NEWELL BRANDS INC

Previous wording

This report contains forward-looking statements within the meaning of the federal securities law. These statements generally can be identified by the use of words such as “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. The Company cautions 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. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to:

Current wording

This report contains forward-looking statements within the meaning of the federal securities laws. These statements generally can be identified by the use of words such as “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. The Company cautions 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. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to:

Previous wording

In addition, the Company continues to review its operating footprint and non-core brands, which will result in future restructuring charges.

Current wording

In addition, the Company continues to review its operating footprint and non-core brands, which will result in future restructuring and restructuring-related charges.

Previous wording

In January 2024, the Company announced the Realignment Plan, which is expected to strengthen the Company’s front-end commercial capabilities, as further described in the preceding section. The Company initiated the Realignment Plan during the three months ended March 31, 2024 and recorded restructuring charges of $22 million. See Footnote 3 of the Notes to Unaudited Condensed Consolidated Financial Statementsfor further information.

Current wording

In January 2024, the Company announced the Realignment Plan, which is expected to strengthen the Company’s front-end commercial capabilities, as further described in the preceding section. The Company initiated the Realignment Plan during the first quarter of 2024. For the three and six months ended June 30, 2024 the Company recorded restructuring charges of $9 million and $31 million, respectively. The Company also recorded restructuring-related costs of $8 million for the three and six months ended June 30, 2024. See Footnote 3 of the Notes to Unaudited Condensed Consolidated Financial Statementsfor further information.

Previous wording

During February 2024, Moody’s Corporation and S&P Global Inc. downgraded the Company’s debt rating to “Ba3” and “BB-”, respectively, which resulted in an interest rate increase of 25 basis points from each rating downgrade. The change to the interest rates as a result of both downgrades will increase the Company’s interest expense by $16 million on an annualized basis (approximately $12 million in 2024). See Footnote 8 of the Notes to Unaudited Condensed Consolidated Financial Statementsfor further information.

Current wording

During February 2024, Moody’s Corporation and S&P Global Inc. downgraded the Company’s senior unsecured debt rating to “Ba3” and “BB-”, respectively, which resulted in an interest rate increase of 25 basis points from each rating downgrade. The change to the interest rates as a result of both downgrades will increase the Company’s interest expense by $16 million on an annualized basis (approximately $12 million in 2024). See Footnote 8 of the Notes to Unaudited Condensed Consolidated Financial Statementsfor further information.

Previous wording

Net sales for the three months ended March 31, 2024 decreased 8%. Net sales were unfavorably impacted by soft global demand, net distribution losses and category exits, partially offset by pricing, mainly in international markets to offset inflation and currency movement. Changes in foreign currency unfavorably impacted net sales by $56 million, or 3%.

Current wording

Net sales for the three months ended June 30, 2024 decreased 8%. Net sales were unfavorably impacted by soft global demand, net distribution losses and product line exits, partially offset by pricing, mainly in international markets to offset inflation and currency movement. Changes in foreign currency unfavorably impacted net sales by $66 million, or 3%.

Previous wording

Notable items other than changes in net sales impacting operating income (loss) for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Notable items other than changes in net sales and benefits from productivity initiatives impacting operating income for the three months ended June 30, 2024 and 2023 are as follows:

Previous wording

(b)Restructuring-related costs during the three months ended March 31, 2024 related to Project Phoenix and Network Optimization Project were $3 million and $2 million, respectively and $8 million related to other discrete programs.

Current wording

(b)Restructuring-related costs during the three months ended June 30, 2024 related to Project Phoenix, Network Optimization Project and Realignment Plan were $2 million, $6 million and $8 million.

Previous wording

Interest expense, net increased due to higher interest rates. The weighted average interest rates for the three months ended March 31, 2024 and 2023 were approximately 5.6% and 4.8%, respectively. See Footnote 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

Current wording

Interest expense, net increased primarily due to higher interest rates and lower interest income. The weighted average interest rates for the three months ended June 30, 2024 and 2023 were approximately 6.0% and 5.3%, respectively. See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information.

Previous wording

Outdoor and Recreation net sales for the three months ended March 31, 2024 decreased 26% primarily reflecting soft global demand, distribution losses and category exits. Changes in foreign currency unfavorably impacted net sales by $12 million or 4%.

Current wording

Outdoor and Recreation net sales for the three months ended June 30, 2024 decreased 23%, reflecting soft global demand, distribution losses and product line exits. Changes in foreign currency unfavorably impacted net sales by $12 million, or 4%.

Previous wording

Operating loss for the three months ended March 31, 2024 was $18 million as compared to operating loss of $1 million in the prior-year period. The decline was primarily due to lower gross profit leverage, partially offset by gross productivity and savings from restructuring actions.

Current wording

Operating loss for the three months ended June 30, 2024 was $11 million as compared to operating income of $5 million in the prior-year period. The decline was due to lower gross profit resulting from lower sales partially offset by savings from restructuring actions.

Previous wording

Gross profit increased compared to prior year. Gross margin also improved to 30.5% as compared with 26.7% in the prior year. The increase in gross profit was driven by productivity, mix and favorable pricing, partially offset by lower sales volume and inflation. Changes in foreign currency exchange rates unfavorably impacted gross profit by $45 million, or 9%.

Current wording

Gross profit increased compared to prior year. Gross margin improved to 32.6% as compared with 27.7% in the prior year. The increase in gross profit was driven by productivity and lower restructuring-related charges, partially offset by lower sales volume and inflation. Changes in foreign currency exchange rates unfavorably impacted gross profit by $83 million, or 7%.

Previous wording

(a)For the three months ended March 31, 2024 restructuring-related costs reported in cost of products sold and in SG&A was $8 million and $5 million, respectively, primarily related to facility closures. For the three months ended March 31, 2023, restructuring-related costs reported in cost of products sold and SG&A was $5 million and $8 million, respectively, primarily related to facility closures. Restructuring costs were $26 million and $38 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(a)For the six months ended June 30, 2024 restructuring-related costs reported in cost of products sold, SG&A and in impairment of goodwill, intangibles and other assets was $15 million, $8 million and $6 million, respectively, primarily related to facility closures. For the six months ended June 30, 2023, restructuring-related costs reported in cost of products sold and SG&A was $31 million and net recovery of $1 million, respectively, primarily related to facility closures. Restructuring costs were $36 million and $60 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

(c)Transaction and other costs for the three months ended March 31, 2024 primarily related to a release of a bad debt reserve due to a recovery of a receivable from an international customer. For the three months ended March 31, 2023 transaction and other costs primarily related to expenses associated with certain legal proceedings.

Current wording

(c)Transaction costs and other for the six months ended June 30, 2024 primarily related to a release of a bad debt reserve due to a recovery of a receivable from an international customer and accelerated amortization and write-off of other assets associated with integration projects. For the six months ended June 30, 2023 transaction and other costs primarily related to expenses associated with certain legal proceedings.

Previous wording

Operating income was $16 million as compared to operating loss of $36 million in the prior year period. The improvement reflects gross productivity, savings from restructuring actions and lower restructuring and restructuring-related charges, partially offset by higher incentive compensation expense, advertising and promotion costs and additional amortization of certain tradenames.

Current wording

Operating income was $179 million as compared to operating income of $84 million in the prior year period. The improvement reflects higher gross profit, savings from restructuring actions, primarily from Project Phoenix and the Realignment Plan, lower restructuring and restructuring-related charges as well as transaction costs and other, partially offset by higher incentive compensation expense, advertising and promotion costs and additional amortization of certain tradenames.

Previous wording

The income tax benefit for the three months ended March 31, 2024 was $51 million as compared to $14 million for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024 was a benefit of 85.0%, due to an increase in the forecasted annual tax rate driven primarily by lower forecasted pretax book income, as compared to 12.1% for the three months ended March 31, 2023.

Current wording

The income tax benefit for the six months ended June 30, 2024 was $12 million as compared to provision of $3 million for the six months ended June 30, 2023. The effective tax rate for the six months ended June 30, 2024 was a benefit of 50.0%, due to the impact of certain discrete items as compared to provision of 3.7% for the six months ended June 30, 2023.

Previous wording

Home and Commercial Solutions net sales for the three months ended March 31, 2024 decreased 8%, which reflected soft demand across all businesses, certain category exits as well as net distribution losses, primarily in the Kitchen business, partially offset by pricing. Changes in foreign currency unfavorably impacted net sales by $29 million, or 3%.

Current wording

Home and Commercial Solutions net sales for the six months ended June 30, 2024 decreased 9%, which reflected soft demand across all businesses, product line exits as well as net distribution losses, partially offset by pricing actions. Changes in foreign currency unfavorably impacted net sales by $71 million, or 3%.

Previous wording

Operating income for the three months ended March 31, 2024 was $16 million as compared to operating loss of $37 million in the prior year. The improvement in operating results is primarily due to gross productivity, mix, savings from restructuring actions, lower restructuring and restructuring-related charges and release of a bad debt reserve due to a recovery of a receivable from an international customer, partially offset by higher advertising and promotion costs and additional amortization of certain tradenames.

Current wording

Operating income for the six months ended June 30, 2024 was $64 million as compared to operating loss of $58 million in the prior year. The improvement in operating results is primarily due to gross productivity, pricing, savings from restructuring actions, lower restructuring and restructuring-related charges, release of a bad debt reserve due to a recovery of a receivable from an international customer and the absence of non-cash impairment charges primarily related to indefinite-lived tradenames, partially offset by higher advertising and promotion costs and additional amortization of certain tradenames.

Previous wording

Learning and Development net sales for the three months ended March 31, 2024 decreased 1%, as slight growth in the Baby business was offset by a slight decline in the Writing business. For the segment, pricing actions were more than offset by changes in foreign currency, which unfavorably impacted net sales by $15 million, or 3%.

Current wording

Learning and Development net sales for the six months ended June 30, 2024 was almost flat, as slight growth in the Baby business was offset by decline in the Writing business. Improved orders from major retailers in the Baby business, as well as contribution from product innovation in the Writing business, were offset by changes in foreign currency which unfavorably impacted net sales by $27 million, or 2%.

Previous wording

Operating income for the three months ended March 31, 2024 increased to $94 million as compared to $72 million in the prior-year period. The increase in operating income is primarily due to gross productivity and savings from restructuring actions, partially offset by higher advertising and promotion costs.

Current wording

Operating income for the six months ended June 30, 2024 increased to $299 million as compared to $260 million in the prior-year period. The increase in operating income is primarily due to gross productivity and savings from restructuring actions, partially offset by higher advertising and promotion costs.

Previous wording

At March 31, 2024, the Company had cash and cash equivalents of approximately $372 million, of which approximately $317 million was held by the Company’s non-U.S. subsidiaries.

Current wording

At June 30, 2024, the Company had cash and cash equivalents of approximately $382 million, of which approximately $309 million was held by the Company’s non-U.S. subsidiaries. During the second quarter, the Company recorded $7 million of additional tax related to withholding taxes associated with certain previously taxed foreign earnings that are no longer indefinitely reinvested, which the Company intends to repatriate such cash during the remainder of 2024.

Previous wording

Cash, cash equivalents and restricted cash increased (decreased) as follows for the three months ended March 31, 2024 and 2023 (in millions):

Current wording

Cash, cash equivalents and restricted cash increased (decreased) as follows for the six months ended June 30, 2024 and 2023 (in millions):

Previous wording

The change in net cash used in financing activities was primarily due to a lower quarterly dividend payment in the current year, offset by the period-over-period net change in short-term debt. See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information.

Current wording

The change in net cash provided by financing activities was primarily due to a lower quarterly dividend payment in the current year and the period-over-period net change in short-term debt. See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information.

Previous wording

At March 31, 2024, the Company had $231 million of outstanding borrowings under the Credit Revolver and approximately $20 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $749 million. See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statementsfor further information.

Current wording

At June 30, 2024, the Company had $285 million of outstanding borrowings under the Credit Revolver and approximately $20 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $695 million. See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statementsfor further information.