Newell Brands Inc. NWL posted mixed fourth-quarter 2024 results, wherein earnings beat the Zacks Consensus Estimate but sales missed. Both the metrics fell year over year.
The company’s normalized earnings per share (EPS) were 16 cents, down 11.1% from 18 cents in the year-ago quarter. The bottom-line figure surpassed the consensus mark of 14 cents per share.
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Newell Brands Inc. Price, Consensus and EPS Surprise
Newell Brands Inc. Price, Consensus and EPS Surprise
Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote
Net sales dipped 6.1% year over year to $1,949 million on lower core sales, as well as the impacts of business exits and adverse foreign exchange. The metric missed the consensus estimate of $1,973 million. Core sales fell 3% year over year.
However, pricing across the international markets to offset inflation and currency was a significant contributor to core sales. A disciplined implementation of the company’s new corporate strategy, operating model and culture transformation appear encouraging. NWL has reinforced its front-end selling and marketing capabilities.
The normalized gross margin expanded 330 bps year over year to 34.6%, reflecting the sixth straight quarter of year-over-year improvement. The normalized operating margin increased 70 bps year over year to 7.1%.
However, shares of the company have fallen more than 20% in the pre-trading session today, following the soft quarterly results and bleak outlook for the first quarter of 2025. In the past three months, the company’s shares have lost 21.1% against the industry’s 2.4% growth.
NWL’s Segmental Details
Net sales in the Home & Commercial Solutions segment were $1.2 billion, down 7.7% from the year-ago period. Core sales dipped 4.6% year over year, due to decreases in the Kitchen and Home Fragrance businesses, somewhat offset by a rise in the Commercial business. Also, the impacts of foreign exchange headwinds and few business exits acted as deterrents. We had expected sales of $1.2 billion for the segment.
The Learning and Development segment recorded net sales of $628 million, down 1.1% from the year-ago quarter. Core sales grew 0.4%, which offset the adverse impacts of foreign exchange. While core sales grew in the Writing business, the metric fell in Baby. We had expected sales of $633.8 million.
The Outdoor and Recreation segment’s net sales of $152 million declined 7.9% from the year-ago quarter. Core sales fell 3.8% and negative foreign exchange hurt the results. However, the metric beat our estimate of $137.3 million.
Updates on NWL’s Organizational Realignment
Newell’s organizational realignment is likely to strengthen its front-end commercial capabilities, including consumer understanding and brand communication.
As part of this realignment, NWL made several organizational design changes, including setting up a cross-functional brand-management organization, realigning business unit finance to aid the new global brand management model and simplifying the regional go-to-market organizations, as well as unifying the domestic retail sales teams, digital technology team, business-related accounting personnel, the manufacturing quality team and the human resources operations into the center-led teams to boost standardization and scale with a One Newell approach.
Under the Realignment Plan in 2024, NWL realized annualized pretax savings of $75 million, net of reinvestment, and spent restructuring and related charges of $52 million.
Other Financial Details of Newell
This Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents of $198 million, long-term debt of $4.5 billion, outstanding debt of $4.6 billion and shareholders’ equity of $2.8 billion. NWL also provided $496 million in cash for operating activities during 2024.
During the reported quarter, the company refinanced $1.25 billion of debt.
NWL’s Outlook
Management issued a preliminary outlook for the first quarter and 2025. The company anticipates 2025 sales to drop in the band of 2-4% year over year, with core sales to decline 2% to increase 1%. The normalized operating margin is likely to be in the band of 9-9.5% compared with 8.2% recorded last year. Normalized EPS is predicted to be in the band of 70-76 cents, up from 68 cents reported last year. The company envisions operating cash flow to be in the range of $450-$500 million.
For the first quarter, net sales are envisioned to dip in the range of 5-8%, with core sales anticipated to drop in the band of 2-4%. The company expects a normalized operating margin in the range of 2-4% and normalized loss in the band of six-nine cents a share. It had posted break-even earnings in the year-ago quarter.
Stocks to Consider in Consumer Staples Space
We have highlighted better-ranked stocks from the broader Consumer Staples space, namely Freshpet FRPT, Ollie's Bargain Outlet OLLI and Helen of Troy HELE.
Freshpet, a pet food company, has a trailing four-quarter average earnings surprise of 144.5%. FRPT currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.2% and 228.6%, respectively, from the prior-year levels.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank of 2. OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial-year’s sales and EPS implies growth of 8.3% and 13.1%, respectively, from the year-ago numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank of 2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and EPS indicates declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s figures.
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