Newell Brands Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Sales: Increased by 3% to approximately $2 billion.

Core Sales: Grew by 2.3%, surpassing guidance expectations.

Normalized Gross Margin: Improved to 40.8% from 35.6% year-over-year.

Normalized Operating Margin: Increased to 16.2% from 10.7% year-over-year, aided by a $100 million tariff recovery.

Normalized Diluted EPS: Reported at $0.42, compared to $0.24 in the prior year.

Operating Cash Flow: Outflow of $204 million, an improvement from $271 million in the previous year.

Net Leverage Ratio: Reduced to 4.8x from 5.4x in the prior quarter.

2Strategic Updates and Business Highlights

Newell Brands has successfully rebuilt its commercial and operational capabilities over the past three years, leading to improved consumer insights, innovation, and brand management.

All six business units launched Tier 1 or Tier 2 innovations, with over 25 planned for the year.

The U.S. market showed significant growth, with net sales up approximately 5%, marking the first growth since COVID.

Strong performance in the Learning and Development segment, particularly in Baby and Writing categories.

Enhanced marketing efforts led to notable consumer engagement, exemplified by a viral campaign for Coleman products.

3Forward Guidance and Outlook

Full-Year Guidance:

Net sales growth expected to be between 1% to 2%.

Core sales growth projected to range from flat to 1%.

Normalized operating margin anticipated between 10% and 10.4%.

Normalized diluted EPS forecasted between $0.73 and $0.77, up from a previous range of $0.56 to $0.60.

Q3 Expectations:

Net and core sales growth projected between 2% and 3%.

Normalized operating margin expected between 9.5% and 10.2%.

4Bad News, Challenges, or Points of Concern

Commercial Segment: Continued to show weakness, remaining below prior year levels despite sequential improvement.

International Business: Experienced a decline, particularly in Europe, due to softer consumer demand and shipment timing issues.

Inflation and Tariffs: Input cost inflation has increased from an expected $100 million to $200 million for the year, with ongoing tariff headwinds projected at $127 million.

Consumer Spending Trends: Caution expressed regarding the sustainability of consumer demand, particularly among middle- and low-income segments.

5Notable Q&A Insights

Commercial Business Improvement: Management is optimistic about future growth driven by new product innovations and improved execution, although recovery may take longer than other segments.

Back-to-School Season: Strong sell-in reported, with early POS data showing market share gains, setting a positive tone for the upcoming season.

Shelf Space Gains: Distribution in the U.S. increased mid-single digits, contributing to sales growth, but international markets lagged due to unique challenges.

Pricing Strategy: Newell is cautious about broad-based pricing increases, focusing instead on targeted actions in specific categories while leveraging productivity gains to offset inflation.

Future Innovation: Emphasis on mid-tier and premium products, with expectations that strong consumer response will mitigate the need for price reductions. Overall, Newell Brands reported a significant turnaround in Q2 2026, marked by growth across most business units and improved financial metrics, while also navigating challenges related to inflation and international market performance.