Newell Brands, the parent company of Marmot, Ex Officio, Stearns, Bubba, Coleman, and Contigo, among others, reported that its Outdoor & Recreation segment suffered another sales decline in the first quarter, although profitability improved.

Segment sales fell 9.1 percent to $182 million compared with $201 million in the prior year period, reflecting a core sales decline of 7.1 percent, as well as the impact of unfavorable foreign exchange.

The core decline worsened sequentially compared with a core sales decline of 3.8 percent in the fourth quarter but still showed improvement over prior recent quarters. Core sales were down 16.8 percent in the 2024 third quarter, 18.2 percent in the second quarter, 20.3 percent in the first quarter, and 21.8 percent in the year-ago fourth quarter.

The reported operating loss in the segment in the latest first quarter was $5 million, or negative 2.7 percent of sales, compared with $18 million, or negative 9.0 percent of sales, in the prior year period. Normalized operating loss was nominal, compared with $9 million, or negative 4.5 percent of sales, in the prior year period.

Consolidated Fourth Quarter Results
Net sales were $1.6 billion, a decline of 5.3 percent compared with the prior year period, reflecting a core sales decline of 2.1 percent, unfavorable foreign exchange and business exits. Newell had forecasted a decline in the range of 8 percent to 5 percent, with core sales down between 2 percent and 4 percent.

Newell’s other brands include Rubbermaid, Sharpie, Graco, Rubbermaid Commercial Products, Yankee Candle, Paper Mate, FoodSaver, Dymo, Expo, Elmer’s, Oster, Nuk, Spontex, and Campingaz.

Reported gross margin was 32.1 percent compared with 30.5 percent in the prior year period, with the positive impact from gross productivity, pricing and lower restructuring-related charges more than offsetting headwinds from inflation and foreign exchange. Normalized gross margin was 32.5 percent compared with 31.0 percent in the prior year period, which represented the seventh consecutive quarter of year-over-year improvement.

Reported operating income was $21 million compared to $16 million in the prior year. Reported operating margin was 1.3 percent compared to 1.0 percent in the prior year period, largely reflecting benefits from higher gross margin and savings from restructuring actions partially offset by higher advertising and promotions costs. Normalized operating income was $71 million, or 4.5 percent of sales, compared with $79 million, or 4.8 percent of sales, in the prior year period.

Net interest expense was $72 million compared with $70 million in the prior year period.

Reported tax benefit was $18 million compared with $51 million in the prior year period. The normalized tax provision was $2 million compared with $6 million in the prior year period.

Reported net loss was $37 million compared with $9 million in the prior year period. Normalized net loss was $6 million compared with a nominal loss in the prior year period. Normalized EBITDA was $136 million compared with $152 million in the prior year period.

Reported diluted loss per share was $0.09 compared with $0.02 in the prior year period. Normalized diluted loss per share was $0.01 compared with $0.00 in the prior year period. Newell had predicted a normalized loss in the range of 9 cents to 6 cents.

Other Segment Results
The company’s Learning & Development segment generated net sales of $572 million compared with $559 million in the prior year period, reflecting core sales growth of 4.2 percent, which more than offset the impact of unfavorable foreign exchange. Core sales increased in its Writing and Baby businesses. Reported operating income was $98 million, or 17.1 percent of sales, compared with $94 million, or 16.8 percent of sales, in the prior period. Normalized operating income was $103 million, or 18.0 percent of sales, compared with $104 million, or 18.6 percent of sales, in the prior year period.

The Home & Commercial Solutions segment generated net sales of $812 million compared with $893 million in the prior year period, reflecting a core sales decline of 5.0 percent and the impact of unfavorable foreign exchange and business exits. Core sales declined in the Commercial, Kitchen and Home Fragrance businesses. Reported operating loss was $2 million, or negative 0.2 percent of sales, compared with operating income of $16 million, or 1.8 percent of sales, in the prior year period. Normalized operating income was $20 million, or 2.5 percent of sales, compared with $45 million, or 5.0 percent of sales, in the prior year period.

Balance Sheet and Cash Flow
Operating cash outflow was $213 million compared with cash flow of $32 million in the prior year period. The prior year operating cash flow included a significant contribution from working capital and a below-target cash bonus payout. The cash conversion cycle in the first quarter of this year improved by four days compared with the prior year period.

At the end of the first quarter of 2025, Newell Brands had debt outstanding of $4.9 billion and cash and cash equivalents of $233 million, compared with $5.0 billion and $372 million, respectively, at the end of the first quarter of 2024.

Outlook
The company initiated its outlook for the second quarter and updated its outlook for the full year 2025 as follows:

 

The company widened its outlook for full year 2025 operating cash flow to $400 million to $500 million from the prior range of $450 million to $500 million due to higher tariff costs on inventory.

Tariff Sensitivity
The company’s outlook includes the initial two rounds of IEEPA tariffs on China totaling 20 percent, Section 232 global steel and aluminum tariffs and all other reciprocal tariffs of 10 percent currently in effect for countries outside China. The company’s current outlook does not include the most recent reciprocal China tariff of 125 percent. The company’s sensitivity analysis shows that if the 125 percent tariff rate remains in effect for the full year and is not mitigated, it could reduce Newell Brands’ 2025 normalized EPS by approximately 20 cents per share; however, the company has identified mitigating actions that it believes would be sufficient to cut this amount in half.

Image courtesy Marmot