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NEWELL BRANDS INC. (NWL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered continued margin expansion despite soft top-line, with reported gross margin up 430 bps YoY to 34.2% and normalized gross margin at 34.6% (+350 bps YoY); normalized operating margin was 7.1% .
  • Net sales were $1.949B (-6.1% YoY) and core sales declined 3.0%; normalized diluted EPS was $0.16, above company guidance of $0.11–$0.14, while reported diluted EPS was -$0.13 due to impairments .
  • Segments: Learning & Development returned to core growth with normalized operating margin 16.1%, Home & Commercial Solutions held normalized margin at 11.7%, Outdoor & Recreation remained loss-making (-18.4% normalized margin) .
  • 2025 preliminary outlook: net sales -4% to -2%, core sales -2% to +1%, normalized operating margin 9.0%–9.5%, normalized EPS $0.70–$0.76; Q1 2025 normalized EPS guided to -$0.09 to -$0.06 as FX headwinds and seasonality weigh near term .

What Went Well and What Went Wrong

  • What Went Well

    • Sustained gross margin expansion: Q4 reported GM 34.2% (+430 bps YoY), normalized GM 34.6% (+350 bps YoY), sixth consecutive quarter of YoY improvement driven by productivity, pricing and mix .
    • EPS outperformance vs company guidance: normalized EPS $0.16 vs guided $0.11–$0.14, supported by margin gains and restructuring savings; management emphasized structural economics transformation over the past six quarters .
    • Balance sheet progress: FY normalized EBITDA rose to $900M (+$118M YoY) and net debt fell to $4.397B; leverage ratio improved to ~4.9x by year-end .

  • What Went Wrong

    • Top-line pressure: Q4 net sales -6.1% YoY with core sales -3.0%; Home Fragrance and Kitchen softness persisted, and FX was a headwind .
    • Impairments and GAAP loss: Q4 included $87M of non-cash impairments; reported net loss was $54M and diluted EPS -$0.13 .
    • Outdoor & Recreation: segment remained weak with normalized operating loss (-$28M) and negative margin (-18.4%); product innovation ramp is weighted to 2026 .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$2.033 $1.947 $1.949
Core Sales Growth (%)(4.2%) (1.7%) (3.0%)
Gross Margin (%) - Reported34.4% 34.9% 34.2%
Gross Margin (%) - Normalized34.8% 35.4% 34.6%
Operating Margin (%) - Reported8.0% (6.2%) 0.5%
Operating Margin (%) - Normalized10.8% 9.5% 7.1%
Diluted EPS (GAAP)$0.11 ($0.48) ($0.13)
Diluted EPS (Normalized)$0.36 $0.16 $0.16
Normalized EBITDA ($USD Millions)$284 $250 $216

Segment breakdown (Q4 2024):

SegmentNet Sales ($MM)Reported Op Margin (%)Normalized Op Income ($MM)Normalized Op Margin (%)
Home & Commercial Solutions$1,169 2.4% $137 11.7%
Learning & Development$628 15.8% $101 16.1%
Outdoor & Recreation$152 (22.4%) ($28) (18.4%)

KPIs and Balance Sheet:

KPIFY 2023FY 2024
Normalized EBITDA ($MM)$782 $900
Operating Cash Flow ($MM)$930 $496
Net Debt ($MM)$4,572 $4,397
Cash & Equivalents ($MM)$332 $198
Gross Debt ($MM)$4,904 $4,595

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Net Sales YoYQ4 2024(7%) to (4%) (6.1%) Within range
Core Sales YoYQ4 2024(5%) to (2%) (3.0%) Within range
Normalized Operating MarginQ4 20247.0% to 7.7% 7.1% Within range
Normalized EPSQ4 2024$0.11 to $0.14 $0.16 Raised (beat)
Normalized Operating MarginFY 20248.1% to 8.3% (updated) 8.2% Achieved mid
Normalized EPSFY 2024$0.63 to $0.66 (updated) $0.68 Beat
Operating Cash FlowFY 2024$500M to $600M (updated) $496M Slightly below
Net Sales YoYFY 2025 (Prelim)—(4%) to (2%) Initiated
Core Sales YoYFY 2025 (Prelim)—(2%) to +1% Initiated
Normalized Operating MarginFY 2025 (Prelim)—9.0% to 9.5% Initiated
Normalized EPSFY 2025 (Prelim)—$0.70 to $0.76 Initiated
Operating Cash FlowFY 2025 (Prelim)—$450M to $500M Initiated
Dividend per ShareQuarterly (announced Feb 13, 2025)—$0.07 (payable Mar 14, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Tariffs / Sourcing shift from ChinaWorking to reduce China exposure to <10% of COGS by end of next year; ~15% at mid-2024; potential competitive advantage from U.S. manufacturing China-sourced COGS ~15% now, targeting <10% by YE; baby products largely exempt historically; monitoring Mexico/Canada; potential net-positive midterm due to U.S. manufacturing footprint Continued mitigation; possible strategic upside
Supply chain productivity (“FUEL”)~6% COGS takeout; multi-year automation, mix management Productivity savings and pricing/mix drove GM expansion despite volume/FX headwinds Structural margin gains sustained
Innovation & A&PTier 1 launches increased; A&P moving toward ~5–6% of sales 2025 Tier 1/2 pipeline 3x 2024; weighted to mid/high price points; A&P up ~20–30% H2 vs H1 Accelerating front-end investment
Product performance highlightsSharpie Creative Markers, Mr. Coffee, FoodSaver; segment wins in Baby/Writing Graco SmartSense, Expo ink upgrades, Oster Extreme Mix, Yankee Candle relaunch/premium line Broadening across categories
Regional trendsInternational core growth; pricing offset FX; retailer inventories stable International pricing aided core; FX transaction headwinds near term; distribution expansion planned International resilience; FX headwinds Q1
AI/Technology initiativesEarly AI in customer service to improve overhead productivity Continued emphasis on data-driven pricing/promo and automation Scaling enablement tools
Outdoor & RecreationBottoming expected; innovation ramp targeting 2026 Sequential improvement expected 2025; core sales growth likely in 2026 Long-dated turnaround

Management Commentary

  • “Fourth quarter reported gross margin increased by 430 basis points to 34.2%... Looking forward, Newell Brands' core sales growth is expected to positively inflect during the back half of 2025.” — CFO Mark Erceg .
  • “We delivered strong results in 2024... drove strong gross and operating margin improvement... and meaningfully de-levered the balance sheet.” — CEO Chris Peterson .
  • “Core sales are expected to be between minus 2% and plus 1% [in 2025]... normalized operating margin between 9% and 9.5%... normalized EPS in the range of $0.70 to $0.76.” — CFO Mark Erceg .
  • “We are launching and investing behind an increasing number of Tier 1 and Tier 2 mid- and high-priced new products across the business.” — CEO Chris Peterson .

Q&A Highlights

  • Core sales trajectory and drivers: Expect low-single-digit decline in H1 2025 turning slightly positive in H2; drivers include stronger innovation funnel, distribution expansion, mix management, and higher A&P .
  • Tariffs and competitive positioning: U.S. manufacturing base and reduced China exposure could be net-positive midterm; baby products most exposed but historically exempt; active retailer dialogues to favor “Made in USA” .
  • Interest expense and refinancing: $1.25B refinanced (2030/2032 tranches), planning to refinance remaining $1.25B in 2025; 2025 interest expense to step up by $5–$10M .
  • Pricing and FX: Q4 pricing contributed ~1 point; significant FX transaction headwind in Q1 2025, with pricing actions expected to offset over the remaining quarters .
  • Margin phasing: Operating margin expansion expected to be more back-half weighted in 2025; structural margin levers intact (automation, mix, productivity) .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable due to data access limits; normalized EPS of $0.16 suggests an upside vs company guidance ($0.11–$0.14). Third-party reports indicated an EPS beat versus ~$0.14 consensus and revenue around $1.95B; external sources differ on revenue surprise (some report a slight miss, others a small beat) .
  • Implication: Street likely needs to raise 2025 EPS/margin expectations modestly given structural margin carry-through and explicit 9.0–9.5% operating margin outlook; near-term Q1 FX headwinds temper the cadence .

Note: S&P Global consensus data was unavailable at time of analysis.

Key Takeaways for Investors

  • Margin story intact: Multi-quarter, structural gross margin expansion (productivity, mix, pricing discipline) continues even amid softer volumes; 2025 operating margin guided above evergreen target .
  • H2 2025 inflection: Management guiding core sales to turn positive in the back half on stepped-up innovation and distribution; near-term FX and seasonality weigh on Q1 .
  • Portfolio quality improving: Continued exit of low-margin tails and consolidation of brands/SKUs supports sustainable profitability; Learning & Development and International lead improvement .
  • Outdoor recovery is long-cycle: Expect sequential trend improvement in 2025, with real core growth not until 2026 as new innovation launches .
  • Capital structure de-risking: Successful $1.25B refinancing, plan to term out remaining 2026 maturities; leverage down to ~4.9x, targeting further improvement in 2025 .
  • Trading lens: Near-term prints may be choppy (Q1 FX headwinds), but narrative supports estimate upward drift for FY25 profitability; watch retailer shelf resets, pricing actions, and Yankee Candle relaunch execution .
  • Dividend maintained: $0.07 per share declared for March 2025, signaling continued shareholder return amidst turnaround execution .