Sign in
NB

NEWELL BRANDS INC. (NWL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat versus Wall Street on revenue and normalized EPS, with net sales of $1.566B and normalized diluted EPS of $-0.01, while gross margin expanded for the seventh consecutive quarter; full-year 2025 guidance for net sales, normalized operating margin, and normalized EPS was affirmed .
  • Management emphasized tariff mitigation and competitive advantage from North American manufacturing; sensitivity analysis suggests the incremental 125% China tariff could reduce normalized EPS by ~$0.20 unmitigated, with identified actions to cut the impact roughly in half (net ~$0.10) if it remains in force for the year .
  • Segment performance was mixed: Learning & Development grew core sales (+4.2%) and expanded reported margins, while Home & Commercial Solutions and Outdoor & Recreation declined on core sales, FX, and exits .
  • Operating cash flow was a seasonal outflow of $213M (vs +$32M LY) driven by timing (higher bonus payout, inventory pull-forward to avoid tariffs); cash conversion cycle improved by 4 days YoY .
  • Catalysts: tariff re-shelving and distribution wins (FoodSaver, Rubbermaid food storage) plus H2 product innovation cadence; near-term baby gear pricing/tariff dynamics remain a watch item .

What Went Well and What Went Wrong

What Went Well

  • Normalized gross margin expanded 150 bps YoY to 32.5%, marking the seventh straight quarter of improvement; management cited productivity savings and pricing offsetting inflation and FX headwinds .
  • Learning & Development segment posted core sales growth of 4.2% with reported operating margin of 17.1% (normalized 18.0%); core sales increased in Writing and Baby .
  • Clear tariff mitigation framework and confidence to fully offset “bucket 1” tariffs; CEO highlighted domestic manufacturing footprint across eight top brands (Rubbermaid, Sharpie, Expo, Yankee Candle, PaperMate, Coleman, Oster, plus NUK) as a strategic advantage .
  • Management secured tangible wins (FoodSaver consumables, Rubbermaid food storage) with timing to impact from mid-year onward; active category discussions across 19 areas with top retailers .

What Went Wrong

  • Net sales declined 5.3% YoY (core sales -2.1%), with segment pressure in Home & Commercial Solutions (core sales -5.0%) and Outdoor & Recreation (-7.1%) driven by FX, exits, and category softness .
  • Normalized operating margin dipped to 4.5% from 4.8% LY, reflecting higher A&P investment despite stronger gross margin; normalized EBITDA fell to $136M from $152M LY .
  • Operating cash flow swung to a $213M outflow (vs +$32M LY) due to higher cash bonus payout and inventory pull-forward ahead of tariff implementation .
  • Baby gear exposure to 125% China tariff is the most challenging area near term; pricing actions (two rounds of +10%) taken, but industry-wide sourcing from China limits immediate mitigation .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Consensus (Q1 2025)*
Net Sales ($USD Billions)$1.653 $1.949 $1.566 $1.544*
Gross Margin % (Reported)30.5% 34.2% 32.1% —
Gross Margin % (Normalized)31.0% 34.6% 32.5% —
Operating Margin % (Reported)1.0% 0.5% 1.3% —
Operating Margin % (Normalized)4.8% 7.1% 4.5% —
Diluted EPS (Reported)$-0.02 $-0.13 $-0.09 —
Diluted EPS (Normalized)$0.00 $0.16 $-0.01 $-0.07*
Normalized EBITDA ($USD Millions)$152 $216 $136 $121*
  • Result vs estimates: Revenue beat ($1.566B vs $1.544B); normalized EPS beat (-$0.01 vs -$0.07); normalized EBITDA above S&P consensus ($136M vs $121M). Values retrieved from S&P Global.*

Segment breakdown (Q1 2025 vs Q1 2024):

SegmentNet Sales ($USD Millions)Reported Op Margin %Normalized Op Margin %
Home & Commercial Solutions$812 vs $893 -0.2% vs 1.8% 2.5% vs 5.0%
Learning & Development$572 vs $559 17.1% vs 16.8% 18.0% vs 18.6%
Outdoor & Recreation$182 vs $201 -2.7% vs -9.0% ~0% vs -4.5%

KPIs:

KPIQ1 2024Q4 2024Q1 2025
Cash Conversion Cycle (YoY change, days)——Improved by 4 days
Operating Cash Flow ($USD Millions)$32 $496 FY 2024 $-213
Net Debt ($USD Billions)$4.615 (TTM 3/31/24) $4.397 (12/31/24) $4.687 (TTM 3/31/25)
Dividend per share (quarterly)$0.07 $0.07 $0.07 (declared May 7, 2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)Q2 2025—(5%) to (3%) decline Initiated
Core Sales (YoY)Q2 2025—(5%) to (3%) decline Initiated
Normalized Operating MarginQ2 2025—10.4% to 10.8% Initiated
Normalized EPSQ2 2025—$0.21 to $0.24 Initiated
Net Sales (YoY)FY 2025(4%) to (2%) decline (4%) to (2%) decline Maintained
Core Sales (YoY)FY 2025(2%) to +1% (3%) to (1%) Lowered
Normalized Operating MarginFY 20259.0% to 9.5% 9.0% to 9.5% Maintained
Normalized EPSFY 2025$0.70 to $0.76 $0.70 to $0.76 Maintained
Operating Cash FlowFY 2025$450M to $500M $400M to $500M Widened lower bound
DividendQuarterly$0.07 $0.07 (June 13 payment) Maintained

Tariff sensitivity (framework):

  • Outlook includes 20% IEEPA China tariffs, Section 232 steel/aluminum, and 10% reciprocal tariffs for non-China countries; 125% China tariff excluded, with unmitigated EPS impact of ~$0.20 and targeted actions to cut to ~$0.10 if sustained .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Gross margin expansionReported +460 bps YoY; normalized 35.4% Reported 34.2%; normalized 34.6% Normalized 32.5% (+150 bps YoY) Sustained multi-quarter improvement
Tariffs & mitigationNotable FX/pricing in international; margin strength Refinanced debt; affirmed 2025 outlook Two tariff buckets; full offset of “bucket 1”; sensitivity for 125% China Elevated focus; mitigation actions in flight
Domestic manufacturing advantageOperational excellence; leverage improving Structural economics transformation 15 US plants + Mexico; advantaged in 8/10 top brands Strengthening competitive moat
Pricing & A&PNormalization practice change impacts normalized EPS Normalized EPS up; A&P higher Higher A&P; selective pricing, FX-driven adjustments Investing for growth while managing mix
Product innovation pipelineContinuous improvement programs; category work 2025 outlook introduced Innovation funnel rebuilt; H2 launches H2 inflection expected
Working capital & cash flowYTD OCF $346M; inventory reductions FY OCF $496M; debt refinanced Seasonal cash outflow; CCC improved 4 days Timing/seasonality; operational progress

Management Commentary

  • CEO: “We had strong results in the first quarter with core sales growth, operating margin and earnings per share all in-line or better than expectations… our decision to maintain and invest in a robust and extensive in-house domestic manufacturing base… positions us well to not just manage tariff related sourcing dislocations, but to ultimately benefit from them.” .
  • CFO: “Swift interventions including targeted pricing, incremental cost reductions, and rapid sourcing decisions… give us confidence we can fully offset U.S. tariffs and foreign retaliatory tariffs… and maintain our original 2025 full year net sales, operating margin and EPS guidance ranges.” .
  • CEO on tariffs: “We have made remarkable progress derisking our China supply base… from 35% of total COGS to 15% in 2024… we planned to reduce U.S. sourced finished goods from China down to 10% by the end of 2025 and even lower by 2026.” .
  • CFO on gross margin runway: PEEK continuous improvement across 42 plants; none at summit phases yet; significant runway remains to improve gross and operating margins .

Q&A Highlights

  • Retail destocking and consumption: No significant Q1 retailer inventory changes; prudently lowered category growth assumption to -1% to -2% to derisk plan without changing EPS/OM guidance .
  • Tariff sensitivity: Baby gear is primary exposure (70% of China imports); two 10% price rounds taken; inventory pull-forward reduces near-term impact; net EPS sensitivity ~$0.10 after mitigation if 125% China tariffs persist .
  • Manufacturing advantage & category wins: Retailers pausing China POs; wins in FoodSaver consumables (from July) and Rubbermaid food storage; discussions across 19 categories to replace private label/Asia-sourced with Newell brands .
  • Pricing contribution: Expect price net of elasticity to add ~1–2 points to full-year sales; selective non-baby price actions where China sourcing persists .
  • Cash flow impact of tariffs: Unmitigated $0.10 EPS (after mitigation) equates to ~$30M operating cash flow impact in FY25; FY OCF range widened to $400–$500M .

Estimates Context

  • Q1 2025 actuals versus S&P Global consensus: Revenue beat ($1.566B vs $1.544B*), normalized EPS beat (-$0.01 vs -$0.07*), normalized EBITDA above consensus ($136M vs $121M*). Values retrieved from S&P Global.*
  • Q2 2025 guide vs Street: Company guided normalized EPS $0.21–$0.24 and net/core sales down (5%)–(3%); S&P consensus EPS ~$0.24* and revenue ~$1.948B*. Guide aligns near EPS consensus midpoint and acknowledges top-line pressure. Values retrieved from S&P Global.*
MetricQ1 2025 Consensus*Q1 2025 Actual
Primary EPS (Normalized, $)-0.069*-0.01
Revenue ($USD Billions)$1.544*$1.566
EBITDA ($USD Millions)$121*$136 (Normalized)

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q1 print de-risks the year: topline/EPS beats and seven straight quarters of margin expansion underpin affirming FY25 EPS ($0.70–$0.76) and OM (9.0%–9.5%) ranges .
  • Tariff playbook is credible: “Bucket 1” fully offset; “125% China” sensitivity modeled with clear actions; watch baby gear pricing and lobbying for exemptions .
  • Manufacturing footprint is a differentiator: 15 US plants + Mexico provide tariff-advantaged supply; expect incremental distribution wins to build into H2 and FY26 .
  • L&D strength offsets softness elsewhere: Writing/Baby momentum and margin profile balance H&CS and O&R headwinds; monitor core declines in Kitchen/Home Fragrance and Outdoor .
  • Cash dynamics are timing-related: Seasonal outflow and inventory pull-forward explain Q1 OCF; CCC improvement and widened FY OCF window ($400–$500M) provide flexibility .
  • Structural margin runway remains: PEEK/automation progress across plants suggests further gross/operating margin potential beyond FY25 .
  • Near-term trading lens: Favor exposure into H2 innovation launches and tariff-driven shelf reallocation, while staying nimble around baby gear pricing cadence and macro category growth prudence .