Newell Brands Q1 2025 Earnings Report

Newell Brands EPS Results

• Actual EPS: -$0.01
• Consensus EPS: -$0.07
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Newell Brands Revenue Results

• Actual Revenue: $1.57 billion
• Expected Revenue: $1.54 billion
• Beat/Miss: Beat by +$25.15 million
• YoY Revenue Growth: -5.30%

Newell Brands Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 9:00AM ET

Newell Brands (NASDAQ:NWL) engages in the design, manufacture, sourcing, and distribution of consumer and commercial products worldwide. The company operates in three segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation. The Commercial Solutions segment provides commercial cleaning and maintenance solution products under the Rubbermaid, Rubbermaid Commercial Products, Mapa, and Spontex brands; closet and garage organization products; hygiene systems and material handling solutions; household products, such as kitchen appliances under the Crockpot, Mr. Coffee, Oster, and Sunbeam brands; small appliances under the Breville brand name in Europe; food and home storage products under the FoodSaver, Rubbermaid, Ball, and Sistema brands; fresh preserving products; vacuum sealing products; and gourmet cookware, bakeware, and cutlery under the Calphalon brand; and home fragrance products under the WoodWick and Yankee Candle brands. The Learning and Development segment offers writing instruments, including markers and highlighters, pens, and pencils; art products; activity-based products; labeling solutions; and baby gear and infant care products under the Dymo, Elmer's, EXPO, Graco, NUK, Paper Mate, Parker, and Sharpie brands. The Outdoor and Recreation segment provides outdoor and outdoor-related products, inlcuding technical apparel and on-the-go beverageware under the Campingaz, Coleman, Contigo, and Marmot brands. It serves warehouse clubs, department and drug/grocery stores, mass merchants, home centers, commercial products distributors, specialty retailers, office superstores and supply stores, contract stationers, e-commerce retailers, and sporting goods, as well as direct to consumers online, select contract customers, and other professional customers. Newell Brands Inc. was founded in 1903 and is based in Atlanta, Georgia.

Newell Brands Q1 2025 Earnings Call Transcript

Key Takeaways

• Newell delivered a strong Q1 with core sales down 2.1% (at the top of guidance), 150 bps normalized gross margin expansion (seventh consecutive quarter), and EPS outperformed the high end of guidance by $0.05.
• The company has aggressively de‐risked China tariffs, reducing U.S. sourced finished goods from China from 35% to 15% of COGS in 2024 and targeting just 10% by the end of 2025.
• With over $2 billion invested in U.S. manufacturing since 2017, more than 60% of sales are in the U.S. and over half of U.S. sales are tariff‐free from 15 U.S. and 2 Mexico plants supporting eight of its top ten brands.
• Newell affirmed its full‐year 2025 guidance—net sales down 4% to 2%, normalized operating margin of 9.0%–9.5%, and EPS of $0.70–$0.76—while moderating core sales to down 3%–1% due to cautious category growth assumptions.
• The potential 125% China tariff on baby gear is treated as a sensitivity outside guidance, with an unmitigated impact of ~$0.20 EPS—but management expects to mitigate at least half through pricing, inventory strategies, and domestic sourcing.

Presentation

[Operator]

Good morning and welcome to the Noel Brands First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. After a brief discussion by management, we will open the call up for questions. In order to stay within the time scheduled for the call, please limit yourself to one question during the Q and A session. Today's conference call is being recorded.

[Operator]

A live webcast of this call is available at irnuelbrands.com. I will now turn the call over to Joanne Freiberger, SVP of Investor Relations and Chief Communications Officer. Ms. Freiberger, you may begin.

[Joanne Freiberger, VP - IR at Newell Brands]

Thank you. Good morning, everyone, and welcome to Newell Brands' First Quarter twenty twenty five Earnings Call. On the call with me today are Chris Peterson, our President and CEO and Mark Ersegg, 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.

[Joanne Freiberger, VP - IR at Newell Brands]

I refer you to the cautionary language and risk factors available in our earnings release, our Form 10 ks, Form 10 Q, and other SEC filings available on our Investor Relations website for a further discussion of the factors affecting forward looking statements. Please also recognize that today's remarks will refer to certain 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 are available, 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.

[Joanne Freiberger, VP - IR at Newell Brands]

And with that, I'll turn the call over to Chris.

[Chris Peterson, CEO & President at Newell Brands]

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 in line or ahead of expectations across all key financial metrics. Core sales at minus 2.1% improved both sequentially and versus year ago. Both Learning and Development and the International business in total delivered core sales growth in the quarter.

[Chris Peterson, CEO & President at Newell Brands]

Normalized gross margin increased meaningfully for the seventh consecutive quarter, expanding by 150 basis points. Normalized operating margin exceeded our outlook even after increasing A and P investment dollars by high single digits compared to prior year, and normalized earnings per share came in $05 better than the upper end of our guidance range, driven by strong operational performance. We remain confident that Newell's new strategy is working. A key piece of our new strategy relates to product innovation. As we shared last quarter, our multiyear innovation funnel has now largely been rebuilt with exciting consumer led proprietary products, which will begin launching in a sustained manner starting with the second half of this year.

[Chris Peterson, CEO & President at Newell Brands]

Despite the dynamic operating environment, we remain laser focused on driving continued progress on our where to play and how to win strategy choices and the capabilities required to deliver against them. That said, we know that tariffs are top of mind, so we'd like to start this morning by explaining why we're confident Newell Brands, after what will likely be a period of temporary disruption, is well positioned to disproportionately benefit from the global trade realignment currently underway. Specifically, we believe past decisions to proactively prepare for higher China tariffs by aggressively shifting sourced finished goods procurement to alternate geographies and to maintain and invest in a robust and extensive in house domestic manufacturing base, while many of our top competitors outsourced or offshored much of their production capability, gives us a unique opportunity to not just manage through this period of tariff related sourcing dislocations, but to be on a net basis significant beneficiaries of them. Let's take each of those two decisions in turn. First, we have made remarkable progress de risking our China supply base over the past several years.

[Chris Peterson, CEO & President at Newell Brands]

Recall that just a few years ago, 35% of Newell's total cost of goods sold was sourced finished goods imported into The U. S. From China. Last year, 2024, that number was down to 15%. To help put this in perspective, consider the following: In 2024, total sourced finished goods imported to The U.

[Chris Peterson, CEO & President at Newell Brands]

S. From all countries represented 24% of Newell's total global cost of goods sold. After netting out the 15% imported from China, Mexico, which is 98% USMCA compliant, was the second largest country of origin, accounting for roughly half of the remaining 9% of U. S. Imports.

[Chris Peterson, CEO & President at Newell Brands]

The remaining balance is sourced from various countries, none of which individually exceed 1% of our total global cost of goods sold. This effectively means that China is what we needed to be focused on. That is why, even prior to the announcement of an additional 125 tariff on Chinese imported goods, we had plans to reduce U. S. Sourced finished goods from China down to 10% by the end of twenty twenty five, and even lower than that by the end of twenty twenty six.

[Chris Peterson, CEO & President at Newell Brands]

Second, in 2024, over 60% of Newell Brands total sales were in The United States, And since the 2017 Tax Cuts and Jobs Act, we have invested nearly $2,000,000,000 in U. S. Manufacturing, much of which was spent on high return automation projects and dramatic improvements in our distribution and transportation systems. As a result, more than half of our 2024 U. S.

[Chris Peterson, CEO & President at Newell Brands]

Sales were manufactured through an extensive North America supply base and are not subject to tariffs. This means we are now uniquely positioned to support multiple product categories and to successfully partner with and lead our U. S. Customers through this tumultuous period of impending supply disruption. In fact, we believe that the number of categories where we are strategically advantaged with North American tariff free production significantly exceeds the number of categories where we are disadvantaged.

[Chris Peterson, CEO & President at Newell Brands]

Key categories that we manufacture tariff free across 15 U. S. Plants and two USMCA compliant plants in Mexico, which collectively employ roughly 7,300 individuals, include eight of our top 10 brands, namely Rubbermaid, Rubbermaid Commercial, Sharpie, Expo, Yankee Candle, Papermate, Coleman and Oster. We also manufacture Nook baby care products and Ball Mason jars domestically. Many of these products compete against China sourced brands, which we believe provides us with a significant competitive advantage in the current environment.

[Chris Peterson, CEO & President at Newell Brands]

With a significant number of customers canceling outstanding purchase orders and actively stopping shipments from China, we have significant untapped capacity across our U. S. And Mexico facilities due to the automation and operational excellence programs we have implemented over the past several years. This gives us the ability to quickly ramp up production of high quality products not subject to tariffs to allow our top strategic customers to keep their store shelves full. When we shared our twenty twenty five plan back in February, we expected a fluid and dynamic macroeconomic environment, which is certainly playing out.

[Chris Peterson, CEO & President at Newell Brands]

Mark will provide additional context on our outlook for the year and walk you through the numbers shortly, but let me spend a few minutes explaining our philosophical and strategic approach to guidance and tariff management. In terms of top line growth, we are maintaining our net sales guidance for the year. Within this, we are moderating our expectations for category growth from what was previously flat to now down 1% to 2%. We believe this is prudent given lower consumer confidence levels and more muted macroeconomic forecasts. Importantly, we are not changing our forecast for market share for the year, as our new product innovation pipeline remains on track.

[Chris Peterson, CEO & President at Newell Brands]

Offsetting this impact, our foreign exchange outlook based on current rates has improved by one to two percentage points. Additionally, we continue to expect stronger top line performance in the back half of the year compared to the front half based on the timing of our innovation launches and distribution gains. Relative to operating margin and earnings per share, we are maintaining our stated guidance for the year as we expect lower commodity and input cost inflation, favorable foreign exchange, stronger productivity results, and select pricing actions to offset higher tariff costs. Within this guidance, we have created two separate tariff buckets. In the first tariff bucket, we have placed five items.

[Chris Peterson, CEO & President at Newell Brands]

First, Mexico and Canadian tariffs, which from a renewal perspective have been effectively resolved because our two Mexican manufacturing facilities are 98% USMCA compliant. Second, the initial IEEPA twenty percent China tariffs third, the Section two thirty two global steel and aluminum tariffs fourth, the reciprocal tariffs that were announced April 2 and then suspended on April 9, leaving a residual baseline tariff of 10% on all countries except China finally, the retaliatory tariffs announced by both Canada and China against The US. We expect to fully offset the expected bottom line normalized earnings per share impact from the five elements which make up our first tariff bucket with a number of proactive actions. First, we updated our commodity and input cost estimates for the full year and found additional savings versus our going in budget estimates in several important areas. For example, the price of crude oil has dropped about 15% since the start of the year, and natural gas is down close to 10%, which, in addition to providing direct cost savings, is favorably impacting resin prices and transportation costs.

[Chris Peterson, CEO & President at Newell Brands]

Second, in tariff affected markets, our procurement team has gone back to suppliers and extracted, broadly speaking, a couple of points of cost reduction. Third, we discretionary overhead and A and P spending under a microscope and made some tough but prudent decisions. Having said that, we still plan to spend more on A and P this year than at any point over the past several years as we invest in the business. Fourth, we updated foreign exchange rates, which have largely moved in our favor since our last earnings call, and we increased prices in select geographies where exchange rate movements versus the U. S.

[Chris Peterson, CEO & President at Newell Brands]

Dollar were justified and appropriate. Finally, we initiated two separate rounds of targeted tariff related price actions in The U. S, One of which has already gone into effect and one of which will be effective May 1. The good news is that after these five actions, we have a plan to fully offset the negative bottom line 2025 normalized earnings per share impacts related to what we are calling our first bucket of tariffs. The second tariff bucket is uniquely centered and isolated against the incremental 125% China tariff.

[Chris Peterson, CEO & President at Newell Brands]

Given the magnitude of this element, and since it seems to be particularly fluid, we have chosen to handle it separately and outside of guidance for now as a sensitivity. As previously mentioned, we already have plans to dramatically reduce our dependency of sourced finished goods originating from China this year. However, considering the incremental 125% tariffs being placed on China, we have done what many leading retailers have done, and paused virtually all outstanding Chinese purchase orders. In addition, as we shared on our February call, we put a moratorium in place stating we will not be signing up any new suppliers who do not already have manufacturing capabilities outside of China or have defined plans to do so. We have taken these actions because we believe as a practical matter, excluding the baby gear category, that the amount of incremental pricing required to hold gross margins and the associated new retail shelf price at this tariff level would be so significant that it would preclude many consumers from purchasing those items.

[Chris Peterson, CEO & President at Newell Brands]

Therefore, instead of continuing to source finished product or raw materials out of China, we will leverage existing inventory on hand while rapidly developing and qualifying alternative sourcing solutions for impacted items. As part of this effort, we have encouraged our business leaders and brand managers to embrace another round of SKU simplification, which is something Newell has proven to be very adept at, having already cut our SKU count from over 100,000 items to less than 20,000 as of last year. The other thing we are doing, and which frankly we are very excited about, is aggressively selling and providing key strategic retailers access to our tariff free North America manufacturing base during what we expect to be an extended period of constrained supply in certain product categories. We have already secured notable wins in food storage and vacuum sealing bags, both of which are included in our updated guidance, and are in active dialogue across many more fronts as we pursue opportunities to expand distribution and share shelf while simultaneously helping customers offer high quality Made in America Newell brands to their customers. That said, and in full transparency, the one piece that is most challenging is baby gear, which is an industry wide issue.

[Chris Peterson, CEO & President at Newell Brands]

This is because approximately 97% of baby strollers and 87% of baby car seats in The U. S. Are sourced from China. In the past, the Trump Administration offered Section three zero one tariff exemptions on baby gear products to help young families afford the significant costs associated with having and raising children. Thus, we are hopeful the Administration will do so again, but in the meantime, we will do everything we can to protect and manage our Baby Gear business.

[Chris Peterson, CEO & President at Newell Brands]

So, before turning the call over to Mark, let me reiterate the key message coming out of this morning's call, which is as follows: We believe that the number of opportunities we have in advantaged categories where we have domestic or USMCA compliant production exempt from tariffs significantly exceeds the number of categories where we are disadvantaged. Consistent with this, we are actively pursuing numerous incremental sales opportunities and are confident that these short term challenges will give way to lasting medium and long term gains. When we look back a few years from now, we believe this time will be remembered as a pivotal point in Newell Brands' evolution into a high performing world class consumer products company. It has been seven quarters since we deployed our new strategy. We remain excited and energized by the progress we are making and the results we are delivering, and look forward to sharing additional updates with you in the future.

[Chris Peterson, CEO & President at Newell Brands]

Finally, would like to thank our dedicated employees for their resilience throughout this dynamic environment and their continued commitment to operating with excellence and delighting consumers around

[Chris Peterson, CEO & President at Newell Brands]

the world. Mark?

[Mark Erceg, Chief Financial Officer at Newell Brands]

Thanks, Chris. Good morning, everyone. First quarter twenty twenty five core sales were minus 2.1%, which was at the high end of our guidance range, reflecting new product innovation and to a lesser extent, pricing benefits.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Both the Learning and Development segment and our International business, which represents nearly 40% of Newell's total sales, posted positive core sales growth for the last five consecutive quarters, which we believe further demonstrates that our new strategy and One Newell operating model are working. Twenty twenty five first quarter net sales included about 2.5 points of currency headwind and just over half a point of category exits. Normalized gross margin in the first quarter expanded by 150 basis points to 32.5%, which was the seventh consecutive quarter of year over year improvement. Gross productivity savings and pricing more than offset inflation and foreign exchange

[Operator]

Please excuse us one moment. We're experiencing a little bit of technical difficulty. Please just hold for one moment. If you guys can hear me okay, and if we can hear you okay, we may begin again if you're ready.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Yeah. Yeah. We can hear you.

[Operator]

That's great. You for your patience, everyone. Allow us to begin again.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Great. Thanks everyone for being patient with us on our little technical snafu there. I'm going go ahead and start with my first portion of my prepared remarks transitioning over from Chris. So thanks and good morning everyone. First quarter twenty twenty five core sales were minus 2.1%, which was at the high end of our guidance range, reflecting new product innovation and to a lesser extent net pricing benefits.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Both the Learning and Development segment and our International business, which represents nearly 40% of Newell's total sales posted positive core sales growth for the last five consecutive quarters, which we believe further demonstrates that our new strategy and One Newell operating model are working. Twenty twenty five first quarter net sales included about 2.5 points of currency headwind and just over zero five point of category exits. Normalized gross margin in the first quarter expanded by 150 basis points to 32.5%, which was the seventh consecutive quarter of year over year improvement. Gross productivity savings and pricing more than offset inflation and foreign exchange headwinds. During Q1, Newell's normalized operating margin was 4.5%, which was comfortably above the guidance range we provided during our last earnings call.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Operating margin results were better than anticipated despite higher levels of A and P investment for two reasons. First, core sales came in towards the top end of our guidance range and second, gross margin performance was stronger than expected. Net interest expense of $72,000,000 represented an increase of $2,000,000 from the prior year and a normalized income tax provision of $2,000,000 was recorded in Q1. Relative to normalized diluted earnings per share, we recorded a loss of $01 in the quarter, but this was $0.05 to $8 above our guidance range without any discrete tax benefits distorting operating results. We had an operating cash outflow of $213,000,000 versus a positive cash flow of $32,000,000 in the year ago period.

[Mark Erceg, Chief Financial Officer at Newell Brands]

However, the first quarter is typically Newell's smallest quarter of the year due to seasonality and as a result, it has always historically been a cash take quarter. Last year, we were able to break the trend due to a significant contribution from working capital, which lowered our cash conversion cycle by thirty days, coupled with a below target cash bonus payout, which is always made during the first quarter of the year. This year, our cash conversion cycle did improve by four additional days, but it would have improved even more absent a decision to pull some inventory purchases forward to avoid impending tariff increases. A significantly higher cash bonus payout versus year ago also negatively impacted Q1 operating cash flow. Our net leverage ratio for the quarter was 5.3 times, which compares favorably to Q1 of twenty twenty four when it was 5.6 times.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Chris mentioned several ways we are mitigating the impact of looming tariffs, one of which included additional procurement and supply chain related cost savings. Recently, I have been asked with increased frequency if there is still ample gross margin runway ahead of us. Thus, before I take you through our outlook for the full year and second quarter, I would like to address that. Newell Brands has 42 global manufacturing plants and as mentioned earlier, 15 are in The U. S.

[Mark Erceg, Chief Financial Officer at Newell Brands]

And two USMCA compliant facilities are located just over the border in Mexico. We have a strong frontline engagement program focused on continuous improvement that we refer to as PEEK, which is a mountain climbing metaphor, which connotes a never ending climb to the summit of continual improvement. Within peak, there are six levels of attainment and each level generally takes twelve to twenty four months depending on the phase, size and complexity of the site to complete. Our first sites understandably took a little longer to ramp, but more recent sites have been moving faster through the program. Phase one is referred to as foundations.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Phase two is base camp. Phases three through five are designated as climb one, two or three and this is where we expand insight, extend across the value chain or consolidate and optimize respectively. Finally, phase six is the summit where continual improvement has become the cultural norm and as such is fully embedded in everything we do. Now with respect to our 42 plants, 15 of our smaller plants have not started their journey. Seven are in Phase one and ten plants are in both Phases two and three.

[Mark Erceg, Chief Financial Officer at Newell Brands]

This means we don't have any plants that have reached Phases four through six yet. Let me repeat that, we don't have any plants in Phases four through six. In addition to our manufacturing facilities, we have seven North American service centers, all of which are in phase one through phase three of peak. And we have only 14 distribution centers out of roughly 70 in total that are currently in either phase one or two. So yes, while we have made and are continuing to make solid progress in gaining meaningful cost efficiencies, we are not even halfway on our journey to the summit of continuous improvement, leaving ample room going forward for us to continue to improve Newell's gross margin and by proxy operating margin.

[Mark Erceg, Chief Financial Officer at Newell Brands]

And of course, Peak is just one of the many cost reduction and supply chain efficiency programs we are scaling across the enterprise. In just the past three years, we have reduced our supply chain staffing needs by 3,800 positions through our automation efforts, which gives us a tremendous opportunity to capture highly accretive unit economics as we look to leverage and monetize our strong domestic manufacturing base across our tariff advantage categories. Now turning to our outlook. Having made a series of swift interventions, including targeted pricing actions, incremental cost reduction efforts and rapid sourcing decisions in conjunction with our Q1 bottom line over delivery, we expect to fully offset on a full year basis all bucket one tariffs Chris referenced during his prepared remarks. Therefore, today we are affirming our 2025 financial outlook for net sales, normalized operating margin and normalized earnings per share.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Specifically, net sales are still expected to be between negative 4% and negative 2%, which now includes an approximate 1% headwind largely driven by category exits. Normalized operating margin remains unchanged at 9% to 9.5%, which at the midpoint represents roughly 110 basis point improvement from 2024 and is more than double our Evergreen target with 50 basis point improvement each year. And our normalized diluted earnings per share range is unchanged at $0.07 0 to $0.76 which represents an 18% increase versus 2024 at the midpoint and on a tax equivalent basis. Please note that this normalized diluted earnings per share range still assumes an effective tax rate in the low to mid teens, but also includes a higher level of expected interest expense, which we will likely incur when we refinance the remaining balance on our outstanding April 2026 notes at some point later this year. With all this being said, it becomes clear that the only substantive change we are making to our full year 2025 guidance relates to core sales.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Core sales are now expected to be between minus 3% to minus 1% versus our previous expectation for core sales that finished the year between minus 2% and plus 1%. As Chris mentioned earlier, this change is solely due to a slightly more pessimistic view of category growth, which we now expect to be essentially down 1% to 2% in 2025. Previously, we had expected our categories in aggregate to be flat. Finally, for the full year, we have widened our operating cash flow range to between 400,000,000 to $500,000,000 from the previous range of $450,000,000 to $500,000,000 primarily due to higher tariff induced inventory valuations. Putting all this together and combining projected cash flow and EBITDA growth, we continue to expect a year end 2025 leverage ratio of about 4.5 times, which is roughly three quarters of a turn better than where it sits today and moves us closer to our longer term ambition of being an investment grade debt issuer.

[Mark Erceg, Chief Financial Officer at Newell Brands]

As it relates to the second quarter of twenty twenty five, we expect both net and core sales to decline 5% to 3%, operating margin to be between 10.410.8% and with a tax rate in the mid teens normalized diluted earnings per share of $0.21 to $0.24 So in closing, despite the challenging macroeconomic environment, we remain confident that the substantial investments we have made to strengthen our core capabilities are accelerating Newell's business transformation and have put us in a position to not just navigate through today's dynamic business environment, but to actually emerge even stronger. This is because we have significantly more categories which should benefit from these increased tariffs than be harmed by them due to our strong domestic and USMCA compliant manufacturing capabilities. It is for this reason we are affirming our 2025 financial outlook for net sales, normalized operating margin and normalized EPS as it relates to all bucket one tariffs, which as noted in our press release include the initial two rounds of IEEPA tariffs on China totaling 20%, Section two thirty two global steel and aluminum tariffs, all other reciprocal tariffs of 10% currently in effect for countries outside of China and any retaliatory tariffs that other countries have enacted against The United States.

[Mark Erceg, Chief Financial Officer at Newell Brands]

If the additional 125% China tariff remains in effect for the full year, we currently estimate based on a comprehensive sensitivity analysis we have conducted that the unmitigated impact could reduce Newell Brands twenty twenty five normalized operating earnings per share by approximately $0.20 That said, we already have a clear line of sight to recover at least half of this impact, which means the net impact of the continued 125% China tariffs for the rest of the year could be a reduction of up to $0.10 on our normalized EPS guidance range of $0.70 to $0.76 Operator, we'll now open the call to questions.

[Operator]

Thank you. At this time, we will now conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. In order to stay within the time scheduled for the call, please limit yourself to one question during the Q and A session.

[Operator]

Our first question comes from Andrea Teixeira from JPMorgan. The floor is yours.

[Andrea Teixeira, Analyst at JPMorgan Chase]

Thank you, operator, and good morning, everyone. I wanted to just go back to what you both said in terms of the retail destocking and also clarification on the tariffs and the 125%. But just on the destocking and consumption, if you can walk us through how was the exit rate for consumption? And if we are mostly out of it seems like from your second quarter guidance, you're still assuming some destocking by retailers and how we should be thinking about those as you set yourself to the big season for back to school. And then second would be the tariff, the 125% mitigation efforts.

[Andrea Teixeira, Analyst at JPMorgan Chase]

You did call out that it was not included in your guidance, but the $0.20 impact and you would have mitigation for half of it. So we are just wondering if you can explain what those one is the likelihood and the mitigation not the likelihood, of course, it's out of your control, but what are the mitigation efforts that you would see and why to begin with, you didn't include that tariff in the guide? Thank you.

[Chris Peterson, CEO & President at Newell Brands]

Yep, very good. Thanks, Andrea. So let me start with the first part of your question. Through the first quarter, we delivered obviously core sales growth of minus 2.1%, which was at the high end of our guidance range, and frankly, a little bit better than our base plan. We have not so through Q1, we believe we're on track.

[Chris Peterson, CEO & President at Newell Brands]

We decided to lower our market growth assumption from what was previous flat when we issued guidance in February to now down 1% to 2% out of a spirit of caution and prudence, given what we've seen from consumer confidence levels and broader macroeconomic forecast. We have not yet seen consumption levels decline in our categories broadly versus our plan, but we believe that it's prudent for us to do that because we didn't want to wind up over planning the inventory and having too much cash flow. So that's why we took the decision to lower the forecast for market growth this year. We believe it's prudent, we believe it derisks the plan. And frankly, we believe that we have a plan to fully offset that and not have it impact operating income or earnings per share as a result.

[Chris Peterson, CEO & President at Newell Brands]

On the retailer inventory levels, we really didn't see a significant change in retailer inventory levels in Q1 of any magnitude. Recall that the Liberation Day tariffs were announced on April 2, so after Q1 ended. And so, didn't see a big surge in retailer inventory levels in Q1. That being said, as we've talked many times in the past, we do tend to look at our business on six month periods versus quarterly periods, because sometimes order flow associated with promotional events can drive a point or two of difference between one quarter and another quarter. So relative to our going in plan, we believe we're right on track for the first half of the year, including the Q2 guidance when put together with the Q1 result.

[Chris Peterson, CEO & President at Newell Brands]

On tariff mitigation, as we said in the prepared remarks, we have taken already proactive action to fully mitigate the tariffs that we mentioned in our bucket one, which include all tariffs except for the additional 125% on China. We chose to put that as a sensitivity because, frankly, there's a lot of discussion about that tariff level being unsustainable. We're not sure if it's going to sustain for the year or not. If it does sustain for the year, our biggest exposure is the baby gear category. Now let me put that into perspective a little bit, because as I said, we've already taken a number of mitigation actions on baby gear.

[Chris Peterson, CEO & President at Newell Brands]

So first of all, if you look at the baby business, about 20% of our baby business is baby care, which is the Nook brand primarily. On the baby care business, we are not tariff exposed. And in fact, we are tariff advantaged because we manufacture the Nook brand in a manufacturing plant in Wisconsin. So we believe on that business, we are likely to gain market share as many of our competitors are sourcing from China. They are going to have tariff costs, we are not.

[Chris Peterson, CEO & President at Newell Brands]

And so we're in active discussions with retailers right now on the baby care business to move their shelf space from China sourced products to our Wisconsin sourced products. There's then a second part of the baby business, which is the gear business that's sold outside The United States, which is another 20% of the business that also is not impacted by tariffs. And then there's the remainder of baby gear business, which is about 60% of the overall baby business that is generally sourced from China and sold in The United States. In that part of the business, we've taken two rounds of pricing so far. We took a 10% price increase for the tariffs that was effective on April 1, that has already gone into effect.

[Chris Peterson, CEO & President at Newell Brands]

We announced a second ten percent price increase that's going into effect tomorrow. So we will have priced up the baby gear products by about 20% to date. We have not priced yet for the 125% tariffs for a couple of reasons. One is, we accelerated, as Mark mentioned, inventory purchases into The United States prior to the implementation of the tariffs. And so as we sit here today, we have probably three or four months of inventory on hand in The US that is not subject to the tariff.

[Chris Peterson, CEO & President at Newell Brands]

We've also paused additional input orders of inventory from China at this point, so we're not paying the tariff at this point. At some point, we will begin to run out of inventory. Retailers will begin to run out of inventory, and we will turn back on reordering from China. When that happens, because the whole industry sources from China, we would expect that we and the rest of the industry will take additional pricing to offset the tariff cost. That's but we're monitoring it on sort of a daily basis.

[Chris Peterson, CEO & President at Newell Brands]

If the tariff regime changes in the meantime, I think we're well positioned. If the tariffs remain in effect, I think also we are well positioned despite what will likely be a period of some volatility during this transition period.

[Andrea Teixeira, Analyst at JPMorgan Chase]

Thank you very much.

[Operator]

Thank you for your question. Our next question comes from the line of Lauren Lieberman from Barclays. The floor is yours.

[Lauren Lieberman, Managing Director at Barclays]

Hey, thanks. Good morning. You guys mentioned, you know, looking to utilize your US capacity and talking to retailers and, you know, effectively looking to contract manufacturer in your plans, I think is what you were suggesting. So I just wanted to understand that a little bit better. Are you considering doing private label for retailers?

[Lauren Lieberman, Managing Director at Barclays]

I just want to understand a little bit more about in the near term, how you were what you meant to sort of say about leveraging The U. S.-based manufacturing and the excess slack that you have in the system. Thanks.

[Chris Peterson, CEO & President at Newell Brands]

Yeah, thanks Lauren. Yeah, let me clarify. We've been asked by a number of retailers whether we would be willing to do their private label, because much of the private label products that retailers are selling are sourced from China. Our answer has been that we're not really set up to do that, so that's not what we're referring to. Instead, what we're recommending is that the retailers basically discontinue their private label product and replace it with our branded product.

[Chris Peterson, CEO & President at Newell Brands]

In addition, there's a number of our competitive brands that are 100% sourced from Asia that are subject to significant tariffs where we are not. And so we're recommending there that retailers replace other branded products that are sourced from Asia with our branded products that are sourced from either The US or Mexico. Let me give you an example. We have a blender plant in Mexico, it's one of our two Mexican blender plants. We have invested over the last several years significant amount of money in automating that blender plant.

[Chris Peterson, CEO & President at Newell Brands]

And as a result, the capacity on that blender plant has virtually doubled. And we are operating with 50% capacity. So we can scale up that blender plant to take and supply The US market. That blender plant largely today supplies Latin America. It does not supply The US, but almost all blenders that are sold in The US come from either China or other Southeast Asia countries that are going to be subject to some amount of tariff.

[Chris Peterson, CEO & President at Newell Brands]

Our blender plant in Latin America or Mexico is not subject to any tariffs. And so we believe it's going to create a competitive advantage. So we are in active dialogue with retailers at discontinuing other branded blenders and replacing them with Oster branded blenders because our products will become a much better value versus competitive blender products. That's an example of what we're trying to talk about here.

[Lauren Lieberman, Managing Director at Barclays]

Okay. That's great. Thank you. And then also, I know you mentioned in terms of your core sales guidance and your expectations on categories, I just want to make sure I heard it correctly, that at this point, you haven't really seen any change in consumer behavior in your categories that is different than what you had in your budget, but that you're adjusting the core sales guidance on an assumption that the environment does become more challenged and to avoid having excess inventory if that comes to pass.

[Chris Peterson, CEO & President at Newell Brands]

Yes, that's correct. And it's interesting because it's a little bit hard to predict. We just felt like it was prudent to do that based on sort of the macro forecast, though we haven't seen it. It could be that we're wrong and the category does better than we think. One of the trends that we've been talking with market researchers about is if consumers begin to cut back on eating out at restaurants and that type of thing and start to spend more time eating at home, that generally is a tailwind for our category of our kitchen products.

[Chris Peterson, CEO & President at Newell Brands]

And so it's possible that depending on how this plays out, we may be wrong and overly conservative in our outlook. But we felt like we would rather on the side of being a little bit more muted in our category growth outlook to ensure that we don't overbuild inventory and ensure that we deliver the cash flow that's in our cash flow forecast.

[Lauren Lieberman, Managing Director at Barclays]

Perfect. Okay. Thanks so much. I'll pass it on.

[Operator]

Thank you for your question. Our next question comes from Steve Powers with Deutsche Bank. The floor is yours. Steve Powers, the floor is yours.

[Steve Powers, Equity Research Analyst at Deutsche Bank]

Sorry about that. I was on mute. Assuming the tariffs the China tariffs do remain, it sounds like you would not really start to feel the impacts that you've called out until the second half of the year. So a couple of questions around that. First, if we think about the annualized twelve month impact, should we be thinking kind of 2x as a run rate?

[Steve Powers, Equity Research Analyst at Deutsche Bank]

Or would the longer term impacts be a little bit more muted because of further mitigation and maybe some seasonality? Question number one. And then if you could, just sort of the sensitivities that you've run, what would be the analogous impacts on operating cash flow, both in fiscal twenty twenty five and on an annualized basis as well as on your go forward leverage ratio expectations?

[Mark Erceg, Chief Financial Officer at Newell Brands]

Great questions. So as we think about the tariff effects, they would, as you rightly said, largely fall into the second half of the year. As we've done our math, we probably think the impact would be roughly 40% in the third quarter, '60 percent in the fourth. That's probably driven by some of the commentary that Chris offered earlier. As we sit here today, at March 31, home and commercial had about one hundred and ten days on hand, learning and development was around one hundred and twenty, outdoor and rec had a higher number than that.

[Mark Erceg, Chief Financial Officer at Newell Brands]

So we have inventory that we can actually bleed through and work into the system. As far as the cash impact, if that 10¢ that we can't mitigate actually does come home to roost and we put that in on an after tax basis, that's probably a $30,000,000 impact to operating cash flow in the current year. Now that said, we widened our range of 400 to $500,000,000 and so it's entirely reasonable to assume that it could fall within that. And then as far as trying to project that out into 'twenty six, frankly, I don't think that's a game we really want to play right now because I think people are thinking about tariffs in isolation. And I'm not an economist, I'm not a politician most certainly, but there's a lot of other things at play here.

[Mark Erceg, Chief Financial Officer at Newell Brands]

And we're talking about consumer dynamics, fuel prices are down, the last few inflation reports were fairly benign. There is talk about a meaningful tax cut that would largely advantage and help the lower and middle class. So it's really, I think, too early to say what this looks like on an ongoing basis. We just know that we're well positioned as we sit here today. We invested in a domestic manufacturing base that others have not chosen to do, and we're ready and prepared to help our strategic retailers provide great high quality products to their consumers.

[Chris Peterson, CEO & President at Newell Brands]

Other thing I would say on that, which is interesting, is that there's a bit of a timing impact here. So in all of these categories where we are advantaged with US or Mexican manufacturing, that revenue lever that we expect is going to be a little bit delayed because it relies on retailers changing their store shelves or changing their merchandise events, which tends to take a little bit of time to work through the system. And so that, as a tailwind, I would expect would be significantly larger in 2026 than 2025, given the timing of implementation of that. The tariff impact on baby, which again affects the whole industry, baby gear in The US, I think creates a little bit of a near term issue. But if the market moves up in pricing, which I expect it will, if it sustains, it's unclear whether that continues as a headwind into 'twenty six or not.

[Steve Powers, Equity Research Analyst at Deutsche Bank]

Yes. Okay. Very good. Very good. And do you have it sounds like you have a lot of active conversations ongoing where you are competitively advantaged.

[Steve Powers, Equity Research Analyst at Deutsche Bank]

In terms of our expectations, when do you think, to your point, most of this as you are successful, probably benefit next year more than this year. But when do you feel like those conversations will start to materialize an actual contracted change?

[Chris Peterson, CEO & President at Newell Brands]

Yes, so we've seen a couple of them already. I mentioned in the prepared remarks on our FoodSaver consumables business. We've gotten some wins there because some of the competitive product was sourced from China. The retailer that was selling that has basically discontinued that item and moved their entire business back to us. So that's a win that will start to materialize in July.

[Chris Peterson, CEO & President at Newell Brands]

Also on Rubbermaid Food Storage, we've gotten significant uptake in that business. I think I mentioned on the last call, we have a major innovation that's launching this summer with Rubbermaid EasyStore that's replacing EasyFine lids. It also happens in that business that we manufacture that product in Ohio and much of the competitive product is coming from Asia. And so we've gotten significant wins on that both in terms of promotions that are shifting from competitive product to us and in terms of some of the private label product being delisted entirely because it's no longer economically viable that was coming from China. Beyond those two categories, we are in active discussions on 19 total categories.

[Chris Peterson, CEO & President at Newell Brands]

And so we factored those two into our guidance, but there are 17 others where we believe we've got a significant competitive advantage that we're having active discussions across our top 10 retailers as we speak on how to navigate and move their stores to advantage our brands.

[Steve Powers, Equity Research Analyst at Deutsche Bank]

Okay. Thank you. That's very helpful framing. Appreciate it. I'll pass it on.

[Operator]

Thank you for your question. Our next question comes from Bill Chappell with Truist Securities. The floor is yours.

[Bill Chappell, Managing Director at Truist Securities]

Thanks. Good morning. Just Good morning, Bill. Taking a step back, I guess I'm not 100% sure I understand why you're continuing to have guidance. And I say that if I understand kind of how you operate and you understand your tariff exposure and pricing, but it seems like forecasting market growth, especially when it's a combination of volume and price, is next to impossible at this point for all your various categories.

[Bill Chappell, Managing Director at Truist Securities]

So maybe help us understand how you came to that estimate? And are you expecting price to be up double digits and volume to be down double digits? And how your competitors will I'm just trying to understand how we get confidence in not necessarily your numbers in a vacuum, but the market growth over the next two, three quarters?

[Chris Peterson, CEO & President at Newell Brands]

Yeah, it's a good question. We spent a fair amount of time talking about that. And I think we feel like in the majority of our business is not tariff impacted. And so when we're talking about the tariff impact, the tariff impact of significance is largely this China One Hundred And Twenty Five Percent, which is largely centered on the baby gear category, which is for import into The US, which is less than 10% of the total company revenue. And so for 90 plus percent of our business, the tariff impact is relatively minor.

[Chris Peterson, CEO & President at Newell Brands]

And we've got a plan to fully offset it, as I mentioned. And so we think that our thought on this is that we have pretty good visibility internally to the plan, how we're adjusting the plan, how we're offsetting this, and we have a view of what we would do if this 125% sustains on China. You're right that our ability to forecast in the current macro environment has become more challenged. But I think our other view is that given the data that we have, we believe that providing some guidance is helpful to the street. Because if we left it out there with no guidance, we feel like people would be all over the map and not really understanding.

[Chris Peterson, CEO & President at Newell Brands]

And we actually feel, I think, better about our position than what I think the market was thinking about our position over the last three months. Because if you look back on this period, as I mentioned in the prepared remarks, a year or two from now, I actually think this is going to be a benefit for Newell, all in. Because the advantaged categories that we have with our US manufacturing base significantly exceed the number of places where we're disadvantaged. We've heard some of our competitors who are 100% sourced from China talk about going out of business. We're not anywhere close to that position.

[Chris Peterson, CEO & President at Newell Brands]

We're talking about 19 product categories where we're competitively advantaged, we're selling. We've got incremental capacity. And by the way, that incremental capacity, when you factor in the fixed cost element of our manufacturing base, is highly profitable. And so if we do our job well and sell the incremental volume on our US and Mexican manufacturing base, I think we're going to come out stronger over medium and long term than if the tariffs had not gone into place.

[Mark Erceg, Chief Financial Officer at Newell Brands]

And if I could, we've talked in the past about how we've largely rebuilt our internal management reporting systems and our new trade fund management system that allows us to get much better price promotion diagnostics. And so we feel that we have demonstrated the ability to be pretty good with respect to our forecast as of late. And then as Chris intimated, we feel guidance is frankly an obligation of management. We don't own this company. We have an obligation to our owners to tell them what we know.

[Mark Erceg, Chief Financial Officer at Newell Brands]

Now, as part of our approach to this particular exercise, I will say that we really went out of our way to de risk our fiscal year plan. And that's why I think we've been so communicative on all these different elements as we sit here today.

[Bill Chappell, Managing Director at Truist Securities]

Yeah, I appreciate that. It's still it seems like it's in a vacuum because we don't know if your competitors have liquidation sales or what they do with pricing or stuff like that. That's what I understand you can forecast. I'm just trying to understand how you forecast your competitive space. Thanks a lot.

[Bill Chappell, Managing Director at Truist Securities]

Thank

[Operator]

you for your question. Our next question comes from Brian McNamara from Canaccord Genuity. The floor is yours.

[Brian McNamara, MD & Senior Analyst - Consumer at Canaccord Genuity - Global Capital Markets]

Hey, good morning, guys. Thanks for taking the questions. So I guess the China sensitivity sounds a little worse than we would have expected given your relatively low exposure there and your high domestic sourcing. Is it simply just lack of pricing in the baby category specifically with triple digit tariffs in place? Or is there anything else we should be considering?

[Chris Peterson, CEO & President at Newell Brands]

I think it's primarily driven by the baby category because that's our 70% of our China import exposure is the baby year category. The balance of what's coming from China to The US, we've had a plan in place that we've been working on for a number of years, as I mentioned, to move out of China. We are accelerating that plan as we speak. And so there could be a small amount of impact in a few other places, but the majority of the impact is the baby gear category. By the way, the baby gear category, I think what Mark said or what we said was that at this point, we've got a plan to mitigate at least half of the $0.20 impact.

[Chris Peterson, CEO & President at Newell Brands]

It could be better than that. Because we're not alone in this, the majority of the stroller market today is in the super premium and premium category. Those brands are all affected by this as well. And Graco being positioned at the high end of mass could wind up being a beneficiary as prices in the market move up, not just for us but for everybody, depending on how this tariff sustains. So that's the primary impact.

[Mark Erceg, Chief Financial Officer at Newell Brands]

The other piece of

[Mark Erceg, Chief Financial Officer at Newell Brands]

the puzzle is, look, we said it's $0.20 assuming that $1.25 China tariffs stay in force for the full calendar year. We said, as we sit here today, we found ways that we think we can offset half of it roughly. Well, we still have eight months to go and the last thing we're going do is sit on our hands. So the full intention is to continually chew against that And we're optimistic that with the team we have in place and the lines that we have in the water to bring in incremental sales, we can continue to make headway.

[Brian McNamara, MD & Senior Analyst - Consumer at Canaccord Genuity - Global Capital Markets]

I appreciate the transparency there. Secondly, Chris, you just alluded to this a little while ago, but your markets, especially the small kitchen appliances still have some pretty significant China sourcing, many are 100% as you said. If triple digit tariffs remain in place on China, wouldn't this result in material consolidation with smaller players effectively dropping out of the market and effectively widen your competitive moat?

[Chris Peterson, CEO & President at Newell Brands]

Yes, no question about it. And that's we think we've got that opportunity in a number of product categories. I think I mentioned there's 19 product categories that we think we are competitively advantaged. And we do think that there are going to be some competitors that basically drop out that's going to allow for significant market share gains for us in some of these categories. As I mentioned on the prepared remarks, the two places where we're seeing already wins are in vacuum sealing with the FoodSaver brand and in the Rubbermaid food storage business.

[Chris Peterson, CEO & President at Newell Brands]

But we've, as Mark said, got a lot of lines out in the water right now. And I think we're in active discussions with retailers on shifting their shelf space and shifting their merchandising to our brands that are made in The US.

[Mark Erceg, Chief Financial Officer at Newell Brands]

If we

[Mark Erceg, Chief Financial Officer at Newell Brands]

could wave a wand and either make the Chinese one hundred twenty five tariffs go away or be guaranteed they would be in place for the full calendar year, we would take the latter based on our positioning in market and based on our strong domestic manufacturing base and based on what we know about the competitive set. Now there might be some temporal disruption, but for the mid and long term, we're well positioned to be advantaged by this scenario.

[Brian McNamara, MD & Senior Analyst - Consumer at Canaccord Genuity - Global Capital Markets]

Very helpful. Thanks, guys. Best of luck.

[Operator]

Thank you for your question. Our next question comes from Filippo Falomi at Citi. The floor is yours.

[Filippo Falorni, Director - Equity Research at Citi]

Hi, good morning everyone.

[Filippo Falorni, Director - Equity Research at Citi]

First, I want to ask

[Filippo Falorni, Director - Equity Research at Citi]

you on pricing, just following up on Bill's question. Based on the announced pricing as of today, what are you expecting in terms of price contribution in your core sales guidance? And just roughly, like what elasticities are you assuming based on your expected response from competitors?

[Mark Erceg, Chief Financial Officer at Newell Brands]

Right now, in our sales walk and our build bridges, we would tell you that for the full year, we think pricing, net of elasticity will be up a point or two.

[Filippo Falorni, Director - Equity Research at Citi]

And that's a total company number being international?

[Mark Erceg, Chief Financial Officer at Newell Brands]

Correct. Correct.

[Filippo Falorni, Director - Equity Research at Citi]

Got it. Got

[Filippo Falorni, Director - Equity Research at Citi]

it. Okay. And then, just a follow-up on the baby gear category. You mentioned last time, in the Trump administration, you were able to get an exemption, for those categories, or the industry was able to get an exemption for those categories. Is that are there conversations currently to ask for an exemption?

[Filippo Falorni, Director - Equity Research at Citi]

Just any thoughts on potentially getting the exemption again this time?

[Chris Peterson, CEO & President at Newell Brands]

Yes. We are actively engaged in lobbying efforts to get an exemption for baby gear products sourced from China. And the Trump administration was the administration that gave the exemptions for baby gear products in the last or in the first term when the initial China tariffs went into effect. It's a fluid situation, so I certainly can't predict the outcome of it. But I can say that there are certainly efforts ongoing, not just by us at Newell, but also by the industry on the lobbying front.

[Filippo Falorni, Director - Equity Research at Citi]

Great. Thank you so much, guys.

[Operator]

Thank you for your question. Our last question comes from Olivia Tong at Raymond James. The floor is yours.

[Olivia Tong, Managing Director at Raymond James Financial]

Great. Thank you so much. You mentioned no change in your market share outlook, but that you were able to secure new distribution in food storage. So can you talk through that a little bit in terms of how you're thinking about some of the discussions that you're having in the other 17 categories? That's my first question.

[Olivia Tong, Managing Director at Raymond James Financial]

And then second, did you price in any other categories beyond baby? And then my last question is just around your key industries, what your competition is doing and if there's any excess capacity outside of China or even domestically because as you mentioned, the efficiency improvements you were able to achieve in The U. S. And the blender category getting to 50% more space. Is there other capacity out there that others are able to capitalize on?

[Olivia Tong, Managing Director at Raymond James Financial]

Thanks.

[Chris Peterson, CEO & President at Newell Brands]

Yeah, so let's start with on the pricing. We did take select pricing on some other goods that were sourced from China that we expected to be sourced from China for a long period of time. It was very small, so the 20% pricing that we put into effect effective as of tomorrow was, I would say, 90% on baby gear, but there was 10% on some other small businesses that we have that we don't anticipate moving out of China in the near term. But baby gear, purposes of the financial modeling, was the major place where we took the pricing. From a capacity standpoint, we don't think that there's significant excess capacity in The US or Mexican market on the categories where we're advantaged.

[Chris Peterson, CEO & President at Newell Brands]

We think many of our competitors have effectively shut down capacity and moved capacity to source finished goods players in Asia in a lot of these categories. And so I mentioned the two categories where we've already secured wins. On the other 17 categories where we're having discussions, this is still relatively new. So recall that it's only been about four weeks since the Liberation Day tariffs have been announced, even though it seems like a long time. And many retailers are still trying to understand the impact of those tariffs and how they're going to mitigate them because they affect a lot of different categories, not just that Newell participates in, but that the retailer participates broadly in.

[Chris Peterson, CEO & President at Newell Brands]

And so we are showing up with a proposal and plan for the categories in which we compete and where we're competitively advantaged, as I mentioned, at each of our top 10 retail customers. We've already had initial conversations top to top with all 10 of them. And we're now starting to drive to the next steps, which is to go down and begin to have discussions with merchants. What I can tell you is that many of our retailers have paused or canceled their purchase orders from China in these categories where we're advantaged. So we do believe that there's going to be a supply disruption in the categories where we're competitively advantaged.

[Chris Peterson, CEO & President at Newell Brands]

That's going to position us, I think, to be able to come in and fill in that incremental inventory level. We have not factored that into our guidance at this point, so that is upside to our guidance on the extra 17 because we don't have commitments at this point. And so that's kind of how we're thinking about it and how we're approaching it. But we are having active discussions as we speak across all of these categories with all of these top retailers.

[Olivia Tong, Managing Director at Raymond James Financial]

Great, thank you.

[Chris Peterson, CEO & President at Newell Brands]

Okay, thank you all for joining and we look forward to talking in follow-up conversations.

[Operator]

That's great. Thank you. This does conclude the question and answer session. Thank you for your participation. A replay of today's call will be available later today on the company's website at irnuelbrands.com.

[Operator]

You may now disconnect. Have a great day.

Participants

Executives

• Joanne Freiberger, VP - IR
• Chris Peterson, CEO & President
• Mark Erceg, Chief Financial Officer

Analysts

• Andrea Teixeira, Analyst at JPMorgan Chase
• Lauren Lieberman, Managing Director at Barclays
• Steve Powers, Equity Research Analyst at Deutsche Bank
• Bill Chappell, Managing Director at Truist Securities
• Brian McNamara, MD & Senior Analyst - Consumer at Canaccord Genuity - Global Capital Markets
• Filippo Falorni, Director - Equity Research at Citi
• Olivia Tong, Managing Director at Raymond James Financial