Newell Brands Exceeds EPS Expectations Despite Revenue Shortfall in Q4 2024

Newell Brands (NASDAQ: NWL) reported its financial results for the fourth quarter of 2024, showing a decline in net sales but improvements in both gross and operating margins. The company recorded net sales of $1.9 billion, marking a 6.1% decrease compared to the same period last year. This decline was attributed to a 3.0% drop in core sales, along with unfavorable foreign exchange impacts and business exits.

Despite the drop in sales, Newell Brands achieved a reported gross margin of 34.2%, up from 29.9% in the prior year, thanks to productivity savings and strategic pricing that offset inflationary pressures and lower sales volumes.

Newell Brands Reports Mixed Results for Q4 2024

The company also saw a notable improvement in its operating margin. The reported operating margin for the quarter was 0.5%, a significant turnaround from the negative 0.5% in the previous year. Normalized operating margin increased to 7.1% from 6.4% in the previous year. This improvement was largely driven by higher gross margins and savings from restructuring efforts, despite increased advertising and promotional expenses. The reported net loss for the quarter was reduced to $54 million from $86 million in the prior year, while normalized net income slightly decreased to $69 million from $73 million.

Additionally, Newell Brands successfully refinanced $1.25 billion of debt, reflecting strong market confidence in its strategic transformation efforts. This refinancing was part of an offering that was six times oversubscribed, underscoring the positive reception of the company’s financial strategy. The company’s balance sheet showed a reduction in debt to $4.6 billion from $4.9 billion at the end of the previous year, with cash and cash equivalents standing at $198 million.

Newell Brands’ performance in the fourth quarter of 2024 fell short of market expectations in terms of revenue but slightly exceeded expectations for earnings per share (EPS). Analysts had anticipated an EPS of $0.1406 and revenue of $1.97 billion for the quarter. The actual results showed a normalized diluted EPS of $0.16, surpassing expectations, while revenue came in at $1.9 billion, below the forecasted figure.

Despite the revenue shortfall, the company’s ability to exceed EPS expectations highlights the effectiveness of its cost management and margin improvement strategies. The reported gross margin increase to 34.2% from 29.9% in the prior year underscores the success of these initiatives. The improvement in operating margins further reflects the company’s focus on enhancing profitability even in the face of declining sales.

The Learning and Development segment, in particular, demonstrated resilience by returning to positive annual sales growth despite broader category declines. This segment generated net sales of $628 million, with core sales growth of 0.4%, which offset unfavorable foreign exchange impacts. In contrast, the Home & Commercial Solutions and Outdoor & Recreation segments faced challenges with core sales declines of 4.6% and 3.8%, respectively.

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Newell Brands Projects Net Sales to Decline in the Range of 2% to 4% in 2025

Newell Brands provided a preliminary outlook for the full year 2025, projecting net sales to decline in the range of 2% to 4%. Core sales are expected to range from a 2% decline to a 1% increase, reflecting ongoing challenges in the market. The company anticipates a normalized EPS range of $0.70 to $0.76 for the year, suggesting an improvement over the past year’s performance.

For the first quarter of 2025, Newell Brands forecasts a net sales decline of 8% to 5% and a core sales decline of 4% to 2%. The company projects a normalized operating margin of 2.0% to 4.0% for the quarter, aiming to maintain profitability amid expected sales pressures. The full-year normalized operating margin is anticipated to be between 9.0% and 9.5%, reflecting the company’s ongoing focus on operational efficiency.

Newell Brands also provided guidance for operating cash flow, estimating it to be between $450 million and $500 million for the full year 2025.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.