NEWELL BRANDS INC. Annual Report Summary

This summary offers potential investors a clear overview of Newell Brands Inc.'s recent performance and strategic direction, based on insights from their latest annual report.

Business Overview

Newell Brands Inc. is a global consumer products company that markets a diverse portfolio of well-known brands. Its products span various segments, including Home & Commercial, Learning & Development, and Outdoor & Recreation. The company sells its goods through a wide range of channels, such as mass merchandisers, department stores, club stores, home centers, drugstores, specialty retailers, and e-commerce platforms. The past year brought significant operational and strategic transformations, reflecting a determined effort to boost long-term performance amid ongoing challenges in the consumer goods market.

Financial Performance

Newell Brands faced significant financial headwinds. A key indicator was the recording of substantial "impairment charges" on several brand names. These charges primarily affected the Learning & Development and Home & Commercial segments, which include writing instruments, commercial products, and baby products.

Impairment charges mean the company reduced the book value of these assets. This signals that their expected future cash flows are lower than previously anticipated, negatively impacting reported profitability and asset valuations. The company recorded these charges throughout 2025 and in prior years for these segments.

Risk Factors

Investors should carefully consider several critical risks:

• Restructuring Costs and Disruption: The extensive and ongoing restructuring efforts, though strategic, are inherently costly and disruptive. They could impact short-term profitability, operational stability, and employee morale.
• High Debt Load and Credit Risk: A significant debt load, coupled with below-investment-grade credit ratings, leads to higher interest expenses and greater sensitivity to interest rate fluctuations. This also limits financial flexibility and could hinder access to capital markets.
• Brand Underperformance: Substantial impairment charges on key brand names point to underlying struggles in certain product categories or markets, which could continue to pressure future earnings and market share.
• Execution Risk: The success of numerous strategic plans depends on effective execution. Failure to achieve desired efficiencies and cost savings could prolong financial challenges.
• Intense Competition: Operating in highly competitive consumer goods markets, the company faces challenges from established brands, private labels, and new entrants, impacting pricing, market share, and profitability.
• Economic Conditions and Consumer Spending: Fluctuations in global economic conditions, inflation, and shifts in consumer spending patterns can significantly affect demand for the company's products.
• Supply Chain Disruptions: Global supply chain disruptions, raw material price volatility, and labor shortages could impact production, distribution, and costs.

Management Discussion (MD&A highlights)

This year, extensive restructuring initiatives dominated operations, aiming to boost efficiency and profitability. These include:

• Global Productivity Plan: A broad initiative to streamline operations.
• Organizational Realignment Plan: Focused on optimizing the workforce.
• Network Optimization Project: Addressed supply chain and distribution efficiencies.
• Project Phoenix: Another significant operational overhaul.

Implementing these plans required difficult decisions, such as employee layoffs, contract terminations, closure of industrial sites, and reduction of office space. While intended for long-term benefit, these actions incur substantial short-term costs and potential operational disruption. The impairment charges highlight underperformance in some business areas, posing a significant challenge to overall financial health.

Despite these challenges, Newell Brands demonstrated financial discipline by actively managing its debt. The company made repayments on some of its Senior Notes, including the 8.500% notes due in 2028 and the 3.90% notes due in 2025. Newell Brands is undergoing a comprehensive strategic overhaul, implementing significant changes across its operations, workforce, and physical infrastructure. The multiple restructuring plans aim to create a leaner, more efficient, and productive organization. The inclusion of even well-known brands like Yankee Candle within the scope of productivity plans underscores the broad and deep nature of this strategic transformation.

Financial Health

Newell Brands carries a substantial debt load, primarily through various "Senior Notes" (corporate bonds) maturing between 2025 and 2046, with interest rates from 3.90% to 8.50%. Specific examples include 3.90% notes due in 2025 and 4.20% notes due in 2026. The company also uses a revolving credit facility and letters of credit to support its daily liquidity needs.

However, Moody's (B1) and S&P (B+) categorize the company's credit ratings as "below investment grade." This rating signals a higher perceived default risk by credit rating agencies. Consequently, Newell Brands faces higher borrowing costs and limited financial flexibility compared to companies with stronger ratings.

Future Outlook

Newell Brands' future outlook hinges on the successful execution of its extensive restructuring initiatives. These forward-looking plans are explicitly designed to improve operational efficiency and enhance profitability in the coming years. While this transformation may bring short-term challenges and disruption, the overarching goal is to emerge as a stronger, more focused, and ultimately more profitable company. The strategic direction emphasizes streamlining operations, optimizing the brand portfolio, and improving financial discipline to drive sustainable long-term value.

Competitive Position

The impairment charges on specific brands strongly suggest intensified competition or declining market relevance for certain product lines. This could erode pricing power, market share, and brand differentiation in a competitive landscape. Newell Brands operates in highly competitive global consumer markets, where competition is based on factors such as brand recognition, product innovation, quality, price, distribution capabilities, and marketing effectiveness. While the company's diverse brand portfolio offers some competitive advantages, it also exposes it to varied competitive pressures across different product categories and geographies. The ongoing strategic transformation aims to strengthen its competitive position by improving operational efficiency and focusing on core, high-potential brands.