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Newell Earnings Meet Estimates in Q3, Core Sales Decline 1.7% Y/Y

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Newell Brands Inc. (NWL - Free Report) posted third-quarter 2024 results, wherein sales missed the Zacks Consensus Estimate and fell year over year. Nevertheless, earnings met the consensus mark. The company is making progress in its turnaround efforts. Its front-end commercial capabilities, appear encouraging.

The company’s normalized earnings per share (EPS) were 16 cents, down from 37 cents in the year-ago quarter. The bottom-line figure met the Zacks Consensus Estimate.

Net sales dipped 4.9% year over year to $1,947 million on lower core sales, as well as the impacts of business exits and adverse foreign exchange. The metric missed the consensus estimate of $1,962 million. Core sales fell 1.7% year over year. However, pricing across the international markets to offset inflation and currency was a significant contributor to core sales.

The normalized gross margin expanded 470 basis points (bps) year over year to 35.4%. The normalized operating margin increased 210 bps year over year to 9.5%.

In the past three months, shares of this  Zacks Rank #3 (Hold) company have risen 6.1% compared with the industry’s 8.2% growth.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

NWL’s Segmental Details

Net sales in the Home & Commercial Solutions segment were $1 billion, down 9.1% from the year-ago period. The metric missed our estimate of $1.1 billion. Core sales slipped 2.3% year over year, due to decreases in the Kitchen and Home Fragrance businesses, somewhat offset by rise in the Commercial business. Also, the impacts of a few business exits acted as deterrents.

The Learning and Development segment recorded net sales of $717 million, up 3.3% from the year-ago quarter. The metric beat our consensus mark of $694.6 million. Core sales grew 4.4%, which was offset by the adverse impacts of foreign exchange. While core sales grew in the Baby business, it fell in Writing.

The Outdoor and Recreation segment’s net sales of $183 million declined 20.8% from the year-ago quarter. Also, the metric lagged our estimate of $202.2 million. Core sales fell 16.8%.

Newell Brands Inc. Price, Consensus and EPS Surprise

 

Newell Brands Inc. Price, Consensus and EPS Surprise

Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote

Other Financial Details of Newell

Newell ended the quarter with cash and cash equivalents of $494 million, long-term debt of $4.1 billion, outstanding debt of $5 billion and shareholders’ equity of $2.9 billion. NWL also provided $346 million in cash for operating activities during the nine months through the second quarter.

Updates on NWL’s Organizational Realignment

Newell’s organizational realignment is likely to strengthen its front-end commercial capabilities, including consumer understanding and brand communication. Apart from improving accountability, the Realignment Plan will unlock operational efficiencies and cost savings, lower complexity and free up funds for reinvestment. 

As part of this realignment, NWL made several organizational design changes, including setting up a cross-functional brand-management organization, realigning business unit finance to wholly aid the new global brand management model and simplifying the regional go-to-market organizations, as well as unifying the domestic retail sales teams, business-aligned accounting personnel, the manufacturing quality team and the human resources functions into the center-led teams to boost standardization and scale with a One Newell approach. 

It looks to optimize its real-estate footprint and take other cost reduction efforts. Such actions are likely to be implemented by this year. After the execution of the organizational design changes , management estimates realizing annualized pretax savings in the range of $65-$90 million, net of reinvestment, with $55-$70 million in 2024. Restructuring and related costs are likely to be in the range of $75-$90 million. NWL incurred restructuring and related charges of $42 million in the first nine months of 2024.

NWL’s Outlook for Q4 & 2024

Management issued guidance for the fourth quarter and raised view for normalized operating margin and normalized EPS in 2024. The company anticipates 2024 sales to decline 6-7% year over year, with a core sales dip of 3-4%. The normalized operating margin is likely to be 8.1-8.3% compared with the prior mentioned 8-8.2%. Normalized EPS is predicted to be 63-66 cents compared with the prior stated 60-65 cents, whereas it reported 79 cents last year.

The company envisions operating cash flow of $500-$600 million. This includes $150 million in cash payments related to restructuring efforts.

For the fourth quarter, net sales are envisioned to dip 4-7%, with core sales anticipated to drop 2-5%. The company expects a normalized operating margin of 7-7.7% and normalized EPS of 11-14 cents.

Key Picks

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