Newell Brands (NWL) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered strong margin expansion and improved profitability, with performance at or above plan across key metrics, despite a 4.9%-5% year-over-year net sales decline due to soft global demand, distribution losses, and product line exits.

• Gross profit increased 9% to $679 million, with gross margin improving to 34.9%-35.4% from 30.3% a year ago, driven by productivity gains and lower restructuring-related charges.

• Operating loss narrowed to $121 million from $159 million, and net loss improved to $198 million from $218 million, while normalized net income was $69 million.

• Significant deleveraging achieved, with net debt reduced by over $560 million in five quarters and leverage ratio down to 4.9x.

• Business transformation and turnaround strategy progressed, supported by organizational realignment and increased A&P investment.

Financial highlights

• Q3 core sales declined 1.7% year-over-year; net sales were $1.9-$1.95 billion, down 4.9%-5%.

• Normalized gross margin rose to 35.4%, the highest since at least 2020; reported gross margin was 34.9%.

• Normalized operating margin increased to 9.5%; reported operating margin improved to -6.2% from -7.8%.

• Normalized diluted EPS was $0.16, at the high end of guidance; reported diluted loss per share was $0.48.

• Operating cash flow for the first nine months reached $346 million, with cash and equivalents at $494 million at quarter-end.

Outlook and guidance

• Full-year 2024 outlook for normalized operating margin raised to 8.1%-8.3% and normalized EPS to $0.63-$0.66.

• Operating cash flow guidance increased to $500-$600 million.

• Q4 core sales expected to decline 2%-5%, net sales down 4%-7%.

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

• Strategic initiatives, including Project Phoenix, Network Optimization, and Realignment Plan, are expected to drive operational efficiencies and cost savings.