In This Article:
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Core Sales: Decreased by 2.1%, at the high end of guidance range.
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Normalized Gross Margin: Increased by 150 basis points to 32.5%.
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Normalized Operating Margin: Achieved 4.5%, above guidance range.
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Normalized Earnings Per Share: Recorded a loss of $0.01, $0.05 to $0.08 above guidance range.
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Net Interest Expense: $72 million, an increase of $2 million from prior year.
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Operating Cash Flow: Outflow of $213 million, compared to a positive $32 million in the prior year.
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Net Leverage Ratio: 5.3 times, improved from 5.6 times in Q1 2024.
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2025 Financial Outlook: Net sales expected to decline 4% to 2%; normalized operating margin at 9% to 9.5%; normalized EPS at $0.70 to $0.76.
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Second Quarter 2025 Guidance: Net and core sales expected to decline 5% to 3%; operating margin between 10.4% and 10.8%; normalized EPS of $0.21 to $0.24.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Newell Brands Inc (NASDAQ:NWL) reported Q1 results that were in line or ahead of expectations across all key financial metrics.
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The company achieved a 150 basis point increase in normalized gross margin, marking the seventh consecutive quarter of improvement.
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Newell Brands Inc (NASDAQ:NWL) has significantly reduced its dependency on China for sourcing, decreasing from 35% to 15% of total cost of goods sold.
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The company has invested nearly $2 billion in US manufacturing since 2017, enhancing its domestic production capabilities.
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Newell Brands Inc (NASDAQ:NWL) is actively pursuing new distribution opportunities in tariff-advantaged categories, with early wins in food storage and vacuum sealing bags.
Negative Points
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Core sales declined by 2.1% in Q1, although this was at the high end of guidance.
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The company faces potential challenges from a new 125% tariff on Chinese imports, particularly impacting the baby gear category.
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Newell Brands Inc (NASDAQ:NWL) has moderated its expectations for category growth, now anticipating a decline of 1% to 2% due to lower consumer confidence.
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Operating cash flow was negative $213 million in Q1, compared to a positive cash flow of $32 million in the prior year.
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The company is experiencing a dynamic and uncertain macroeconomic environment, which could impact future performance.
Q & A Highlights
Q: Can you explain the impact of retail destocking and the 125% China tariffs on your guidance? A: Christopher Peterson, President and CEO: We delivered core sales growth of -2.1% in Q1, which was at the high end of our guidance. We lowered our market growth assumption from flat to down 1%-2% due to consumer confidence and macroeconomic forecasts, despite not seeing a decline in consumption levels. Regarding tariffs, we've taken proactive actions to mitigate all except the 125% China tariff, which primarily affects our baby gear category. We've paused orders from China and have inventory to manage the short-term impact.