Newell Brands Inc (NWL) Q3 2024 Earnings Call Highlights: Margin Gains Amid Sales Challenges

GuruFocus News
4 min read

In This Article:

  • Core Sales: Decreased by 1.7% in Q3 2024.

  • Net Sales: Decreased by 4.9% in Q3 2024.

  • Normalized Gross Margin: Increased by 470 basis points to 35.4% in Q3 2024.

  • Normalized Operating Margin: Increased by 210 basis points to 9.5% in Q3 2024.

  • Normalized Earnings Per Share (EPS): $0.16 in Q3 2024.

  • Operating Cash Flow: $346 million in the first nine months of 2024.

  • Leverage Ratio: Reduced to 4.9 times in Q3 2024.

  • Net Debt Reduction: Over $560 million reduced in the past five quarters.

  • Normalized EBITDA: Increased by 22% to $903 million on a trailing 12-month basis.

  • Full Year Normalized Operating Margin Guidance: Increased to 8.1% to 8.3%.

  • Full Year Normalized EPS Guidance: Increased to $0.63 to $0.66.

  • Full Year Operating Cash Flow Guidance: Increased to $500 million to $600 million.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Newell Brands Inc (NASDAQ:NWL) reported strong third-quarter results, with performance at the high end or ahead of plan across most key metrics.

  • The company achieved a fifth consecutive quarter of gross margin improvement, driven by outstanding productivity results that offset inflation.

  • Normalized operating margin exceeded expectations despite planned higher advertising and promotion (A&P) investments.

  • Newell Brands Inc (NASDAQ:NWL) significantly reduced its cash conversion cycle and deleveraged its balance sheet to under 5 times.

  • The company raised its full-year outlook for normalized operating margin improvement, normalized earnings per share, and operating cash flow.

Negative Points

  • Core sales for the third quarter were down 1.7%, indicating ongoing challenges in achieving positive sales growth.

  • The outdoor and recreation segment continued to face difficulties, with a year-over-year decline in core sales growth.

  • The general merchandise market remains down low single digits, impacting Newell Brands Inc (NASDAQ:NWL)'s sales performance.

  • Lower income households are prioritizing spending on basic needs, affecting demand for Newell Brands Inc (NASDAQ:NWL)'s products.

  • The company faces uncertainty in market dynamics and consumer behavior, which could impact future sales growth.

Q & A Highlights

Q: Can you provide an overview of the performance across different divisions and discuss the impact of price mix on sales and gross margin? A: Christopher Peterson, President and CEO, explained that the learning and development segment showed positive core sales growth, driven by the baby business and writing products. The home and commercial segment improved its core sales growth by 200 basis points, while the outdoor and recreation segment is expected to take longer to turn around. Regarding price mix, the company is focusing on launching gross margin accretive products rather than increasing prices on base products.

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