Summary of Newell Brands Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 Net Sales:: $1.9 billion, down 2.7% year-over-year; core sales declined 4.1%.

Normalized Gross Margin:: 33.9%, up 70 basis points year-over-year; normalized operating margin at 8.7%, up 160 basis points.

Normalized EBITDA:: Increased nearly 12% to $241 million.

Normalized EPS:: $0.18, at the midpoint of expectations.

Full Year Net Sales:: $7.2 billion, down 5%; core sales decreased by 4.6%.

Normalized Operating Margin for 2025:: 8.4%, a slight increase from 8.2% in 2024.

Normalized EPS for 2025:: $0.57, down from $0.68 in 2024.

Cash Generation:: Strong at approximately $160 million in Q4; full year operating cash flow was $264 million.

2Strategic Updates and Business Highlights

Turnaround Strategy:: Since mid-2023, Newell has focused on rebuilding front-end capabilities, enhancing supply chain resilience, and reducing complexity.

Supply Chain Diversification:: Reduced reliance on China sourcing from 35% to below 10%.

Global Productivity Plan:: Announced to enhance competitiveness and streamline operations, expected to generate over $75 million in savings.

Innovation Pipeline:: 25 Tier 1 and Tier 2 launches planned for 2026, the strongest lineup since the Jarden acquisition.

Segment Performance::

Learning and Development:: Strong performance with brands like Sharpie and EXPO.

Baby Segment:: Improved market share and performance, driven by successful innovations.

Home and Commercial Segment:: Faced challenges, particularly in Kitchen, but saw improvements in promotional strategies.

Outdoor & Recreation:: Stabilizing performance with improved margins.

3Forward Guidance and Outlook

2026 Guidance:: Net sales expected to be down 1% to up 1%; core sales projected to decline by approximately 2% to flat.

First Quarter Expectations:: Anticipated core sales decline of 7% to 5%, with recovery expected in Q2 due to innovation and shelf resets.

Normalized Operating Margin for 2026:: Expected to be between 8.6% and 9.2%.

Normalized EPS for 2026:: Projected in the range of $0.54 to $0.60.

Operating Cash Flow Guidance for 2026:: $350 million to $400 million, reflecting a 40% increase over 2025.

4Bad News, Challenges, or Points of Concern

Sales Decline:: Core sales declined in Q4 and for the full year, reflecting ongoing challenges in the market.

Tariff Impacts:: Continued tariff-related costs affecting profitability; $174 million in gross cash tariff impacts in 2025, with $130 million expected in 2026.

Competitive Pressures:: Slow competitive responses to pricing actions and the need for promotional adjustments in a challenging retail environment.

Visibility Concerns:: Uncertainty regarding the timing of retailer shelf resets and consumer demand dynamics.

5Notable Q&A Insights

Innovation Confidence:: Management expressed confidence in the innovation pipeline, citing successful past launches and a robust support plan for new products.

Retailer Engagement:: Visibility into shelf space wins and retailer support for innovation is strong, with expectations for improved performance in Q2.

Consumer Spending Trends:: Acknowledged a K-shaped recovery in consumer spending, with higher-income households spending more, while lower-income consumers are pulling back.

External Tailwinds:: Potential for tax refunds to stimulate consumer spending, though not included in guidance; management remains cautious but prepared for possible positive impacts. Overall, Newell Brands is navigating a challenging market environment while focusing on strategic initiatives to enhance innovation and operational efficiency, with cautious optimism for recovery in 2026.