NEWELL BRANDS INC. The following discussion and analysis provides information which management believes is relevant to an assessment and understanding ofNewell Brands Inc.'s ("Newell Brands ," the "Company," "we," "us" or "our") consolidated financial condition and results of operations. The discussion should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto. Forward-Looking Statements Forward-looking statements in this Report are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements generally can be identified by the use of words such as "intend," "anticipate," "believe," "estimate," "project," "target," "plan," "expect," "setting up," "beginning to," "will," "should," "would," "resume," "are confident that," "remain optimistic that" or similar statements. The Company cautions that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. Actual results may differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to: •the Company's ability to manage the demand, supply and operational challenges with the actual or perceived effects of the COVID-19 pandemic; •the Company's dependence on the strength of retail, commercial and industrial sectors of the economy in various parts of the world; •competition with other manufacturers and distributors of consumer products; •major retailers' strong bargaining power and consolidation of the Company's customers; •the Company's ability to improve productivity, reduce complexity and streamline operations; •the Company's ability to develop innovative new products, to develop, maintain and strengthen end-user brands and to realize the benefits of increased advertising and promotion spend; •the Company's ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; •risks related to the Company's substantial indebtedness, potential increases in interest rates or changes in the Company's credit ratings; •future events that could adversely affect the value of the Company's assets and/or stock price and require additional impairment charges; •the impact of cost associated with acquisition and divestitures; •our ability to effectively execute our turnaround plan; •changes in the prices of raw materials and sourced products, including inflation, and the Company's ability to obtain raw materials and sourced products in a timely manner; •the impact of governmental investigation, inspections, lawsuits, legislation requests or other actions or other activities by third parties; •the risks inherent to the Company's foreign operations, including currency fluctuations, exchange controls and pricing restrictions; •a failure of one of the Company's key information technology systems, networks, processes or related controls or those of the Company's services providers; •the impact ofUnited States or foreign regulations on the Company's operations, including the impact of tariffs and environmental remediation costs; •the potential inability to attract, retain and motivate key employees; •the resolution of tax contingencies resulting in additional tax liabilities; •product liability, product recalls or related regulatory actions; •the Company's ability to protect its intellectual property rights; •significant increases in the funding obligations related to the Company's pension plans and •other factors listed from time to time in ourSEC filings, including but not limited to our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The information contained in this Report is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this Report as a result of new information or future events or developments. In addition, there can be no assurance that the Company has correctly identified and assessed all of the factors affecting the Company or that the publicly available and other information the Company receives with respect to these factors is complete or correct. 26 -------------------------------------------------------------------------------- Table of Contents OverviewNewell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid®, Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer's®, Coleman®, Marmot®, Oster®, Sunbeam®, FoodSaver®, Mr.Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Contigo®, First Alert®, Mapa®, Spontex® and Yankee Candle®.Newell Brands is committed to enhancing the lives of consumers around the world with planet friendly, innovative and attractive products that create moments of joy and provide peace of mind. The Company sells its products in nearly 200 countries around the world and has operations on the ground in over 40 of these countries, excluding third-party distributors. Business Strategy The Company is continuing to execute on its turnaround strategy of building a global, next generation consumer products company that can unleash the full potential of its brands in a fast moving omni-channel environment. The strategy, developed in 2019, is designed to drive sustainable top line growth, improve operating margins, accelerate cash conversion cycle and strengthen the portfolio, organizational capabilities and employee engagement, while addressing key challenges facing the Company. These challenges include: shifting consumer preferences and behaviors; a highly competitive operating environment; a rapidly changing retail landscape, including the growth in e-commerce; continued macroeconomic and political volatility and an evolving regulatory landscape. The COVID-19 pandemic and its impact to the Company's business resulted in the acceleration of these initiatives in many respects.
The Company has made significant progress on the following imperatives it previously identified as part of its turnaround strategy:
•Strengthening the portfolio by investing in attractive categories aligned with its capabilities and strategy; •Driving sustainable profitable growth by focusing on innovation, as well as growth in digital marketing, e-commerce and its international businesses; •Improving margins by driving productivity and overhead savings, while reinvesting into the business; •Enhancing cash efficiency by improving key working capital metrics, resulting in a lower cash conversion cycle; and •Building a winning team through engagement and focusing the best people on the right things.
Continued execution of these strategic imperatives will better position the Company for long-term sustainable growth.
27
--------------------------------------------------------------------------------
Table of Contents
Organizational Structure
The Company's five primary reportable segments are the following:
Segment Key Brands Description of Primary Products Home Appliances Calphalon®, Crock-Pot®,
Household products, including kitchen appliances
Mr. Coffee®, Oster® and Sunbeam®
Commercial Solutions BRK®, First Alert®, Mapa®, Commercial cleaning and maintenance solutions; closet and
Quickie®, Rubbermaid Commercial garage organization; hygiene systems and material handling
Products®, and Spontex®
solutions; connected home and security and smoke and
monoxide alarms
Home Ball® (1), Calphalon®, Chesapeake Food and home storage products; fresh preserving products, Solutions
Bay Candle®, FoodSaver®, vacuum sealing products, gourmet cookware, bakeware and
Rubbermaid®, Sistema®, WoodWick® cutlery and home fragrance products
and Yankee Candle®
Learning and Aprica®, Baby Jogger®, Dymo®, Baby gear and infant care products; writing instruments, Development
Elmer's®, EXPO®, Graco®, including markers and highlighters, pens and pencils; art
Mr. Sketch®, NUK®, Paper Mate®, products; activity-based adhesive and cutting products and
Parker®, Prismacolor®, Sharpie®, labeling solutions
Tigex® Waterman® and X-Acto®
Outdoor and Recreation Coleman®, Contigo®, ExOfficio®, Products for outdoor and outdoor-related activities
Marmot®
(1)[[Image Removed: nwl-20210331_g1.gif]] and Ball® TM of Ball Corporation, used under license.
The Company also provides general corporate services to its segments which is reported as a non-operating segment, Corporate. See Footnote 15 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information. Recent Developments Coronavirus (COVID-19)
The COVID-19 pandemic, which began in late 2019, has continued to disrupt the Company's global operations, similar to those of many large, multi-national corporations in three primary areas:
Supply chain. Of the Company's 135 manufacturing and distribution facilities, approximately 20 were temporarily closed at the end of the first quarter of 2020, the most significant of which were itsSouth Deerfield, MA , Home Fragrance plant, itsMexicali, Mexico and India Writing facilities and itsJuarez, Mexico Connected Home and Security facility, all of which were closed in accordance with government guidelines. The majority of the Company's manufacturing and distribution facilities reopened during the second and third quarter of 2020, and have since been operating at or near capacity with inventory levels replenished. The Company does, however, continue to face intermittent supply and labor shortages, capacity constraints, transportation and logistical challenges, and higher than expected inflation in resin, sourced finished goods and components, freight and fuel. These various disruptions are expected to persist until the current economic and public health conditions improve globally. Retail. While the Company's largest retail customers experienced a surge in sales as their stores remained open, a number of secondary customers, primarily in the specialty and department store channels, temporarily closed their brick and mortar doors inMarch 2020 , and began to reopen in certain regions where conditions improved towards the end of the second quarter of 2020. These dynamics, in combination with some retailers' prioritization of essential items, have had a meaningful impact on the Company's traditional order patterns. In addition, the Company temporarily closed itsYankee Candle retail stores inNorth America in mid-March of 2020. These stores reopened by the end of the third quarter in 2020 and have remained open since. Consumer demand patterns. During the quarantine phase of the pandemic in 2020, consumer purchasing behavior strongly shifted to certain focused categories. Certain of the Company's product categories have continued to benefit from this shift, primarily in Food, Commercial and Home Appliances. Some of the Company's other businesses have seen positive momentum with a rebound in demand post lockdowns, in particular Writing, Baby and Parenting and Home Fragrance. 28 -------------------------------------------------------------------------------- Table of Contents The Company believes the extent of the impact of the COVID-19 pandemic to its businesses, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the pandemic, the impact of new strains and variants of the coronavirus, the pandemic's impact on theU.S. and global economies and the timing, scope and effectiveness of federal, state and local governmental administration of vaccines to the general public, especially in areas where conditions have recently worsened and lockdowns or travel bans have been reinstituted. Those primary drivers are beyond the Company's knowledge and control, and as a result, at this time it is difficult to predict the cumulative impact, both in terms of severity and duration, COVID-19 pandemic will have on its future sales, operating results, cash flows and financial condition. Furthermore, the impact to the Company's businesses, operating results, cash flows, liquidity and financial condition may be further adversely impacted if the COVID-19 pandemic continues to exist or worsens for a prolonged period of time, new variants of the coronavirus emerge, or if plans to administer vaccines are delayed.
Redemption of Senior Notes
OnMarch 1, 2021 (the "Redemption Date"), the Company redeemed its 3.15% senior notes that were scheduled to mature inApril 2021 (the "April 2021 Notes") at a redemption price equal to 100% of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the Redemption Date.
During the first quarter of 2021, the Company repurchased
See Footnote 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements for further information.
© Edgar Online, source
