Released on October 27, 2023, Newell Brands Inc (NWL, Financial)'s third quarter 2023 financial results reveal a decline in net sales but an improvement in gross margin and a significant increase in operating cash flow year-to-date. Despite the challenging macroeconomic backdrop, the company remains confident in its new strategy, which focuses on leading brands in top markets and puts consumer understanding and insights at the center of its operations.
Financial Highlights
For Q3 2023, Newell Brands Inc (NWL, Financial) reported net sales of $2.0 billion, a decline of 9.1% compared to the prior year period. Core sales also declined by 9.2%. However, the company's gross margin improved, with reported gross margin at 30.3% compared to 29.2% in the prior year period. Normalized gross margin was 31.3% compared to 29.6% in the prior year period.
Reported operating margin was negative 7.8%, including the impact of a $263 million non-cash impairment charge. This is compared to positive 1.8% in the prior year period, which included the impact of a $148 million non-cash impairment charge. Normalized operating margin was 8.2% compared to 10.4% in the prior year period.
The company reported a diluted loss per share of $0.53 compared to reported diluted earnings per share of $0.05 in the prior year period. Normalized diluted earnings per share were $0.39 compared to $0.50 per share in the prior year period.
Balance Sheet and Cash Flow
Year-to-date operating cash flow increased by more than $1.2 billion to $679 million compared with an outflow of $567 million in the prior year period. This significant improvement was largely driven by working capital and a reduction in incentive compensation payments, which more than offset the impact of lower operating income and higher restructuring payments.
At the end of the third quarter, Newell Brands had cash and cash equivalents of $396 million and net debt outstanding of $4.7 billion, as compared to $5.0 billion at the end of the second quarter.
Outlook for Fourth Quarter and Full Year 2023
The company initiated its outlook for the fourth quarter 2023 and updated its full year 2023 outlook. For Q4 2023, net sales are expected to be between $1.96 billion to $2.03 billion, with a 14% to 11% decline in core sales. The normalized operating margin is expected to be between 7.8% to 8.8%, and normalized EPS is expected to be between $0.15 to $0.20.
For the full year 2023, the company updated its outlook for net sales and normalized earnings per share to $8.02 billion to $8.09 billion and $0.72 to $0.77, respectively. The company raised its outlook for full year 2023 operating cash flow to $800 million to $900 million.
Explore the complete 8-K earnings release (here) from Newell Brands Inc for further details.
