Newell Brands Inc. Q2 FY2025 earnings call

• Newell Brands demonstrated agility during Q2, with strict adherence to strategy and operational discipline driving Q2 results in line with expectations. Normalized operating margin and gross margin improved. - The multiyear innovation funnel has been rebuilt, with Yankee Candle officially launching a comprehensive brand Refresh. - Added financial flexibility by redeeming remaining bonds and completed additional ERP integrations during Q2, including moving Home Fragrance from Oracle to SAP and migrating Datasul instances in Brazil.

Newell Brands' normalized operating margin increased 10 basis points versus a year ago to 10.7%, with all 3 business segments positive for the first time since Q3 of 2022. Normalized gross margin increased by 80 basis points to 35.6%, the highest rate in 4 years. Second quarter core sales was minus 4.4%, with first half core sales for '25 coming in at minus 3.4%. The international business, accounting for nearly 40% of total sales, delivered a 6th consecutive quarter of positive core sales growth in the Writing and Home Fragrance segments.

• Updated full year 2025 financial projections reflect short-term category softness, tariff-related business wins, foreign exchange, and tariff cost offsets. Core sales expected to be low single-digit decline for the balance of the year, partially offset by $30 million of incremental back half sales from tariff-related business wins. - Normalized EPS guidance range updated to $0.66 to $0.70. - Operating cash flow expected to be between $400 million and $450 million for the year. - Q3 core sales expected to decline 4% to 2%, normalized operating margin between 9.1% and 9.5%, normalized EPS $0.16 to $0.19.

• Dynamic global macroeconomic environment poses challenges. - Uncertainty regarding short and near-term shopper behavior and tariff impacts. - Competitive pricing strategies and inventory destocking at retailers could impact performance.

Q: Can you comment on back-to-school and innovation across categories?

A: Chris Peterson said back-to-school sell-in and setup are strong with high fill rates and wins secured, and innovation is progressing well across categories like Writing, Baby, Yankee Candle, etc.

Q: What drives the material inflection in core sales from first 3 quarters to Q4?

A: Mark Erceg and Christopher Peterson mentioned tariff distribution wins are Q4 weighted, big innovations like Yankee Candle relaunch have Q4 impact, and store shelf resets implemented in October contribute.

Q: How is retailer response to pricing and competitive response?

A: Christopher Peterson said retailers have been constructive, but competitive response is fuzzy with some delaying price increases, and pricing impact will become clearer as pre-tariff inventory runs out