Newell Brands Inc.

Good morning and welcome to Newell Brand's second quarter 2025 earnings conference call. At this time all participants are in listen-only mode. After a brief discussion by management, we will open up the call for your questions. In order to stay within the time scheduled for the call, please limit yourselves to one question during the Q&A session. Today's conference call is being recorded. A live webcast of the call is available at .NewellBrands.com. I will now turn the call over to Joanne Freyberger, SVP of Invest Relations and Chief Communications Officer. Ms. Freyberger, you may begin.

Thank you. Good morning everyone and welcome to Newell Brand's second quarter 2025 earnings call. On the call with me today are Chris Peterson, our President and CEO, and Mark Ersig, our CFO. Before we begin, I'd like to inform you that during 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 10K, Form 10Q, and other SEC filings available on our Investor Relations website for a 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 referred 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 are available and 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 with that, I'll turn the call over to Chris.

Thank you, Joanne. Good morning, everyone, and welcome to our second quarter earnings call. Newell Brands demonstrated tremendous agility during the second quarter, deftly managing the short and long-term needs of the business as all constituents across the consumer products value chain were being challenged by a very dynamic global macroeconomic environment. Strict adherence to the key tenets of our strategy, coupled with another quarter of operational discipline, drove Q2 results in line with expectations across all financial metrics, with normalized operating margin and normalized earnings per share results both being particularly noteworthy. Normalized operating margin increased 10 basis points versus year ago to 10.7 percent, with all three business segments being positive for the first time since Q3 of 2022. The increase in normalized operating margin was driven by normalized gross margin, which increased by 80 basis points to the highest rate in four years at 35.6 percent. This was the eighth consecutive quarter of meaningful -over-year expansion in gross margin as we continue to focus on dramatically improving the structural economics of the business. Normalized earnings per share came in at 24 cents, which was at the top end of our guidance range, despite incurring a higher than expected tax rate in the quarter. Relative to the top line, second quarter core sales was minus 4.4 percent, which was within our guidance range, but frankly slightly below our operating plan. You may recall that since our new corporate strategy was deployed in June of 2023, core sales trends have dramatically improved each six-month period, going from down 14.7 percent in the first half of 2023 to down 2.3 percent in the second half of 2024. With second quarter results now posted, first half core sales for 25 came in at minus 3.4 percent, which is an improvement versus year ago, but does interrupt the steady sequential progress that had been delivered during each six-month period up until now. Having said that, it is important to note that this was largely driven by category softness related to consumer pullback and retailer actions. We estimate market growth was down low single digits in the first half of 2025. This means Newell largely held market share during the first half of the year. From our standpoint, this is a notable improvement as prior to the implementation of the new strategy and the capability improvement projects, Newell had been consistently losing market share. Looking forward, we expect market growth to remain subdued as certain consumer cohorts remain under pressure. In this context, we are focused on continuing to improve our front-end capabilities, and over the course of the past several months, we have further strengthened our back-half distribution, innovation, and marketing plans. While we are excited about what we have achieved in all three areas, distribution gains is the area where we'll spend the most time today because we continue to believe Newell Brands is well positioned to disproportionately benefit from the global tariff-driven trade realignment currently underway. Recall that more than half of our U.S. sales are manufactured through an extensive and highly automated North American supply base consisting of 15 U.S. manufacturing plants and two Mexico-based U.S. MCA compliant facilities, none of which are subject to tariffs. Because we have invested nearly $2 billion across our North American production system since 2017, we have significant untapped capacity which we can quickly access to help strategic customers keep their store shelves full of high-quality American-made products that represent good value for their shoppers. In June, we shared notable tariff-related business wends that had been secured in food storage, vacuum sealing, bags, markers, and home fragrance. Since then, considerable progress has been made. We have now secured incremental business in 13 of the 19 categories where we have domestic manufacturing capability. In addition, we have identified 10 other categories where we have a relative sourcing advantage versus competition based on country of origin and or where we have existing tariff-free inventory available for incremental promotions. Collectively, we have successfully secured tariff-related relative sourcing advantage or tariff-free inventory wins with over 30 customers across nearly every domestic channel where we go to market. Some of these business wins are large and some are small. Some of them are one time in nature whereas others have the potential to be much, much longer in duration. Some of them will present themselves in 2025 and others will not come online until 2026. However, in all cases, we are leveraging the scale, efficiency, and capabilities our where to play and how to win choices are creating to accelerate our business and grow profitably. Turning to innovation, we remain confident that Newell's new strategy is working. As we shared earlier this year, our multi-year innovation funnel has now largely been rebuilt with exciting consumer-led proprietary products which will begin launching in a more sustained manner starting with the second half of this year. In fact, our most recent and largest tier one innovation launch for 2025 was just announced last week. In a pivotal evolution for the brand, Yankee Candle has officially launched a comprehensive brand refresh, an initiative that reimagines the iconic fragrance experience with a premium product upgrade, modern design, and a deepened emotional connection to consumers. Grounded in consumer insights, this fragrance first relaunch establishes a new benchmark for how heritage brands can evolve with purpose. To bring the refresh brand to life, Yankee Candle partnered with Brittany Snow, actress, director, and longtime fan. The Yankee Candle launch is supported by a full 360-degree marketing program and the products are being sold directly to consumers through company-operated stores, Yankee Candle's branded website, and third-party online and retail stores. Finally, from a marketing standpoint, we plan to invest more money in absolute dollar terms and as a percentage of sales during the back half of 2025 than during any six-month period since 2017. This money will be invested behind a strong set of innovative new product launches using holistic 360-degree marketing campaigns with stronger return on investment expectations as our marketing capabilities have improved over the past two years. So for all of these reasons, we are confident that core sales during the back half of 2025 will improve sequentially versus the first half of the year and that broadly speaking, Newell's turnaround story is pacing well. The last thing I would like to comment on before turning the call over to Mark, who will walk you through the details, is how we have approached tariff impacts conceptually and at a high level in our updated guidance from both a top and bottom line standpoint. Recall that last quarter we spent considerable time describing and walking everyone through the numerous parts and pieces of the global tariff picture. As we stand here today, we have a much better understanding of the various rate impacts, but short and near-term shopper behavior over the next three to six months remains uncertain. On the one hand, inflation has moderated, employment trends are favorable, real wages are up, and the recently enacted legislation out of Washington has several notable new tax provisions which should put more dollars into the of lower income households while providing rate stability for moderate and high earners who typically look for more value added MPP and HPP products. On the other hand, many consumers are still wrestling with the cumulative effect of several years of above trend inflation and interest rates remain stubbornly high, which is depressing household formation, new housing starts, and discretionary consumer purchases in general, but particularly for low income consumers across merchandise categories. Thus, while we are optimistic about the mid and longer-term trajectory of the U.S. and global economy, we remain a bit cautious in the short term. Therefore, we are updating our core sales guidance range for the year to reflect category growth expectations at the low end of our prior range. This is being offset by better foreign exchange, which in turn has us in the top half of our prior net sales guidance range. As it relates to our structural economics, in the bottom line, we made the determination that we will price where necessary to protect the gross margin gains we have achieved as part of our turnaround strategy. Consistent with this, after identifying and executing additional productivity and overhead reduction actions, we initiated three separate rounds of targeted tariff-related price actions in the U.S., two of which we discussed last quarter and went into effect April 1st and May 1st respectively. The first two rounds of pricing incorporated the initial IEPA 20% China tariffs and the 25% tariff on aluminum and steel. The most recent price increase with a July 28th effective date included pricing where necessary to cover the additional 10% China and rest of the world where reciprocal tariffs exist. The combination of our cost reduction efforts and these pricing actions has put us in a position where we believe we will be able to fully offset all of the currently announced and either in effect or soon to be in effect tariff actions that are expected to be permanent in nature, which we believe is a tremendous accomplishment by the Newell team and represents the absorption and offsetting of about 16 cents per share. The only piece of tariff-related impacts which is worth about five cents per share, we don't plan to recover, is the one-time cost related to the incremental 125% China tariff that was only in effect for a limited period of time. While we immediately suspended future orders once that rate was announced, we did incur that rate on in-transit goods that could not be delayed. Since those costs will not be ongoing, we believe it would be inappropriate and short-sighted for us to reduce planned A&P investment, eliminate or cut back organization capability enhancements being developed, or price to recover these non-recurring transitory costs. As I turn the call over to Mark, who will provide additional details, let me state we expect sequential top-line progress to resume going forward based on distribution gains, innovation launches, and marketing programs. And we remain on track to expand normalized operating margins, grow normalized earnings per share on a tax equalized basis by double digits, grow normalized EBITDA by mid to high single digits, and improve Newell's leverage ratio versus prior year during 2025. To the extent additional tariff-related pricing actions are necessary, we will act accordingly, but we think pricing actions for 2025 are now largely behind us. In closing, I would like to thank our dedicated employees for their continued agility, resilience, and grit demonstrated throughout this dynamic environment. Their continued commitment to operating with excellence makes it possible for Newell brands to delight consumers around the world. Mark? Thanks, Chris.