Newell Brands (NASDAQ:NWL) reported first-quarter financial results on Friday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
Newell Brands reported better-than-expected Q1 results across all key financial metrics, with core sales at -3.5% driven by improved consumer demand and market share gains.
The company plans to launch 25 new innovations this year, up from 18 last year, aiming to enhance consumer engagement and expand market presence.
Despite a dynamic cost environment, the company raised its full-year guidance for net sales, core sales, and normalized EPS, driven by strong Q1 performance and future growth prospects.
Operational highlights include successful cost management and improved deduction management, contributing to a higher-than-expected operating margin.
Management expressed confidence in the turnaround strategy and noted significant improvements in consumer engagement, innovation pipeline, and retail activation.
Full Transcript
OPERATOR
Good morning and welcome to Newell Brands’ first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time schedule for the call, please limit yourself to one question during the Q and A session. Today’s conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Joanne Friberger, SVP of Investor Relations and Chief Communications Officer. Ms. Friberger. You may begin.
Joanne Friberger (SVP of Investor Relations and Chief Communications Officer)
Thank you. Good morning everyone and welcome to Newell Brands’ 2026 earnings call. On the call with me today are Chris Peterson, our President and CEO, and Mark Erceg, our CFO. Before we begin, I’d like to inform you that during today’s call we will be making forward looking statements which involve risks and uncertainties. Actual results and outcomes may differ materially and we undertake no obligation to update forward looking statements. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10K, Form 10Q and other SEC filings available on our Investor Relations website for a further discussion of the factors affecting forward looking statements. Today’s remarks will also refer to non GAAP financial measures, including those referred to as normalized measures. We believe these non GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with gaap. Explanations of these non GAAP measures and reconciliations between GAAP and non GAAP measures can be found in today’s earnings release and tables that were furnished to the SEC. Thank you. And with that, I’ll turn the call over to Chris.
Chris Peterson (President and CEO)
Thank you Joanne. Good morning everyone and welcome to our first quarter earnings call. We had a strong start to the year with Q1 results ahead of expectations across all key financial metrics. All three segments delivered core sales growth above plan with the learning and development segment returning to core sales growth. Core sales at -3.5% improved both sequentially and versus year ago for two primary reasons. First, we experienced better than expected consumer demand for our products driven by improving point of sale and market share trends, which we believe is directly related to our focus on innovation and higher levels of advertising and promotion support. Stronger consumer demand was most pronounced across the U.S. brand portfolio where six of our top 10 brands gained market share in the first quarter. In addition, for the first time in over four years, six of our top 10 brands delivered year over year point of sale growth and seven top ten brands improved their sequential trajectory versus the fourth quarter. These notable proof points provide clear evidence that our new innovation strategy and heightened levels of advertising and promotion investments are having the desired effect, namely allowing Newell to once again engage and delight consumers with high quality products that deliver real solutions and benefits to with strong consumer value. As we discussed at CAGNY, 2026 is the first year since we initiated our turnaround strategy that we have a robust consumer relevant innovation pipeline supported by competitive AMP levels and strong retail activation plans. During the course of the year we Plan to launch 25 Tier 1 and Tier 2 innovations up from 18 last year and those innovations span every one of our businesses. Importantly, we are now bringing to market fully vetted consumer preferred ideas that are designed to improve value, expand usage occasions and give retailers more reasons to support our brands. Those efforts are translating into better point of sale results, improved share trends and stronger distribution opportunities. The SECond reason first quarter core sales came in better than expected was a net pricing benefit related to customer programs due to better claims experience and improved deduction management. Our focus on improving the return on investment of our customer spending and improving operational discipline in spend management is paying off. These two items which led to top line over delivery drove normalized operating margin above our outlook even after increasing AP investment. Compared to prior year, normalized earnings per share came in $0.03 better than the upper end of our guidance range due to higher than expected core sales, better than expected normalized operating margin and a lower than expected first quarter effective tax rate. From a segment perspective, learning and development was the strongest part of the portfolio in the quarter. The segment returned to core sales growth led by baby, which grew 4.9% in the first quarter supported by strong consumer demand, positive POS trends, innovation and share gains both home and commercial and outdoor and recreation exceeded plan and improved sequentially. Based on these solid first quarter results, we remain confident that Newell’s strategy is working. At the same time, the external environment remains dynamic, particularly as it relates to petro based cost inputs and tariffs. So let’s spend some time on each of those two important areas. Currently we see an additional approximately $50 million of commodity and transportation inflation versus our original plan, with higher resin costs accounting for about 60% of the total increase. That said, unfortunately, resin is now a much smaller part of Newell’s overall cost structure. For perspective, direct resin purchases represent roughly 5% of 2025’s total cost of goods sold, which is down materially from about double that level historically and our sourcing and supply chain teams manage our resin exposure through established contract structures rather than spot market purchases. This provides better visibility, reduces exposure to short term spot market volatility, and creates some lag time in how costs flow through the P&L, which gives the business more time to respond. Moving to Tariffs the framework has shifted materially since our last call. IP tariffs were invalidated, new tariffs under SECtion 122 were put in place at a temporary 10% replacement rate, existing tariffs under SECtion 232 were revised and new SECtion 301 investigations are now underway for potential new tariffs. The tariff environment clearly remains very fluid with a few important things to note. First, our initial outlook assumed a higher tariff baseline, so the current tariff regime is actually a help versus our going in expectations. In fact, we believe tariff help will offset about 50% of the previously mentioned incremental commodity hurt, with the remainder being offset by higher levels of productivity savings and targeted price and promotion adjustments where necessary. Second, the best in class sourcing manufacturing and trade capabilities we have built over the past several years have positioned us well on a relative basis versus competition. For example, we have reduced China sourced finished goods from a peak of roughly 35% of global cost of goods sold to under 10% and our remaining China exposure principally in baby gear, is an industry wide challenge, not one unique to Newell. In addition, our highly automated domestic manufacturing footprint creates what we believe is is a structural tariff cost advantage across 19 product categories. Third, and before moving on, I want to recognize Newell’s Trade Expertise Center. TEC, as we call it,, is a highly professionalized centralized capability that brings together trade compliance, policy, intelligence, analytics and operational execution to ensure Newell stays compliant, keeps goods moving seamlessly across borders, and responds quickly and efficiently as trade policy changes. To close out this SECtion, please note that we will actively pursue tariff refunds related to approximately $120 million of IP tariffs paid in 2025 and neither our Q1 actuals nor our outlook include any benefit from these potential refunds. Having touched on first quarter performance and what we are seeing and expect relative to commodity cost and tariff impacts, I want to turn to the overall consumer and category environment and how we see our top line growth prospects for the balance of the year. Consumer spending in the categories in which Newell competes came in slightly better than we expected in the first quarter. At down 1%, we continue to see category growth from high income consumer cohort being slightly more than offset by declines from low income consumers. Additionally, it appears the tax refund stimulus boost is largely offsetting higher fuel and energy costs so far. Importantly consumers are still responding when the value proposition is clear, when innovation solves a need, trusted brands are well supported, price and value are appropriately balanced, and retail execution is strong. Coming into the year, we assumed our categories in aggregate would decline about 2%. However, based on what we saw in the first quarter, we’re now assuming a 1.5% category decline for the full year. This slight improvement in underlying consumer and category dynamics, when coupled with better than expected first quarter results and what we know about the strength of our innovation, marketing and distribution plans for the balance of the year, puts us in a position to predict a return to top line growth in the SECond quarter. Additionally, given the stronger than expected first quarter results and our SECond quarter outlook for core sales growth, we are also raising our full year outlook for net sales, core sales and normalized earnings per share. Before closing, I want to thank all of the Newell employees for their dedication to the turnaround effort and their agility and resilience in dealing with a dynamic operating environment. With that, I’ll turn the call over to Mark to walk through the financials and outlook in more detail.
Mark Erceg (Chief Financial Officer)
Thanks Chris Good morning everyone. First quarter 2026 net n core sales declined versus year ago by 1.1 and 3.5% respectively, with 2.7 points of favorable foreign exchange and 0.3 points of exits and other impacts Accounting for the difference between net and core normalized gross margin in the first quarter expanded by 70 basis points to 33.2%. Gross productivity and favorable net pricing actions, more than offset cost inflation tariff costs and lower volume normalized overhead dollars were slightly lower year over year as we continue to execute against the previously announced Global productivity plan. During Q1 we recorded $6 million of restructuring charges, bringing cumulative charges under the plan to $46 million. We continue to expect total restructuring and restructuring related charges associated with the plan of approximately 75 to $90 million, the rest of which should be largely incurred by the end of 2026. As expected, a and P as a percentage of sales was just north of 5%, which was about 30 basis points higher than a year ago as we continue to invest behind the strongest innovation program Newell has fielded since at least the Jarden acquisition. All of this brought Newell’s normalized operating margin in at 4.8%, which was 30 basis points above year ago and ahead of our expectations. As Chris indicated, we did …
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