What changed in this filing

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Item 1. Business

2023-02-15 compared with 2022-02-14 · 57 added, 59 removed, 155 unchanged (43% of the section changed)

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The information on the Company’s website is not incorporated by reference into this Annual report on Form 10-K.

Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, First Alert, Spontex, Coleman, Campingaz, Oster, Sunbeam and Mr.

Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, Spontex, Coleman, Campingaz, Contigo, Oster, Sunbeam and Mr.

Newell Brands' beloved brands enhance and brighten consumers lives at home and outside by creating moments of joy, building confidence and providing peace of mind.

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BUSINESS STRATEGY

The Company is continuing to execute on its turnaround strategy of building a global, next generation consumer products company that can unleash the full potential of its brands in a fast-moving omni-channel environment.

The Company continues to execute on its turnaround strategy of building a global, next generation consumer products company that can unleash the full potential of its brands in a fast-moving omni-channel environment.

The strategy, developed in 2019, is designed to:

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• Improve operating margins by driving productivity and overhead savings, while reinvesting in the business;

• Accelerate cash conversion cycle by focusing on cash efficiency and improving key working capital metrics;

• Accelerate the cash conversion cycle by focusing on cash efficiency and improving key working capital metrics;

• Strengthen the portfolio by investing in attractive categories that are aligned with its capabilities and strategy and optimizing product mix;

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a rapidly changing retail landscape;

continued macroeconomic and political volatility;

continued macroeconomic and geopolitical volatility;

a softening macro backdrop;

significant inflationary and supply chain pressures, and an evolving regulatory landscape.

The coronavirus (COVID-19) pandemic and its impact to the Company’s business resulted in the acceleration of the turnaround initiatives in many respects.

Continued execution of these strategic imperatives, in combination with new initiatives aimed to build operational excellence, will better position the Company for long-term sustainable growth.

One such initiative that was announced in the third quarter of 2021 is Project Ovid, a 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.

This initiative is expected to leverage technology to further simplify the organization by harmonizing and automating processes.

One such initiative is Project Ovid, a 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.

This initiative, which commenced its first phase go-live during the third quarter of 2022 and its second phase go-live in February 2023, is expected to leverage technology to further simplify the organization by harmonizing and automating processes.

Project Ovid is designed to optimize the Company’s distribution network by creating a single integrated supply chain from 23 business-unit-centric supply chains.

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This new operating model is also expected to drive efficiencies by better utilizing the Company's transportation and distribution network.

Current Macroeconomic Conditions

The Company, which has been impacted in recent years by inflationary and supply chain pressures, labor shortages, and logistical challenges across its businesses, and more recently by the indirect macroeconomic impact of the Russia-Ukraine conflict, is also experiencing additional headwinds due to softening global demand and an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers.

While all of the Company's segments have been negatively impacted to

varying degrees by the softening global demand, the Home Appliances and Home Solutions segments have been the most impacted.

These collective macroeconomic trends, the duration and severity of which are highly uncertain, are rapidly changing the retail landscape and have impacted the Company’s operating results, cash flows and financial condition in 2022 and are expected to persist into 2023.

To help mitigate the negative impact of these conditions on the operating performance of its businesses, the Company has secured selective pricing increases, accelerated productivity initiatives, optimized advertising and promotion expenses, deployed overhead cost containment efforts, adjusted demand forecasts and supply plans and taken actions designed to improve working capital.

The Company will continue to evaluate other opportunities to improve its financial performance both in the short and long term.

Although management has made its best estimates and assumptions based upon current information, actual results could materially differ given the uncertainty of these factors and may require future changes to such estimates and assumptions, including reserves, which may result in future expense or impairment charges.

Russia-Ukraine Conflict

The global economy has been negatively impacted by the military conflict between Russia and Ukraine.

While the Company does not expect the conflict to have a material impact on its results of operations, it has experienced shortages in raw materials and increased costs for transportation, energy, and commodities due in part to the negative impact of the Russia-Ukraine military conflict on the global economy.

Further escalation of geopolitical tensions related to the conflict, including increased trade barriers and restrictions on global trade, could result in, among other things, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.

Additionally, if the military conflict escalates beyond its current scope, the Company could be negatively impacted by an economic recession in certain neighboring European countries or globally.

See Recent Developments, Liquidity and Capital Resources and Critical Accounting Estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Footnote 1 of the Notes to Consolidated Financial Statements for further information.

Project Phoenix

In January 2023, the Company announced a restructuring and savings initiative (“Project Phoenix”) that aims to strengthen the Company by leveraging its scale to further reduce complexity by streamlining its operating model and driving operational efficiencies.

Project Phoenix is expected to be substantially completed by the end of 2023.

It incorporates a variety of initiatives designed to simplify the organizational structure, streamline the company’s real estate, centralize its supply chain functions, which include manufacturing, distribution, transportation and customer service, transition to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs.

See Recent Developments in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Footnote 4 of the Notes to Consolidated Financial Statements for further information.

Sale of Connected Home & Security Business

On February 6, 2022, the Company signed a definitive agreement to sell its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc.

for a purchase price of $593 million, subject to customary working capital and transaction adjustments.

The transaction is expected to be completed by the end of the first quarter of 2022, subject to customary closing conditions, including regulatory approvals.

On March 31, 2022, the Company sold its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc., for approximately $593 million, subject to customary working capital and other post-closing adjustments.

See Recent Developments and Liquidity and Capital Resources in Item 7, Management’s Discussion and Analysis of Financial Condition and Footnotes 1, 2 and 17 of the Notes to Consolidated Financial Statements for further information.

Coronavirus (COVID-19)

The COVID-19 pandemic, which began in late 2019, has continued to disrupt the Company’s global operations, similar to those

of many large, multi-national corporations in three primary areas:

Supply chain.

Of its 135 manufacturing and distribution facilities, approximately 20 were temporarily closed at the end of the first quarter of 2020, the most significant of which were its South Deerfield, Massachusetts, Home Fragrance plant, its Mexicali, Mexico and India Writing facilities, and its Juarez, Mexico Connected Home and Security facility, all of which were closed in accordance with applicable government guidelines.

The majority of the Company’s manufacturing and distribution facilities reopened during the second and third quarter of 2020 and have since been operating at or near capacity with inventory levels replenished.

The Company does, however, continue to face significant product, supply and labor shortages, capacity constraints and logistical challenges across its businesses, including port congestion, constrained shipping container availability and delays in carrier pickup, which have negatively impacted the Company's ability to satisfy demand for its products, creating order backlog in a number of categories.

The Company also continues to face significantly higher than expected inflation for commodities, primarily resin, sourced finished goods, transportation and labor, which had a negative high-single-digit-percentage impact to costs of products sold for 2021.

These various disruptions are expected to persist, at least in the near-term.

To help mitigate the negative impact of inflation to the operating performance of its businesses, the Company has secured selective pricing increases, accelerated productivity initiatives and deployed overhead cost containment efforts.

While the Company’s largest retail customers experienced a surge in sales as their stores remained open, a number of secondary customers, primarily in the specialty and department store channels, temporarily closed their brick and mortar doors in March 2020, and began to reopen in certain regions where conditions improved towards the end of the second quarter of 2020.

These dynamics, in combination with some retailers’ prioritization of essential items, have had a meaningful impact on the Company's traditional order patterns.

In addition, the Company temporarily closed its Yankee Candle retail stores in North America as of mid-March of 2020 due to COVID-19.

These stores reopened by the end of the third quarter of 2020 and have remained open since.

Consumer demand patterns.

During the quarantine phase of the pandemic in 2020, consumer purchasing behavior strongly shifted to certain focused categories.

Certain of the Company’s product categories benefited from this shift, primarily in Food, Commercial and Home Appliances.

Some of the Company’s other businesses were negatively impacted but have seen positive momentum with an increase in demand post lockdowns, in particular Writing, Baby and Home Fragrance.

While the seasonality of its businesses reverted to historical trends in 2021, uncertainty still remains over the volatility and direction of future consumer demand patterns.

The Company believes the extent of the impact of the COVID-19 pandemic on the Company's future sales, operating results, cash flows, liquidity and financial condition will continue to be driven by numerous evolving factors that the Company cannot accurately predict and which will vary by jurisdiction and market, including severity and duration of the pandemic, the emergence of new strains and variants of the coronavirus, the likelihood of a resurgence of positive cases, the development and availability of effective treatments and vaccines, especially in areas where conditions have recently worsened and work restrictions, operational or travel bans have been reinstituted, the rate at which vaccines are administered to the general public, the timing and amount of fiscal stimulus and relief programs packages that may become available to the general public in the future, and any changes in consumer demand patterns for the Company's products as the impact of the global pandemic lessens.

With the spread of new strains and variants of the coronavirus, the Company continues to monitor developments, including government requirements and recommendations at the national, state, and local level on whether to reinstate and/or extend certain initiatives previously implemented to help contain the spread of COVID-19 and currently plans to mandate vaccinations for its U.S.

See Recent Developments, Liquidity and Capital Resources and Critical Accounting Estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

Organizational Structure

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Segment Key Brands Description of Primary Products

Commercial Solutions BRK, First Alert, Mapa, Quickie, Rubbermaid, Rubbermaid Commercial Products, and Spontex Commercial cleaning and maintenance solutions;

Commercial Solutions Mapa, Quickie, Rubbermaid, Rubbermaid Commercial Products, and Spontex Commercial cleaning and maintenance solutions;

closet and garage organization;

hygiene systems and material handling solutions

connected home and security and smoke and carbon monoxide alarms

Home Appliances Calphalon, Crockpot, Mr.

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(1) and Ball®, TM of Ball Corporation, used under license.

This structure reflects the manner in which the chief operating decision maker regularly assesses information for decision-making purposes, including the allocation of resources.

This structure reflects the manner in which the chief operating decision maker (“CODM”) regularly assesses information for decision-making purposes, including the allocation of resources.

The Company also provides general corporate services to its segments which is reported as a non-operating segment, Corporate.

See Footnotes 1 and 17 of the Notes to the Consolidated Financial Statements for further information.

Beginning in January 2023, the Company will combine its previously reported Commercial Solutions, Home Appliances and Home Solutions operating segments into one operating segment, Home and Commercial Solutions.

This change by the CODM was driven by the implementation of a new operating model which is intended to drive further simplification and unlock additional efficiencies and synergies within the Company.

The Learning and Development and Outdoor and Recreation operating segments will remain as the Company’s other two operating segments.

The Company will recast prior period comparable results in its first quarter 2023 reporting to conform to this operating segment change.

See Footnote 17 of the Notes to Consolidated Financial Statements for further information.

Commercial Solutions

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hygiene systems and material handling solutions primarily under the Rubbermaid, Rubbermaid Commercial Products, Mapa, Quickie, and Spontex brands.

The segment also manufactures and distributes connected home and security products as well as smoke and carbon monoxide alarms mostly under the BRK and First Alert brands.

See Footnotes 1 and 17 of the Notes to Consolidated Financial Statements for further information on the expected sale of the CH&S business unit.

The Commercial Solutions segment primarily markets its products directly to warehouse clubs, home centers, commercial products distributors, mass merchants, specialty retailers, distributors, e-commerce retailers, select contract customers and other professional customers.

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Multi-Product Offering

The Company’s broad product offering in multiple categories permits it to more effectively meet the needs of its customers.

With families of leading brand names and profitable and innovative new products, the Company can assist volume purchasers in selling a more profitable product mix.

The Company’s broad product offering in multiple categories permits it to meet the needs of its customers more effectively.

With families of leading brand names and innovative new products, the Company can assist volume purchasers in selling a more profitable product mix.

As a potential single source for an entire product line, the Company can use program merchandising to improve product presentation, optimize display space for both sales and income, and encourage impulse buying by retail consumers.

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The Company has multiple foreign and domestic sources of supply for substantially all of its material requirements.

The raw materials and various purchased components required for its products have generally been available in sufficient quantities, although the Company did experience capacity constraints around certain raw materials and finished goods in 2021 driven by global conditions, including continued demand volatility related to the COVID-19 pandemic, which are expected to continue into 2022.

The raw materials and various purchased components required for its products have generally been available in sufficient quantities, although the Company experienced capacity constraints around certain raw materials and finished goods in 2022 driven by global conditions, which are expected to continue into 2023.

The Company’s product offerings require the purchase of resin, corrugate, glass, plastic, expanded polystyrene, extinguisher powder, nylon, paper, plastic resin, sawdust, tin plate, wax and wood, natural rubber, electrical components, glass fiber, magnesium, adhesives, various paper-related packaging materials and metals, including steel, stainless steel, aluminum and copper.

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Historically, the Company has experienced inflation in sourced product costs due to currency fluctuations and increased input and labor costs.

During 2021, the Company experienced significant inflationary pressures for its sourced finished goods driven by global conditions, including demand volatility related to the COVID-19 pandemic, which is expected to continue into 2022.

For a limited number of product lines, a single

manufacturer or a limited number of manufacturers may supply substantially all the finished goods for a product line.

During 2022, the Company experienced significant inflationary pressures for its sourced finished goods driven by global conditions, including demand volatility

related to the Russia-Ukraine conflict, which is expected to continue into 2023.

For a limited number of product lines, a single manufacturer or a limited number of manufacturers may supply substantially all the finished goods for a product line.

In particular, certain businesses within the Company’s Learning and Development segment rely on third-party manufacturers for substantially all of their products.

Specifically, the Baby business unit has a single source of supply for products that comprise a majority of its sales and which owns the intellectual property for many of those products.

Specifically, the Baby business unit has a single source of supply for products that comprise a majority of its sales and that owns the intellectual property for many of those products.

The dollar value of unshipped orders is not material.

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In addition, the Company 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.

The Company's sales and operating results were disrupted by the COVID-19 pandemic, negatively impacting the Company's performance during the first half of 2020, with improved performance thereafter.

While the seasonality of its businesses reverted back to historical patterns in 2021, uncertainty still remains over the volatility of the direction of future consumer demand patterns.

The Company's sales and operating results, previously disrupted by the COVID-19 pandemic in 2020, reverted to historical patterns in 2021, however, uncertainty remains due to the significant volatility and direction of future consumer and customer demand patterns due to softening global demand, an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers, as well as supply chain pressures.

Patents and Trademarks

The Company has many patents, trademarks, brand names and tradenames that are, in the aggregate, important to its business.

The Company’s most significant brands include Aprica, Baby Jogger, Calphalon, Campingaz, Coleman, Contigo, Crockpot, Dymo, Elmer’s, EXPO, First Alert, FoodSaver, Graco, Mapa, Marmot, Mr.

The Company’s most significant brands include Calphalon, Campingaz, Coleman, Contigo, Crockpot, Dymo, Elmer’s, EXPO, FoodSaver, Graco, Mapa, Marmot, Mr.

Coffee, NUK, Oster, Paper Mate, Parker, Quickie, Rubbermaid Commercial Products, Rubbermaid, Sistema, Spontex, Sunbeam, WoodWick, Sharpie and Yankee Candle.

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This environment may limit the Company’s ability to recover cost increases through pricing.

Current trends among retailers include fostering high levels of competition among suppliers, reducing current inventory levels, demanding innovative new products and products tailored to each of their unique requirements and requiring suppliers to maintain or reduce product prices and deliver products with shorter lead times.

Current trends among retailers include fostering high levels of competition among suppliers, rebalancing and reducing current inventory levels, demanding innovative new products and products tailored to each of their unique requirements and requiring suppliers to maintain or reduce product prices and deliver products with shorter lead times.

Other trends, in the absence of a strong new product development effort or strong end-user brands, are for retailers to import generic products directly from foreign sources and to source and sell products under their own private label brands, which compete with the Company’s products.

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In addition, the Company has an experienced management team that focuses on building consumer loyalty and increased consumer demand through increased investment in consumer insights and using those insights to develop innovative products and product features that meet consumers’ needs.

The Company's service and delivery levels in 2021 were negatively impacted by product, supply and labor shortages, capacity constraints and logistical challenges across its businesses, all of which the Company expects to continue in 2022.

The Company's service and delivery levels in 2022 were negatively impacted by product, supply and labor shortages, capacity constraints and logistical challenges across its businesses, all of which the Company expects to continue into 2023.

The Company has also positioned itself to respond to the competitive challenges in the retail environment by developing strong relationships with large, high-volume purchasers.

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The Company’s largest customer, Walmart Inc.

and subsidiaries (“Walmart”), accounted for approximately 15% of net sales in 2021, 2020 and 2019.

Amazon, the Company's second largest customer, accounted for approximately 13%, 12%, and 9% of net sales in 2021, 2020 and 2019, respectively.

and subsidiaries (“Walmart”), accounted for approximately 14% of net sales in 2022 and 15% of net sales in each of 2021 and 2020.

Amazon, the Company's second largest customer, accounted for approximately 13% of net sales in each of 2022 and 2021 and 12% of net sales in 2020.

The Company’s top-ten customers in alphabetical order in 2022 included:

Amazon, Bed, Bath & Beyond, Costco, Kroger, Lowe’s, Office Depot, Staples, Target, The Home Depot and Walmart.

Amazon, Bed, Bath & Beyond, Costco, Kroger, Lowe’s, Office Depot Inc., Staples, Target, The Home Depot and Walmart.

Environmental Matters

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The ERGs provide a space where employees can foster connections and develop in a supportive environment.

At December 31, 2021, the Company had the following six ERGs:

At December 31, 2022, the Company had the following eight ERGs:

• ABLE (Disabled Employees and Allies);

• BEACON (Black and African ancestry);

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• VETS (Veterans and Military Family Members);

In 2022, we will continue to expand and introduce additional ERGs across the globe.

• MOSAIC (All).

In 2023, we will continue to expand ERGs across the globe.

The Company is focused on recruitment of diverse candidates and on internal talent development of its diverse leaders so they can advance their careers and move into leadership positions within the Company.

The Company has adopted a policy requiring diverse slates for recruitment at the Director level and above.

Also, during 2021, the Company conducted a fully digital, enterprise-wide engagement survey, which was given to all employee groups including professional, clerical and factory hourly employees and was

available in 33 languages, which focused on measuring engagement and inclusion.

The Company has adopted a policy requiring diverse

slates for recruitment at the Director level and above.

This policy applies to recruitment of members of the Board of Directors as well.

Also, during 2022, the Company conducted a fully digital, enterprise-wide engagement survey, which was given to all employee groups including professional, clerical and factory hourly employees and was available in 33 languages, which focused on measuring engagement and inclusion.

The results showed that the majority of the scores were equal to or above the global benchmarks.

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The Company believes its management team has the experience necessary to effectively execute its strategy and advance its product and technology leadership.

The Chief Executive Officer and Executive Committee have meaningful industry experience.

The Chief Executive Officer and executive leadership team have meaningful industry experience.

They partner and work closely with an experienced and talented management team who is dedicated to maintaining and expanding our position as a global leader in the consumer products industry.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business