What Newell Brands (NWL) Said on Its Q3 Earnings Call

Key Points

• Newell Brands exceeded Q3 sales guidance: Net sales rose 3.7% to approximately $1.9 billion, while core sales increased 3.3%, driven by market-share gains, innovation and broader distribution across writing, home and commercial businesses.
• Profitability and leverage improved despite inflation: Normalized gross margin expanded to 35.2%, operating margin reached 9.8% and normalized EPS rose to $0.20. Net leverage fell to about 4.5 times, although the company raised its estimated 2026 inflation headwind to $220 million.
• The outlook is mixed: Newell raised its full-year sales-growth forecast and maintained its $0.75 midpoint EPS target, but cut expected operating cash flow to approximately $150 million. Management anticipates about $150 million of inflation in 2027 and plans modest pricing actions early next year.

Newell Brands NASDAQ: NWL reported third-quarter 2026 sales growth that exceeded its guidance range, as broad-based market-share gains, product innovation and distribution expansion supported its second consecutive quarter of year-over-year revenue growth.

Net sales rose 3.7% to approximately $1.9 billion, while core sales increased 3.3%, above the company’s guided range of 2% to 3%. President and CEO Chris Peterson said growth extended across two of the company’s three segments, four of six businesses, seven of its top 10 brands and seven of its top 10 countries. The U.S. continued to grow, while international sales returned to growth, including positive core-sales performance in Latin America, EMEA and Asia-Pacific.

“Top-line growth accelerated sequentially,” Peterson said, attributing the performance to investments in consumer insights, innovation, marketing and go-to-market capabilities.

Margins expand despite higher inflation

Newell’s normalized gross margin increased 70 basis points year over year to 35.2%, while normalized operating margin increased 90 basis points to 9.8%. CFO Mark Erceg said higher sales and productivity more than offset inflation and tariffs during the period. Normalized diluted earnings per share rose to $0.20 from $0.17 a year earlier.

Trailing 12-month normalized EBITDA increased by approximately $173 million year over year to $1.03 billion. Net leverage declined to about 4.5 times, compared with 4.8 times at the end of the second quarter and 5.3 times a year earlier.

The company said inflation excluding tariffs continued to exceed expectations, led by diesel fuel, transportation, resins, purchased products and labor. Newell now expects a $220 million inflation headwind for 2026, up from an initial estimate of approximately $100 million at the start of the year. The projected amount represents about 4.6% of total cost of goods sold.

Peterson said Newell’s FUEL productivity program is expected to generate savings above its original budget and stretch target. The company has also used disciplined overhead management, higher sales and a portion of tariff refunds recorded in the second quarter to offset cost pressure. Limited pricing actions have covered less than 10% of the portfolio, according to management.

Growth across writing, home and commercial businesses

In Learning and Development, writing posted mid-single-digit core-sales growth, supported by what Peterson called the company’s strongest U.S. back-to-school point-of-sale growth in three years. Sharpie, EXPO, Elmer’s and Prismacolor benefited from innovation, distribution gains and replenishment orders.

Baby core sales were roughly flat, as U.S. growth was offset by lower Canadian sales. Graco delivered core-sales growth and continued gains in car seats, including its Turn2Me and EasyTurn 360 rotating-car-seat platforms. NUK also reported positive U.S. point-of-sale trends and market-share gains following its brand relaunch.

Home and Commercial core sales increased 6%, with all three businesses in the segment growing for the first time in five years. Commercial benefited from gains in U.S. business-to-business and do-it-yourself channels, while Kitchen delivered its second consecutive quarter of core-sales growth. Peterson cited demand for Rubbermaid Brilliance Glass Food Storage and growth from Crock-Pot design-series slow cookers.

Home Fragrance posted very strong core-sales growth against a favorable comparison. Yankee Candle returned to double-digit U.S. growth and gained market share, aided by retail-store, direct-to-consumer and grocery-channel performance.

Outdoor and Recreation core sales declined after returning to growth in the second quarter. Peterson described the result as largely a shipment-timing issue and said the company expects the business to return to positive core-sales growth in the fourth quarter. Contigo grew during the quarter, while Coleman Snap ’N Go coolers continued to see demand above initial expectations.

Updated outlook and 2027 pricing plans

For the fourth quarter, Newell expects net and core-sales growth of 1% to 3%, normalized operating margin of 8.4% to 9%, and normalized diluted EPS of $0.17 to $0.19.

The company raised its full-year sales outlook and now expects net-sales growth of 2% to 3% and core-sales growth of 1% to 2%. It maintained normalized operating-margin guidance of 10% to 10.4% and narrowed normalized diluted EPS guidance to $0.74 to $0.76, maintaining the $0.75 midpoint.

The earnings outlook includes approximately $100 million, or $0.17 per share, from a one-time recovery of IEEPA tariff costs expensed during 2025 and recognized in the second quarter of 2026.

For 2027, management said it is planning for approximately $150 million of inflation, lower than 2026 but still above normal levels. Newell expects to take modest pricing actions early in the year because productivity alone cannot fully offset the estimated two-year cumulative inflation impact of $370 million. Peterson said pricing would vary by business and geography and could include list-price adjustments, assortment changes, promotional actions and innovation-led pricing.

Management said baby gear could be excluded from some pricing actions if the U.S.-China “30-for-30” trade initiative results in lower tariffs for the category. Peterson said implementation details, timing and the extent of any tariff relief have not been confirmed.

Cash flow, refinancing and operations

Newell now expects approximately $150 million of full-year operating cash flow, down from a prior expectation of about $400 million. Erceg said the revision reflects cash-flow classification related to the termination of non-qualified defined-benefit plans and approximately $165 million less contribution from receivables factoring programs versus the prior year.

Management said the pension transaction is expected to provide a $60 million net cash benefit, although benefit payments and related taxes reduce reported operating cash flow by approximately $85 million. Newell continues to expect total debt and outstanding factored receivables combined to decline by a couple hundred million dollars from year-end 2025 and expects to finish 2026 comfortably below 4.5 times net leverage.

During the quarter, the company replaced its secured revolver with an $800 million asset-based revolving credit facility maturing in 2031. It also issued $600 million of 2031 senior notes with a 6.25% coupon, using proceeds to redeem June 2027 notes and repay revolving borrowings. Newell ended the quarter with no short-term debt outstanding.

The company also named Guillermo Beade as chief operating officer. Beade will lead global sales, central marketing and supply-chain functions.

About Newell Brands (NASDAQ:NWL)

Newell Brands Inc is a global consumer products company that designs, manufactures and markets products used in homes, workplaces and outdoor settings. Its portfolio includes well-known brands such as Rubbermaid, Sharpie, Graco, Coleman, Yankee Candle, Crock-Pot, Mr. Coffee, FoodSaver, Calphalon, Elmer's and Sistema.

The company's products span food and home storage, cookware and small kitchen appliances, writing instruments and other learning supplies, baby and parenting products, outdoor and recreation equipment, home fragrance, and commercial products.

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