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NEWELL BRANDS INC. (NWL)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered mixed results: revenue declined 4.8% year over year to $1.94B, while gross margin hit a four-year high at 35.4% and normalized operating margin inched up to 10.7%; normalized EPS was $0.24, at the high end of guidance .
  • Management updated FY25 guidance to reflect tariffs: normalized EPS was tightened to $0.66–$0.70 (from $0.70–$0.76), net/core sales both to down 3% to 2%, and operating cash flow to $400–$450M; Q3 guidance calls for normalized EPS of $0.16–$0.19 .
  • The company quantified an incremental FY25 cash tariff cost of $155M, with $105M gross profit impact to the FY25 P&L ($0.21/share after tax); management aims to offset permanent tariff effects via pricing and productivity, but will not recover the one-time 125% China tariff ($0.05/share) .
  • Strategic catalysts: secured tariff-related sourcing/distribution wins across 13 of 19 domestic categories and >30 customers; a major Yankee Candle brand refresh is launching into a Q4-weighted season, alongside the back-to-school setup in Writing .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 100 bps YoY to 35.4% (normalized 35.6%), marking the eighth straight quarter of 100+ bps expansion; operating margin rose to 8.8% (normalized 10.7%) .
  • CEO: “Normalized operating margin increased 10 basis points versus year ago to 10.7%, with all three business segments being positive for the first time since 2022… normalized EPS came in at $0.24 which was at the top end of our guidance range” .
  • CFO: “We enhanced our financial flexibility by refinancing $1.25 billion of debt in an offering that was four-times oversubscribed,” supporting balance sheet strength and structural economics .

What Went Wrong

  • Top line under pressure: net sales fell 4.8% with core sales down 4.4%; Home & Commercial Solutions and Outdoor & Recreation posted core declines of 6.0% and 10.9%, respectively .
  • Operating cash flow was an outflow of $271M year to date, impacted by working capital lapping, cash tariff costs and prior-year bonus timing; debt rose to $5.1B, cash fell to $219M vs prior year Q2 .
  • Guidance cut for normalized EPS (to $0.66–$0.70) and operating cash flow (to $400–$450M), reflecting tariff timing and short-term category softness; Q3 includes ~$0.11/share negative tariff impact ahead of mitigation .

Financial Results

Quarterly financials (prior quarter → latest)

MetricQ4 2024Q1 2025Q2 2025
Net sales ($USD Billions)$1.949 $1.566 $1.935
Core sales growth (%)(3.0)% (2.1)% (4.4)%
Gross margin (%)34.2% 32.1% 35.4%
Normalized gross margin (%)34.6% 32.5% 35.6%
Operating margin (%)0.5% 1.3% 8.8%
Normalized operating margin (%)7.1% 4.5% 10.7%
Diluted EPS (GAAP, $)(0.13) (0.09) 0.11
Normalized diluted EPS ($)0.16 (0.01) 0.24
Normalized EBITDA ($USD Millions)216 136 280

Segment performance (Q2 2025 vs Q2 2024)

SegmentNet Sales ($USD Millions) Q2’24Net Sales ($USD Millions) Q2’25Core Sales Growth Q2’25 (%)Normalized Operating Margin Q2’24 (%)Normalized Operating Margin Q2’25 (%)
Home & Commercial Solutions962 892 (6.0)% 7.3% 4.9%
Learning & Development813 809 (0.5)% 26.1% 25.6%
Outdoor & Recreation258 234 (10.9)% (0.4)% 5.6%

KPIs and balance sheet/cash flow

KPIQ2 2025
Operating cash flow YTD ($USD Millions)(271)
Debt outstanding ($USD Billions)5.1
Cash & equivalents ($USD Millions)219
Net debt ($USD Billions)4.858
Net leverage ratio (TTM Normalized EBITDA basis, mgmt)5.5x
Gross margin (%)35.4%

Results vs Wall Street consensus (S&P Global)

Metric (Q2 2025)ConsensusActualDeltaComment
Revenue ($USD)$1,948,438,740*$1,935,000,000 (0.7%)Slight miss vs consensus*
Primary EPS ($)$0.239*$0.24 +$0.001In line/high end of guidance*
EBITDA ($USD)$278,498,230*$280,000,000 (Normalized) +$1.5MDefinition differences; mgmt reports normalized

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025 8‑K)Current Guidance (Q2 2025 8‑K)Change
Net Sales (YoY change)FY 2025(4%) to (2%) (3%) to (2%) Raised (less negative)
Core Sales (YoY change)FY 2025(3%) to (1%) (3%) to (2%) Lowered at top end (narrowed down)
Normalized Operating MarginFY 20259.0% to 9.5% 9.0% to 9.5% Maintained
Normalized EPS ($)FY 2025$0.70 to $0.76 $0.66 to $0.70 Lowered
Operating Cash Flow ($USD Millions)FY 2025$400 to $500 $400 to $450 Tightened lower
Net/Core Sales (YoY change)Q3 2025N/A(4%) to (2%) New
Normalized Operating MarginQ3 2025N/A9.1% to 9.5% New
Normalized EPS ($)Q3 2025N/A$0.16 to $0.19 New

Tariff quantification added: incremental FY25 cash tariff cost $155M; $105M gross profit/P&L impact ($0.21/share after tax). One-time 125% China tariff ($0.05/share) not recovered through pricing .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Tariffs & mitigationQ1: sensitivity around 125% China tariff; plan to offset tariffs via pricing/productivity; FY25 EPS at risk if sustained . Q4: macro/tariff impacts called out in risk disclosures .Mgmt quantified ~$155M cash tariff cost; $105M P&L ($0.21/share); pricing/productivity to fully offset permanent tariffs; not recouping ~$0.05/share one-time 125% tariff .Improving control; quantified and addressed
Domestic manufacturing advantageQ1: Maintaining robust NA manufacturing positions NWL to benefit from sourcing realignment .Secured incremental business in 13/19 domestic categories; >30 customers across channels leveraging tariff-free inventory and USMCA capacity .Building momentum
Innovation pipelineQ4: Gross/operating margin progress; setup for back-half topline inflection .Yankee Candle brand refresh; tier-one launch; Writing innovation (Sharpie/Expo) and Baby products gaining share; Outdoor & Rec innovation slated for early 2026 .Strengthening; Q4-weighted
A&P investment intensityQ4/Q1: Higher A&P spend noted with margins improving .Second-half A&P “highest level since 2017,” supported by stronger marketing capabilities .Increasing investment
Leverage and ERPQ4: Deleveraging with normalized EBITDA growth .Net leverage 5.5x in Q2; target ~4.5x YE; ERP harmonization progress with migrations completed, aiming for 2026 completion .Deleveraging; systems consolidation progressing
Retailer inventories & pricingQ1: Retailers tightly managing inventory .Some direct import pauses around China tariffs; retailer acceptance of cost-based pricing; staggered pricing timing by category; clearer visibility expected over 3–6 months .Stabilizing, still noisy

Management Commentary

  • CEO: “Normalized operating margin increased… to 10.7%, with all three business segments being positive for the first time since 2022… normalized EPS came in at $0.24… despite incurring a higher than expected tax rate” .
  • CEO on distribution wins: “We have now secured incremental business in 13 of the 19 categories where we have domestic manufacturing capability… wins with over 30 customers across nearly every domestic channel” .
  • CFO on tariffs: “Expected incremental cash tariff cost… ~$155M vs 2024… $105M to 2025 P&L ($0.21/share)… ~$0.05/share one-time 125% China tariff will largely impact Q3” .
  • CEO on strategy: “We plan to invest more money… during the 2025 than during any six month period since 2017… with stronger ROI expectations as our marketing capabilities have improved” .
  • Yankee Candle relaunch: modernized design, improved wax blend, and a national campaign to drive emotional connection to fragrance, timed ahead of Q4 seasonality .

Q&A Highlights

  • Core sales trajectory and Q4 inflection: Management implied Q4 core sales roughly flat, with Q3/Q4 sequential progress driven by tariff-related distribution gains and Q4-weighted innovation (e.g., Yankee Candle) .
  • Pricing and retailer response: Retailers generally accepted cost-based pricing; timing varies by category depending on pre-tariff inventory, with clearer competitive pricing dynamics expected within 3–6 months; baby category pricing just went into effect (July 28) .
  • Back-to-school: Record fill rates and quality; exclusivity wins in Expo/Sharpie with several retailers; strongest consumer readouts expected over next four weeks .
  • Category/macro: Acknowledged consumer pullback in discretionary general merchandise; expect subdued market growth near term, but confidence in innovation-driven share gains and eventual category recovery .
  • Margins/leverage: Targeting double-digit normalized EPS growth on a tax-equalized basis, mid/high single-digit normalized EBITDA growth, and YE leverage ~4.5x; overheads as % of sales expected to decline beginning Q3 .

Estimates Context

  • Q2 2025 results vs consensus: Revenue $1,935M vs $1,948M consensus (miss ~0.7%); EPS $0.24 vs $0.239 consensus (in line to slight beat); consensus counts: 9 (revenue), 11 (EPS)* .
  • FY 2025 context: Company guidance for normalized EPS is $0.66–$0.70, above current FY25 EPS consensus of ~$0.575*, suggesting potential upward estimate revisions if execution on pricing, productivity and distribution wins persists .

Values retrieved from S&P Global.*

Consensus detail (reference)

PeriodRevenue Consensus Mean ($USD)Primary EPS Consensus Mean ($)EBITDA Consensus Mean ($USD)# Rev Est# EPS Est
Q4 2024$1,961,418,560*$0.136*$230,031,780*9*11*
Q1 2025$1,543,763,870*($0.069)*$121,007,080*9*10*
Q2 2025$1,948,438,740*$0.239*$278,498,230*9*11*
FY 2025$7,190,474,220*$0.575*$920,640,380*9*10*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Margin story intact: eight consecutive quarters of 100+ bps gross margin expansion and Q2 normalized margin at 10.7% underscore structural improvements despite top-line softness .
  • Tariff overhang quantified and mostly mitigated: ~$0.21/share after-tax drag targeted for offset via pricing and productivity; one-time ~$0.05/share 125% China tariff will pass through Q3, then abate .
  • Near-term trading setup: Watch Q3 tariff flow-through and pricing elasticity, back-to-school sell-through, and Q4 Yankee Candle relaunch—potential catalysts for sequential core sales improvement; any upside to Q3 normalized EPS ($0.16–$0.19) could re-rate sentiment .
  • Medium-term thesis: Domestic manufacturing/logistics and ERP harmonization provide a defensible moat and operating leverage as volumes recover; overhead ratio expected to bend lower beginning Q3 .
  • Balance sheet: Refinancing completed; management targets YE leverage ~4.5x; monitor operating cash flow delivery ($400–$450M FY25) in context of tariff capitalization into inventory .
  • Segment focus: Writing and Home Fragrance show strengthening momentum; Outdoor & Recreation remains a 2026 innovation story—track category trends and shelf resets in Q4 .
  • Estimates risk: Company’s FY EPS guidance sits above current consensus; execution on offsets and Q4 seasonal uplift could drive estimate revisions upward* .

Values retrieved from S&P Global.*