Newell Brands Announces Third Quarter 2022 Results

Rhea-AI Summary

Newell Brands (NASDAQ: NWL) reported third quarter 2022 net sales of $2.3 billion, a 19.2% decline year-over-year, attributed to various factors including core sales decreases and inventory rightsizing by retailers. Core sales were down 10.8%, and the reported operating margin fell to 1.6% due to a $148 million non-cash impairment charge. Reported diluted EPS dropped to $0.07 from $0.44 last year. The company improved financial flexibility, refinancing its credit facility and updating its full-year outlook to net sales of $9.35 to $9.43 billion and normalized EPS of $1.56 to $1.61.

Positive

• Strengthened financial flexibility through refinancing and increased borrowing capacity.
• Maintained strong cost discipline amid challenging market conditions.
• Updated full-year 2022 outlook for net sales to $9.35-$9.43 billion.

Negative

• Net sales declined 19.2% year-over-year.
• Core sales decreased 10.8%, with only one business unit reporting growth.
• Reported operating margin fell to 1.6%, impacted by a $148 million impairment charge.
• Diluted EPS decreased from $0.44 to $0.07 compared to the prior year.
• Operating cash flow significantly below the prior range due to rising inventory and slowing consumer demand.

Net Sales Decline 19.2%; Core Sales Decline 10.8%

Diluted EPS $0.07; Normalized Diluted EPS $0.53

Strengthens Financial Flexibility

Updates Outlook for Full Year 2022

ATLANTA--(BUSINESS WIRE)-- Newell Brands (NASDAQ: NWL) today announced its third quarter 2022 financial results.

"Following strong performance over the first half of the year, results decelerated in Q3, reflecting a tough operating environment as many retailers rightsized their inventory positions, inflationary pressure on both the consumer and our business, as well as the impact of a stronger dollar,” said Ravi Saligram, Newell Brands CEO. “We expect economic uncertainty and external disruptions to persist in the near-term and are staying agile, as we adjust our playbook to this environment, while taking decisive actions to maximize profits and cash. We remain confident in the strength of our brands and our ability to drive sustainable and profitable growth over the long term."

Chris Peterson, President and Chief Financial Officer, said, “During the third quarter we enhanced Newell's financial flexibility and maintained strong cost discipline, as results were impacted by top line deleveraging. We remain laser focused on aligning the company's cost structure with the macro backdrop, reducing inventory and strengthening cash flow, while continuing to invest in core capabilities."

Third Quarter 2022 Executive Summary

• Net sales were $2.3 billion, a 19.2 percent decline compared with the prior year period, including the year over year impact from the sale of the Connected Home & Security (CH&S) business at the end of the first quarter 2022.
• Core sales declined 10.8 percent compared with the prior year period. One of seven business units increased core sales compared with the prior year period.
• Reported operating margin was 1.6 percent, including the impact of a $148 million non-cash impairment charge, compared with 10.1 percent in the prior year period. Normalized operating margin was 10.2 percent compared with 11.4 percent in the prior year period.
• Reported diluted earnings per share were $0.07 compared with $0.44 per share in the prior year period.
• Normalized diluted earnings per share were $0.53 compared with $0.54 per share in the prior year period.
• The company strengthened its financial flexibility and refinanced its unsecured revolving credit facility as well as its senior notes due April 2023 (April 2023 notes). In September, the company issued $1.0 billion of senior notes and in October, used the net proceeds, together with available cash, to redeem the April 2023 notes.
• The company's leverage ratio was 3.9x at the end of the third quarter versus 3.1x in the prior year period and 3.0x at the end of 2021.
• The company updated its full year 2022 net sales and normalized earnings per share outlook to $9.35 billion to $9.43 billion and $1.56 to $1.61, respectively.

Third Quarter 2022 Operating Results

Net sales were $2.3 billion, a 19.2 percent decline compared to the prior year period, reflecting a core sales decrease of 10.8 percent, the impact of the sale of the CH&S business at the end of the first quarter 2022, unfavorable foreign exchange, as well as category and retail store exits.

Reported gross margin was 29.0 percent compared with 30.4 percent in the prior year period, as fixed cost deleveraging and significant headwinds from foreign exchange and inflation, particularly related to sourced finished goods, transportation and labor, more than offset benefits from pricing and FUEL productivity savings. Normalized gross margin was 29.4 percent compared with 30.6 percent in the prior year period.

Reported operating income was $35 million compared with $281 million in the prior year period. A non-cash impairment charge of $148 million related to goodwill and intangible assets was incurred in the current period. Reported operating margin was 1.6 percent compared with 10.1 percent in the prior year period, as the impact of lower net sales, the impairment charge, significant headwinds from inflation and foreign exchange and an increase in advertising and promotion expense as a percentage of sales more than offset benefits from pricing, FUEL productivity savings and lower overhead costs. Normalized operating income was $229 million, or 10.2 percent of sales, compared with $317 million, or 11.4 percent of sales, in the prior year period.

Net interest expense was $57 million compared with $65 million in the prior year period.

Reported tax benefit was $61 million compared with a tax provision of $25 million in the prior year period, largely reflecting an increase in discrete tax benefits. The normalized tax benefit was $58 million compared with a normalized tax provision of $20 million in the prior year period.

The company reported net income of $31 million, or $0.07 diluted earnings per share, compared with $190 million, or $0.44 diluted earnings per share, in the prior year period.

Normalized net income was $220 million, or $0.53 normalized diluted earnings per share, compared with $231 million, or $0.54 normalized diluted earnings per share, in the prior year period.

An explanation of non-GAAP measures and a reconciliation of these non-GAAP results to comparable GAAP measures are included in the tables attached to this release.

Balance Sheet and Cash Flow

Year to date, operating cash outflow was $567 million compared with operating cash flow of $490 million in the prior year period, primarily reflecting an increase in working capital use, largely due to higher inventory levels driven by significantly greater than anticipated pullback in retailer orders and slowing consumer demand, lower accounts payable due to the timing of supply plan reductions, as well as a decline in operating income.

The company strengthened its financial flexibility by refinancing its prior senior unsecured revolving credit facility and upsizing borrowing capacity under the revolving credit facility to $1.5 billion. In September, the company also raised $1.0 billion through the issuance of $500 million of 6.375% notes due 2027 and $500 million of 6.625% notes due 2029 and in October, used the net proceeds, together with available cash, to redeem the remaining $1.1 billion of the April 2023 notes.

At the end of the third quarter, Newell Brands had cash and cash equivalents of $636 million and net debt outstanding of $5.2 billion. Newell Brands exited the third quarter with a leverage ratio of 3.9x compared to 3.1x in the prior year period and 3.0x at the end of 2021.

Leverage ratio is defined as the ratio of net debt to normalized EBITDA over the preceding twelve-month period. An explanation of how the leverage ratio is calculated and a related reconciliation, as well as a reconciliation of reported results to normalized results, are included in the tables attached to this release.

Third Quarter 2022 Operating Segment Results

The Commercial Solutions segment generated net sales of $397 million compared with $486 million in the prior year period, reflecting core sales growth of 9.2 percent, which was more than offset by the impact of the sale of the CH&S business at the end of the first quarter 2022 and unfavorable foreign exchange. Reported operating income was $28 million, or 7.1 percent of sales, compared with $18 million, or 3.7 percent of sales, in the prior year period. Normalized operating income was $31 million, or 7.8 percent of sales, versus $21 million, or 4.3 percent of sales, in the prior year period.

The Home Appliances segment generated net sales of $305 million compared with $443 million in the prior year period, reflecting core sales decline of 23.2 percent, as well as the impact of exits from certain low margin categories and unfavorable foreign exchange. Reported operating loss was $20 million, or negative 6.6 percent of sales, compared with an operating income of $19 million, or 4.3 percent of sales, in the prior year period. The year over year difference was impacted by a $15 million impairment charge related to intangible assets. Normalized operating loss was $3 million, or negative 1.0 percent of sales, versus an operating income of $24 million, or 5.4 percent of sales, in the prior year period.

The Home Solutions segment generated net sales of $510 million compared with $598 million in the prior year period, reflecting core sales decline of 11.6 percent, the impact of unfavorable foreign exchange and the exit of 42 Yankee Candle retail locations during the first nine months of the year. Core sales declined across both the Home Fragrance and Food business units. Reported operating loss was $88 million, or negative 17.3 percent of sales, compared with an operating income of $75 million, or 12.5 percent of sales, in the prior year period. The year over year difference was impacted by a $108 million impairment charge related to goodwill. Normalized operating income was $30 million, or 5.9 percent of sales, versus $86 million, or 14.4 percent of sales, in the prior year period.

The Learning & Development segment generated net sales of $751 million compared with $869 million in the prior year period, reflecting core sales decline of 9.9 percent and the impact of unfavorable foreign exchange. Core sales declined in both the Writing and Baby business units. Reported operating income was $120 million, or 16.0 percent of sales, compared with $195 million, or 22.4 percent of sales, in the prior year period. The year over year difference was impacted by a $25 million impairment charge related to intangible assets. Normalized operating income was $148 million, or 19.7 percent of sales, compared with $197 million, or 22.7 percent of sales, in the prior year period.

The Outdoor & Recreation segment generated net sales of $289 million compared with $391 million in the prior year period, reflecting core sales decline of 18.4 percent, as well as the impact of exits from certain low margin categories and unfavorable foreign exchange. Reported operating income was $8 million, or 2.8 percent of sales, compared with $27 million, or 6.9 percent of sales, in the prior year period. Normalized operating income was $18 million, or 6.2 percent of sales, compared with $34 million, or 8.7 percent of sales, in the prior year period.

Outlook for Fourth Quarter and Full Year 2022

The company initiated its outlook for fourth quarter 2022 and updated its full year 2022 outlook.

						Q4 2022 Outlook
Net Sales						$2.18 to $2.26 billion
Core Sales						9% to 12% decline
Normalized Operating Margin						5.1% to 6.5%
Normalized EPS						$0.09 to $0.14

			Previous Full Year 2022 Outlook			Updated Full Year 2022 Outlook
Net Sales			$9.37 to $9.58 billion			$9.35 to $9.43 billion
Core Sales			2% to 4% decline			3% to 4% decline
Normalized Operating Margin			10.0% to 10.5%			10.0% to 10.3%
Normalized EPS			$1.56 to $1.70			$1.56 to $1.61

The full year 2022 outlook for net sales, normalized operating margin and normalized EPS includes the contribution from CH&S during the first quarter. Core sales growth outlook for full year 2022 excludes the contribution from CH&S. Net sales outlooks for both Q4 2022, as well as for the full year 2022, account for the expected unfavorable foreign exchange movements, using current rates, as well as closures of Yankee Candle retail locations and market and category exits, primarily in the Outdoor & Recreation and Home Appliances segments.

For full year 2022, the company currently expects to deliver operating cash flow significantly below its prior range of $400 million to $500 million, including the impact of the loss of profits from the sale of the CH&S business, as well as a one-time cash tax payment on this transaction.

The company has presented forward-looking statements regarding core sales, normalized operating margin and normalized earnings per share. These non-GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measures is a matter of management judgement and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. We are unable to present a quantitative reconciliation of forward-looking normalized operating margin or normalized earnings per share to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict all of the necessary components of such GAAP measures without unreasonable effort or expense. In addition, we believe such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the company's future financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end and year-end adjustments. Any variation between the company's actual results and preliminary financial data set forth above may be material.

Conference Call

Newell Brands’ third quarter 2022 earnings conference call will be held today, October 28, at 11:00 a.m. ET. A link to the webcast is provided under Events & Presentations in the Investors section of the company’s website at www.newellbrands.com. A webcast replay will be made available in the Quarterly Earnings section of the company’s website.

Non-GAAP Financial Measures

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (the "SEC") and includes a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.

The company uses certain non-GAAP financial measures that are included in this press release and the additional financial information both to explain its results to stockholders and the investment community and in the internal evaluation and management of its businesses. The company’s management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures (a) permit investors to view the company’s performance and liquidity using the same tools that management uses to evaluate the company’s past performance, reportable segments, prospects for future performance and liquidity, and (b) determine certain elements of management incentive compensation.

The company’s management believes that core sales provides a more complete understanding of underlying sales trends by providing sales on a consistent basis as it excludes the impacts of acquisitions, divestitures, retail store openings and closings, certain market and category exits, and changes in foreign exchange from year-over-year comparisons. The effect of changes in foreign exchange on reported sales is calculated by applying the prior year average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures), with the difference between the 2022 reported sales and constant currency sales presented as the foreign exchange impact increase or decrease in core sales. The company’s management believes that “normalized” gross margin, “normalized” operating income, “normalized” operating margin, "normalized EBITDA", “normalized” net income, “normalized” diluted earnings per share, “normalized” interest and “normalized” income tax benefit or expense, which exclude restructuring and restructuring-related expenses and one-time and other events such as costs related to the extinguishment of debt, certain tax benefits and charges, impairment charges, pension settlement charges, divestiture costs, costs related to the acquisition, integration and financing of acquired businesses, amortization of acquisition-related intangible assets, inflationary adjustments, expenses related to certain product recalls and certain other items, are useful because they provide investors with a meaningful perspective on the current underlying performance of the company’s core ongoing operations and liquidity. “Normalized EBITDA” is an ongoing liquidity measure (that excludes non-cash items) and is calculated as normalized earnings before interest, tax depreciation, amortization and stock-based compensation expense. "Leverage ratio" is a liquidity measure calculated as the ratio of net debt (defined as total debt less cash and cash equivalents) to normalized EBITDA.

The company determines the tax effect of the items excluded from normalized diluted earnings per share by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the company utilizes a “with” and “without” approach to determine normalized income tax benefit or expense.

While the company believes these non-GAAP financial measures are useful in evaluating the company’s performance and liquidity, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.

About Newell Brands

Newell Brands (NASDAQ: NWL) is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, Spontex, Coleman, Campingaz, Contigo, Oster, Sunbeam and Mr. Coffee. Newell Brands' beloved, planet friendly brands enhance and brighten consumers lives at home and outside by creating moments of joy, building confidence and providing peace of mind.

This press release and additional information about Newell Brands are available on the company’s website, www.newellbrands.com.

Caution Concerning Forward-Looking Statements

Some of the statements in this press release and its exhibits, particularly those anticipating future financial performance, business prospects, growth, operating strategies, the impact of the COVID-19 pandemic and similar matters, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements generally can be identified by the use of words or phrases, including, but not limited to, "guidance," "outlook," “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “setting up,” "beginning to,” “will,” “should,” “would,” "could," “resume,” “are confident that,” "remain optimistic that," "seek to," or similar statements. We caution that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. Actual results may differ materially from those expressed or implied in the forward-looking statements, including impairment charges and accounting for income taxes. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to:

• our ability to optimize costs and cash flow and mitigate the impact of retailer inventory rebalancing through discretionary and overhead spend management, advertising and promotion expense optimization, demand forecast and supply plan adjustments and actions to improve working capital;
• our dependence on the strength of retail and consumer demand and commercial and industrial sectors of the economy in various countries around the world;
• our ability to improve productivity, reduce complexity and streamline operations;
• our ability to manage the actual or perceived effects of the COVID-19 pandemic, including as a result of any additional variants of the virus or the efficacy and distribution of vaccines;
• competition with other manufacturers and distributors of consumer products;
• major retailers’ strong bargaining power and consolidation of our customers;
• supply chain and operational disruptions in the markets in which we operate, whether as a result of the actual or perceived effects of the COVID-19 pandemic or broader geopolitical and macroeconomic conditions, including the military conflict between Russia and Ukraine;
• changes in the prices and availability of labor, transportation, raw materials and sourced products, including significant inflation, and our ability to offset cost increases through pricing and productivity in a timely manner;
• the cost and outcomes of governmental investigations, inspections, lawsuits, legislative requests or other actions by third parties, the potential outcomes of which could exceed policy limits, to the extent insured;
• our ability to develop innovative new products, to develop, maintain and strengthen end-user brands and to realize the benefits of increased advertising and promotion spend;
• our ability to consistently maintain effective internal control over financial reporting;
• the risks inherent to our foreign operations, including currency fluctuations, exchange controls and pricing restrictions;
• future events that could adversely affect the value of our assets and/or stock price and require additional impairment charges;
• unexpected costs or expenses associated with dispositions;
• our ability to effectively execute our turnaround plan, including Project Ovid;
• risks related to our substantial indebtedness, potential increases in interest rates or changes in our credit ratings;
• a failure or breach of one of our key information technology systems, networks, processes or related controls or those of our service providers;
• the impact of U.S. and foreign regulations on our operations, including the impact of tariffs and environmental remediation costs and legislation and regulatory actions related to data privacy and climate change;
• the potential inability to attract, retain and motivate key employees;
• changes in tax laws and the resolution of tax contingencies resulting in additional tax liabilities;
• product liability, product recalls or related regulatory actions;
• our ability to protect intellectual property rights;
• significant increases in the funding obligations related to our pension plans; and
• other factors listed from time to time in our SEC filings, including but not limited to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our other SEC filings.

The consolidated condensed financial statements are prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Management’s application of U.S. GAAP requires the pervasive use of estimates and assumptions in preparing the unaudited condensed consolidated financial statements. The company continues to be impacted by the COVID-19 pandemic, inflationary and supply chain pressures, and the indirect macroeconomic impact of the Russia-Ukraine conflict, which has required greater use of estimates and assumptions in the preparation of our condensed consolidated financial statements. Although we have made our best estimates based upon current information, actual results could materially differ and may require future changes to such estimates and assumptions, including reserves, which may result in future expense.

The information contained in this press release and the tables is as of the date indicated. The company assumes no obligation to update any forward-looking statements as a result of new information, future events or developments.

NEWELL BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share data)
		Three Months Ended September 30,										Nine Months Ended September 30,
		2022				2021			% Change			2022				2021				% Change
Net sales		$	2,252			$	2,787		(19.2	)%		$	7,174			$	7,784			(7.8	)%
Cost of products sold			1,599				1,939						4,956				5,323
Gross profit			653				848		(23.0	)%			2,218				2,461			(9.9	)%
Selling, general and administrative expenses			467				561		(16.8	)%			1,489				1,667			(10.7	)%
Restructuring costs, net			3				6						12				16
Impairment of goodwill, intangibles and other assets			148				—						148				—
Operating income			35				281		(87.5	)%			569				778			(26.9	)%
Non-operating expenses:
Interest expense, net			57				65						171				197
Other (income) expense, net			8				1						(108	)			(3	)
Income (loss) before income taxes			(30	)			215		NM				506				584			(13.4	)%
Income tax provision (benefit)			(61	)			25						37				108
Net income		$	31			$	190		(83.7	)%		$	469			$	476			(1.5	)%
Weighted average common shares outstanding:
Basic			413.6				425.4						416.4				425.2
Diluted			414.6				428.5						418.3				427.9
Earnings per share:
Basic		$	0.07			$	0.45					$	1.13			$	1.12
Diluted		$	0.07			$	0.44					$	1.12			$	1.11
Dividends per share		$	0.23			$	0.23					$	0.69			$	0.69

NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in millions)
		September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents		$	636		$	440
Accounts receivable, net			1,502			1,500
Inventories			2,527			1,997
Prepaid expenses and other current assets			483			325
Total current assets			5,148			4,262
Property, plant and equipment, net			1,124			1,204
Operating lease assets			585			558
Goodwill			3,300			3,504
Other intangible assets, net			2,869			3,370
Deferred income taxes			778			814
Other assets			874			467
TOTAL ASSETS		$	14,678		$	14,179
Liabilities and stockholders' equity
Current liabilities
Accounts payable		$	1,437		$	1,680
Accrued compensation			123			270
Other accrued liabilities			1,470			1,364
Short-term debt and current portion of long-term debt			1,078			3
Total current liabilities			4,108			3,317
Long-term debt			4,762			4,883
Deferred income taxes			641			405
Operating lease liabilities			519			500
Other noncurrent liabilities			872			983
Total liabilities			10,902			10,088
Total stockholders' equity			3,776			4,091
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	14,678		$	14,179

NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in millions)
		Nine Months Ended September 30,
		2022				2021
Cash flows from operating activities:
Net income		$	469			$	476
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			222				244
Impairment of goodwill, intangibles and other assets			148				—
(Gain) loss from sale of businesses			(136	)			2
Deferred income taxes			211				(17	)
Stock based compensation expense			8				37
Other, net			(2	)			(1	)
Changes in operating accounts excluding the effects of divestitures:
Accounts receivable			(165	)			(44	)
Inventories			(738	)			(488	)
Accounts payable			(143	)			194
Accrued liabilities and other			(441	)			87
Net cash provided by (used in) operating activities			(567	)			490
Cash flows from investing activities:
Proceeds from sale of divested business			616				—
Capital expenditures			(221	)			(181	)
Other investing activities, net			25				1
Net cash provided by (used in) investing activities			420				(180	)
Cash flows from financing activities:
Net proceeds from issuance of long-term debt			990				—
Payments on current portion of long-term debt			(2	)			(447	)
Payments on long-term debt			—				(6	)
Repurchase of shares of common stock			(325	)			—
Cash dividends			(290	)			(296	)
Acquisition of noncontrolling interests			—				(26	)
Equity compensation activity and other, net			(29	)			(25	)
Net cash provided by (used in) financing activities			344				(800	)
Exchange rate effect on cash, cash equivalents and restricted cash			(13	)			(14	)
Increase (decrease) in cash, cash equivalents and restricted cash			184				(504	)
Cash, cash equivalents and restricted cash at beginning of period			477				1,021
Cash, cash equivalents and restricted cash at end of period		$	661			$	517
Supplemental disclosures:
Restricted cash at beginning of period		$	37			$	40
Restricted cash at end of period			25				23

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share data)
		Three Months Ended September 30, 2022
		GAAP				Restructuring				Acquisition				Transaction				Non-GAAP
		Measure				and restructuring-				amortization and				costs and				Measure
		Reported				related costs				impairment				other [1]				Normalized*
Net sales		$	2,252			$	—			$	—			$	—			$	2,252
Cost of products sold			1,599				(7	)			—				(1	)			1,591
Gross profit			653				7				—				1				661
			29.0	%															29.4	%
Selling, general and administrative expenses			467				(2	)			(16	)			(17	)			432
			20.7	%															19.2	%
Restructuring costs, net			3				(3	)			—				—				—
Impairment of goodwill, intangibles and other assets			148				—				(148	)			—				—
Operating income			35				12				164				18				229
			1.6	%															10.2	%
Non-operating expense			65				—				—				2				67
Income (loss) before income taxes			(30	)			12				164				16				162
Income tax provision (benefit) [2]			(61	)			3				9				(9	)			(58	)
Net income		$	31			$	9			$	155			$	25			$	220
Diluted earnings per share **		$	0.07			$	0.02			$	0.37			$	0.06			$	0.53

*	Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**	Adjustments and normalized earnings per share are calculated based on diluted weighted average shares of 414.6 million shares for the three months ended September 30, 2022.
	Totals may not add due to rounding.
[1]	Transaction costs and other includes $16 million related to expenses for certain legal proceedings; $3 million related to Argentina hyperinflationary adjustment; $3 million gain on disposition of business; $1 million of costs related to completed divestitures and $1 million gain due to changes in fair market value of investments. Includes income tax benefit of $14 million related to difference in effective tax rate.
[2]	The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the Company uses a "with" and "without" approach to determine normalized income tax expense.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share data)
		Three Months Ended September 30, 2021
		GAAP				Restructuring								Transaction				Non-GAAP
		Measure				and restructuring-				Acquisition				costs and				Measure
		Reported				related costs				amortization				other [1]				Normalized*
Net sales		$	2,787			$	—			$	—			$	—			$	2,787
Cost of products sold			1,939				(6	)			—				—				1,933
Gross profit			848				6				—				—				854
			30.4	%															30.6	%
Selling, general and administrative expenses			561				(1	)			(19	)			(4	)			537
			20.1	%															19.3	%
Restructuring costs, net			6				(6	)			—				—				—
Operating income			281				13				19				4				317
			10.1	%															11.4	%
Non-operating expense			66				—				—				—				66
Income before income taxes			215				13				19				4				251
Income tax provision (benefit) [2]			25				2				4				(11	)			20
Net income		$	190			$	11			$	15			$	15			$	231
Diluted earnings per share **		$	0.44			$	0.03			$	0.04			$	0.04			$	0.54

*	Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**	Adjustments and normalized earnings per share are calculated based on diluted weighted average shares of 428.5 million shares for the three months ended September 30, 2021.
	Totals may not add due to rounding.
[1]	Transaction costs and other includes $3 million primarily related to expenses for certain legal proceedings; $1 million related to Argentina hyperinflationary adjustment; $1 million of costs related to completed divestitures and $1 million of gain due to change in fair market value of investments. Includes income tax benefit of $11 million related to difference in effective tax rate.
[2]	The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the Company uses a "with" and "without" approach to determine normalized income tax expense.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share data)
		Nine Months Ended September 30, 2022
		GAAP				Restructuring				Acquisition				Transaction				Non-GAAP
		Measure				and restructuring-				amortization and				costs and				Measure
		Reported				related costs				impairment				other [1]				Normalized*
Net sales		$	7,174			$	—			$	—			$	—			$	7,174
Cost of products sold			4,956				(15	)			—				(3	)			4,938
Gross profit			2,218				15				—				3				2,236
			30.9	%															31.2	%
Selling, general and administrative expenses			1,489				(2	)			(51	)			(27	)			1,409
			20.8	%															19.6	%
Restructuring costs, net			12				(12	)			—				—				—
Impairment of goodwill, intangibles and other assets			148				—				(148	)			—				—
Operating income			569				29				199				30				827
			7.9	%															11.5	%
Non-operating expense			63				—				—				134				197
Income (loss) before income taxes			506				29				199				(104	)			630
Income tax provision (benefit) [2]			37				8				15				(41	)			19
Net income (loss)		$	469			$	21			$	184			$	(63	)		$	611
Diluted earnings (loss) per share **		$	1.12			$	0.05			$	0.44			$	(0.15	)		$	1.46

*	Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**	Adjustments and normalized earnings per share are calculated based on diluted weighted average shares of 418.3 million shares for the nine months ended September 30, 2022.
	Totals may not add due to rounding.
[1]	Transaction costs and other includes $22 million related to expenses for certain legal proceedings; $7 million related to Argentina hyperinflationary adjustment; $5 million of costs related to completed divestitures; $136 million gain on disposition of business and $2 million gain due to changes in fair market value of investments. Includes income tax benefit of $34 million related to difference in effective tax rate.
[2]	The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the Company uses a "with" and "without" approach to determine normalized income tax expense.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per share data)
		Nine Months Ended September 30, 2021
		GAAP				Restructuring								Transaction				Non-GAAP
		Measure				and restructuring-				Acquisition				costs and				Measure
		Reported				related costs				amortization				other [1]				Normalized*
Net sales		$	7,784			$	—			$	—			$	—			$	7,784
Cost of products sold			5,323				(13	)			—				(2	)			5,308
Gross profit			2,461				13				—				2				2,476
			31.6	%															31.8	%
Selling, general and administrative expenses			1,667				(5	)			(59	)			(15	)			1,588
			21.4	%															20.4	%
Restructuring costs, net			16				(16	)			—				—				—
Operating income			778				34				59				17				888
			10.0	%															11.4	%
Non-operating (income) expense			194				—				—				(4	)			190
Income before income taxes			584				34				59				21				698
Income tax provision (benefit) [1]			108				7				12				(27	)			100
Net income		$	476			$	27			$	47			$	48			$	598
Diluted earnings per share **		$	1.11			$	0.06			$	0.11			$	0.11			$	1.40

*	Normalized results are financial measures that are not in accordance with GAAP and exclude the above normalized adjustments. See below for a discussion of each of these adjustments.
**	Adjustments and normalized earnings per share are calculated based on diluted weighted average shares of 427.9 million shares for the nine months ended September 30, 2021.
	Totals may not add due to rounding.
[1]	Transaction costs and other includes $12 million primarily related to expenses for certain legal proceedings; $5 million related to Argentina hyperinflationary adjustment; $3 million of costs related to completed divestitures; $2 million loss on disposition of businesses and $1 million of gain due to change in fair market value of investments. Includes income tax benefit of $31 million related to difference in effective tax rate.
[2]	The Company determined the tax effect of the items excluded from normalized results by applying the estimated effective rate for the applicable jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain situations in which an item excluded from normalized results impacts income tax expense, the Company uses a "with" and "without" approach to determine normalized income tax expense.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT REPORTING
(Amounts in millions)
	Three Months Ended September 30, 2022															Three Months Ended September 30, 2021															Year over year changes
			Reported			Reported				Normalized			Normalized					Reported			Reported				Normalized			Normalized										Normalized
			Operating			Operating		Normalized		Operating			Operating					Operating			Operating		Normalized		Operating			Operating			Net Sales							Operating Income
	Net Sales		Income (Loss)			Margin		Items [1]		Income (Loss)			Margin			Net Sales		Income (Loss)			Margin		Items [2]		Income (Loss)			Margin			$				%			$			%
COMMERCIAL SOLUTIONS	$	397	$	28		7.1	%	$	3	$	31		7.8	%		$	486	$	18		3.7	%	$	3	$	21		4.3	%		$	(89	)		(18.3	)%		$	10		47.6	%
HOME APPLIANCES		305		(20	)	(6.6	)%		17		(3	)	(1.0	)%			443		19		4.3	%		5		24		5.4	%			(138	)		(31.2	)%			(27	)	NM
HOME SOLUTIONS		510		(88	)	(17.3	)%		118		30		5.9	%			598		75		12.5	%		11		86		14.4	%			(88	)		(14.7	)%			(56	)	(65.1	)%
LEARNING AND DEVELOPMENT		751		120		16.0	%		28		148		19.7	%			869		195		22.4	%		2		197		22.7	%			(118	)		(13.6	)%			(49	)	(24.9	)%
OUTDOOR AND RECREATION		289		8		2.8	%		10		18		6.2	%			391		27		6.9	%		7		34		8.7	%			(102	)		(26.1	)%			(16	)	(47.1	)%
CORPORATE		—		(13	)	—	%		18		5		—	%			—		(53	)	—	%		8		(45	)	—	%			—			—	%			50		NM
	$	2,252	$	35		1.6	%	$	194	$	229		10.2	%		$	2,787	$	281		10.1	%	$	36	$	317		11.4	%		$	(535	)		(19.2	)%		$	(88	)	(27.8	)%
*NM - NOT MEANINGFUL

[1]	The three months ended September 30, 2022 normalized items consist of $148 million of impairment of goodwill and other intangible assets; $16 million of acquisition amortization costs; $16 million related to expenses for certain legal proceedings; $12 million of restructuring and restructuring-related charges; $1 million of costs related to completed divestitures and $1 million Argentina hyperinflationary adjustment.
[2]	The three months ended September 30, 2021 normalized items consist of $19 million of acquisition amortization costs; $13 million of restructuring and restructuring-related charges; $3 million of expenses for certain legal proceedings and $1 million of costs related to related to completed divestitures.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT REPORTING
(Amounts in millions)
	Nine Months Ended September 30, 2022															Nine Months Ended September 30, 2021															Year over year changes
			Reported			Reported				Normalized			Normalized					Reported			Reported				Normalized			Normalized									Normalized Operating
			Operating			Operating		Normalized		Operating			Operating					Operating			Operating		Normalized		Operating			Operating			Net Sales						Income (Loss)
	Net Sales		Income (Loss)			Margin		Items [1]		Income (Loss)			Margin			Net Sales		Income (Loss)			Margin		Items [2]		Income (Loss)			Margin			$			%			$			%
COMMERCIAL SOLUTIONS	$	1,336	$	126		9.4	%	$	8	$	134		10.0	%		$	1,450	$	111		7.7	%	$	10	$	121		8.3	%		$	(114	)	(7.9	)%		$	13		10.7	%
HOME APPLIANCES		991		(23	)	(2.3	)%		23		—		—	%			1,197		35		2.9	%		16		51		4.3	%			(206	)	(17.2	)%			(51	)	(100.0	)%
HOME SOLUTIONS		1,477		(22	)	(1.5	)%		139		117		7.9	%			1,627		189		11.6	%		37		226		13.9	%			(150	)	(9.2	)%			(109	)	(48.2	)%
LEARNING AND DEVELOPMENT		2,266		497		21.9	%		38		535		23.6	%			2,330		522		22.4	%		8		530		22.7	%			(64	)	(2.7	)%			5		0.9	%
OUTDOOR AND RECREATION		1,104		99		9.0	%		20		119		10.8	%			1,180		90		7.6	%		16		106		9.0	%			(76	)	(6.4	)%			13		12.3	%
CORPORATE		—		(108	)	—	%		30		(78	)	—	%			—		(169	)	—	%		23		(146	)	—	%			—		—	%			68		46.6	%
	$	7,174	$	569		7.9	%	$	258	$	827		11.5	%		$	7,784	$	778		10.0	%	$	110	$	888		11.4	%		$	(610	)	(7.8	)%		$	(61	)	(6.9	)%

[1]	The nine months ended September 30, 2022 normalized items consist of $148 million of impairment of goodwill and other intangible assets; $51 million of acquisition amortization; $29 million of restructuring and restructuring-related costs; $22 million related to expenses for certain legal proceedings; $5 million of costs related to completed divestitures and $3 million of Argentina hyperinflationary adjustment.
[2]	The nine months ended September 30, 2021 normalized items consist of $59 million of acquisition amortization; $34 million of restructuring and restructuring-related costs; $12 million of expenses for certain legal proceedings; $3 million of costs related to completed divestitures and $2 million of Argentina hyperinflationary adjustment.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY SEGMENT
		Three Months Ended September 30, 2022									Nine Months Ended September 30, 2022
		Net Sales (REPORTED)		Acquisitions, Divestitures and Other, Net [2]		Currency Impact [3]		Core Sales [1] [4]			Net Sales (REPORTED)		Acquisitions, Divestitures and Other, Net [2]		Currency Impact [3]		Core Sales [1] [4]
COMMERCIAL SOLUTIONS		(18.3	)%	23.5	%	4.0	%	9.2	%		(7.9	)%	14.2	%	2.8	%	9.1	%
HOME APPLIANCES		(31.2	)%	5.7	%	2.3	%	(23.2	)%		(17.2	)%	5.0	%	1.8	%	(10.4	)%
HOME SOLUTIONS		(14.7	)%	0.4	%	2.7	%	(11.6	)%		(9.2	)%	0.8	%	1.8	%	(6.6	)%
LEARNING AND DEVELOPMENT		(13.6	)%	0.1	%	3.6	%	(9.9	)%		(2.7	)%	0.1	%	2.9	%	0.3	%
OUTDOOR AND RECREATION		(26.1	)%	1.9	%	5.8	%	(18.4	)%		(6.4	)%	2.7	%	5.1	%	1.4	%
TOTAL COMPANY		(19.2	)%	4.8	%	3.6	%	(10.8	)%		(7.8	)%	3.7	%	2.8	%	(1.3	)%

CORE SALES GROWTH BY GEOGRAPHY
		Three Months Ended September 30, 2022									Nine Months Ended September 30, 2022
		Net Sales (REPORTED)		Acquisitions, Divestitures and Other, Net [2]		Currency Impact [3]		Core Sales [1] [4]			Net Sales (REPORTED)		Acquisitions, Divestitures and Other, Net [2]		Currency Impact [3]		Core Sales [1] [4]
NORTH AMERICA		(21.5	)%	6.3	%	0.2	%	(15.0	)%		(8.1	)%	5.2	%	0.1	%	(2.8	)%
EUROPE, MIDDLE EAST, AFRICA		(18.5	)%	0.6	%	14.6	%	(3.3	)%		(13.4	)%	0.3	%	10.6	%	(2.5	)%
LATIN AMERICA		(1.6	)%	0.2	%	6.2	%	4.8	%		5.6	%	0.3	%	3.9	%	9.8	%
ASIA PACIFIC		(16.5	)%	—	%	12.4	%	(4.1	)%		(7.3	)%	—	%	10.5	%	3.2	%
TOTAL COMPANY		(19.2	)%	4.8	%	3.6	%	(10.8	)%		(7.8	)%	3.7	%	2.8	%	(1.3	)%

[1]	“Core Sales” provides a consistent basis for year-over-year comparisons in sales as it excludes the impacts of acquisitions, completed divestitures (including the sale of the Connected Home & Security business unit), retail store openings and closings, certain market and category exits, as well as changes in foreign currency.
[2]	Divestitures include the sale of the Connected Home & Security business unit, certain market and category exits and current and prior period net sales from retail store closures (consistent with standard retail practice).
[3]	“Currency Impact” represents the effect of foreign currency on 2022 reported sales and is calculated by applying the 2021 average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures) and comparing to 2022 reported sales.
[4]	Totals may not add due to rounding.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
NET DEBT TO NORMALIZED EBITDA RECONCILIATION
(Amounts in millions)
		September 30, 2022				December 31, 2021 [1]				September 30, 2021
NET DEBT RECONCILIATION:
Short-term debt and current portion of long-term debt		$	1,078			$	3			$	253
Long-term debt			4,762				4,883				4,884
Gross debt			5,840				4,886				5,137
Less: Cash and cash equivalents			636				440				494
NET DEBT		$	5,204			$	4,446			$	4,643
Net income [2]		$	565			$	572			$	603
Normalized items [2]			226				206				233
NET INCOME			791				778				836
Normalized income tax [2]			57				138				94
Interest expense, net [2]			230				256				266
Normalized depreciation and amortization [2] [3]			228				236				241
Stock-based compensation [4]			23				52				50
NORMALIZED EBITDA		$	1,329			$	1,460			$	1,487
NET DEBT TO NORMALIZED EBITDA LEVERAGE RATIO [5]		3.9		x		3.0		x		3.1		x

[1]	For the twelve months ended December 31, 2021, refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the twelve months ended December 31, 2021, on the Company’s Form 8-K furnished on February 11, 2022.
[2]	For the trailing-twelve months ended September 30, 2022, refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021 on the Company’s Forms 8-K furnished on July 29, 2022, April 29, 2022 and February 11, 2022, respectively. For the trailing-twelve months ended September 30, 2021, refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2021, March 31, 2021 and December 31, 2020 on the Company’s Forms 8-K furnished on July 29, 2022, April 29, 2022 and February 11, 2022, respectively.
[3]	For the trailing-twelve months ended September 30, 2022, normalized depreciation and amortization excludes the following items: (a) acquisition amortization expense of $70 million associated with intangible assets recognized in purchase accounting; (b) $5 million of accelerated depreciation costs associated with restructuring activities. Refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021 on the Company’s Forms 8-K furnished on July 29, 2022, April 29, 2022 and February 11, 2022, respectively. For the trailing-twelve months ended September 30, 2021, normalized depreciation and amortization excludes the following items: (a) acquisition amortization expense of $79 million associated with intangible assets recognized in purchase accounting; (b) $14 million of accelerated depreciation costs associated with restructuring activities. Refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the three months ended June 30, 2021, March 31, 2021 and December 31, 2020 on the Company’s Forms 8-K furnished on July 29, 2022, April 29, 2022 and February 11, 2022, respectively. Normalized depreciation and amortization excludes from GAAP depreciation and amortization for the twelve months ended December 31, 2021, the following items: (a) acquisition amortization expense of $78 million associated with intangible assets recognized in purchase accounting (b) accelerated depreciation and amortization costs of $11 million associated with restructuring activities. Refer to “Reconciliation of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items” for the twelve months ended December 31, 2021 on the Company’s Forms 8-K furnished on February 11, 2022 for further information.
[4]	Represents non-cash expense associated with stock-based compensation.
[5]	The Net Debt to Normalized EBITDA ratio is defined as Net Debt divided by Normalized EBITDA. The Company's debt has certain financial covenants such as debt to equity ratio and interest coverage ratio; however the Net Debt to Normalized EBITDA leverage ratio is used by management as a liquidity measure and is not prescribed in the Company's debt covenants.

NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION (UNAUDITED)
CORE SALES OUTLOOK
		Three Months Ending December 31, 2022						Twelve Months Ending December 31, 2022
Estimated net sales change (GAAP)		(22	)%	to	(19	)%		(12	)%	to	(11	)%
Estimated currency impact [1] and divestitures [2], net		~10%						~8%
Core sales change (NON-GAAP)		(12	)%	to	(9	)%		(4	)%	to	(3	)%

[1]	“Currency Impact” represents the effect of foreign currency on 2022 reported sales and is calculated by applying the 2021 average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures) and comparing to 2022 reported sales.
[2]	Divestitures include the sale of the Connected Home & Security business unit, certain market and category exits and current and prior period net sales from retail store closures (consistent with standard retail practice).

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221027006194/en/

Investor Contact:

Sofya Tsinis

VP, Investor Relations

+1 (201) 610-6901

sofya.tsinis@newellco.com

Media Contact:

Beth Stellato

Chief Communications Officer

+1 (470) 580-1086

beth.stellato@newellco.com

Source: Newell Brands

FAQ

What was Newell Brands' net sales for Q3 2022?

Newell Brands reported net sales of $2.3 billion for Q3 2022.

How much did Newell Brands' diluted EPS change in Q3 2022?

Diluted EPS for Newell Brands decreased to $0.07 in Q3 2022, down from $0.44 in the prior year.

What is the updated full-year outlook for Newell Brands in 2022?

The updated full-year outlook for Newell Brands is net sales of $9.35 to $9.43 billion and normalized EPS of $1.56 to $1.61.

What factors contributed to the decline in Newell Brands' core sales?

The decline in core sales was attributed to inventory rightsizing by retailers, inflationary pressures, and unfavorable foreign exchange.

What impact did impairment charges have on Newell Brands' operating margin?

Newell Brands fell to an operating margin of 1.6% in Q3 2022 due to a $148 million impairment charge.