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nwl-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

for the Quarterly Period Ended June 30, 2022

Commission File Number 1-9608

NEWELL BRANDS INC.

(Exact name of registrant as specified in its charter)


Delaware						36-3514169
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

6655 Peachtree Dunwoody Road,

Atlanta, Georgia 30328

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (770) 418-7000

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS

TRADING SYMBOL

NAME OF EXCHANGE ON WHICH REGISTERED

Common stock, $1 par value per share

NWL

Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large Accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding (net of treasury shares) as of July 25, 2022: 413.6 million.

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION			2
Item 1. Financial Statements			2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures about Market Risk			41
Item 4. Controls and Procedures			41
PART II. OTHER INFORMATION			43
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 6. Exhibits			44
SIGNATURES			45

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NEWELL BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	2,534	$	2,709	$	4,922	$	4,997
Cost of products sold	1,709		1,827		3,357		3,384
Gross profit	825		882		1,565		1,613
Selling, general and administrative expenses	504		572		1,022		1,106
Restructuring costs, net	4		5		9		10

Operating income	317		305		534		497
Non-operating expenses:
Interest expense, net	55		65		114		132

Other (income) expense, net	8		(3)		(116)		(4)
Income before income taxes	254		243		536		369
Income tax provision	50		46		98		83
Net income	$	204	$	197	$	438	$	286

Weighted average common shares outstanding:
Basic	413.8		425.4		417.9		425.1
Diluted	415.7		427.8		420.2		427.7

Earnings per share:
Basic	$	0.49	$	0.46	$	1.05	$	0.67
Diluted	$	0.49	$	0.46	$	1.04	$	0.67

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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NEWELL BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Amounts in millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Comprehensive income (loss):
Net income	$	204	$	197	$	438	$	286
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(120)		34		(97)		(10)
Pension and postretirement costs	7		4		12		9
Derivative financial instruments	11		3		11		8
Total other comprehensive income (loss), net of tax	(102)		41		(74)		7
Comprehensive income	102		238		364		293


Total comprehensive income attributable to noncontrolling interests	—		3		—		2
Total comprehensive income attributable to parent	$	102	$	235	$	364	$	291

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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NEWELL BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Amounts in millions, except par values)


	June 30, 2022		December 31, 2021
Assets:
Cash and cash equivalents	$	323	$	440
Accounts receivable, net	1,562		1,500
Inventories	2,522		1,997
Prepaid expenses and other current assets	350		325
Total current assets	4,757		4,262
Property, plant and equipment, net	1,138		1,204
Operating lease assets	563		558
Goodwill	3,450		3,504
Other intangible assets, net	2,977		3,370
Deferred income taxes	786		814
Other assets	777		467
Total assets	$	14,448	$	14,179
Liabilities:
Accounts payable	$	1,700	$	1,680
Accrued compensation	160		270
Other accrued liabilities	1,309		1,364
Short-term debt and current portion of long-term debt	1,461		3
Total current liabilities	4,630		3,317
Long-term debt	3,793		4,883
Deferred income taxes	714		405
Operating lease liabilities	500		500
Other noncurrent liabilities	864		983
Total liabilities	10,501		10,088
Commitments and contingencies (Footnote 17)
Stockholders’ equity:
Preferred stock (10.0 authorized shares, $1.00 par value, no shares issued at June 30, 2022 and December 31, 2021)	—		—
Common stock (800.0 authorized shares, $1.00 par value, 438.6 shares and 450.0 shares issued at June 30, 2022 and December 31, 2021, respectively)	439		450
Treasury stock, at cost (25.0 shares and 24.5 shares at June 30, 2022 and December 31, 2021, respectively)	(623)		(609)
Additional paid-in capital	7,251		7,734
Retained deficit	(2,164)		(2,602)
Accumulated other comprehensive loss	(956)		(882)


Total stockholders’ equity	3,947		4,091
Total liabilities and stockholders’ equity	$	14,448	$	14,179

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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NEWELL BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in millions)


	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	438	$	286
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	147		166

(Gain) loss from sale of businesses	(133)		2
Deferred income taxes	309		(12)
Stock based compensation expense	23		26

Other, net	(1)		(3)
Changes in operating accounts excluding the effects of divestitures:
Accounts receivable	(177)		(50)
Inventories	(681)		(386)
Accounts payable	106		54
Accrued liabilities and other	(481)		(7)
Net cash provided by (used in) operating activities	(450)		76
Cash flows from investing activities:
Proceeds from sale of divested business	620		—
Capital expenditures	(140)		(114)

Other investing activities, net	19		9
Net cash provided by (used in) investing activities	499		(105)
Cash flows from financing activities:
Short-term debt, net	372		(1)

Payments on current portion of long-term debt	(2)		(94)
Payments on long-term debt	—		(6)

Repurchase of shares of common stock	(325)		—
Cash dividends	(195)		(198)

Acquisition of noncontrolling interest	—		(4)
Equity compensation activity and other, net	(35)		(35)
Net cash used in financing activities	(185)		(338)
Exchange rate effect on cash, cash equivalents and restricted cash	(3)		(6)
Decrease in cash, cash equivalents and restricted cash	(139)		(373)
Cash, cash equivalents and restricted cash at beginning of period	477		1,021
Cash, cash equivalents and restricted cash at end of period	$	338	$	648
Supplemental disclosures:
Restricted cash at beginning of period	$	37	$	40
Restricted cash at end of period	15		11

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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NEWELL BRANDS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

(Amounts in millions)


	Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at March 31, 2022	$	441	$	(623)	$	7,384	$	(2,368)	$	(854)	$	3,980
Comprehensive income (loss)	—		—		—		204		(102)		102
Dividends declared on common stock - $0.23 per share	—		—		(95)		—		—		(95)
Equity compensation, net of tax	—		—		10		—		—		10
Common stock purchased and retired	(2)		—		(48)		—		—		(50)




Balance at June 30, 2022	$	439	$	(623)	$	7,251	$	(2,164)	$	(956)	$	3,947

Balance at December 31, 2021	$	450	$	(609)	$	7,734	$	(2,602)	$	(882)	$	4,091
Comprehensive income (loss)	—		—		—		438		(74)		364
Dividends declared on common stock - $0.46 per share	—		—		(192)		—		—		(192)
Equity compensation, net of tax	2		(14)		22		—		—		10
Common stock purchased and retired	(13)		—		(312)		—		—		(325)



Other	—		—		(1)		—		—		(1)
Balance at June 30, 2022	$	439	$	(623)	$	7,251	$	(2,164)	$	(956)	$	3,947


	Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Stockholders' Equity Attributable to Parent		Noncontrolling Interests		Total Stockholders' Equity
Balance at March 31, 2021	$	450	$	(608)	$	7,993	$	(3,085)	$	(914)	$	3,836	$	25	$	3,861
Comprehensive income	—		—		—		197		38		235		3		238
Dividends declared on common stock - $0.23 per share	—		—		(99)		—		—		(99)		—		(99)
Equity compensation, net of tax	—		(1)		12		—		—		11		—		11
Acquisition of noncontrolling interests	—		—		—		—		—		—		(3)		(3)
Other changes attributable to noncontrolling interests	—		—		—		—		3		3		—		3

Balance at June 30, 2021	$	450	$	(609)	$	7,906	$	(2,888)	$	(873)	$	3,986	$	25	$	4,011

Balance at December 31, 2020	$	448	$	(598)	$	8,078	$	(3,174)	$	(880)	$	3,874	$	26	$	3,900
Comprehensive income	—		—		—		286		6		292		1		293
Dividends declared on common stock - $0.46 per share	—		—		(200)		—		—		(200)		—		(200)
Equity compensation, net of tax	2		(11)		28		—		—		19		—		19
Acquisition of noncontrolling interests	—		—		—		—		—		—		(3)		(3)
Other changes attributable to noncontrolling interests	—		—		—		—		1		1		1		2

Balance at June 30, 2021	$	450	$	(609)	$	7,906	$	(2,888)	$	(873)	$	3,986	$	25	$	4,011

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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NEWELL BRANDS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Footnote 1 — Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of Newell Brands Inc. (collectively with its subsidiaries, the “Company”) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (including normal recurring accruals) considered necessary for a fair statement of the financial position and the results of operations of the Company. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, and the footnotes thereto, included in the Company’s most recent Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements as of that date, but it does not include all the information and footnotes required by U.S. GAAP for a complete financial statement. Certain reclassifications have been made in the Company's financial statements of the prior year to conform to current year presentation.

On March 31, 2022, the Company sold its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc. See Footnotes 2 and 16 for further information.

Use of Estimates and Risks

Management’s application of U.S. GAAP in preparing the Company's consolidated financial statements requires the pervasive use of estimates and assumptions. The Company continues to be impacted by the COVID-19 pandemic, inflationary and supply chain pressures, and the indirect macroeconomic impact of the Russia-Ukraine conflict, which has required greater use of estimates and assumptions in the preparation of the consolidated financial statements, more specifically, those estimates and assumptions utilized in the Company’s forecasted results of operations and cash flows that form the basis in developing the fair values utilized in its impairment assessments, its annual effective tax rate and other related reserves. These estimates also include assumptions as to the timing and amount of demand shifts amongst sales channels, workforce availability and supply chain continuity. Although management has made its best estimates and assumptions based upon current information, actual results could materially differ and may require future changes to such estimates and assumptions, including reserves, which may result in future expense.

Seasonal Variations

Sales of the Company’s products tend to be seasonal, with sales, operating income and operating cash flow in the first quarter generally lower than any other quarter during the year, driven principally by reduced volume and the mix of products sold in the first quarter. The seasonality of the Company’s sales volume combined with the accounting for fixed costs, such as depreciation, amortization, rent, personnel costs and interest expense, impacts the Company’s results on a quarterly basis. In addition, the Company typically tends to generate the majority of its operating cash flow in the third and fourth quarters of the year due to seasonal variations in operating results, the timing of annual performance-based compensation payments, customer program payments, working capital requirements and credit terms provided to customers. Accordingly, the Company’s results of operations for the three and six months ended June 30, 2022 and cash flows for the six months ended June 30, 2022, may not necessarily be indicative of the results that may be expected for the year ending December 31, 2022.

The Company's sales and operating results, previously disrupted by the COVID-19 pandemic, reverted back to historical patterns in 2021, however, uncertainty still remains due to the inflationary and supply chain pressures and the volatility and direction of future consumer demand patterns.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs.

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In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of this guidance with the issuance of ASU 2021-01, Reference Rate Reform: Scope. ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate if certain criteria are met. ASU 2020-04 may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the potential effects of the adoption of ASU 2020-04.

Sales of Accounts Receivables

Factored receivables at June 30, 2022 associated with the Company's existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $545 million, an increase of approximately $45 million from December 31, 2021. During the second quarter of 2022, the Company amended the Customer Receivables Purchase Agreement to (1) increase the amount of certain customer receivables that may be sold under the agreement, (2) add new customers to the agreement and (3) change the reference rate from LIBOR to Secured Overnight Financing Rate (“SOFR”). Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction. The Company classifies the proceeds received from the sales of accounts receivable as an operating cash flow in the Condensed Consolidated Statement of Cash Flows. The Company records the discount as other (income) expense, net in the Condensed Consolidated Statement of Operations and collections of accounts receivables not yet submitted to the financial institution as a financing cash flow.

Footnote 2 — Divestiture Activity

On March 31, 2022, the Company sold its CH&S business unit to Resideo Technologies, Inc., for approximately $593 million, subject to customary working capital and other post-closing adjustments. As a result, during the six months ended June 30, 2022, the Company recorded a pretax gain of $133 million, which was included in other (income) expense, net in its Condensed Consolidated Statements of Operations.

Footnote 3 — Accumulated Other Comprehensive Income (Loss)

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the six months ended June 30, 2022 (in millions):


	Cumulative Translation Adjustment		Pension and Postretirement Costs		Derivative Financial Instruments		AOCL
Balance at December 31, 2021	$	(575)	$	(292)	$	(15)	$	(882)
Other comprehensive income (loss) before reclassifications	(103)		6		13		(84)
Amounts reclassified to earnings	6		6		(2)		10
Net current period other comprehensive income (loss)	(97)		12		11		(74)
Balance at June 30, 2022	$	(672)	$	(280)	$	(4)	$	(956)

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Reclassifications from AOCL to the results of operations for the three and six months ended June 30, 2022 and 2021 were pretax (income) expense of (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cumulative translation adjustment (1)	$	—	$	—	$	6	$	—
Pension and postretirement benefit plans (2)	3		6		7		11
Derivative financial instruments (3)	(4)		7		(3)		11

(1)See Footnote 2 for further information.

(2)See Footnote 11 for further information.

(3)See Footnote 10 for further information.

The income tax provision (benefit) allocated to the components of AOCL for the periods indicated are as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Foreign currency translation adjustments	$	19	$	(3)	$	20	$	9
Pension and postretirement benefit costs	1		1		1		2
Derivative financial instruments	4		1		3		3
Income tax provision (benefit) related to AOCL	$	24	$	(1)	$	24	$	14

Footnote 4 — Restructuring Costs

Restructuring costs, net incurred by reportable business segments for all restructuring activities for the periods indicated are as follows (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Commercial Solutions	$	—	$	—	$	1	$	—
Home Appliances	—		3		1		4
Home Solutions	—		1		1		3
Learning and Development	—		—		2		1
Outdoor and Recreation	2		—		2		1
Corporate	2		1		2		1
	$	4	$	5	$	9	$	10

Accrued restructuring costs activity for the six months ended June 30, 2022 are as follows (in millions):


	Balance at December 31, 2021		Restructuring Costs, Net		Payments		Balance at June 30, 2022
Severance and termination costs	$	8	$	8	$	(9)	$	7
Contract termination and other costs	2		1		(2)		1
	$	10	$	9	$	(11)	$	8

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2020 Restructuring Plan

The Company’s 2020 restructuring program, which was substantially complete at the end of 2021, was designed to reduce overhead costs, streamline certain underperforming operations and improve future profitability. The restructuring costs, which impacted all segments, include employee-related costs such as severance and other termination benefits. During the three and six months ended June 30, 2021, the Company recorded restructuring charges of $4 million and $9 million, respectively. Any remaining cash payments are expected to be paid within one year of charges incurred.

Other Restructuring and Restructuring-Related Costs

The Company regularly incurs other restructuring and restructuring-related costs in connection with various discrete initiatives, including certain costs associated with Project Ovid, the multi-year, customer centric supply chain initiative to transform the Company's go-to-market capabilities in the U.S., improve customer service levels and drive operational efficiencies. Restructuring-related costs are recorded in cost of products sold and selling, general and administrative expenses (“SG&A”) in the Condensed Consolidated Statements of Operations based on the nature of the underlying costs incurred. During the three and six months ended June 30, 2022, the Company recorded restructuring charges of $4 million and $9 million, respectively.

Footnote 5 — Inventories

Inventories are comprised of the following at the dates indicated (in millions):


	June 30, 2022		December 31, 2021
Raw materials and supplies	$	327	$	310
Work-in-process	203		167
Finished products	1,992		1,520
	$	2,522	$	1,997

Footnote 6 — Property, Plant and Equipment, Net

Property, plant and equipment, net, is comprised of the following at the dates indicated (in millions):


	June 30, 2022		December 31, 2021
Land	$	76	$	82
Buildings and improvements	632		678
Machinery and equipment	2,325		2,387
	3,033		3,147
Less: Accumulated depreciation	(1,895)		(1,943)
	$	1,138	$	1,204

Depreciation expense was $47 million and $51 million for the three months ended June 30, 2022 and 2021, respectively, and $96 million and $103 million for the six months ended June 30, 2022 and 2021, respectively.

During the three months ended March 31, 2022, the Company took possession of a right of use operating lease asset with future obligations of approximately $64 million.

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Footnote 7 — Goodwill and Other Intangible Assets, Net

Goodwill activity for the six months ended June 30, 2022 is as follows (in millions):


Segments	Net Book Value at December 31, 2021		Foreign Exchange		Gross Carrying Amount		Accumulated Impairment Charges		Net Book Value at June 30, 2022
Commercial Solutions	$	747	$	—	$	916	$	(169)	$	747
Home Appliances	—		—		569		(569)		—
Home Solutions	164		—		2,567		(2,403)		164
Learning and Development	2,593		(54)		3,385		(846)		2,539
Outdoor and Recreation	—		—		788		(788)		—
	$	3,504	$	(54)	$	8,225	$	(4,775)	$	3,450

Other intangible assets, net, are comprised of the following at the dates indicated (in millions):


	June 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Trade names — indefinite life	$	1,985	$	—	$	1,985	$	2,219	$	—	$	2,219
Trade names — other	160		(73)		87		159		(65)		94
Capitalized software	586		(466)		120		631		(495)		136
Patents and intellectual property	22		(15)		7		22		(