Newell Stock Up 13% on $1.65B Revenue, Aims for $70M Savings

Key Takeaway

• Newell Brands Inc. stock surged 13% to $7.86 after beating revenue forecasts and showing margin improvement amid restructuring.
• Q1 losses narrowed significantly to $9 million from last year's $102 million, with revenue outperforming expectations at $1.65 billion.
• The company aims for $55 million to $70 million in cost savings in 2024, despite projecting lower-than-expected earnings for Q2 and the full year.

Stock Rally Amid Cost-Cutting Measures

Newell Brands Inc. experienced a notable surge in its stock price, climbing 13% to $7.86 a share, marking its highest level in approximately a month. This rally was fueled by the company's announcement of improved margins, a narrowed first-quarter loss, and revenue figures that exceeded analysts' expectations. The company's strategic focus on cost reduction and margin enhancement appears to be yielding tangible results, as evidenced by the positive market reaction.

In the first quarter, Newell Brands reported a loss of $9 million, or 2 cents per share, a significant improvement from a loss of $102 million, or 25 cents per share, in the same period last year. On an adjusted basis, the company broke even, surpassing the FactSet consensus estimate, which predicted a loss of 7 cents per share. Despite an 8.4% decline in revenue to $1.65 billion, the company still managed to outperform the FactSet consensus estimate of $1.64 billion.

Margin Improvement and Restructuring Progress

Under the leadership of Chief Executive Chris Peterson, Newell Brands has demonstrated "excellent progress" in its restructuring efforts, which were initially announced in January. These efforts have led to sequential improvements in core sales performance, normalized operating margin, and increased operating cash flow. The company's operating margin increased to 1%, reversing from a negative 2% in the year-ago period, with an adjusted operating margin rising to 4.6% from 2.4%.

As part of its restructuring plan, Newell Brands announced a workforce reduction of 7%, affecting its total employee count of 24,600 as of December 31. This move is part of a broader strategy to optimize the company's real estate footprint and pursue additional cost-reduction initiatives.

Financial Outlook and Cost Savings

Looking ahead, Newell Brands provided guidance for adjusted second-quarter earnings of 18 cents to 21 cents per share, which falls below the analyst estimate of 25 cents per share. For the full year of 2024, the company projects adjusted earnings of 52 cents to 62 cents per share, compared to the analyst estimate of 57 cents per share.

The company has taken $22 million of restructuring costs in the first quarter, targeting $55 million to $70 million in cost savings for 2024. Additionally, Newell estimates it will incur $75 million to $90 million in restructuring charges by the end of the year, as part of its ongoing efforts to streamline operations and improve financial performance.

Management Quotes

• Chris Peterson, CEO of Newell Brands:

  "We saw excellent progress on our restructuring efforts initially announced in January, with sequential improvement in core sales performance, normalized operating margin and increased operating cash flow."