Newell Brands Tariff Sensitivity Analysis Shows 125% China Tariff Impact, Stock Tumbles

Newell Brands Inc. NWL shares are trading lower on Wednesday after reporting the first-quarter earnings report.

The company reported adjusted earnings per share of a one-cent loss, beating the street view of a six-cent loss. Quarterly revenues of $1.57 billion (down 5.3% year over year) beat the analyst consensus estimate of $1.54 billion.

Core sales declined 2.1% compared with the prior year period.

The Learning & Development segment generated net sales of $572 million compared with $559 million in the prior year, reflecting core sales growth of 4.2%.

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The Home & Commercial Solutions segment generated net sales of $812 million, compared with $893 million in the prior year period, reflecting a 5% decline in core sales.

Quarterly normalized gross margin increased to 32.5% compared with 31.0% in the prior year period, while normalized operating margin was 4.5% compared with 4.8% in the previous year period.

In the first quarter, normalized EBITDA was $136 million compared to $152 million in the prior year.

Operating cash outflow was $213 million, compared to $32 million in the prior year period. 

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At the end of the first quarter, Newell Brands had an outstanding debt of $4.9 billion and cash and cash equivalents of $233 million.

“Our decision to maintain and invest in a robust and extensive in-house domestic manufacturing base while many of our competitors outsourced or off-shored much of their production capability, positions us well to not just manage tariff related sourcing dislocations, but to ultimately benefit from them,” said President and Chief Executive Officer Chris Peterson.

Tariff Sensitivity: The most recent reciprocal China tariff of 125% is not included in the company’s current outlook. The company’s sensitivity analysis shows that if the 125% tariff rate remains in effect for the full year and is not mitigated, it could reduce Newell Brands’ 2025 normalized EPS by approximately $0.20. However, the company has already identified mitigating actions that it believes would be sufficient to cut this amount in half.

Outlook: Newell Brands reaffirmed its FY2025 adjusted EPS guidance at $0.70–$0.76, above the $0.68 consensus estimate.

The company also maintained its FY2025 sales outlook of $7.28 billion—$7.43 billion, compared to the $7.37 billion estimate.

Newell Brands expects Q2 adjusted EPS of $0.21–$0.24, missing the $0.32 estimate. It sees Q2 sales between $1.931 billion and $1.972 billion, compared with the $1.97 billion estimate.

Price Action: NWL shares are trading lower by 7.45% to $4.79 at last check Wednesday.

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