Newell Brands Inc. (NWL) Earnings

Management highlights

### Turnaround Milestone - Newell's 3-year capability-building turnaround (focused on stronger consumer insights, disciplined innovation, better brand/category management, more effective customer investment, and a simplified go-to-market model) delivered an important milestone: the company returned to year-over-year net and core sales growth in Q2 2026, the first time in over four years, with results exceeding expectations across all key metrics. - Total U.S. points of distribution increased mid-single digits year-over-year, with planned additional distribution gains contributing to growth in H2 2026; POS trends were favorable, with six of the top 10 brands delivering year-over-year POS growth, and eight improving their growth trajectory sequentially. Newell gained U.S. market share across multiple priority brands including Graco, Sharpie, Expo, and Coleman. ### Operational and Marketing Progress - The innovation pipeline is broader and stronger than it has been in years: all six business units have launched Tier 1 or Tier 2 innovation, with more planned for H2, putting Newell on track to deliver over 25 full-year Tier 1/Tier 2 launches, with a new consumer-led, disciplined process integrated with commercial plans. - Modern, culturally relevant marketing capabilities have been expanded; for example, a viral consumer moment for Coleman was leveraged to generate over 90 million earned media impressions, 48 million social impressions, 2.8 million consumer engagements, and 30,000 new consumer subscribers via largely organic activity. - Working capital management improved, with the cash conversion cycle improving by 15 days year-over-year; a new automated cash application and deduction management system has accelerated receivables processing and resolution. - The PEAK fuel productivity program has expanded to 47 sites (over 90% of targeted sites, up from 39 at end-2025), with ongoing efficiency gains expected as sites move through the program's maturity stages, delivering significant cost savings ahead of plan.

Guidance

- Management raised full-year 2026 guidance across all key financial metrics, driven by stronger-than-expected Q2 performance. New guidance is: 1-2% net sales growth, flat to 1% core sales growth, 10-10.4% normalized operating margin, and 73-77 cents normalized diluted EPS, up from the prior 56-60 cents range. The 17 cents per sheet one-time IEPA tariff recovery from 2025 expenses was fully added to the prior guidance range, with in-year tariff refunds and productivity offsetting higher inflation. - Q3 2026 guidance expects 2-3% growth for both net and core sales (midpoint represents sequential core growth improvement from Q2), with normalized operating margin of 9.5-10.2% and normalized diluted EPS of 0.18-0.20. - Management updated full-year category assumptions: after 1% decline in Q1 and essentially flat performance in Q2, full-year 2026 categories are expected to decline ~1%, down from the initial 2% decline assumption. Newell expects to outperform category growth, driven by improved operational capabilities. - The company expects to generate an incremental $60 million of cash by year-end from liquidating legacy life insurance assets associated with non-qualified benefit plans.

Segment performance

Overall Q2 2026 net sales grew 3% year-over-year to ~$2 billion, with core sales up 2.3%. Five of six business units delivered core sales growth, with broad-based gains across most top brands and geographies. The U.S., the company's largest market, delivered ~5% net sales growth. 1. **Learning and Development**: The strongest performing segment, delivering nearly 5% core sales growth. The Baby sub-segment delivered double-digit sales growth, supported by strong demand, increased distribution, and new innovation; Graco saw strong double-digit U.S. POS growth and 2.7 percentage points of year-to-date market share gains, while Nook also delivered double-digit U.S. POS growth and market share gains. The Writing sub-segment returned to core sales growth, driven by distribution gains, innovation, and stronger back-to-school execution, with strong momentum for Sharpie. 2. **Home and Commercial**: Improved meaningfully quarter-over-quarter. Kitchen and Home Fragrance returned to core growth; Kitchen delivered its first quarter of core growth since early 2023, with strong performance from Ball's canning business and Rubbermaid's Brilliance Glass platform. Home Fragrance's owned channels grew for a second consecutive quarter, and comparable retail stores returned to growth for the first time in over a decade. Commercial remained below prior year levels, but its core sales growth rate improved meaningfully versus Q1 2026. 3. **Outdoor and Recreation**: Returned to core sales growth during the Q2 outdoor season, delivering nearly 4% growth, led by the U.S. business, supported by consumer-led innovation across Coleman, Contigo, and Bubba platforms.

Risks & headwinds

- Input cost inflation is significantly higher than expected at the start of 2026, now projected to reach ~$200 million for the full year, up from the initial $100 million projection, with $50 million of the increase occurring since the last earnings call. - Net P&L tariff headwind for 2026 is projected to be $127 million, $12 million higher than 2025, driven by changes to existing tariffs and new tariffs including Section 301 forced labor tariffs and potential additional tariffs related to structural excess capacity. - The timing of remaining IEPA tariff recovery cash collections is subject to U.S. government processes and remains difficult to predict, even though a substantial portion is expected to be collected by year-end. - Macroeconomic uncertainty remains: while category performance has been better than expected in H1, management is cautious about H2 2026 due to ongoing volatility in gas prices, inflation, and divergent consumer demand across income segments. - The commercial segment has not yet returned to growth, and will take longer to inflect than other segments.

Analyst Q&A

• Q: Analyst asks why commercial is still negative, what it will take to return to growth, and asks for an update on the early back-to-school season and shipment timing across Q2/Q3. /

  A: Management notes commercial improved sequentially in Q2 and trends should continue to improve into Q3. New innovation (a revamped Brute trash can, new Brute farm products, and a new high-margin Spontex sponge product in Europe) is already getting strong retailer and consumer reaction, and the business should inflect to positive growth in the near term. For back-to-school, sell-in and in-store setup went much better than last year, with the company prioritizing early display setup this year. Through the first three weeks of July, U.S. POS is in line with forecast and the company has gained market share each week, led by Sharpie, Elmer's, and Prismacolor. There was no material change in shipment timing versus plan between Q2 and Q3.

• Q: Analyst asks for detail on U.S. shelf space gains, what drove international weakness in Q2, and whether similar shelf gains can be achieved internationally. /

  A: U.S. distribution gains (mid-single digits year-over-year) are driven by improved core capabilities: strong new innovation, better category growth stories, higher A&P investment, and stronger service execution that won line reviews ahead of 2026 resets. Gains are broad-based across categories, and are backed by positive consumer offtake, not just pipeline shipments, with additional secured gains coming in H2. International weakness in Q2 was driven by softer demand in Europe due to regional spillover effects and shipment timing challenges in Latin America, after six straight quarters of international growth. Management expects international to improve sequentially and return to positive growth in Q3, driven by the same capability build-out that delivered U.S. growth.

• Q: Analyst asks which top 10 brands are still declining in POS, what common factors drive declines, when they will return to growth, and if modest core growth is the new baseline expectation. /

  A: Two of the top 10 brands did not grow in Q2, largely due to staggered innovation launch timing. For example, PaperMate was down in Q2 because its new innovation and retail reset are scheduled for a later date in 2026. It is unusual for all top 10 brands to grow in the same quarter, and management is focused on rolling out the same capability playbook across the top 25 brands (which represent 90% of sales and profit) to deliver consistent total company growth with most brands expanding.

• Q: Analyst asks why management is cautious on H2 category growth, if that is just prudence or based on real-time data, and how the company will handle persistent inflation versus peers. /

  A: The cautious category assumption is primarily prudent planning, given ongoing macro volatility. So far in 2026, high-income consumers are driving mid-single digit category growth, middle-income consumers are flat to slightly down, and low-income consumers' decline has stabilized after steeper drops earlier. The company is using tariff refunds, top-line momentum, and the ahead-of-plan fuel productivity program to offset higher inflation, and has only taken targeted resin-related price increases on less than 10% of the business, in line with industry action. Management avoids broad price increases because some inflation appears to be peaking (resin prices are already starting to decline), and the company wants to avoid pricing at peak inflation and having to reverse increases later.