Q4 2020 Newell Brands Inc Earnings Call

[music].

Good morning, and welcome to New L brands fourth quarter, and full year 'twenty 'twenty earnings Conference call.

At this time all participants are in a listen only mode.

After a brief discussion by management, we will open up the call for questions.

In order to stay within the time schedule as far as the call. Please limit yourself to one question during the question and answer session.

As a reminder, today's conference is being recorded.

Live webcast of this call is available at IR Gosh, you will brands Dot com.

I will now turn the call over to Sofia, <unk> VP of Investor Relations.

And as soon as you may begin.

Thank you good morning, everyone and welcome to L brands fourth quarter earnings call on the call with me today and solid Graham, our president and CEO and Chris Peterson, our CFO and President business operations before we begin I'd like to and quality that during the course of today's call, we will be making forward looking statements.

Risks and uncertainties.

Actual results and outcomes may differ materially I refer you to the cautionary language and risk factors are available and our earnings release, and our form 10-K, and 10-Q available and our Investor Relations website for further discussion of the factors affecting forward looking statements.

We assume no obligation to update any forward looking statements.

And also recognize that today's remarks literature, and certain non-GAAP financial measures, including those who are referred to as normalized measures.

These non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP explanations of these non-GAAP measures and available reconciliations between GAAP and non-GAAP measures can be found in today's earnings release and tables and other materials and new Investor Relations website. Thank you.

And now I'll turn the call over to Rob.

And on surface.

Good morning, everyone happy new year, and happy to live out here and welcome to our call.

And Kelly.

And I want this day.

And I would say, yes right.

While the maritime.

And any crazy it was a very challenging year.

Mike Brown and the results our team delivered as we quickly adapted to the evolving environment at the same time, we remain focused on ensuring the safety and wellbeing of our employees Gaffney operating our plants and distribution facility.

Good day, and maintaining financial viability and business opportunities.

Clothes this tarski, yeah and then.

And unexceptional.

The fourth quarter and full year results ahead of our expectations across the board. This is a testament to the incredible resilience force Intuit and commitment to product volume to execute with excellence and in fact, and Thats already pivoted to accelerate the turnaround plan.

And so you didn't Miss the continued strong underlying performance and the business and the.

And second half of the GAAP across all key value drivers.

And margins earnings per share and cash flow. We also achieved meaningful progress against our strategic priorities and training training fast food strengthened and diversified our team as we brought in and low cost leader from the outside and to our clients commercial food and outgrow and recreation businesses.

And it drove up functions they hit the ground running and scope.

And it certainly get off and did not allow for any downtime that complement our strong existing with leaders across the other night and pulp businesses.

The leadership team and I are focused on building, a really wide and your culture focus from trust.

And the teamwork and diversity inclusion and belonging efforts that our top priority as we continue to galvanize, our employee and unify everyone and behind the common and preference of delighting consumers with us.

Brands that create moments of joy sales comps.

And provide peace of mind set.

And second throughout the year, we improve customer relationship through enhanced collaboration joint business planning efforts as well as increased emphasis on delivering excellent service for our customers. We're leveraging our omni channel capabilities for advanced joint business planning and believes it is an area of strength for Newell.

Also seizing opportunities to close distribution gaps, particularly and the food drug and dollar channel, we're already making progress on that front across a number of businesses such as food rising and home fragrance.

We drove a 30 basis point improvement and normalized operating margin and Fannie and Freddie and.

Incredible feat, given the constant and business mix headwinds, we had to overcome during day yet.

And this was made possible by establishing a culture and productivity as well as aggressively attacking the overhead cost at organizational complexity in fact normalized operating margin expanded 100.

And basis points, yet early yet and the second half and as well.

Things are awesome and the second quarter was mostly driven by fixed cost deleveraging.

And for the full year EPS of $1 79.

100% from continuing operations for tight working capital management resulted in operating cash flow of more than $1.4 billion, you asphalt from $12 billion business unit, and Cfos med fire and billions of dollars and Chris Peterson.

And John Lastly, one of the key objectives.

And that's been to return the company to sustainable core sales growth.

Sales for the year declined $1 12 per cent I'm delighted to say that and the second half of training training lead times, a corner core sales grew 6% and increased across seven out of eight business units.

Every geographic region growth during training training and we experienced healthy domestic consumption, that's broad base strength.

And resilience of our portfolio to show through as growth in food commercial and appliances, <unk> cookware business unit offset revenue softness.

The team successfully navigating and demand such as product and container availability issues and temporary factory and distribution center closures.

Heightened focus on relevant generation grounded and consumer insights as well as omni channel execution are making it a price during training and we drove improved domestic market share across a number of businesses, including baby gear food storage vacuum sealing fresh preserving cash quarters and.

And I'm up here.

Many of the five top brands delivered incredible results and training training and development food and say I'll start Matt.

And context, Paul prevalent and all.

All of the growth at a double digit free.

And the challenge is the rainfall and a critical priority for us.

E Commerce business has continued to be a substantial growth engine for the company in 2000 and training E Commerce revenue growth accelerated to the high Thirty's and penetration online improved through the bag training to percentage of net sales on a regular basis growth.

And <unk> doubled versus two years ago.

And as baby remains by far the most highly penetrated and business across the digital platform with the meaningful shift towards online consumption across the portfolio in fact and training for all business units combined with digital penetration as a percentage of net sales of more than 20%, including baby home fragrance outdoor and.

Recreation and appliances, and cookware and food is chasing that number.

All of our leaders took quick and decisive actions to strictly and after the COVID-19 environment and in my view and credits these trends, including improved preparing more food at home and Greg. Your people currently per home chef heightened interest and outdoor hobbies and plus per one theme and increased investment in China.

And we anticipate that trend sort of continues to evolve throughout 2021. We also believe that many of the habits that have been found during this pandemic and get to stay with our portfolio well positioned to capitalize on them.

Let me briefly touch upon each of our businesses performed and training training.

And and truly thrilled with the progress we are in line.

Let's stop and appliances, and cookware and revenue delivered mid single digit core sales growth driven by the strength and the international markets in the U S consumption increased during the fourth quarter and for the food yet as more people have been cooking banking and spending time accounts.

And Latin America, despite COVID-19 related challenges the team delivered outstanding results.

Davidson.

And as the digital platform.

I'm extremely proud of these results I also realize that a lot more work needs to be done and to reposition the appliance business for sustainable growth.

And finally training the appliances category accelerated significantly and in some instances, we did not keep up especially in the U S. This resulted in share losses, albeit lower and magnitude than in prior years. Although we are seeing good traction with recent innovations such as Mr. Coffee Iced coffee maker bolster cash just yet.

And as for Diamond and force heating and cooking.

Cooking products, and you need to extend and learning and leveraged consumer insights across the entire branded portfolio Backflip began and training training and is continuing.

Trading 21, as we implement the net speed strategic changes.

And to successfully transition appliances.

Strong international appliances franchise with strong brand equity for those drove cross border Sunbeam, and Latam and Australia, New Zealand, followed by brands and in Europe. Our challenge is to address Pedro category businesses and the U S with low gross margins that dragged down the portfolio.

And Chris Robinson, CEO products business and undertake actions and train two.

To prune the portfolio.

And within the commercial solutions segment.

Much of the business.

And nominal training and training.

Core sales growth during each quarter culminated and high single digit growth per year, we saw particularly strong sales growth and Walkthrough love and scouring and product as well as outdoor and garage organization businesses, which benefited from heightened consumer engagement across the home improvement categories and.

And respond to strong demand for monetization as relative to our strategic investments to expand production capacity. When we play it's about a 3.3 million soap and dispenser sanitizer dispensers globally and sold enough soap and sanitizer to obtain over.

<unk> 30 billion and Paris.

A lot of patents.

We're not stopping there we're introducing innovative staff and brackets that enables facility operators from one hand, sanitizers virtually anywhere around and building, including a law and the tabletop and general open space.

The breadth of the commercial business portfolio, which includes both consumer.

And commercial offerings and sort of thing.

Diverse coverage of verticals and enhanced partnership with retail partners and positioned the business for the home for long term success.

Let's move to connected home and security business and of course, houseware down and trade trends due to supply constraints caused by pandemic related plant shutdowns and the business performed well and the back half per year with top line and accelerating and the fourth quarter.

Within the home solutions segment, our food.

Business has.

And so that really led to its rocket ship status and are growing very fond of.

It actually returned to growth prior to the pandemic and built momentum from mid twenties percentage of core sales growth and training.

We're battle by strong consumption throughout the year as well and market share gains in the U S are leading brands rubbermaid food and savor and ball took share across food storage food preservation and accounting vertical benefiting from improved commercialization of products stronger consumer and social engagement and programming and.

Recent innovations such as the latest bankruptcy and device food favor and <unk> multi use preservation system and rubbermaid brilliance glass.

The launch of brilliance class is off to a rolling stock and the overall sub brand and our rubbermaid brilliance and sales have almost doubled and training training training training was a stellar year for food segment, which was the fastest growing brands and all.

From your brands and it broke through and that's a top 10 brands for US strong appliance sales and training training should translate into increased consumer purchases and training for anyone.

Food, we continue to chase demand from January and we're working hard to address supply constraints and certain product lines.

And turning to home.

And frankly, as we experienced strong consumption growth and our home fragrance business doing anything driven by upside and demand and the back half of the year as a result.

Core sales increased in both North America, and EMEA and the second half of the year and in the seasonally critical fourth quarter period full year top line sales performance.

Was partially and that by the temporary closure by Yankee candle retail stores and other specialty chains.

So several months ago, and yet and the supply chain disruption experienced in the second quarter I'm extremely proud of the team's resilience and creativity and addressing supply shortages and they worked around the clock and <unk> engaged our corporate teams in the manufacturing and packing operations.

And our production and attempt to keep up with consumer demand, which remains robust in January.

Second category and cabinet category, but some fire and crane for any unintended as demand for products that bring transparency into consumer homes remains robust and we held share despite supply constrained as we look out to 'twenty 'twenty, one and a number of exciting innovations and the hopper, including the Yankee candle and signature collection.

The largest update to the Yankee line and yes, and it is launching this month.

And provider base.

Betting experience today.

We continue to reposition the home fragrance business from a longtime during training training and we exited the fundraising business.

And 77 retail stores with additional store closures and anticipated and training training law and the same time and building cranes momentum on our direct to consumer business, which grew strong double digits, and 2000 and trends offsetting shortfalls and retail expanding distribution into diversity and truck channels and diverse.

Defining our product portfolio into auto and Diffusers and Tetra.

And the learning and development segment core sales for our baby business grew modestly during training training.

And the rebound from QC persisted into Q4, driven by healthy consumption recovering from the depressed levels in March and April when Lockdowns and fully paid for the year domestic demand improved across baby gear and infant care businesses, particularly talk about coffee typecast shrinks and bottle.

And we've seen a continuation of strong domestic consumption trends in January.

Mobility improved post dropdowns, the rebound and demand for toddler car seats has been nothing short of remarkable what's even more gratifying is that these solidified our leading position and that's been important category and.

Training training and getting over 250 basis points of share with trail by the strong performance of our graco brands, which picked up 130 basis points per share and training and training.

GAAP taxes innovation more exciting launches planned for 'twenty and 'twenty, one, including Graco Slim fit.

And one copy us limits design.

C car seats across savings space, and the backseat without compromising on safety and the future features Barents Sea.

And now as anticipated.

Nike training with a healthier from a writing business and the category in total and particularly in the punishment channel courthouse pressure continued into the fourth quarter, albeit at lower levels relative to the price of borrowers so the demand and the U S normalized EBITDA.

During the fourth quarter, we did see continued consumption growth and the U S. We started in September at the <unk>.

Back to school season was extended for the full year. There are also a few bright spots and couldn't patents labeling and find our businesses all of which group despite.

Despite the disruption.

Although category headwinds for significant both in the U S and internationally, we've made progress on the market share products and a quarter I think categories, which positions position us to come out of the pandemic on a stronger footing 'twenty and 'twenty with the euro per Panther, writing business with innovation and delivering outstanding market share gains.

And about 750 basis points and growth plans and 260 basis points across the total pet category, where.

Optimistic about our momentum and depends category and have lunch expansion from a sharp edge platform with sharp ESD and fashion designs and our expansion and choppy as governmental barrel.

We'll be launching this platform around the growth. We also received achieved strong share performance and our lending business and diamond reached record share both in the U S and EMEA while category challenges specific consumption has remained positive thus far and <unk> trademark, we exited and training training with our newest retail.

And mentoring position across the office superstores and several years this should better position us and the retailers for a rebound and post pandemic and schools and office has returned to a more normal cadence, while that's a great degree of uncertainty around the timing of return from a sensor and almost in schools and offices.

Assuming a more normal and back to school season in 2021, but that office has made in Maine and hybrid environments and the balance of the Inc.

Impacting our commercial channel.

Lastly, core sales from consumption and outgrow and recreation business, while under pressure during 2020 weighted down by the softness and our technical apparel and beverages businesses and as a result of further used on the growth activities.

We delivered solid performance and the outdoor business and the back half of the year, particularly in the outdoor equipment category, such as coolers stance and stores. We also saw a number of favorable development and the market share pump and several core categories, such as coolers and tenants, where we gained about 90 and 190 basis points.

Chad respectively.

Especially and decided to share the colon, which is one of the largest fastest time to growth during 2020, Waterlase and celebrate the then current and 20th anniversary.

<unk> had a number of successful launches and training training and coding the colon sky and we refreshed. Many coolers were following up and depending 'twenty one season with additional consumer centric and purposeful.

Innovations to highlight just a few we're expanding the assortment of the training training Portland Sky don't tend to larger content formats and above.

Alrighty of solid colors, and we're also introducing and equivalent reunion collection of coolers, which will include new manpower chronic patients and treat beautiful and focus.

Elevate and rejuvenate the equivalents deals that are critical line, although im certainly encouraged by the progress we have made and outdoor equipment business, we have more work.

On technical apparel, which is especially led by mom and brands and beverage with pump to go live.

What and capable leaders to do just that and I expect a stronger and in 'twenty one.

And now two years and did the turnaround with notable progress and hospital organization as we look into look out to 'twenty 'twenty, one and beyond and we intend to build on the improving momentum we will continue to position Newell brands for sustainable and profitable growth with our strategic priorities focused on our call.

Five areas.

Galvanized times noise behind that purpose to create consumer set.

Customer focused organization that is digitally savvy and willing to experiment and learn line is getting to our core values.

Sustained top line growth by focusing on the end to end consumer journey, strengthening omni channel capabilities, while accelerating online penetration.

And focusing on scaling and modernized and got a top brands. We also lot of strength and efforts to improve supply about ability to improve customer service levels from strong focus on forecast accuracy.

The comment and innovation engine by sharpening, our focus and consumer insights and trends and implementing an enterprise wide innovation operating model building cross business unit and platforms and better leveraging our R&D resources.

And the accelerated international growth and improved profitability by addressing fragmentation high overhead prioritizing drive countries evolving autonomous geographic units to one Newell approach.

Approach to build scale and moving to a distributor model and non priority countries and food.

Care to make progress on the bilateral and gander expanding margins through productivity tight management of overhead costs and.

And complexity reduction and strengthening yields Newell brands cash conversion cycle and balance sheet, all the Fannie and Freddie.

And if they wanted to try and volatile period in recent history.

<unk> volume resilience, but system's ability to adapt.

And execute with speed and agility. This has enabled us to gain significant traction.

And strategy and strengthen the underlying fundamentals positioning the company to come out even stronger post the pandemic I am excited about <unk> prospects and feel our better days are ahead of price Agra and up.

And now I turn the call over to our billion dollar commodity.

Chris Peterson.

Thanks, Ravi and good morning, everyone.

The team delivered an outstanding finish to the year with Q4 results ahead of our expectations across every key metric, including top line operating margin EPS and operating cash flow and fact, our 2020 results exceeded or were in line with the initial guidance, we laid out a year ago. Despite the significant disruption from the pandemic.

And now two years and the the turnaround and have come a long way and strengthening the financial performance and operational effectiveness and the company.

Last year, and we drove excellent progress on each area of the turnaround plan and gained significant momentum and the second half from 2020 before getting into the financial results and outlook I want to spend a few minutes operational highlights we.

And we've made significant progress simplifying the organization for example on SKU count we exceeded our target a year early and exited 2020 with 47000 skus as compared to our goal of 50000 and by the end of 'twenty one.

We have eliminated 54% of our skus over the past two years with a 37% reduction and 2020 alone effectively we have doubled our revenue per SKU over the past two years. We've also meaningfully strengthened the quality of our inventory cutting our excess and obsolete inventory by more than half since 2018.

We are not stopping here and we will continue to simplify the SKU portfolio across each of our businesses.

Over the past two years, we've also significantly simplified our IP architecture, as we rationalize nearly 90% of it applications ending 2020 with less and 800 and apps successfully implemented ERP migrations include into October 1st move up home and North America to Sap's, which went smoothly and we <unk>.

Back to get 95% of our business on two ERP systems over the next two years.

We also fully redesigned our digital technology platform rationalizing the number of sites in North America from about 290 to 40.

We have already migrated 35 of these 40 sites to the new platform with another free convergent is expected to be completed by the end of February.

This is a remarkable achievement within an 18 month period, the new platform delivers and much higher quality more engaging and impactful consumer experience and allows us to introduce exciting omni channel features along the way we expect to complete the conversion of the remaining U S sites by the summer and later this year and plan to extend this initiative to our international markets.

And as I mentioned on our prior call. During 2020, we also implemented a new technology to consolidate and better control the company's indirect overhead spending, which we expect to drive significant savings going forward.

Just a few examples of where we are eliminating complexity from the organization, but the efforts go well beyond the ones I mentioned impacting areas, including the supply chain legal entity structure cost centers profit centers financial system and real estate amongst others.

We're driving overhead efficiencies through complexity reduction along with benefits from restructuring savings, which we started to realize and the back half of the year, we lowered our overhead as a percentage of sales by another 100 basis points from 2020.

Importantly, as we look forward, we see ample opportunity to continue to simplify our operations and optimize our supply chain beyond efficiencies simplification allows us to become a more preferred partner with our retail customers.

And we continue to optimize our cost structure and we are increasingly leaning into our productivity initiative called fuel a significant enabler of our margin ambition and.

And 2020, we drove a stellar outcome on fuel and reducing our cost of goods sold base by about 4% year over year as growth savings increased about 35%.

This was not only the best annual result, Newell brands delivered since we started tracking this measure, but also amongst best in class and the industry.

We our system, our time and these productivity efforts across the organization and have a strong pipeline of projects for 2021, and the coming years, which should help drive gross margin improvement going forward.

Now, let's turn to the quarterly results.

During the fourth quarter and old net sales increased two 5% year over year to $2 $7 billion as core sales growth of four 9% was partially offset by headwinds from foreign exchange as well as business and retail store items from the second consecutive quarter. We saw broad based top line momentum with core sales growth across all four geographic.

BRIC region and 6000 assurance.

Normalized operating margin improved 10 basis points year over year to 11, 4%, which was ahead of our expectations overhead cost reduction and productivity savings helped to offset higher advertising and marketing expenses as well as pressure from business unit mix COVID-19 related costs and inflation.

We reduced our net interest expense by $1 million year over year to $69 million due to debt repayments during the year.

We reported a normalized tax benefit of $6 million as compared to a normalized tax expense of $51 million and the year ago period, reflecting discrete tax benefits and the current quarter.

We grew Q4 normalized diluted earnings per share, 33% year over year from 56 cents per share.

Stronger than anticipated top line results in combination with disciplined expense management and strong productivity enabled us to out per performed versus our expectations.

Moving on to our segments core sales per appliance and cookware increased four 2% driven by international markets consumption trends continue to reflect an increased frequency of at home cooking.

I would like to point out that effective January one 2021, the CEO, but food business has taken over the responsibilities for the calc along cookware business as a result of this change the appliances and cookware segment will be renamed home appliances and 2021.

Core sales growth for the commercial solutions segment and accelerated sequentially to 13, 8% with increases across both the commercial and the connected home and security businesses consumption trends also improved sequentially across both businesses within commercial we saw strong demand from any consumer facing businesses as well as and washroom and hand protection.

Core sales from home solutions segment increased 12, 4% propelled by growth across both food and home fragrance business shops food with once again, the strongest performer within the portfolio continuing on a double digit growth stream as consumption remains strong and a seasonally important quarter core sales.

<unk> and the home fragrance business, reflecting strength in E commerce.

And the wholesale channel.

As anticipated core sales and the outdoor and Rec segment were under pressure and declining seven 4% fourth quarter results were negatively impacted by the timing shift of sales and calm and North America into Q3 ahead of the October one conversion to S&P.

Looking past the timing shift and focusing on the second half of 2020 core sales per outdoor and rec grew both year over year and improved consumption and outdoor equipment categories offset softness in beverage and technical apparel.

Core sales from our learning and development segment contracted two 2%, which was a meaningful improvement from the prior three quarters, while core sales per riding were challenged due to the impact of COVID-19 on school and office closures. We were encouraged to see continuation of positive consumption trends and the U S.

Top line momentum per baby accelerated and the fourth quarter, reflecting strong consumer demand.

Our efforts to tightened and working capital delivered outstanding results, making cash flow and one of the major highlights from 2020.

We generated over $1 $4 billion of operating cash flow during the year, which represents a $388 million improvement from 2019 last year at Cagny, we set an ambitious target of delivering free cash flow and productivity in excess of 100% and this was our second consecutive year of needed and that goal.

In fact from 2020 Newell free cash flow and productivity was 154% a remarkable achievement by all accounts, we have shortened our cash conversion cycle by about 26 days to 72 day, which is very close to our benchmark target of 70 days.

Accounts payable was the most significant drivers of improvement and the cash conversion cycle and we saw a flow through of more favorable payment terms that we have renegotiated with our suppliers. We also ramped up our supply chain to build inventory in order to support demand, creating a timing benefit and payables that we expect to partially reverse in 2021.

We are and a much stronger balance sheet position today than it had been and a very long time.

We ended the year with a net debt to normalized EBITDA leverage ratio of three five times versus $4 and other times at the end of 2019, and we are closing in on our target of three <unk> times.

During the fourth quarter, we completed a $300 million debt tender and for the year, we reduced our net debt by $748 million to $4 6 billion.

And we exited in 2020, and a very strong short term liquidity position, which exceeded $2 $5 billion, including nearly $1 billion per cash on the balance sheet.

Turning to <unk> 'twenty, 'twenty, one and I want to start by providing some context for our plan.

We are encouraged by the momentum, we've seen and our business and the second half of 2020.

The first quarter of 2021 is off to a very strong start from both the consumption and shipment perspective.

At the same time, we are balancing this optimism against the macro environment, which remains quite dynamic as a result of the ongoing pandemic.

We are taking a prudent planning approach to 2021 and capitalizing on growth opportunities, while continuing to drive cost and cash discipline and.

While we expect many of the recent consumer habits to persist we are assuming a normalization of category trends over the course of the year.

Since the comparisons are much tougher and the back half of 2021, we expect a stronger first half relative to the second half.

Additionally, we are seeing inflation trends and pick up primarily due to resin transportation cost wage rates and sourced finished good pricing.

We plan to grow gross margins, despite the cost pressure with both pricing and productivity actions.

Typically in 'twenty and 'twenty, one we expect to deliver on our evergreen financial targets for core sales growth operating margin expansion and free cash flow productivity.

For the full year of 2021, we are guiding for net sales and $9 five to $9 $7 million with core sales growing and a low single digit rate and favorable foreign exchange more than offsetting the headwind from continued rationalization of the Yankee candle retail store footprint and other minor business segments. We are planning for normalized operating.

And improvement of 30 to 60 basis points year over year to 11, 4% to 11, 7%, we expect productivity and overhead savings were more than offset the impact of inflation as well as incremental investment behind higher advertising and marketing spend.

We are assuming a normalized effective tax rate and the high teens significantly above the 2020 level due to a lower benefit from discrete tax items. This outlook does not contemplate any potential changes and the U S corporate tax rate under the new administration.

We expect this to net out and normalized earnings per share of $1 $55 and $1 65, with a modest uptick and the number of shares relative to 2020 levels the year over year step up and the tax rate represents a more than 30 expense headwind to earnings per share and 2021 on the tax rate equivalent basis, we are projecting strong growth.

And earnings per share and 2021.

For 'twenty and 'twenty, one we expect to generate operating cash flow of approximately $1 billion. Our outlook implies that we will continue to make progress on reducing our cash conversion cycle. Despite a lower year over year benefit from working capital.

For Q1, we are guiding for net sales of two 4% and $2 8 billion or 8% to 10% year over year growth with core sales, increasing and the high single digit range versus Q1, and 2020 favorable currency is expected to more than offset the impact from Yankee candle store closures and minor business segments, our first quarter guidance assumes normalized.

Margin improved 90 to 130 basis points year over year to $6 nine to seven 3%, reflecting benefits from productivity efforts and overhead savings that are partially masked by higher advertising and marketing investments as well as heightened commodity and transportation costs.

We are projecting our normalized effective tax rate and the mid twenties from the first quarter, reflecting and discrete tax headwind and the quarter.

We expect normalized earnings per share and the 12 to 14 range, which represents strong double digit growth as compared to nine from a year ago period.

Over the past few years, we have made tremendous progress on our turnaround and we are coming out of 2020 and a much stronger position than we were coming in and despite the ongoing disruption from the pandemic. We continue to see significant opportunity for value creation, and we will remain vigilant and executing on our goal of driving consistent and sustainable core sales growth.

Operating margin expansion and improved cash conversion cycle, operator, let's now open up the Q&A session.

Thank you.

Like to ask a question. Please press star one on your telephone keypad.

Star one to ask a question.

We will now take our first question.

From Bill Chappell from Securities.

Securities. Please go ahead.

Thanks, and good morning.

Hi, Rob.

And I understand that.

Broadcast and with US this morning.

And our science.

Can you kind of walk us through.

On the I guess the.

Sure.

Understanding and I guess three things one being a year ahead of expectations, what the SKU count reduction does too.

<unk> revenue too.

And the Yankee store closures.

And we won't have as much impact line.

On the first quarter, but then we would on the back half. So just trying to understand what that dose and then third I can't remember I don't remember exactly what it was in terms of last season, and you had a fair amount of.

Net closures around Covid.

Created shortages and out of stocks.

Any idea of kind of what.

You can be made back and as we looked at first second quarter of this year, sorry, the plot and thanks.

Yes, no problem, let me try to try to address those so.

We are very excited on the SKU count progress that we've made as I said in the prepared remarks.

Got into our goal and your early.

One of the things that we've done is we've put in place a systemic process.

We call the magic quadrant analysis that looks at revenue per SKU and gross margin per SKU and as we've gotten into that and system and types of process. We think we've got opportunity to go further on SKU count reduction.

Going forward, we don't believe that this is going to be a revenue headwind. We actually think that this is going to be a revenue help for the company and a cost help because it allows us to improve our customer service levels.

And in the process of setting new targets and we'll share more probably at Cagny next week with regard to the outbound targets.

But very encouraged by the results so far and we see it as an enabler for both revenue growth and continued productivity and.

90 stores.

Ended 2020 by clothing, I think 77 stores and 2020, our store count was 398 stores.

Our plan for 'twenty, one is to close somewhere about another 80 to 100 most of those will happen and in fact most of those happened in January so it's very front part of the year loaded that does not have a significant impact on the company's revenue because we're growing very fast and that business on the E Commerce side.

And with the wholesale business and and the international markets and so we believe that.

We're going to see a profitability benefit.

As we make that transition from retail to more online and wholesale and that business and then on the plant closures.

You are right and the second quarter last year of our about 135 manufacturing facilities and distribution centers and we had 20 that were closed.

Government mandate.

As we sit here today all of our facilities are open.

Largely operating at full capacity and we have largely caught up.

The majority of our product categories that being said, we do have some product categories, where we're still.

Supply constrained and.

Those tend to be the product categories, where we've seen outsized consumer demand increases.

But we're working hard to catch up and add capacity and.

Situations.

So that's great and one just follow up on writing and you're talking about some tougher comparisons for the overall business and the second half.

And then writing and set up for a gang busters.

Third and fourth quarter, assuming schools are back open options with them.

Preparing for that.

Or how should we be thinking about that as we move from the third quarter fourth quarter.

Yes.

Tackle that.

The first piece of good news and times.

And the resilience of the portfolio and you look at training training and as all of the headwinds to be add on writing.

And that we were able to do relative to the second half and actually contain the decline but per year turned negative one is testimony to how we're beginning to get.

Our resilience to the other brands so.

The doctor with cost cutting and you look from a long term right thing, it's a very well managed business for us. It's just the macro has.

And then you wanted to cash when we look at 'twenty one.

I think whatsapp and assuming is that schools will go back to reopening rfps for Super Mcdonalds.

And the second half of the.

And we've taken that into consideration.

Adding brands, we think it'll be a more normal or back to school season, and I think soundly and about students. This fall.

Big unknown at this stage is the commercial business, because when you look and offices.

<unk> and I had thought that most of the offices will be getting back in by July but everything we're reading and hearing is that until you get hurt and the other day I think companies Loews drew so ill take that step we will have from silicon valley companies that.

And they may actually the main growth not only from all of US day Italia. So that does get affected in terms of.

Our commercial business, which is sort of a quarter of the business. So we will have to see on that.

Overall, we expect our writing business to grow in trading.

Trading volume versus trade Crazy training, absolutely how much I think second half that would be the question Mark.

And look the other thing I should say.

Like I said in my prepared remarks, the share gains that have and Viking are truly spectacular and.

Sharpies brands strength, but it can go beyond Lockups and heritage doing independent side and all of the innovations that are coming up and lastly, we're really preparing for our data from future with this business. We're now that team and very focused on innovations, which is that's more stay at home and stuff.

To do that and the longer term so it's still very.

And I feel good about this business and the other business picking up and spot.

Okay. Thanks, so much.

Thank you.

We can now take our next question from Olivia Tong from Bank of America.

Please go ahead.

Hey, Thanks, and good morning.

Hoping you could talk a little bit more about the margins, particularly the gross margin.

And if my earnings pressure of course, and some pricing.

Perhaps could you give a little bit monkey, Cal and times, where.

Where do you think you could potentially price.

And then just sort of marrying all the different things and puts and takes from <unk>.

And that's my question or potentially from offset from pricing and maybe a little bit less language, but hopefully and improved sales mix relative to last year. So just thinking through all the pieces and people.

A little bit more color on that in terms of the puts and takes there. Thank you Chris.

Chris if I could take that yeah sure. So.

If we think about the margin guidance, the operating margin guidance and particular gross margin and tons for next year for 2021 basically there are two primary headwinds the first is inflation.

As I mentioned in the prepared remarks is due to resin wage rates to be sourced finished goods, primarily due to the strengthening of the Chinese currency and transportation costs.

We expect that inflation pressure based on what we're seeing today to be almost a 200 basis point.

Headwind from the company from next year, which is a significant ramp up from prior years. We also are planning to increase our advertising and marketing costs.

As a percentage of sales and 2021, given that our innovation pipeline has strengthened in 2021.

And as we've brought new leadership on and the day has begun to develop stronger innovation plans and so those are the two headwinds.

We're guiding to operating margin growth because we have.

Benefits more than offset that and.

And the benefits that we're seeing are the biggest point is productivity with the fuel savings program.

And so we're using that productivity drive to basically offset largely offset the inflation pressure.

We also have we are going to take selective pricing, we're not taking pricing to fully offset inflation, but we are taking selective pricing and those categories that have seen the biggest inflationary pressure. We also expect business unit mix benefit.

And as Ravi mentioned, we are expecting the writing business.

To come back and be a meaningful growth driver for the company and 2021 actually we are expecting the writing business to growth starting in the first quarter from what we've seen.

And then the last thing I would mention is continued focus on overhead cost reduction through our simplification initiatives. So those are sort of a walk through the puts and takes I think when you net it all together.

And we're expecting to drive gross margin improvement in.

In 2021, despite the inflation environment because of the productivity efforts and the pricing and the mix.

From the business units.

Forecast for.

And last question please.

Thank you.

Can I ask you one about how youre thinking about channel exposure.

From a business line.

Obviously, you can how much is compelling.

Substantially.

Online, Okay, and what are the margin implications of that.

And then where are you focusing on distribution expansion.

Keeping in line with.

Segments.

Thank you have more opportunity in terms of distributions per.

Let me quickly and get better.

Yes.

So we.

I think E commerce is share at the state is going to continue to grow and we're going to be advantage, because we have growth strength.

And I mentioned print and 2% global net sales penetration and E commerce growth high Thirty's.

And for us that business, our income growth businesses are quite profitable and it's not something that is.

Very very good margin business. So I don't think Thats, a concern and we will continue to grow their second in terms of channels.

As I mentioned, where the Big trust from US the grocery business. The dollar stores drugstores, and we're making already good progress, especially our food business really.

Goodyear on the grocery side, we're putting together and I'm a very focused sales team on this channel. We think that there is a lot of opportunity, while we continue to do well and with our strong mass merchants for our.

Biggest customers so.

Continued focus on that.

Okay. Thanks.

And please.

And our next question comes from Kevin Grundy from Jefferies. Please go ahead.

Great. Thanks, Good morning, everyone and congratulations here and the recent momentum great to see first.

First question, perhaps for Chris and the margin opportunity and I have one for Rami and the geographic opportunity. So first on the margin opportunity, Chris as you're as you're well aware to the 600 to 800 basis point opportunity with respect to mining gross margin and overheads understanding those figures are growth and ex any sort of range.

West and concerns but.

And frankly, it's pretty unique and rather substantial within the consumer space. So the long term guidance calls for 50 basis points of improvement each year.

Here's 30 to 60 basis points. The question is whats the organization's ability to lean in and accelerate the pace of that margin enhancement and unlocking that value for shareholders, while balancing versus the investment needs and cost inflation that you're encountering any given year.

So your comments there would be helpful and I have a quick follow up on opportunities.

For change outside the U S.

Yes, So let me start on the margin question Kevin.

So if you look at the underlying trends of what were driving the share.

The organization is driving sustainable margin improvement progress on both gross margins from the field program and an overhead reduction through the complexity reduction that dramatically exceeds our guidance of 30 to 60 basis points and operating margin improvement. The reason why we're guiding to 30%.

60 basis points is because we have an inflationary environment.

Which I mentioned is about a 200 basis point headwind and we're planning to increase advertising and marketing cost as a percentage of sales significantly.

In 2021 and so.

Those two things were not there you would see our our ability to fundamentally be driving operating margin improvement.

Higher than the net guidance I think the.

Have a great model that we've put out a 50 basis points improvement each year, where our guidance is very much in line with this year. So we're excited that our guidance. This year has us fully on all metrics in line with the with our Evergreen model and we think that the company has really turned the corner.

In regard to delivering against that evergreen model. So.

And any given year, we'll guide as appropriate when we get there, but I feel very good about the underlying capabilities of the company to continue to drive margin improvement per.

Primarily and the gross margin and overhead area.

Got it.

Follow up.

Yes, I got a follow up thanks for the comment I'm sorry.

You had a follow up go ahead.

Yes. Thank you Robyn just very quickly on the and the opportunity outside the U S.

For the business I think.

It's probably been a little bit lost and the company's efforts to stabilize and put processes in place, which you've had success doing but now it's about roughly 30% of the company's mix could you spend a moment on the international strategy, how big of a priority. It is to grow the business outside the U S where you see the greatest opportunities and should we think about the algorithm for the overall portfolio.

How should we think about the core sales growth rate for your business is outside the U S. And then I'll pass it on thank you.

Yeah. So thank you Kevin.

You May know from my background I have been inside of that and international price and my career.

So this is something that is near and Dear to my heart.

But our first priority was to really get.

Yes.

Focus, which we are now beginning to get traction. So we're embedding more of our attention on that.

For 'twenty, one and beyond I think that is a lot of opportunity and the key is that non breath and we're not into banking price, which has been the issue and the hospice, where I think and a lot of places.

And the overhead from the international business are higher.

And then.

So we've got to get it.

Great and fragmented so if you take the U K, we have many businesses and different offices theres not the synergies. So we've got to get focused so what they're doing is focusing on some of our top 10 countries and saying how do you get after them and.

How do we create longer term and country management system growth.

<unk>, one youll approach rather than everyone building their own and having said that the teams have been still doing pretty well and when you look at the fact that overall international actually grew pretty well and slightly better than the U S Inc.

And <unk> and when you think about appliances, where Latin America, the strong double digit growth strong double digit growth and Latin America. So it's all positive I guess and get a lot of opportunity and risk.

And again after that.

A very bright and articulate the strategy of Covid has also made it difficult to get to these countries, but this year. This is one of my big priorities as we go forward.

Great I appreciate it and good luck and thank you. Thank.

Thank you Randy.

And your next question comes from Wendy Nicholson from Citi.

Hi.

Your question please.

And the very short term.

Right and report about the port of Los Angeles, having backlog and issues and Chris I was just wondering if you had and if you've given that imports from China are your materials from China do you have any issues or bottlenecks there and then.

Question actually back on the margins, but looking at it from a different perspective.

My take is that the.

Biggest hindrance to your overall margin.

How would your margins were bad and appliances, and cookware, specifically and I know, there's been a lot of lumpiness quarter to quarter.

And if you went there.

How long do you think it will be and go back.

Segment can firmly be in double digits from an EBIT margin perspective, okay.

Very good thanks Wendy.

So on the part of Los Angeles.

Just a few comments, we do import a significant amount of containers through the port of Los Angeles from.

Asia and primarily China.

It has been a backlog and a source of supply disruption force, so earlier and the pandemic as I mentioned and the second quarter of last year. It was about our manufacturing facilities and our distribution facilities now the disruption is more related to that port.

We are getting products through there also.

Shipping through other ports.

On the East Coast, and other places and the West Coast.

The prices for containers have gone up dramatically.

We are a large scale and quarter from.

From a volume standpoint that gives us some advantage and marketplace, because we have contractual commitments for volume and pricing that.

I think advantages us versus many of our smaller competitors. So.

We don't see it as a major headwind for the quarter or per the year, but it is something we're sort of battling every day.

As we go along here.

Great.

And then on.

Let me address appliances.

And so yes, we recognize that the appliances business.

And we need to work on the margin structure.

Question. So the big issue is growth Mark news.

And part of the issue products this week.

Deal with some of the Otp and MVP segments, and so we've got to get more innovation and <unk>, which then can be.

And at higher gross margins the good news and we look at our brands, which are more premium outside of the United States like available in Europe, Our Ulster and Latin America. The gross margins outside of the U S are actually quite good so.

The cash Christophe and say and then got against that growth margin or the net.

Several years and also as we get to get out of the sale of businesses and some of these we are finding.

Gross margin and negative so we really need to get out if you are giving absolute dollar bills with some things.

So we're being very hard headed about looking at these categories and monitoring the sharp down about who might have a little revenue shortfall.

Okay, and we move to get the margins up so very very focused on gross margins from this business.

Fair enough. Thank you so much.

Thank you.

Okay.

Next question comes from Joe <unk>.

From Raymond James.

Thanks, Hey, guys good morning.

On the guidance.

And the momentum that you guys saw and the second half and then.

And you've seen some of those consumer trends.

Last year that stuck and normalize and there's a lot of uncertainty why would sales.

2021 people load 2019, and other than writing on the commercial side what day.

Might be lagging from three years ago.

Sorry, if you think strength if any volume versus.

As a point of view to.

Sure, you're very well sorry about that Jeff.

Outside of writing on the commercial side that might be lagging from <unk>.

2019.

Yes, So I think I don't I don't think force, we're our guidance is implying lagged and let me try to just address the the top line guidance and give some color to it. So I think as you all know the company turned positive on core sales growth and Q3 of last year, we had a very strong Q3 our reported.

Today, a strong Q4, we're guiding to high single digit core sales growth and the first quarter and to low single digit.

For the year and I think when you look at that and.

And you look at the.

If you were to look at our two year stack growth rates returned to positive on a two year stack basis. In Q3, we were positive on Q4, we're guiding positive on Q1, and we're guiding positive for all of 2021, if you look specifically at the categories.

I think the categories.

And the category that has been most negatively impacted as we've talked to has been writing.

And because of the schools and office closures.

As Ravi mentioned in the prepared remarks, and as we alluded to and <unk>.

Q&A and we are exiting two.

2020.

And a very good position from a retail inventory perspective, and we expect the writing business to be back to growth and 2021, starting in the first quarter. So I don't I don't think we're seeing a category.

Categories that were expecting to have declines heading into 2021.

And one thing to that which is the first half rehab and better visibility because no one knows what's going to happen and the first half.

<unk> given you a pretty good sales so first quarter, we had a great second half.

But he also taking into consideration our food business that grows 25%.

Yeah from a core sales.

And it's got a lot.

In the second half price.

Especially relative to last that so when you look at that growth I think we're doing pretty well so.

We actually feel pretty strongly.

<unk> EBIT coming out of Covid.

And this is beginning to turn around and net growth momentum.

That's helpful. I appreciate that just one quick follow up for Chris you mentioned that there is more opportunity.

And now you're at 47000 now how long do you think that number and ultimately to that.

Yes so.

And we're as I mentioned, we're excited about getting to our goal of 50000 a year early.

We're going through that analysis.

And as we speak and I think we're doing it and a databased fashion I guess, just as a little bit of background two years ago at Cagny.

When I first presented.

The new CFO of Newell brands.

We were over 100000, Skus and so we've been able to go from over 100000 down to 47000, and we set our 50000 golf based on just sort of a bomb and the air what we've got now is a much more databased way of tracking and measuring it and we're finalizing our objective and we will share.

Our revised Out-front target next week at Cagny, and we get there, but there's no question that we have further opportunity for SKU reduction and that further opportunity.

I think is going to enable us to.

Both accelerate revenue growth and.

And drive strong growth productivity and cost of goods savings and margin gross margin improvement.

But we'll share more next week.

Great. Thank you.

Next question comes from Lauren Lieberman from Barclays. Please go ahead.

Great Thanks, and good morning.

And I was hoping we could talk a little bit about baby and you called out very strong performance and the fourth quarter and well just thinking forward from that.

Headline risks and the reality is about the birth rate.

No that overtime innovation trumps birth rate dynamics, but I was just curious what you were seeing in terms of how you are projecting the category and how you're thinking about innovation and the pipeline and what may be developing from a competitive landscape.

And point, yes.

Good morning.

So while the U S phosphate itself.

It is off hire but youll also have continued immigration and.

And so and growth rates depending on.

And the illness and the U S population, maybe hiring certain.

Groups and stuff, so, but also really it's a global business for us and better.

And there is opportunities outside of the growth.

And we have both the gear business and eye care business, and we think in the care business in the U S. They have a lot of share opportunities with non milk brands and where.

We're driving innovation and put out that temperature control model, which is really down the road both in the U S and Germany and.

And then year, we continue theres still set from segments.

And we are grateful as the overall leader and had a tremendous share.

Approval and this year.

Theres still more together.

So we think that.

And this just this business is a good steady business and Scott good operating margins good cash flow overall, a solid business and we are.

Price.

Confidence that this will be.

We continue to be a good part of the portfolio.

The only thing I would add on that.

And you alluded to we've done it's actually a fairly deep dive into the category growth rates and.

The U S birth rate is not indicative of the category growth rate because of the immigration point that Robin mentioned, what we're seeing is that immigration is as big a driver and.

And the category growth rate as the U S birth rate and what we're seeing is the immigration and trend is more than.

Setting the U S birth rate dynamics, so that the category is actually growing even on a volume basis because of the net of those two two.

Two dynamics.

And maybe a little bit counterintuitive to those that are just thinking about the U S birth rate.

And you are wrong.

Where other people have asked us that question.

Yeah, that's really helpful.

And just anything on innovation, sorry that was a kind of a category growth because I know we're late in the call today, and just curious if that innovation and competition.

Yeah I think.

And I've talked about.

The slip and privacy I think that is.

Greg from.

And the whole sensory size were.

Is that we launched last year, which we're continuing to look at in a rising.

And rich in terms of.

And Craig It was back from its all of that is very positive from us I think that technology.

So I think when you look at those the new craveable food.

And that really is the Japanese and sort of innovation and that came in and doing so we're continuing to innovate I mean this this group and then we launched the century and.

And which has been.

And a great more.

It's really a minimalistic appeals to modernity and millennials is more value based and.

And we think that will have a lot of products.

Traction going forward and then we're working on lot of innovations from baby dollar so that should come out and training and training.

Okay.

Thanks, so much.

Okay.

We only have time for one more question.

It's from Steve powers from Deutsche Bank. Please go ahead.

Hey, Thanks I appreciate it.

And actually if I could sneak in two that'd be great, but I think they are both relatively straightforward. The first one is just as you think about 'twenty, one balancing expected store closures that you called out versus some channel maybe reopening and your own efforts to stand points of distribution on line and that drove it elsewhere.

And how you're expecting actual end market consumption trends across the portfolio versus the low single digit core sales guidance and you should today and just want to square that circle, if I could.

Yeah, I'll do a quick comment on that.

Which is.

The.

Look as we look at our various categories.

We do think.

And from the past per channel, we have more visibility.

Continued growth and I think for all of these trends that came out and the pandemic.

And that's been a real interest walks out of it.

Home cooking as a security measure and months ago. So much restaurants. They have done and then two from Avi towards really a home chef. So I think you'll continue to see EPS, which.

Which moves many of the categories we compete in.

Are there things ahead of growth and but importantly, we're also taking share I mean, this the past year and 'twenty, where we got share in a number of categories and.

Right.

And.

We feel very good that we're pushing the share side and.

And second half, we just have to see so I think overall and I think one of the comments for some store closures, which is really more of a.

It really affects two things drive Yankee candle is where our sales closing.

The DTC business for US has been very strong so it's absorbing that on the specialty side Kenny back effects on rising business.

And.

So the commercial business is affected there a little bit, but overall I think.

And we're hoping that with the strength that we have both in terms of our brands growth if the category growth.

<unk>.

And our.

Slide three we'll go after share so.

Okay.

And if I summarize it sounds like you're assuming that overall consumption trends and more or less in line with core sales.

Fair.

Yeah, Yeah, I would say that's a fair comment.

Okay Cool and then Christmas maybe something you'll talk more about next week, but just the working capital drivers that you outlined on slide 15, you gave us some color on your 'twenty, one expectations, but I guess, just stepping back and I'm curious how you view the longer term opportunity on those metrics and just the pacing by which you think you might be able to make ongoing improvement there. So.

Maybe any any down and U S.

Any color thanks.

Yeah sure so.

And you're right I'll cover a little bit more on this next week at Cagny, but.

And just as background I.

And I think two years ago, when I as I mentioned when I first showed up at Cagny two months at the company and I reported that we were our cash conversion cycle of 150 days, which had us as the worst company and the industry.

And we set a goal of 70 days.

We wanted to get to and the Saturday day. It was really based on looking at the categories that we compete in and trying to say, if we could get to a medium level.

Based on our peer group, what would that look like and that was 70 and.

And with this year at 72 so.

We've gotten and are very quickly.

I think the.

The move from 115 days down to 72 has been phenomenal.

I'm not satisfied with being a median and I think that we aspire to be best in class not just medium and so we're working through similar to the SKU count now that we've achieved the initial targets that we've set.

I think we're likely to set a more aspirational target that's more aggressive because we continue to see opportunity ahead of us per cash working capital takeout and cash conversion cycle improvement.

Similar to SKU, count and I'll share more detail and what that looks like next week and then we get into the strategy discussion.

One quick follow up.

And also I forgot to mention and January consumption.

And looking strong and across most of our categories and.

And as Rps and.

And as well so that bodes well.

Alright, great. Thank you both I appreciate you putting me in.

Thank you Alright, I think this concludes this concludes our question and answer session and I will now turn the call back to Mr. Silicon for closing remarks.

Thanks very much.

And we feel very good as to be greater from train one.

I apologize to those who couldn't get their questions, we learn a little bit, but thank you for that and onwards and upwards.

Thank you a replay of today's call will be made available later today on our website IR gosh Newell brands Dot Com. This concludes our conference you may now disconnect.

Yeah.

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Good morning, and welcome to and you will brands fourth quarter and full year 'twenty 'twenty earnings Conference call.

At this time all participants are in a listen only mode.

After a brief discussion by management, we will open up the call for questions and.

And the origin to stay within the time scheduled for the call. Please limit yourself to one question during the question and answer session.

As a reminder, today's conference is being recorded.

A live webcast of this call is available and I Argos, you well brands Dot com.

I'll now turn the call over to Sofia Senate VP of Investor Relations.

You may begin.

Thank you and good morning, everyone and welcome to nail brands and fourth quarter earnings call on the call with me today is Sally Graham, our president and CEO and Chris Peterson, our CFO and President business operations before we begin I'd like to inform you that during the course of today's call and you'll be making forward looking statements.

And uncertainty.

Actual results and outcomes may differ materially I refer you to the cautionary language and risk factors and available and our earnings release, and our form 10-K, and 10-Q available and our Investor Relations website for further discussion of the doctors that fact and forward looking statement read.

And we assume no obligation to update any forward looking statements.

Please also recognize that today's remarks, little price and certain non-GAAP financial measures, including those who refer to as normalized measures.

These non-GAAP measures are useful to investors and others.

And not be considered superior to the measures presented in accordance with GAAP explanations of these non-GAAP measures and available reconciliations between GAAP and non-GAAP measures can be found in today's earnings release and tables and other materials and no one's observation was correct.

And now I'll turn the call over to Rod.

Your line.

Good morning, everyone happy new year and happy to live.

And welcome to our call.

Thank you.

Non office space.

While the net adds are there.

Are there any crazy it was a very challenging yet.

And Keith Brown, and the result of Athene and deliver as we quickly adapted to the evolving environment at the same time, we remain focused on ensuring the safety and wellbeing and the fireplace gaffney operating our plants and distribution facilities and Rockies.

And have capacity and maintaining financial viability and business opportunity.

Yeah and then.

Organic exceptional.

And fourth quarter and full year results ahead of our expectations across the board.

And best Testament to the impact motor inverter and <unk>.

<unk> and commitment to buy and volume execution excellence and fashion bed, while R&D expenditure and downtown.

And so you didn't have for continued strong underlying performance and the business and the <unk>.

Second half of the GAAP across all key value drivers top line margins earnings per share and cash flow. We also achieved meaningful progress against our strategic priorities and training training.

We strengthened and diversified our team as we brought them in long products leader from the us.

And from clients commercial food and outgrowing recreation businesses.

Jamba functions they hit EBITDA.

Round Robin as Covid is that day.

And not allow for any downtime there and complement our strong existing with leaders across the bank and full businesses.

And the leadership team and I are focused on building a winning one youll culture focused on trust.

And the teamwork and diversity inclusion and belonging efforts that our top priority as we continue to capitalize on and volume and unify everyone and behind the common and preference of delighting consumers with our brands that create relative to our self confidence and provide peace of mind.

Throughout the year, the improved customer relationship through enhanced collaboration joint business planning excellence as well as increased emphasis on delivering excellent service for our customers. We are leveraging our omni channel capabilities for advanced joint business planning and believe this is an area of strength for Newell.

We're also seizing opportunities to grow that distribution gaps, particularly and the food drug and dollar channel as well.

We're already making progress on that front across a number of instances such as food pricing and home fragrance.

We drove a 30 basis point improvement and normalized operating margin and Fannie and Freddie.

Credible feat given the cost and business mix headwinds, we had to overcome during day yet.

This was made possible by establishing a culture and productivity as well as aggressively attacking overhead cost and organization complexity in fact normalized operating margin expanded 110.

Credit basis volume generally yet and the second half and investing that office and the second quarter.

Mostly driven by fixed cost deleveraging.

And for the full year EPS of $1 79.

And you Havent, 12% from continuing operations for tight working capital management resulted in parallel and operating cash flow of more than $4 billion you asphalt from blindfold video business unit and Cfos net buyer bidding and the bottom line and Chris Peterson.

And John Lastly, one of the key objectives.

And I expect to return the company to sustainable core sales growth.

Net sales declined 1% I'm delighted to say that and the second half of training training. These brands a corner core sales grew 6% and increased across south operating business.

Business unit.

Geographic region growth during bearing trend, we experienced healthy domestic consumption.

<unk> base, the strength and resilience of our portfolio shown through as growth in.

And so commercial and appliances, <unk> cookware business units offset dragging softness.

The team successfully navigated and demand such as product and container and availability issues and temporary factory and distribution center closures and heightened focus on relevant innovation and grounded and consumer insights as well as omni channel execution and are making it a price yearning for independence, we grew and improved.

Domestic market share across a number of businesses, including baby gear food storage vacuum sealing fresh preserving corners and patents per name appeared.

And the five top brands delivered incredible results and training training as the number of food sales I'll start Matt.

Context.

And then for Greg.

And at a double digit free.

From the challenges the rainfall and a critical priority brands. Our E. Commerce business has continued to be a substantial growth engine for the company and training training and E Commerce revenue growth accelerated to the high thirties and penetration online improved through the bag training to percentage of net sales on a revenue basis growth.

Alright, whereas two years ago.

And with baby remains by far the most highly penetrated and business across the digital platform.

And with meaningful shift towards online consumption across the portfolio in fact, and 24 business units combined with digital penetration as a percentage of net sales of more than 20%, including baby home fragrance outdoor and recreation and appliances and cookware and food is chasing that number.

All of our leaders took quick and decisive actions to swiftly adapt to the COVID-19 environment and in my view and credits these trends, including improved preparing more food at home and Greg where people can recover share heightened interest and outdoor hobbies and patent per wellbeing and increased investment in penetration.

We anticipate that trends from continued to evolve throughout 'twenty and 'twenty. One. We also believe that many of the habits that have been found during this pandemic and get to stay with our portfolio well positioned to capitalize on them.

Let me briefly touch upon each of our businesses performed and training training.

And I am truly thrilled with the progress we have in mind.

And that's top of appliances and cookware revenue delivered mid single digit core sales growth driven by the strength and the international markets in the U S consumption increased during the fourth quarter and for the full year as more people have been cooking banking and spending time accounts.

And Latin America, despite COVID-19 related challenges the team delivered outstanding results.

Pivoting towards the digital platform.

I'm extremely proud of these results I also realize that a lot more work needs to be done and to reposition the appliance business for sustainable growth.

And Fannie Freddie the appliances category accelerated significantly and and pumps instances, we did not keep up especially in the U S. This resulted in share losses, albeit lower and magnitude than in prior years, Although we are seeing good traction with <unk>.

And incentives Mr Coffee iced coffee maker bolstered by adjusted net blenders.

Blenders, and ASP and Diamond force heating and cooking products, we need to extend the learning and leverage consumer insights across the entire brand portfolio that flow.

And we guided and trading trends and income.

<unk> and <unk> 'twenty 'twenty one.

As we implement the net discrete strategic changes to <unk>.

Except for the physician appliances, there was price.

International appliances franchise with strong brand equity for those drive cross border Sunbeam, and Latam and Australia, New Zealand, followed by brand and in Europe. Our challenge is to address payable category businesses and the U S with low growth margins that dragged down the portfolio.

And Chris Robison CEO products business will undertake actions and training.

And to prune the portfolio.

And within the commercial solutions segment.

<unk> business had a nominal and training training.

Core sales growth during each quarter culminated and high single digit growth per year we.

We saw particularly strong sales growth and Wahoo love and scouring products as well as outdoor and garage organization businesses benefited from heightened consumer engagement across the home improvement categories.

And respond to strong demand for monetization and relative to our strategic investments to expand production capacity will replace about one 3.3 million sales.

And Sir.

And that is expensive globally and <unk>.

In non soap and Sanitizers turkeys and over $30 billion and bears a pattern. That's a lot of patterns and we're not stopping there we're introducing innovative staff and brackets that enables facility operator.

Advertisers virtually anywhere and in building and creating a wall and tabletop and general open space.

The breadth of the commercial business portfolio, which includes both consumer and.

And commercial offerings and benefit.

The words coverage of verticals and enhanced partnerships with retail partners and positioned the business for the home for long term success.

Let's move and connected home and security and business, while of course, houseware down and trade.

And due to supply constraints caused by pandemic related plant shutdowns and the business performed well and the back half per year with top line and accelerating in the fourth quarter.

Within the home solutions segment.

Our business has really left up to its rocket ship status and are growing very products.

Actually returned to growth prior to the pandemic and built momentum from mid 20 percentage of core sales growth and training and training.

We're better line of strong consumption per year.

Market share gains in the U S are leading brands Rubbermaid food segment and ball took share across food storage food preservation and accounting vertical benefiting from improved commercialization of products stronger consumer and social engagement and programming and.

Innovations such as the latest bankruptcy and device food flavor and <unk> multi use preservation system and rubbermaid brilliance glass launch and brilliance class is off to a rolling stock and the overall sub brand and our rubbermaid brilliance sales have almost doubled and training plan.

Training training with the non-GAAP for food segment, which was the fastest growing brands and how all of Newell brands and it truly is the top 10 brands for US strong appliance sales and training training should translate into increased consumer purchases and training for anyone.

And food, we continue to chase demand from January and we are working hard to address supply constraints and certain product lines.

And then Joe from commentary.

And as we experienced strong consumption growth and our home fragrance business June <unk>, driven by the fed and demand and the back half of the year as a result courthouse increase and both North America, and EMEA and the second half of the year and in the seasonally critical fourth quarter period full year top line sales performance.

And was partially index by the temporary closure by Yankee candle retail stores and other specialty chains.

For several months and together and the supply chain disruption experienced in the second quarter I am extremely proud of the team's resilience and creativity and and dressing for time charters and they would drop and the crop and <unk> and engage the corporate teams in the manufacturing and packing operations.

And on production and attempt to keep up with consumer demand.

<unk> remained robust in January.

And category Cabinet category, and some fire and training training unintended as demand for products that bring transparency into consumer homes remains robust and we held share despite supply constraints as we look out to 'twenty 'twenty, one and a number of exciting innovations and the hardware, including the Yankee candle and signature collection.

And the largest update to the Yankee line and yes, and it is launching this month and it will.

And provide best bonding experience today.

Continue to reposition the home fragrance business and from a long path during training training and exited the fundraising business.

And 77 retail stores with additional store closures and huge advantage and training training law and.

At the same Congress and building great momentum on our direct to consumer business.

<unk> grew strong double digits, and <unk> trends offsetting shortfalls and retail expanding distribution into the grocery and club channels and diversifying the product portfolio and to auto Diffusers and tetra.

And the learning and development segments core chat from bakery business grew modestly during training training. The rebound from Q3 percentage stayed into Q4, driven by healthy consumption recovering from the day, perhaps levels in March and April when Lockdowns and fully paid for the year domestic demand and improved across baby gear and.

And infant care businesses, particularly talk about coffee typecast strength and bottle.

We have seen a continuation of strong domestic consumption trends in January.

Mobility improved post dropdowns, the rebound and demand for top line currency has been nothing short of remarkable what's even more gratifying necessity solidified our leading position and that's been important category and.

And training training and getting over 250 basis points per share with channel by the strong and components of our graco brands, which picked up 130 basis points of share in 2000 and training.

GAAP taxes innovation more exciting launches planned for 'twenty and 'twenty, one, including Greg from stem fifth Street, and one copy tops limits design.

Free car seats across savings space, and the vaccine without compromising on safety and the future features Barrett and Smedes.

And now as anticipated.

And training with a healthier from operating business and the category trends, particularly in the commercial channel courthouse pressure continued into the fourth quarter, albeit at lower levels relative to the prior to prior to the demand and the U S normalized EBITDA during.

During the fourth quarter, if we did see continued consumption growth and the U S, which started in September at the back to school season was extended for the full here and there will also and few bright spots, including patents lagging and find our businesses all of which grew despite the disruption.

Although the category headwinds and towards significant both in the U S and internationally, we've made progress on the market share products and our.

<unk>, Inc, categories, which positions position us to come out of the pandemic on a stronger footing 'twenty and 'twenty with the euro per pad from the writing business with innovation and delivering outstanding market share getting over that 750 basis points and growth plans and 260 basis points across.

The total spend category.

We're optimistic about our momentum and depends category and <unk>.

Have lunch expansion to our sharpie and Jeff.

And with sharp ESD and fashion designs and content expansion and choppy as Joe and metal bottle.

And we'll be launching this platform around the growth. We also achieved strong share performance and our legacy business as dialogue reached record share both in the U S and EMEA while category challenges specific consumption has remained positive thus far and <unk> trademark.

And training training with our newest retail inventory position across the office superstores and several years this should better position us and the retailers for a rebound and post pandemic.

Rules and office has returned to a more normal cadence, while that's a great degree of uncertainty around and the timing of return from it.

And sort of almost in schools and offices, we're assuming a more normal factors food season in 2000 and training one but that office has made the claim and a hybrid and environment for the balance of the year impacting our commercial channel.

Lastly, core sales from consumption and outgrow and recreation business, while under pressure during training trends weighed down by the softness and our technical apparel and beverage businesses and as a result of further used on the growth activities.

We delivered solid performance and the outdoor business and the back half of the year, particularly and the outdoor equipment category such as cooler expanse and stores. We also saw a number of favorable development from the market share pump and several core categories, such as coolers and tenants, where we gained about 90 and 190 basis points of share.

And secondly.

I'm, especially excited to share that colon, which is one of the largest brands turn to.

And to growth during 2020, Waterlase and celebrate the then current and <unk> antibody <unk>.

<unk> had a number of successful launches and training training and coding the coma Sky and we refreshed many quarters were falling up and the 'twenty 'twenty one season with additional consumer centric and purposeful.

And just to highlight just a few we're expanding the assortment of the training training Portland Skydome came from larger content formats, and a variety of styles and colors and we're also introducing a KOL and reunion collection of coolers, which will introduce new manpower clinic patients and three beautiful strength focus column.

Alright, and route Jim and then the equivalents deal by the surgical line, although it certainly encouraged by the progress we have made and outdoor equipment business, we have more work.

On technical apparel, which is especially net by mom and Brian and beverage with ginkgo were brought in and capable leaders to do just that and I expect a stronger 2021.

New home now to EPS and visit pattern and with notable progress and hospital organization as we look into look after 'twenty 'twenty, one and beyond.

We intend to build on the improving momentum we will continue to position Newell brands for sustainable and profitable growth with our strategic priorities focused on the quality and five areas.

Galvanize hydrocolloids and behind that purpose to create consumer and customer focused organization with us digitally savvy and willing to experiment and non adhering to our core values second sustain top line growth by focusing on the end to end consumers and strengthening.

Omni channel capabilities, while accelerating online penetration.

And and focusing on scaling and modernized and got a top brands. We also want a strength and efforts to improve supply availability to improve customer service fellows from strong focus on forecast accuracy.

The comment the innovation engine by sharpening our focus on consumer insights and trends and implementing an enterprise wide innovation operating model building cross business unit and platform and better leveraging the R&D resources for accelerated international growth and improved profitability by addressing.

Segmentation.

<unk> has prioritized and drive countries evolve and autonomous geographic units to one Newell.

Approach to build scale and moving to a distributor model and non priority countries and test.

Share to make progress on the bilateral and agenda and expanding margins through productivity and tight management of overhead costs and.

And complexity reduction as well and strengthening.

Newell brands cash conversion cycle and balance sheet, all that Fannie and Freddie with and.

Undeniably one of the best trial and volatile periods in recent history.

<unk> volume resilience persistence ability to adapt.

And execute with speed and agility. This has enabled us to gain significant traction.

And strategy and strengthen the underlying fundamentals positioning the company to come out even stronger post the pandemic.

I'm excited about <unk> prospects and feel our better days are ahead of price.

And I'll close and now I turn the call over to our billion dollar commodity.

Chris Peterson.

Thanks, Robert and good morning, everyone.

The team delivered an outstanding finish to the year with Q4 results ahead of our expectations across every key metric, including top line operating margin EPS and operating cash flow and fact, our 2020 results exceeded or were in line with the initial guidance, we laid out a year ago. Despite the significant disruption from the Pan back and we are.

And now two years and to the turnaround and have come a long way and strengthening the financial performance and operational effectiveness and the company.

Last year, and we drove excellent progress on each area of the turnaround plan and gained significant momentum and the second half from 2020.

Before getting into the financial results and outlook I want to spend a few minutes operational highlights.

We've made significant progress simplifying the organization for example, and SKU count we exceeded our target a year early and exited 2020 with 47000 as compared to our goal of 50000 and by the end of 'twenty one we.

We have eliminated 54% of our skus over the past two years with a 37% reduction and 2020 alone.

Secondly, we have doubled our revenue per SKU over the past two years, we've also meaningfully strengthened the quality of our and inventory cutting our excess and obsolete inventory by more than half. Since 2018, we are not stopping here and we will continue to simplify the SKU portfolio across each of our businesses.

Over the past two years, we've also significantly simplified our IP architecture as we rationalize nearly 90% of IP applications and in 2020 was less than 800 and apps successfully implemented.

ERP integrations, including the October 1st through a home in North America to Sap's, which went smoothly and we expect to get 95% of our business on two ERP systems over the next two years.

We also fully redesigned our digital technology platform rationalizing the number of sites in North America from about 290 million of force.

We have already migrated 35 of these 40 sites to the new platform with another three conversions expected to be completed by the end of February.

This is a remarkable achievement within an 18 month period, the new platform delivers and much higher quality more engaging and impactful consumer experience and allows us to introduce exciting omni channel features along the way we expect to complete the conversion of the remaining U S sites by the summer and later this year plan to extend this initiative to our international markets.

And.

As I mentioned on our prior call. During 2020, we also implemented a new technology to consolidate and better control the company's indirect overhead spending, which we expect to drive significant savings going forward.

Just a few examples of where we are eliminating complexity from the organization, but the efforts go well beyond the ones I mentioned impacting areas, including the supply chain legal entity structure cost centers profit centers and financial system and real estate among others.

We're driving overhead efficiencies through complexity reduction along with benefits from restructuring savings, which we started to realize and the back half of the year, we lowered our overhead as a percentage of sales by another 100 basis points from 2020 and.

Importantly, as we look forward, we see ample opportunity to continue to simplify our operations and optimize our supply chain beyond efficiency simplification allows us to become a more preferred partner with our retail customers.

And we continue to optimize no cost structure and we are increasingly leaning into our productivity initiative called fuel a significant enabler of our margin ambition and.

And 2020, we drove a stellar outcome on fuel and reducing our cost of goods sold base by about 4% year over year as growth savings increased about 35%.

This was not only the best annual result, Newell brands delivered since we started tracking this measure but it also amongst best in class and the industry.

We our system are Todd reviewed productivity efforts across the organization and have a strong pipeline of projects for 2021, and the coming years, which should help drive gross margin improvement going forward.

Now, let's turn to the quarterly results.

During the fourth quarter <unk> net sales increased two 5% year over year to $2 $7 billion as core sales growth of four 9% was partially offset by headwinds from foreign exchange as well as business and retail store items from the second consecutive quarter. We saw broad based top line momentum with core sales growth across all four geographic.

BRIC region and 6000 assurance.

Normalized operating margin improved 10 basis points year over year to 11, 4%, which was ahead of our expectations overhead cost reduction and productivity savings helped to offset higher advertising and marketing expenses as well as pressure from business unit mix COVID-19 related costs and inflation.

We reduced our net interest expense by $1 million year over year to $69 million due to debt repayments during the year.

We reported a normalized tax benefit of $6 million as compared to a normalized tax expense of $51 million and the year ago period, reflecting discrete tax benefits and the current quarter.

We grew Q4 normalized diluted earnings per share, 33% year over year to 56 cents per share.

Stronger than anticipated top line results in combination with disciplined expense management and strong productivity enabled us to our per performed versus our expectations.

Moving on to our segments core sales per appliance and cookware increased four 2% driven by international markets consumption trends continue to reflect an increased frequency of at home cooking.

I would like to point out that effective January one 2021, the CEO, but food business has taken over the responsibilities for the calc along cookware business as a result of this change the appliances and cookware segment will be renamed Paul appliances and 2021.

Core sales growth for the commercial solutions segment and accelerated sequentially to 13, 8% with increases across both the commercial and the connected home and security businesses.

Function trends also improved sequentially across both businesses within commercial we saw strong demand from any consumer facing businesses as well as and washroom and hand protection.

Core sales from home solutions segment increased 12, 4% propelled by growth across both food and home fragrance business share.

Food was once again, the strongest performer within the portfolio continuing on a double digit growth stream as consumption remains strong and a seasonally important quarter core sales increased and the home fragrance business, reflecting the strength and E commerce.

And the wholesale channel.

As anticipated core sales and the outdoor and Rec segment were under pressure declining seven 4% fourth quarter results were negatively impacted by the timing shift of sales and calm and North America into Q3 ahead of the October one conversion to S&P.

Looking past the timing shifts and focusing on the second half of 2020 core sales per outdoor and rec grew both year over year and improved consumption and outdoor equipment categories offset softness in beverage and technical apparel.

Core sales per the learning and development segment contracted two 2%, which was a meaningful improvement from the prior three quarters, while core sales per riding were challenged due to the impact of COVID-19 on school and office closures. We were encouraged to see a continuation of positive consumption trends and the U S.

Top line momentum per baby accelerated and the fourth quarter, reflecting strong consumer demand.

Our efforts to tightened and working capital delivered outstanding results, making cash flow and one of the major highlights from 2020.

We generated over $1 $4 billion of operating cash flow during the year, which represents a $388 million improvement from 2019 last year at Cagny, we set an ambitious target of delivering free cash flow and productivity and excess of 100% and this was our second consecutive year needed and that goal and.

Back from 2020, Newell free cash flow and productivity was 154% a remarkable achievement by all accounts, we've shortened our cash conversion cycle by about 26 days to 72 days, which is very close to our benchmark target of 70 days.

Accounts payable was the most significant drivers of improvement and the cash conversion cycle and we saw a flow through of more favorable payment terms that we have renegotiated with our suppliers.

Also ramped up our supply chain to build inventory in order to support demand, creating a timing benefit and payables that we expect to partially reverse in 2021.

We are and a much stronger balance sheet position today than they have been and a very long time.

Ended the year with a net debt to normalized EBITDA leverage ratio of three five times versus $4 and other times at the end of 2019, and we are closing and our target of three <unk> times.

During the fourth quarter, we completed a $300 million debt.

Tender and for the year, we reduced our net debt by $748 million to $4 $6 billion. We exited in 2020, and a very strong short term liquidity position, which exceeded $2 $5 billion, including two over $1 billion per cash on the balance sheet.

Turning to <unk> 'twenty, 'twenty, one and I want to start by providing some context for our plan.

We are encouraged by the momentum, we've seen and our business and the second half of 2020 and.

The first quarter of 2021 is off to a very strong start from both the consumption and shipment perspective.

At the same time, we are balancing this optimism against the macro environment, which remains quite dynamic and as a result of the ongoing pandemic.

We are taking a prudent planning approach to 2021 and capitalizing on growth opportunities, while continuing to drive cost and cash discipline and while we expect many of the recent consumer habits to persist we are assuming a normalization of category trends over the course of the year.

Since the comparisons are much tougher and the back half of 2021, we expect a stronger first half relative to the second half.

Additionally, we are seeing inflation trends pick up primarily due to resin transportation cost wage rates and sourced finished good pricing.

We plan to grow gross margins, despite the cost pressure with both pricing and productivity actions and spin.

And specifically in 2021, we expect to deliver on our evergreen financial targets per core sales growth operating margin expansion and free cash flow productivity from.

For the full year of 2021, we are guiding for net sales and $9 five to $9 $7 million with core sales growing and a low single digit rate and favorable foreign exchange more than offsetting the headwind from continued rationalization of the Yankee candle retail store footprint and other minor business exits.

We are planning for normalized operating margin improvement of 30% to 60 basis points year over year to 11, 4% to 11, 7%, we expect productivity and overhead savings were more than offset the impact of inflation as well as incremental investment behind higher advertising and marketing spend.

We are assuming a normalized effective tax rate and the high teens and significantly above the 2020 level due to a lower benefit from discrete tax items. This outlook does not contemplate any potential changes and the U S corporate tax rate under the new administration.

We expect this to net out and normalized earnings per share and $1 $55 and $1 65, with a modest uptick and the number of shares relative to 2020 levels the year over year step up and the tax rate represents a more than 30 expense headwind to earnings per share and 2021 on the tax rate equivalent basis, we are projecting strong growth.

And earnings per share and 2021.

For 2021, we expect to generate operating cash flow of approximately $1 billion. Our outlook implies that we will continue to make progress on reducing our cash conversion cycle. Despite a lower year over year benefit from working capital.

For Q1, we are guiding for net sales of two 4% and $2 8 billion or 8% to 10% year over year growth with core sales, increasing and the high single digit range versus Q1, and 2020 favorable currency is expected to more than offset the impact from Yankee candle store closures and minor business segments, and our first quarter guidance assumes normalized.

Operating margin improved 90 to 130 basis points year over year to six 9% to seven 3%, reflecting benefits from productivity efforts and overhead savings that are partially masked by higher advertising and marketing investments as well as heightened commodity and transportation costs.

We are projecting our normalized effective tax rate and the mid twenties from the first quarter, reflecting a discrete tax headwind and the quarter.

We expect normalized earnings per share and the 12 to 14 range, which represents strong double digit growth as compared to mine from the year ago period.

Over the past few years, we've made tremendous progress on our turnaround and we are coming out of 2020, and a much stronger position than they were coming in and despite the ongoing disruption from the pandemic.

We continue to see significant opportunity for value creation, and we will remain vigilant and executing on our goal of driving consistent and sustainable core sales growth operating margin expansion and improved cash conversion cycle operator, let's now open up the Q&A session.

Thank you.

If you would like to ask a question. Please press star one on your telephone keypad.

Star one to ask a question.

We will now take our first question.

From Bill Chappell from Securities.

Securities. Please go ahead.

Thanks, and good morning.

On development.

And I wanted to just.

And I understand.

Broadcast and this year as warm and aren't going to science.

Can you kind of walk us through.

On the I guess the.

I'm curious.

Understanding that I guess three things one being a year ahead of expectations with the SKU count reduction does too.

<unk> revenue.

<unk>.

And the Yankees store closures.

And we won't have as much impact line.

On the first quarter, but certainly on the back half. So just trying to understand what that dose and then third I can't remember I don't remember exactly what it was.

And in terms of last year, and you had a fair amount of.

Net closures around Covid.

Created shortages and out of stocks.

Any idea of kind of what.

You can be made back and as you looked at first second quarter of this year sorry the plot.

Yes, no problem, let me try to try to address those so.

We are very excited on the SKU count progress that we've made as I said in the prepared remarks.

<unk> gotten to our goal and your early.

One of the things that we've done and as we've put in place a systemic process.

And we call the magic quadrant analysis that looks at revenue per SKU and gross margin per SKU and as we've gotten into that and system of ties. The process. We think we've got opportunity to go further on SKU count reduction.

Going forward, we don't believe that this is going to be a revenue headwind. We actually think that this is going to be a revenue help for the company and a cost help because it allows us to improve our customer service levels.

And in the process of setting new targets and we'll share more probably at Cagny next week with regard to the outbound targets.

But very encouraged by the results so far and we see it as an enabler for both revenue growth and continued productivity and.

Nike stores.

Ended 2020 by clothing, I think 77 stores and 2020, our store count was 398 stores.

Our plan for 'twenty, one is to close somewhere about another 80 to 100 most of those will happen and in fact most of those happened in January so it's very front part of the year loaded that does not have a significant impact on the company's revenue because we are growing very fast and that business on the E Commerce side.

With the wholesale business and and the international markets and so we believe that.

We're going to see a profitability benefit.

As we make that transition from retail to more online and wholesale and that business and then on the plant closures.

You are right and the second quarter last year of our about 135 manufacturing facilities and distribution centers and we have 20 that were closed.

Government mandate.

As we sit here today all of our facilities are open.

Largely operating at full capacity and we have largely caught up.

The majority of our product categories that being said, we do have some product categories, where we're still.

Supply constrained and.

Those tend to be the product categories, where we've seen outsized consumer demand increases.

But we're working hard to catch up and add capacity and.

Situations.

So that's great and one just follow up on writing and you're talking about kind of tougher comparisons for the overall business and the second half.

And then writing and set up for a gang busters.

Third and fourth quarter, assuming schools are back open options with us.

Preparing for that.

Or how should we be thinking about that as we move from the third quarter fourth quarter.

Yes.

And to tackle that.

But the price piece of good news and titles.

And the resilience of the portfolio and you look at training training and as all of the headwinds to be accurate rising.

And that we were able to do relative to the second half and.

Actually and contain the declines but forget from negative one is testimony to how we are beginning to get.

And the resilience of the other brands so.

The doctor with the cost cutting and then you look from a long term lightning is a very well managed business for US is just the macro has.

And then you wanted cash, but when we look at <unk> one.

And what do you mean is that schools will go back to reopening.

The Super Mcdonalds.

And the second half of the.

And we've taken that we took that into the range and we're prepared.

Adding brands, we think it'll be a more and I'll go back to school season, and I think Bob again investing in fiscal <unk>.

Big unknown at this stage and commercial business.

And when you look and offices.

Prediction I had thought that most of the offices will get back in by July, but everything we're reading and hearing is that can you get kind of and the other day I think company Lowe's drew so ill take the fifth we will have from Silicon Valley companies.

And they may actually the main growth not only being sort of all of US day anti yet so that does get affected in terms of.

Our commercial business, which itself requires a business. So we will have to see on that.

Overall, we expect operating business to grow in non U.

Trading volume versus training training training, absolutely how much I think second half that would be the question Mark.

And look the other thing I should say live.

And my prepared remarks, the share gains, we're proud and hiking and truly spectacular.

Sharpie brands brands that it can go beyond market and how it is doing independent side and all of the innovations we're coming up and lastly, we're really preparing for our data from future with this business. We're now and that team is very focused on innovations.

And more stay at home and stuff that we have.

To do that.

And the longer term so it is still very.

And I'll feel good about this business and about the other business picking up this line.

Okay. Thanks, so much.

Thank you.

We can now take our next question from Olivia Tong from Bank of America.

Please go ahead.

Okay, Thanks, and good morning.

Was hoping you could talk a little bit more about the margins, particularly gross margin you mentioned the commodity pressure of course and some pricing.

Perhaps could you give a little bit more detail in terms, and where we're and thinking could potentially price.

And then just sort of marrying all the different things and puts and takes.

From margin and that commodity pressure potentially from offset from pricing, maybe a little bit less leverage, but hopefully and improved sales mix relative to last year. So just thinking through all the pieces and people.

A little bit more color on that in terms of the puts and takes there. Thank you Chris.

<unk> five per data, yes, sure so.

If we think about the margin guidance the operating margin guidance and particular gross margin income per next year for 2021 basically there are two primary headwinds. The first is inflation, which as I mentioned in the prepared remarks is due to resin wage rates.

Source finished goods, primarily due to the strengthening of the Chinese currency and transportation costs, we expect that inflation pressure based on what we're seeing today to be almost a 200 basis point.

Headwind for the company from next year, which is a significant ramp up from prior years. We also are planning to increase our advertising and marketing costs.

And as a percentage of sales and 2021, given that our innovation pipeline and had strengthened in 2021.

As we brought new leadership on and the day has begun to develop stronger innovation plans and so those are the two headwinds.

And we're guiding to operating margin growth because we have.

Benefits more than offset that and the benefits that we're seeing are the biggest one is productivity with the fuel savings program.

And so we're using that productivity drive to basically offset largely offset the inflation pressure.

We also have we are going to take selective pricing.

We're not taking pricing to fully offset inflation, but we are taking selective pricing and those categories that have seen the biggest inflationary pressure. We also expect business unit mix benefit.

And as Ravi mentioned, we are expecting the writing business.

To come back and be a meaningful growth driver for the company and 2021.

Actually we are expecting the writing business to grow starting in the first quarter from what we've seen.

And then the last thing I would mention is continued focus on overhead cost reduction through our simplification initiatives. So those are sort of a walk through the puts and takes I think when you net it all together.

And we're expecting to drive gross margin improvement and.

In 2021, despite the inflation environment because of the productivity efforts and the pricing and the mix.

From the business unit.

Forecast for.

And can I ask.

Question. Please.

Thank you.

Can I ask you one about how youre thinking about channel exposure.

From a business going forward.

Obviously, you can how much is compelling.

And substantially expand.

And that line can you talk about the margin implications of that.

And then where are you focusing on distribution expansion.

Marty Inc.

Segments.

Thank you have more opportunity in terms of distribution expansion. Thank you.

And then quickly.

Yes.

So I think E. Commerce is share at the state is going to continue to grow and we're going to be advantage, because we have growth strengths.

As I mentioned, <unk>, 2% global net satisfy and attraction and E commerce growth.

<unk>.

And for us that business, our income growth businesses are quite profitable and.

It's not something that is.

It's very very good margin business. So I don't think thats, the concern and will continue to grow their second and terms so the channels.

As I mentioned, where the Big trust from US the grocery business. The dollar stores drugstores, and we're making already good progress, especially our food business really good.

On the grocery side, we're putting together now and we're very focused the sales team on this channel. We think that there is a lot of opportunity.

And we continue to do well with our strong mass merchants for our.

Our biggest customers so.

Continued focus on that.

Okay next question please.

And our next question comes from Kevin Grundy from Jefferies. Please go ahead.

Great. Thanks, Good morning, everyone and congratulations to you and the recent momentum great to see.

First question, perhaps for Chris and the margin opportunity and I would say and one for Rob and the geographic opportunity. So first on the margin opportunity, Chris as you're as you're well aware the 600 to 800 basis point opportunity with respect combined gross margin and overheads understanding those figures are growth and ex any sort of read.

West and concerns but.

And frankly, it's pretty unique and rather substantial within the consumer space. So the long term guidance calls for 50 basis points of improvement each year, you've got just yours 30 to 60 basis points.

<unk> is whats the organization's ability to lean in and accelerate the pace of that margin enhancement and unlocking that value for shareholders, while balancing versus the investment needs and cost inflation that Joel and counter and any given year.

So your commentary would be helpful and I have a quick follow up on <unk>.

For changes outside the U S.

Yes, So let me start on the margin question Kevin.

So if you look at the underlying trends of what we're driving this year.

The organization is driving sustainable margin improvement progress on both gross margins from the fuel program and an overhead reduction through the complexity reduction that dramatically exceeds our guidance of 30 to 60 basis points and operating margin improvement. The reason why we're guiding to.

30 to 60 basis points, because we have an inflationary environment.

Which I mentioned is about a 200 basis point headwind and we're planning to increase advertising and marketing cost as a percentage of sales significantly.

In 2021 and so.

Those two things were not there you would see our our ability to fundamentally be driving operating margin improvement.

Higher than the net guidance I think the.

Great and model that we've put out a 50 basis points improvement each year, where our guidance and very much in line with this year. So we're excited that our guidance. This year has us fully on all metrics in line with the with our Evergreen model and we think that the company has really turned the corner and.

In regard to delivering against that evergreen model. So.

And any given year.

And we'll guide to as appropriate when we get there, but I feel very good about the underlying capabilities of the company to continue to drive margin improvement per.

Primarily and the gross margin and overhead area.

Got it.

And so.

Yes, I got a follow up thanks for the comment I'm sorry.

And a follow up go ahead.

Yes. Thank you Ravi just very quickly on the and the opportunity outside the U S.

For the business I think.

It's probably been a little bit lost and the company's efforts to stabilize and put processes in place, which you've had success doing but now it's about roughly 30% of the company's mix could you spend a moment on the international strategy, how big of a priority. It is to grow the business outside the U S where you see the greatest opportunities and should we think about the algorithm for the overall portfolio.

How should we think about the core sales growth rate for your business is outside of the U S. And then I'll pass it on thank you.

Yeah. So thank you Kevin.

You may know from my background I've been inside and out of international price and my career.

Obviously this is something that is near and Dear to my heart.

But our first priority was to really get.

Yes.

Focus, which we are now beginning to get traction so we're getting more upon and attention on that.

For 'twenty, one and beyond I think there is a lot of opportunities and the key is depth breadth and we're not into brand and price, which has been the issue and the assets, where I think and a lot of places.

And the overhead from the international business the higher.

And then.

So we have got a GAAP.

Very fragmented so if you take the U K, we have many businesses and different offices theres not the synergies. So we've got a GAAP focus so what we're doing is focusing on some of our top 10 countries and saying how do you get after them and.

How do we create longer term and country management system growth.

As a one year and approach rather than everyone building their own but having said that the teams have been doing pretty well and when you look at the process overall international actually grew pretty well and slightly better than the U S Inc.

And when you think about appliances, where Latin America, the strong growth double digit growth strong double digit growth and Latin America. So it's all positive I just think there's a lot of opportunity and where it is.

And again after that.

A very bright and articulate the strategy Covid has also made it difficult to get to these countries, but this year. This is one of my big part of our business as we go forward.

Great I appreciate it and good luck and thank you. Thank.

Thank you Randy.

Yes.

And your next question comes from Wendy Nicholson from Citi.

Uh huh.

Hi, two questions. Please.

And just in the very short term.

Rice from report about the port of Los Angeles, having backlog and issues and Chris I was just wondering if you had and.

Given that your imports from China are your materials from China do you have any issues or bottlenecks, there and then.

And actually GAAP on the margins, but looking at it from a different perspective.

And I take it.

Biggest hindrance to your overall margin is.

Your margins were bad and appliances, and cookware, specifically and I know theres been a lot of lumpiness quarter to quarter, but with new management there.

How long do you think it will be until that.

And then Ken firmly be in double digits from an EBIT margin perspective, okay.

Very good thanks Wendy.

And so on the part of Los Angeles.

A few comments, we do import a significant amount of containers through the port of Los Angeles from.

Asia and primarily China.

Has been a backlog and a source of supply disruption force, so earlier and the pandemic as I mentioned and the second quarter of last year. It was about our manufacturing facilities and our distribution facilities now the disruption is more related to that port.

We are getting products through there were also.

Shipping through other ports.

And on the East coast than other places and the West Coast.

Prices for containers have gone up dramatically.

We are a large scale and quarter from.

From a volume standpoint that gives us some advantage and marketplace, because we have contractual commitments for volume and pricing that.

I think advantages us versus many of our smaller competitors. So.

We don't see it as a major headwind for the quarter or per year, but it is something we're sort of battling every day.

As we go along here.

Okay.

Great.

And then on them.

Let me address appliances.

And so yes, we recognize.

The appliances business.

We need to work on the margin structure. There is no question. So the big issue with gross margins and part of the issue products as we.

Deal with some of the Otp and MVP segments and.

So we've got to get more innovation and <unk>, which then can be.

And at higher gross margins the good news, there and we looked at and our brands, which are more premium outside of the United States like a revenue in Europe, our Ulster and Latin America. The gross margins outside of the U S are actually quite good so what.

The cash Christophe and say, we've got against that growth margin over the next several years and also as we get to get out of the scale of businesses from all of these we are finding.

Gross margin of negative so we really need to get if you are giving absolute dollar bills with some things.

So we're being very hard headed about looking at these category and widening the chop them up and might have a little revenue shortfall and so.

Okay, and we move to get the margins up so very very focused on gross margins on this business.

Fair enough. Thank you so much.

Thank you.

Net.

Next question comes from Joe Belo from Raymond James.

Thanks, Hey, guys good morning.

Question on the guidance given the momentum that you guys saw and the second half and then.

And some of those consumer trends that we saw last year and normalize and there's a lot of uncertainty from why would sales.

21 people load 2019, I mean other than writing on the commercial side, what businesses might be lagging from two years ago.

Sorry, if you think strength if any one of them versus first point can you repeat.

<unk> share, you're very well sorry about that Jeff.

Yes.

Outside of writing on the commercial side, what businesses might be lagging.

And from 2019.

Yes, So I think I don't I don't think we're our guidance is implying lagged and let me try to just address the top line guidance and give some color to it.

And so.

As you all know the company turned positive on core sales growth and Q3 of last year and we had a very strong Q3, our reporting today a strong Q4, we're guiding to high single digit core sales growth and the first quarter and to low single digit.

<unk> for the year and I think when you look at that and you look at the <unk>.

And you were to look at our two year stack growth rates returned to positive on a two year stack basis. In Q3, we were positive on Q4, we're guiding positive on Q1, and we're guiding positive for all of 2021.

Look specifically at the categories.

I think the categories.

Category that has been most negatively impacted as we've talked to has been rising.

Cause of the schools and office closures.

And as Ravi mentioned in the prepared remarks, and as we alluded to.

And the Q&A and we are exiting.

2020 and.

And a very good position from a retail inventory perspective, and we expect the writing business to be back to growth in 'twenty and 'twenty one starting in the first quarter. So I don't I don't think we're seeing categories that we're expecting to have declines heading into 2021.

And one thing to that which is the first half growth rehab and better visibility because no one knows what's going to happen and the first half we are pretty bullish I mean, giving.

<unk> given you a pretty good sales so first quarter, we had a great second half.

But we also take into consideration our food business that grows 25%.

Core sales and.

Got it.

In the second half, especially and so you've lapped that so when you look at that growth I think we're doing pretty well so.

We actually feel pretty strongly that EBIT coming out of Covid.

Business is beginning to bear out and net growth momentum.

That's helpful. I appreciate that just one quick follow up for credit and you mentioned that there is more opportunity.

Accounts Youre at 47000 now how long do you think that number can ultimately get.

Yes so.

And we're as I mentioned, we're excited about getting to our goal of 50000 a year early.

We're going through that analysis.

As we speak and I think we're doing it and the database fashion, just as a little bit of background two years ago at Cagny.

When I first presented.

And the new CFO of Newell brands.

We were over 100000, Skus and so we've been able to go from over 100000 down to 47000, and we set our 50000 golf based on just sort of Dom and the air what we've got now is a much more databased way of tracking and measuring it.

We're finalizing our objective and we will share.

Our revised Out-front target next week at Cagny.

We get there, but there is no question that we have further opportunity for SKU reduction and that further opportunity.

<unk> is going to enable us to.

Both accelerate revenue growth and drive strong growth productivity and cost of goods savings and margin gross margin improvement.

But we'll share more next week.

Great. Thank you.

Next question comes from Lauren Lieberman from Barclays. Please go ahead.

Great Thanks, and good morning.

And I was hoping we could talk a little bit about baby and you called out very strong performance and the fourth quarter and well just thinking forward some of that.

Headline risks and the reality is about the birth rate.

No that overtime innovation trumps birth rate dynamics, but I was just curious what you were seeing.