Newell Brands - $NWL - Earnings Analysis: Successful debt refinancing and improved credit metrics.

Business Model

Newell Brands operates with a portfolio of well-known brands, including Rubbermaid, Sharpie, Graco, Coleman, Yankee Candle, Paper Mate, and others. Revenue is generated through the sale of these consumer goods across various segments.

Revenue Sources

• Home & Commercial Solutions: Includes brands like Rubbermaid and Yankee Candle.
• Learning & Development: Includes brands like Sharpie, Paper Mate, EXPO, and Elmer's.
• Outdoor & Recreation: Includes brands like Coleman and Campingaz.

Income Statement Analysis

• Net sales decreased by 6.1% due to core sales decline, unfavorable foreign exchange, and business exits.
• Gross profit increased by 7.2% driven by productivity savings and pricing actions offsetting headwinds.
• Operating income improved from a loss to a profit, but was impacted by non-cash impairment charges.

Balance Sheet Analysis

• Cash and cash equivalents decreased from $332 million to $198 million.
• Total assets decreased from $12,163 million to $11,004 million.
• Total liabilities decreased from $9,051 million to $8,253 million.
• Total stockholders' equity decreased from $3,112 million to $2,751 million.

Cash Flow Analysis

• Operating cash flow decreased from $930 million to $496 million. The prior year operating cash flow included a significant contribution from working capital primarily due to inventory reduction.

Capital Allocation

The company refinanced $1.25 billion of debt in Q4 2024. The company plans to invest between $250 million and $270 million in capital expenditures in 2025, focusing on high-return cost savings projects and supporting consumer product innovations.

Management Commentary

Newell Brands delivered strong results in 2024 driven by disciplined implementation of our new corporate strategy, operating model and culture transformation.

Fourth quarter reported gross margin increased by 430 basis points to 34.2% compared to the same quarter last year and was 790 basis points higher than the fourth quarter of 2022.

Looking forward, Newell Brands' core sales growth is expected to positively inflect during the back half of 2025

Overall Sentiment: Positive, emphasizing the progress made in the turnaround strategy and expectations for future growth and margin improvement.

Recommendation

Rating: Hold

Reason for Rating: Hold rating based on the ongoing turnaround efforts, margin improvements, and debt refinancing, balanced against declining sales and macroeconomic uncertainties.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/8/2025, 3:44:26 AM