Newell Brands Inc.: Good news, 2Q did well; maintain Overweight

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Newell Brands Inc.

Good news, 2Q did well; maintain

Overweight

Earnings Review

We expect momentum to build in 2H26

31 July 2026

We maintain our Overweight on NWL Sr Notes as we believe the company’s strategies

and positioning are working and expect Adj EBITDA returns to growth in 3Q26. The

company’s innovation has been well received and is allowing Newell to grow sales. In

addition, we believe that the company has pricing power and can increase its prices if

input costs remain elevated in FY27. This was proven by significant price increases

implemented in FY25 and modest ones in FY26. Lastly, the company operates separable

business units that could be sold if necessary.

High Yield Credit

United States

Consumer Products

2Q26 was slightly above our estimates

2Q26 Adj EBITDA was flat year-over-year at $280 million (adjusted to exclude the

benefit of a $126 million tariff refund). Including the tariff reversal, Adj EBITDA

increased to $406 million. Results were slightly ahead of our estimate of $277 million.

Total revenue increased 3% to $1.99 billion with 2% organic sales growth. Normalized

gross margin as reported by the company increased 520 bps to 40.8% due to the benefit

of tariff refunds. Excluding the benefit of tariff refunds, adj gross margin decreased 100

bps to 34.5%. Based upon debt of $5.06 billion and cash of $209 million, net leverage

was 5.5x at the end of the quarter.

Tariff refunds have begun to be received

Newell paid IEEPA cash tariffs of $120 million in FY25 and this is expected to be

refunded. The company also paid additional IEEPA tariffs in early 1Q26, which should

also be refunded. The company began to receive refunds in July 2026 and expects to

receive most refunds during FY26.

FY26 guidance raised

Newell slightly increased its FY26 sales guidance and updated operating income

guidance to reflect the impact of tariff refunds. Guidance includes: (1) net sales +1% to

+2% (previously flat to +2%); (2) an Adj operating margin of 10.0% to 10.4% (previously

8.6% to 9.2%); (3) operating cash flow of $400 million (previously at the lower end of

$350 to $400 million); and (5) net leverage below 4.5x. We raised our FY26 Adj EBITDA

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