Newell Brands Inc.

Good morning and welcome to Newell Brands' first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time schedule for the call, please limit yourself to one question during the Q&A session. Today's conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Sophia Sinnes, VP of Investor Relations. Ms. Sinnes, you may begin.

Thank you. Good morning, everyone. Welcome to Newell Brand's first quarter earnings call. On the call with me today are Chris Peterson, our President and CEO, and Mark Ercik, our CFO. Before we begin, I'd like to inform you that during the course of 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. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10-K, Form 10-Q, and other SEC filings available on our investor relations website for 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 we refer 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 and available 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, and now I'll turn the call over to Chris.

Thank you, Sophia. Good morning, everyone, and welcome to our first quarter call. Newell's turnaround gained momentum during the first quarter, with results ahead of plan across all key metrics. Core sales performance improved sequentially, and versus year ago, gross margin increased for the third consecutive quarter. Normalized operating margin nearly doubled, with normalized EBITDA growing over 30%, and we meaningfully increased operating cash flow. We made excellent progress on the five major operational and financial priorities that we established for the year. First, during the quarter, we operationalized the new operating model and continued to execute our strategy, which focuses on disproportionately investing in innovation, brand building, and go-to-market excellence in our largest and most profitable brands and markets, while driving further standardization and scale efficiencies across the supply chain and back office functions. We are seeing stronger cross-functional partnerships which enable more agile and efficient decision-making, streamlined ways of working, and a greater sense of ownership and accountability from Newell's teams, all of which are critical to our transition to a high-performing, innovative, and inclusive organization. Second, during the quarter, Newell's top-line performance improved sequentially as core sales declined 4.7% versus 9.3% in the fourth quarter, with three businesses, baby, writing, and commercial, returning to core sales growth. We are seeing green shoots from the decisive actions we are taking to strengthen Newell's front-end commercial capabilities as we are beginning to bring consumer-driven innovation to market. The new business development team is gaining momentum. and the international businesses outpacing North America. Let me provide you with a few tangible examples on these three elements. Upgrading Newell's consumer insights function to unlock actionable insights and proprietary consumer understanding so that we can develop and launch superior new product innovation has been an integral area of focus for us. During the first quarter, we launched our first top-tier innovations that came out of our strengthened funnel, as we debuted the new Sharpie Creative Markers and PaperMate InkJoy Gel Bright Pens, and what we have deemed a year of creativity for the writing business. Sharpie Creative Markers represents the brand's entrance into a new category and are expected to be highly accretive to the category. They feature proprietary, no-bleed, paint-like ink with the control of a marker, which enables writing and creative enthusiasts to make bold statements on a variety of light and dark surfaces, including metal, wood, ceramic, glass, rock, canvas, and more. The new InkJoy gel bright pens feature vivid ink that pops on light and dark paper to inspire endless creative possibilities. To support both launches, in March we kicked off the Let's Get Creative campaign at the hub of creativity and innovation, South by Southwest. Sharpie also partnered with Mindy Kaling for a variety of media and influencer events, while Papermate launched a new Feel the Joy campaign featuring influencer Happy Kelly to introduce Papermate InkJoy Gel Bright. And just last week, Sharpie embarked upon the World is Your Campus cross-country Sharpie bus tour, which began at the Main Street Arts Festival in Fort Worth, with additional planned stops at festivals, events, and retailers throughout the year, culminating at Art Basel in Miami. We are fully supporting the marketing activation for these exciting consumer-driven innovations, which are off to a terrific start. In fact, the Sharpie 12-count creative marker set is already amongst the top SKUs for permanent and paint markers at several key retailers, and the six-count pack of PaperMate InkJoy Gel Bright is currently the number one selling gel pen SKU at the same retail customers. Importantly, this is just the first example of much stronger new product innovation supported with compelling marketing campaigns we plan to launch across our top 25 brands as we operationalize the new strategy and use our pillars of competitive advantage framework to strengthen Newell's market-leading brands. We have eight top-tier innovations planned for this year across multiple businesses and expect the pipeline to continue to build as we look further out. The new business development team, which we stood up last year in the US is driving distribution gains with both new customers and existing customers with new categories. During the first quarter new distribution was one of the upside drivers to core sales versus the company's outlook. The new business development team has made significant strides in a remarkably brief period. This team has delivered new distribution gains on Graco, Rubbermaid Brilliance, Calphalon, and Commercial Cleaning in the Club Channel, which will set in the second half of 2024. We have also seen gains in the Dollar Channel with significant wins on Rubbermaid and Nook Baby Care, to name a few. With the exit of Buy-Buy Baby, we have many new specialty retailers. We will be expanding our distribution of Graco and Nook and other existing customers who are looking to elevate the Omni shopping experience for the baby category. Kohl's recently announced their Babies R Us store and store concept, and our brands will be prominently featured. We expect new distribution gains to be a meaningful contributor to top-line growth going forward. International markets were a growth engine in the first quarter as we moved to the one new commercial organization across most regions. Pricing in international markets to offset inflation and currency movements was a meaningful contributor to the core sales performance. Similar to the situation in the United States, we have substantial potential across key markets to enhance distribution further, an opportunity that the regional teams are prioritizing. The third priority we identified for 2024 was driving strong gross margin and operating margin improvement, building on the progress from the second half of 2023. Newell's first quarter results were ahead of our expectations on both metrics, as normalized gross margin and operating margin expanded 410 basis points and 220 basis points versus last year, respectively, even as we increased advertising and promotion spend as a percent of sales about 100 basis points year over year. This excellent result was a direct reflection of the strategic choices we made to accelerate productivity focus on more profitable parts of the portfolio, exit structurally unattractive skews and categories, and direct our innovation efforts to focus more on MPP and HPP segments. We also made progress on the fourth priority for 2024 as we drove strong growth in operating cash flow, with the cash conversion cycle improving about 30 days year over year, enabling us to slightly reduce the company's leverage ratio relative to 2023 year end and what is historically a cash use quarter. And lastly, we continue to improve operational excellence by reducing organization complexity through business process redesign with a focus on simplification and accountability, as well as technology standardization and enablement across the organization. For example, we successfully completed the Sistema SAP integration in the first quarter. We are encouraged by our first quarter results being ahead of plan on all key metrics. That being said, the first quarter is our seasonally smallest quarter, and the external environment remains challenging, as we expected. The categories we compete in remain under pressure, with consumers continuing to carefully manage their discretionary spend as the cumulative impact of inflation on food, energy, and housing costs has outpaced wage growth. As such, we are maintaining our outlook for the full year with a continued focus on the five key priorities we laid out at the beginning of the year. It has been less than one year since we deployed our new strategy. We are excited and energized by the progress we are delivering on the turnaround agenda. We remain confident in our ability to strengthen the company's performance and create value for our stakeholders over time as we continue to move with speed and agility to operationalize our strategy. I would like to thank our dedicated employees for their continued commitment to operating with excellence and delighting our consumers around the world. I'll now hand the call over to Mark.