, and operating cash flow, citing strong first-half performance and confidence in its new strategy.

Financial highlights

• Q2 2024 net sales: $2.0-$2.03 billion (down 7.8%-8% year-over-year); core sales declined 4.2%.

• Gross margin: 34.4% (reported, up from 28.5%); normalized gross margin: 34.8%.

• Operating margin: 8.0% (reported, up from 5.4%); normalized operating margin: 10.8%.

• Normalized diluted EPS was $0.36, up 50% year-over-year and above guidance; reported diluted EPS was $0.11.

• Operating cash flow for the first six months was $64 million, down from $277 million last year due to prior working capital improvements.

Outlook and guidance

• Full-year 2024 outlook raised: net sales expected to decline 7%-6%, core sales down 4%-3%, normalized operating margin 8.0%-8.2%, normalized EPS $0.60-$0.65.

• Operating cash flow guidance increased to $450-$550 million, assuming $150-$200 million in restructuring-related cash payments.

• Leverage expected to be around 5x by year-end, with a long-term target of 2.5x.

• Management expects continued negative impact from soft global demand, retailer inventory controls, inflationary pressures, and elevated interest rates.