Newell Brands Inc.

05/01/2026 | Press release | Distributed by Public on 05/01/2026 14:02

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of Newell Brands Inc.'s ("Newell Brands," the "Company," "we," "us" or "our") consolidated financial condition and results of operations. The discussion should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities law. These statements generally can be identified by the use of words such as "intend," "anticipate," "believe," "estimate," "project," "target," "plan," "expect," "setting up," "beginning to," "will," "should," "would," "could," "resume," "are confident that," "remain optimistic that," "seek to," or similar statements. The Company cautions that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to:
•the Company's ability to optimize costs and cash flow and mitigate the impact of soft global demand and retailers' inventory rebalancing through discretionary and overhead spend management, advertising and promotion expense optimization, demand forecast and supply plan adjustments and actions to improve working capital;
•the Company's dependence on the strength of retail and consumer demand and commercial and industrial sectors of the economy in various countries around the world;
•the Company's ability to improve productivity, reduce complexity and streamline operations;
•risks related to the Company's substantial indebtedness and current leverage profile, ability to refinance upcoming revolver and bond maturities on favorable terms, and potential increases in interest rates or changes in the Company's credit ratings including the failure to maintain financial covenants which if breached could subject us to cross-default and acceleration provisions in our debt documents;
•the impact on the Company's operations and financial condition resulting from current global macroeconomic environment, including the impact of tariffs imposed by the U.S. and retaliatory tariffs imposed by foreign countries, and the Company's ability to effectively execute its mitigation plans;
•competition with other manufacturers and distributors of consumer products;
•major retailers' strong bargaining power and consolidation of the Company's customers;
•supply chain and operational disruptions in the markets in which we operate, including as a result of geopolitical and macroeconomic conditions and any global military conflicts including those between Russia and Ukraine and in the Middle East;
•changes in the prices and availability of labor, transportation, raw materials and sourced products, including significant inflation, and the Company's ability to offset cost increases through pricing and productivity in a timely manner;
•the Company's ability to effectively execute its turnaround plan, including the Productivity Plan announced in December 2025 and other restructuring and cost saving initiatives;
•the Company's ability to develop innovative new products, to develop, maintain and strengthen end-user brands and to realize the benefits of increased advertising and promotion spend;
•the risks inherent to the Company's foreign operations, including currency fluctuations, exchange controls and pricing restrictions;
•future events that could adversely affect the value of the Company's assets and/or stock price and require additional impairment charges;
•unexpected costs or expenses associated with dispositions;
•the cost and outcomes of governmental investigations, inspections, lawsuits, legislative requests or other actions by third parties, including but not limited to those described in Footnote 14 of the Notes to Unaudited Condensed Consolidated Financial Statements, the potential outcomes of which could exceed policy limits, to the extent insured;
•the Company's ability to maintain effective internal control over financial reporting;
•risk associated with the use of artificial intelligence in the Company's operations and the Company's ability to properly manage such use;
•a failure or breach of one of the Company's key information technology systems, networks, processes or related controls or those of the Company's service providers;
•the impact of U.S. and foreign regulations on the Company's operations, including environmental remediation costs and legislation and regulatory actions related to product safety, data privacy and climate change;
•the potential inability to attract, retain and motivate key employees;
•changes in tax laws and the resolution of tax contingencies resulting in additional tax liabilities;
•product liability, product recalls or related regulatory actions;
•the Company's ability to protect its intellectual property rights;
•the impact of climate change and the increased focus of governmental and non-governmental organizations and customers on sustainability issues, as well as external expectations related to environmental, social and governance considerations;
•significant increases in the funding obligations related to the Company's pension plans; and
•other factors listed from time to time in our SEC filings, including but not limited to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings.
The information contained in this Report is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this Report as a result of new information or future events or developments. In addition, there can be no assurance that the Company has correctly identified and assessed all of the factors affecting the Company or that the publicly available and other information the Company receives with respect to these factors is complete or correct.
Overview
Newell Brands Inc. is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, Sharpie, Graco, Coleman, Rubbermaid Commercial Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, EXPO, Elmer's, Oster, NUK, Spontex and Campingaz. Newell Brands is focused on delighting consumers by lighting up everyday moments. The Company sells its products in over 150 countries around the world and has operations on the ground in more than 45 of these countries, excluding third-party distributors. The Company has three operating segments: Home and Commercial Solutions ("H&CS"), Learning and Development ("L&D") and Outdoor and Recreation ("O&R").
Business Strategy
The Company continues to execute the strategic priorities identified through its 2023 comprehensive capability assessment. These priorities, grounded in defined "where to play" and "how to win" choices, are intended to drive sustainable improvement in revenue performance, margins and cash flow through a redesigned operating model, targeted talent investments and a culture redesign.
The Company remains in the execution phase of its multi-year transformation. The Company believes that actions taken during 2025 strengthened foundational capabilities across innovation, brand building, productivity and commercial execution, and the Company expects the benefits of these initiatives to continue to phase in over time.
Execution of the Company's strategy continues amid a dynamic operating environment, including shifting consumer preferences, heightened competitive intensity, changes in retailer inventory and promotional behavior, increased adoption of digital and artificial intelligence-enabled tools, macroeconomic and geopolitical volatility, cumulative inflationary pressures on consumers, tariffs imposed by the U.S. in 2025 and 2026 as well as other countries' related retaliatory actions, and an evolving regulatory landscape. The Company continues to deploy mitigation actions, including pricing optimization, productivity initiatives and strategic manufacturing relocations, where appropriate.
The Company's operating focus remains on disciplined execution of its key priorities, including driving top-line improvement over time through product and commercial innovation and brand investment; protecting margins through productivity, procurement savings, overhead management and disciplined reinvestment; further deleveraging the balance sheet; improving cash flow and balance sheet strength through working capital management and capital allocation; and enhancing commercial and operational execution through complexity reduction, technology standardization, Enterprise Resource Planning System (ERP) consolidation, stock- keeping unit (SKU) rationalization and supply chain optimization.
As part of these efforts, in December 2025 the Company announced a global productivity plan (the "Productivity Plan") to further simplify processes, streamline overhead and reallocate resources to higher-value activities, including workforce reductions and retail footprint optimization. Employee separations in the U.S. were mostly executed by the end of 2025, with international actions expected to occur in 2026, subject to applicable local law and consultation
requirements. The Company also closed approximately 20 Yankee Candle stores in the U.S. and Canada in January 2026.
In addition, the Company continues to review its operating footprint and portfolio of non-core brands, which will result in future restructuring and restructuring-related charges.
Recent Developments
Update on Tariffs
In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs, invalidating tariffs previously imposed under that statute, and in April 2026 the U.S. Court of International Trade issued a related order directing U.S. Customs and Border Protection to administer affected import entries accordingly. The Company is evaluating the impact of these developments, including ongoing administrative and legal processes. See Footnote 14 of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
The Company continues to operate in a highly uncertain trade environment, with ongoing uncertainty regarding the scope, duration, legal sustainability and potential replacement of current tariffs, as well as the risk of retaliatory actions by other countries. While the Company continues to pursue mitigation actions as necessary with respect to its tariff exposure, including pricing actions, productivity initiatives, sourcing diversification and manufacturing footprint optimization, changes in trade policy, related legal challenges and geopolitical responses could continue to adversely affect the Company's costs, supply chain and financial results. See Footnote 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
Geopolitical Conflicts
Global economic conditions continue to be adversely affected by ongoing geopolitical conflicts, including the Russia-Ukraine and the Middle East conflicts. The Company has experienced increased costs for raw materials, transportation, energy, and commodity costs, driven in part by elevated fuel prices and global macroeconomic effects. The continuation or escalation of geopolitical tensions, including the expansion of trade restrictions, sanctions, or other barriers to global trade, could adversely affect the Company by disrupting its supply chain (including changes in prices and availability of transportation, raw materials and sourced products), reducing consumer demand, increasing volatility in foreign exchange rates and financial markets, and contributing to localized or global economic downturns. See "Results of Operations" and Footnote 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
Results of Operations
Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025
Consolidated Operating Results
Three Months Ended March 31,
(in millions)
2026
2025
$ Change % Change
Net sales $ 1,549 $ 1,566 $ (17) (1.1)%
Gross profit 513 503 10 2.0%
Gross margin 33.1 % 32.1 %
Operating income 34 21 13 61.9%
Operating margin 2.2 % 1.3 %
Interest expense, net 84 72 12 16.7%
Other expense, net 11 4 7 NM
Loss before income taxes (61) (55) (6) (10.9)%
Income tax benefit (28) (18) (10) (55.6)%
Income tax rate 45.9 % 32.7 %
Net loss $ (33) $ (37) $ 4 10.8%
Diluted loss per share $ (0.08) $ (0.09)
NM - NOT MEANINGFUL
Net sales for the three months ended March 31, 2026 decreased approximately 1%. Net sales were unfavorably impacted by continued soft demand, primarily in the H&CS segment. In addition, unfavorable order timing impacted net sales growth during the first quarter of 2026, as certain customers accelerated purchases in the first quarter of 2025, ahead of anticipated tariff impacts and price increases and retailers shifted orders into the second quarter of 2026 primarily in connection with key reset events. These factors were partially offset by product innovation launches and favorable net pricing including a $25 million contribution from a refinement of estimates related to customer programs, reflecting better claims experience and improved deduction management. Changes in foreign currency favorably impacted net sales by $42 million, or 3%.
Gross profit increased by approximately $10 million, or 2% compared to the prior year. Gross margin improved to 33.1% as compared with 32.1% in the prior year. The improvement in gross margin was driven by gross productivity and net pricing actions including the $25 million contribution related to customer programs discussed above, partially offset by the volume impact of lower sales, higher tariffs and inflation. Changes in foreign currency exchange rates favorably impacted gross profit by $9 million, or 2%.
Notable items, other than those noted above, impacting operating income for the three months ended March 31, 2026 and 2025 were as follows (in millions):
Three Months Ended March 31,
2026 2025
Restructuring and restructuring-related costs (a) (b)
$ 8 $ 25
Transaction costs and other (c)
8 2
$ 16 $ 27
(a)See Footnote 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information.
(b)Restructuring-related costs reported in selling, general and administrative expense ("SG&A") for the three months ended March 31, 2026 was $1 million and primarily related to facility closures associated with previously announced but substantially completed restructuring activities. For the three months ended March 31, 2025, restructuring-related costs reported in cost of products sold and SG&A were $3
million and $11 million, respectively, and primarily related to facility closures associated with various discrete initiatives as well as previously announced but substantially completed restructuring activities.
(c)Transaction and other costs for the three months ended March 31, 2026 primarily related to certain legal proceedings and completed divestitures. Transaction and other costs for the three months ended March 31, 2025 primarily related to hyperinflationary currency movements.
Operating income was $34 million, compared to $21 million in the prior year period. The improvement reflects the aforementioned factors related to the increase in gross profit of $10 million and savings from restructuring actions related to the Productivity Plan, partially offset by $5 million increase in advertising and promotion spending.
Interest expense, net increased by $12 million due to higher interest rates. The weighted average interest rates for the three months ended March 31, 2026 and 2025 were approximately 6.9% and 6.0%, respectively. See Footnote 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information.
Other expense, net for three months ended March 31, 2026 and 2025 includes the following items (in millions):
Three Months Ended March 31,
2026 2025
Foreign exchange losses, net $ 8 $ 1
Discount on factored receivables and other, net 3 3
$ 11 $ 4
The income tax benefit for the three months ended March 31, 2026 was $28 million as compared to $18 million for the three months ended March 31, 2025. The Company's effective income tax rates for the three months ended March 31, 2026 and 2025 were a benefit of 45.9% and 32.7% respectively. The change in the tax rate reflects a year over year decrease in forecasted pretax book income for 2026 combined with an increase in income tax benefits. See Footnote 10 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information.
Business Segment Operating Results
Home and Commercial Solutions
Three Months Ended March 31,
(in millions) 2026 2025 $ Change % Change
Net sales $ 780 $ 812 $ (32) (3.9)%
Operating loss (3) (2) (1) (50.0)%
Operating margin (0.4) % (0.2) %
H&CS net sales for the three months ended March 31, 2026 decreased approximately 4%, reflecting soft demand across all businesses, as well as unfavorable order timing, as certain customers accelerated purchases in the first quarter of 2025 ahead of anticipated tariff impacts and price increases, and retailers shifted orders into the second quarter of 2026, primarily in connection with key reset events. These factors were partially offset by product innovation launches and favorable net pricing including a $17 million contribution from a refinement of estimates related to customer programs as discussed above. Changes in foreign currency favorably impacted net sales by $26 million, or approximately 3%.
Operating loss for the three months ended March 31, 2026 was $3 million as compared to $2 million in the prior year. The decline in operating results was primarily driven by a $5 million decrease in gross profit due mainly to lower sales volume and inflation, partially offset by gross productivity and net pricing actions including the $17 million contribution related to customer programs discussed above. Savings from restructuring actions were partially offset by increased amortization related to a certain tradename that no longer qualified as indefinite-lived intangible asset.
Learning and Development
Three Months Ended March 31,
(in millions) 2026 2025 $ Change % Change
Net sales $ 594 $ 572 $ 22 3.8%
Operating income 108 98 10 10.2%
Operating margin 18.2 % 17.1 %
L&D net sales for the three months ended March 31, 2026 increased approximately 4%. Net sales increased in both the Baby and the Writing businesses. The increase in the Baby business was primarily driven by improved replenishment orders from major retailers, pricing actions and contributions from product innovation. The increase in Writing business was due to distribution gains and favorable net pricing including a $7 million contribution from a refinement of estimates related to customer programs as discussed above. Changes in foreign currency favorably impacted net sales by $11 million, or approximately 2%.
Operating income for the three months ended March 31, 2026 increased to $108 million as compared to $98 million in the prior-year period. The increase in operating income was primarily due to higher gross profit of $11 million, as gross productivity and net pricing actions including the $7 million contribution related to customer programs discussed above, which were partially offset by inflation and increased advertising and promotion spending.
Outdoor and Recreation
Three Months Ended March 31,
(in millions) 2026 2025 $ Change % Change
Net sales $ 175 $ 182 $ (7) (3.8)%
Operating loss (7) (5) (2) (40.0)%
Operating margin (4.0) % (2.7) %
O&R net sales for the three months ended March 31, 2026 decreased approximately 4% reflecting soft demand, partially offset by favorable pricing and contributions from product innovations. Changes in foreign currency favorably impacted net sales by $5 million, or approximately 3%.
Operating loss for the three months ended March 31, 2026 was $7 million as compared to $5 million in the prior-year period. The change in operating performance was due to increased advertising and promotion spending, partially offset by $4 million improvement in gross profit due to favorable pricing and gross productivity.
Liquidity and Capital Resources
Liquidity
The Company believes the extent of the impact of the rapidly changing retail and consumer landscape, which reflects an increased focus by retailers to rebalance inventory levels, inflationary pressures and uncertainty over the volatility and direction of future demand patterns on the Company's future sales, operating results, cash flows, liquidity and financial condition, will continue to be driven by numerous evolving factors the Company cannot accurately predict and which will vary. The Company has taken actions to further strengthen its financial position and balance sheet, and maintain financial liquidity and flexibility.
The Company believes these actions and its cash generating capability, together with its borrowing capacity and available cash and cash equivalents, provide adequate liquidity, both in the near-term and longer-term, to fund its operations, support its growth platforms, pay down debt and debt maturities as they come due and execute its ongoing business initiatives. The Company regularly assesses its cash requirements and the available sources to fund these needs.
For further information, refer to Risk Factors in Part I - Item 1A and Recent Developments and Liquidity and Capital Resources in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's most recent Annual Report on Form 10-K, filed on February 13, 2026.
At March 31, 2026, the Company had cash and cash equivalents of approximately $201 million, of which approximately $157 million was held by the Company's non-U.S. subsidiaries.
Cash, cash equivalents and restricted cash increased (decreased) as follows for the three months ended March 31, 2026 and 2025 (in millions):
2026 2025 Increase (Decrease)
Cash used in operating activities $ (233) $ (213) $ (20)
Cash used in investing activities (29) (27) (2)
Cash provided by financing activities 286 270 16
Exchange rate effect on cash, cash equivalents and restricted cash (1) 3 (4)
Increase in cash, cash equivalents and restricted cash $ 23 $ 33 $ (10)
The Company has historically generated the majority of its operating cash flow in the third and fourth quarters of the year due to seasonal variations in operating results, the timing of annual performance-based compensation payments, customer program payments, working capital requirements and credit terms provided to customers.
Cash Flows from Operating Activities
The change in net cash used in operating activities reflects higher restructuring payment and higher inventory levels driven by planned builds to support anticipated second quarter demand, partially offset by improvement in accounts receivable collections and lower incentive compensation payment.
Cash Flows from Investing Activities
The change in net cash used in investing activities was primarily due to $22 million decrease in capital expenditures offset by cash used for transactions related to certain hedging instruments.
Cash Flows from Financing Activities
The change in net cash provided by financing activities primarily reflected proceeds from balance sheet hedge settlements and an increase in accounts receivable collections not yet remitted to the financial institution under the Company's receivables factoring arrangements, partially offset by lower borrowings under the Credit Revolver (as defined hereafter) during the current period and higher cash used to settle withholding taxes on vested equity awards. See Footnotes 1 and 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information on factoring of receivables and Credit Revolver, respectively.
Capital Resources
Credit Revolver
The Company maintains a $1.00 billion senior secured revolving credit facility (the "Credit Revolver") maturing in August 2027. Under the Credit Revolver, the Company may borrow funds on a variety of interest terms. The Credit Revolver agreement (i) requires the Company to satisfy financial covenants testing the Company's Collateral Coverage Ratio and Total Net Leverage Ratio (each further defined in the Credit Revolver, as amended), (ii) requires the Company and certain of its domestic and foreign subsidiaries (the "Guarantors") to guaranty Company obligations under the Credit Revolver and (iii) requires the Company and other Guarantors to grant a lien and security interest in certain assets consisting of eligible accounts receivables, eligible inventory, eligible equipment and eligible intellectual property, and all products and proceeds of the foregoing, subject to certain limitations.
In accordance with the terms of the Credit Revolver, the Total Net Leverage Ratio covenant is scheduled to decrease as of the last day of the fiscal quarter ending September 30, 2026 and to continue at such level for each fiscal quarter
ending thereafter during the remaining term of the Credit Revolver. The Company's ability to continue to comply with the Total Net Leverage Ratio covenant is dependent upon the Company's future operating and financial performance, which may be affected by economic conditions and other factors beyond our control. A failure to maintain the Company's financial covenants and to subsequently remedy a default would impair its ability to borrow under the Credit Revolver and, absent a waiver of such default by the lenders under the Credit Revolver or an amendment or replacement of the Credit Revolver with alternative financing, potentially subject the Company to cross-default and acceleration provisions in its debt documents, which would have a significant adverse effect on the Company's business, financial condition and operating results. While the Company would pursue refinancing the Credit Revolver with a new or amended borrowing facility should such action be necessary, there can be no assurance regarding the availability of such a new or amended facility on terms favorable to the Company or at all.
Other than outstanding borrowings under the Credit Revolver, availability under the Credit Revolver is subject to change in accordance with the terms of the agreement, including in response to changes in the Company's pledged collateral value or outstanding letters of credit under the Credit Revolver. At March 31, 2026, there was $789 million of availability under the Credit Revolver, based on the value of the pledged collateral and prior to giving effect to outstanding borrowings and letters of credit.
The Credit Revolver provides for the issuance of up to $150 million of letters of credit, so long as there is sufficient availability for borrowing under the Credit Revolver. At March 31, 2026, the Company had approximately $37 million of outstanding standby letters of credit issued against the Credit Revolver and $425 million of outstanding borrowings under the Credit Revolver resulting in a net availability of approximately $327 million.
See Footnote 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information.
The Company was in compliance with all of its debt covenants at March 31, 2026.
Risk Management
From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate, foreign currency rate and commodity price fluctuations. The Company does not enter into derivative transactions for trading purposes.
See Footnote 9 of the Notes to Unaudited Condensed Consolidated Financial Statements for further information on the Company's derivative instruments.
Significant Accounting Policies and Critical Estimates
For further information on significant accounting policies and critical estimates, refer to the Company's most recent Annual Report on Form 10-K, filed on February 13, 2026 and Footnote 1 of the Notes to Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Newell Brands Inc. published this content on May 01, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 01, 2026 at 20:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]