Q1 2021 Newell Brands Inc Earnings Call

April 30, 2021

[music].

Good morning, and welcome to the Newell brands first quarter 2021 earnings conference call.

At this time all participants are in a listen only mode. After a brief discussion by management and we will open the call for questions and order to stay within the scheduled time for the call. Please limit yourself to one question during the Q&A session.

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

Is available at IR Dot Newell brands Dot Com I will now turn the call over to Sofia and as VP of Investor Relations Ms. <unk> you may begin.

Thank you good morning, everyone welcome to Newell brands first quarter earnings call on the call with me today are Ravi father, 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, we will be making forward looking statements which involve risks.

And uncertainties actual results and outcomes may differ materially I refer you to the cautionary language and risk factors available and our earnings release, our form 10-K, and other SEC filings available on our Investor Relations website for further discussion of the factors affecting forward looking statements. Please.

Please also recognize that today's remarks will refer to certain non-GAAP financial measures, including those who are referred to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered and superior to the measures presented in accordance with GAAP explanations of these non-GAAP measures and available reconciliation.

And between GAAP and non-GAAP measures can be found in today's earnings release and tables as well as and other materials and Nils Investor Relations website.

Thank you and now I'll turn the call over to Ravi. Thank you Sofia.

Very hard to get good morning, everybody and welcome to our call.

I am pleased and honored to share the highlights.

On Fob phenomenal first quarter results as we carry forward the strong momentum from the back half of 'twenty 'twenty.

Top line grew and us.

Standard and being trained and the 1%.

As normalized operating profit doubled and all.

Normalized earnings per share tripled versus last year.

This is the third consecutive quarter of core sales growth for the company and by far the best resolved yet.

On a two year stacked basis core sales grew in the mid teens.

And the encouraged that the first part of growth was in all eight businesses all four regions and.

All channels.

And populate the collective power of icon.

And <unk> brands is evident and this performance with 18 out of 20 brands demonstrating growth with Elster Yankee candle Coleman Rubbermaid and dimer, leading the pack.

On the top line.

Trend was truly broad based and seven or eight business units grew sales.

And I would say a double digit rate.

Home fragrances and home appliances business has struggled to show.

We were also really pleased to see that the writing business is moving past the pandemic related work as more schools open up in person and learning.

And the business returned to strong core sales growth and the first quarter mirroring the levels of the company.

All four geographic regions grew core sales at a double digit rate with international market up nearly 27% and continuing to outpace North America.

In the U S. We experienced strong consumer demand throughout the first quarter, but the acceleration and the last months. We started to lap initial lockdowns from training training and mid March and also saw lift and demand following the passage of the fiscal stimulus.

Shoppers continue to seek out home centric products as well as those that favorable personal wellbeing and outdoor activities.

And with the gradual reopening of the economy. We're also seeing an uptick across some categories such as writing that have been disproportionately hit by the pandemic.

We expect continued evolution of consumer behavior throughout this year as vaccination rates and mobility improve at the same time, we believe many of the new habits consumer volume.

Ceased beyond the 10 day example at home cooking.

We expect the shift towards online shopping for have a lasting impact.

On consumption trends and nuanced e-commerce sales growth accelerated into the mid $40 range. During the first quarter with global sales penetration improved about four percentage points versus last year to approximately 21%.

While the sustained growth and the digital business fades away from such a strong top line outcome. In Q1 sales trends were also healthy across other channels as we started to lap year ago, Lockdowns and mid March and mobility improve particularly in the U S.

E Commerce is a notable competitive advantage and and engine for growth from newer brands.

I am thrilled to share that we have recently.

A critical role in this ABS, we appointed Mike gather as president of E Commerce and digital he joined US from Pepsico, where he served as senior Vice President E Commerce marketing technology and data science.

Prior to that Mike spent 10 years at Amazon.

And so e-commerce expertise his technology prowess and data science and analytics capabilities and.

<unk> zeal and intellectual curiosity and Mike will build on Newell strong E Commerce Foundation to make us a digital powerhouse and on omni leader.

I am pleased to report that the leadership team now is complete.

Built a team that is best and pass diverse and thinking and unified and strategic direction and will pave the way from lasting success. The strength of the first quarter results reflect the progress we're making on the execution from strengthening our brands and scanning innovations increase.

<unk> distribution.

Improving customer relationships, leveraging consumer trends as well as macro tailwind.

The common theme and this quarter was the broad based strength and consumption courthouse growth across the entire portfolio share gains in several categories and regions and strength in international.

The home fragrance business deliver phenomenal results and the first quarter as consumption growth accelerated to about double the level from the back half of 'twenty training. In fact, this was by far our fastest growing business.

Bell.

From a core sales and Prs perspectives are reflection of pent up demand for and supply constraints and training training.

Consumers continue to seek out moments of serenity and their homes as they adopt a more holistic approach to rugby.

We drove core sales growth.

More than double the rate on the overall company.

To put it and perspective home fragrance grew net sales at a double digit Craig and other parts of 2000 and timing.

And 2019, despite closure of about 150 stores during this timeframe and last year's exit from the fund raising business.

We are successfully managing the purposeful transition of our business as we pivot towards expanding distribution across traditional retail and direct to consumer channels, while reducing our Yankee candle retail store footprint.

Okay.

We are driving strong growth and our direct to consumer channel through personalization and loyalty programs that are maximizing lifetime customer value.

Our recent launch of Yankee candle with signature collection, the most meaningful redesign of the Yankee lining, yes is gaining traction and we're not just focused on renting and cameras and we're gaining share and tracked channels, but also within the overall home fragrance category with an exciting pipeline of new products planned across.

The fleet gives user waxed mounts.

And <unk> and center categories.

Okay.

Excuse me the food business, which now includes sky from cookware and cutlery maintained strong growth momentum.

And sales increased and the trends.

Okay.

Excuse me with the large portion.

But neil still prepared and Eaton and the home. It is not surprising that consumption has remained strong, particularly in the food storage and fresh preserving categories.

And I'm delighted to share that early in April Rubbermaid was named the most trusted food storage brands in Newsweek magazine water.

We've driven strong share gains on rubbermaid and are seeing solid traction on the brilliance glass and tried from food and Patrick storage line.

We continue to drive animated elevated demand for our accounting business, where we also built on our leading share position with <unk>, leading the way heightened consumer interest and gardening bodes well for continuation of this trend and we are continuing to bring new innovation and new use us to the market and the first quarter.

Ball launch nesting gas the stacked together, which helps make storage more compact and would reduce the amount of space needed from making just by 30% food sales continues to do well, albeit 3000 innovation launched in July 2000, and training as already sold 350000 units and is moving the needle.

Home appliances delivered its strongest performance yet sales grew 38% with double digit increases across all four regions as the category remained quite volume.

In the U S double digit growth and consumption was evident across most subcategories, including cheated cooking blending coffee pain management and App purifiers as stimulus provided additional fuel despite the Lockdowns Latin America posted very strong results across all countries with Brazil, Colombia, Chile.

And Peru being the standouts similar consumer trends played out and Asia Pacific and EMEA, where we saw broad based sales growth during the first quarter. We've continued to build on the terrific fall 2000, and pending launch of Mr. Coffee Iced coffee maker by expanding its distribution with additional rollout plans in place for.

Balance of the year as capacity comes online to meet demand is quickly becoming the number of on selling coffee and SKU and relevant retailers, where the product is available and.

Please note. This is another innovation, thus gaining traction just last week crop up and celebrated its 50th anniversary. This year was recognized as the most cash did slow cooker, Bram and Newsweek and another exciting news and PD, Mexico awarded <unk> and so when a training 20 market share growth in the kitchen.

Electronic segment.

And the first quarter on writing business rebounded nicely as core sales.

Grew at a strong double digit rate with broad based growth across from writing and creating expressions labeling and fine writing businesses. We're finally, beginning to put the training and <unk> pandemic related disruption on this business in the area of view mirror.

While the category also returned to growth and the U S and in the first quarter nuanced consumption grew at approximately double double the rate of the market and the segments. We compete as we gained meaningful share daimon captured over 400 basis points of incremental chat, while our share and Jeff brands increased by more.

More than 13 100 basis points on the heels on the successful year ago launch of Sharpie S gel.

<unk> has become a needle mover with excellent gross margin the fourth quarter expansion on sharp <unk> platform through sharp <unk> fashion barrels and cross blue and worldwide as well as sharpie STL metal barrels and gunmetal and Champaign are off to a promising start and already are among our top selling patents the REIT.

Bound and our writing business as well as the category is driven by the return of nearly 60% of school districts in bus and learning and cycling against the onset of dependent.

Similar dynamics played out and the UK, and Australia, and New Zealand, where our consumption growth significantly outpaced the market.

Although admittedly there is still a fair amount of uncertainty surrounding the timing of return to normalcy in schools and offices. We are excited about the prospects for the writing business. This year and together with our retail partners and are planning for a normal back to school season.

We continue to assume that offices may remain in a hybrid model for the balance of the year.

Sales growth for our baby business accelerated to mid teens rate and in the first quarter as we experienced a significant uptick and consumption levels across our baby gear and baby care categories. The strong outcome was driven by a combination of healthy share gains by Greg and Nook Nook in the U S stimulus funding.

As well as cycling against competitively depressed consumption levels and March trending trend as Dropdowns play implemented.

This theme is knocking it out of the park, but fantastic e-commerce penetration of more than 50% of global sales and the first quarter up more than 700 basis points versus last year, both Greg and continue to bring news to the market and Q1, two launches such as Greg <unk> Slim fit three.

And three in one car seat and North space Night, Pacifiers and EMEA EMEA I'm.

Im also pleased to announce a new addition, Tom baby portfolio with the launch of century, and a sustainable and stylish baby brand for young families.

Q1 was another strong quarter for the commercial business unit as low double digit sales growth reflected sustained momentum and many consumer facing categories, such as outgrow and garage organization gloves and home cleaning.

Consumers continue to direct discretionary spending towards home improvement project with home still being their hub, we're beginning to see traction and commercial demand, but software products, such as cleaning costs step on containers and professional gloves.

However, lockdowns along with slow global reopening and back to office is still a limiting factor and commercial categories, particularly.

Within the food service travel and entertainment and hospitality verticals as well as and washroom solutions.

We had good momentum on recent launches such and scrubber made easy installed sound by seven and sheds.

Dec boxes, and real group as well as a robust innovation pipeline, we think commercial is very well positioned going forward.

The connected home and security business delivered double digit growth. The team is making considerable progress on our complete innovation overhaul of desk smoke alarm product line as part of <unk> to $1 seven through advanced technology. This team leads and Iot and has made huge advances and automation.

And therefore as planned.

Similar to the rest of our business units outdoor and recreation started off training and training one on a solid note as sales increased at a high single digit rate, reflecting growth and the outdoor equipment business with particular strength and the international regions in the U S consumption accelerated versus the second half of 2020.

Driven by broad based demand across most of the outdoor equipment categories, such as coolers stents and stoves consumers are tired of being cooped up inside and the Hudson the call of the outdoors, although core sales as was still under pressure consumption for technical a Pat on the turn positive.

During the first quarter, we expect the beverage business to rebound as the on.

And the go activities pickup and more schools reopen.

While still early days, we are seeing traction from the recent introduction of three new product lines and contiguous hydration portfolio.

Coleman continues to bring news to the market with an exciting assortment and new products launched and the first quarter, including Skydome tenant expansion expand soft cooler collection and the reunion steel belted cooler collection.

While the first quarter results came in ahead of our expectations and Chris will explain the key reasons, we contended with a fair amount of their challenges as well, including port congestion and the impact of Tech, Texas storms on raw material availability and a significant rise and inflationary cost.

Price challenges as well as demand spikes across many categories.

Our supply chain teams are printed but excellence through these turbulent conditions and successfully manage and broad based demand surges.

Looking out into the remainder of training and training them on and BR been laser focused on building on the solid momentum and the business.

Ill turn it on continues to gain traction this no change and our five strategic priorities that I laid out last quarter, which improved first galvanize our employees behind our purpose to create and consumer obsessed and customer focused organization that is digitally savvy and committed to providing moments of joy and peace of mind to consumers.

Second sustained top line growth.

By focusing on the end to end consumer journey, securing new distribution across channels, especially food dollar and home centers strengthening omni channel capabilities, while accelerating online penetration and focusing on scaling and modernizing our top brands. We will also strengthen that puts from flows improved supply and availability.

To improve customer service levels from our strong focus on forecast accuracy.

And that become on the innovation engine by sharpening our focus on consumer insights and trends and implementing and enterprise innovation operating model and building cross business unit and technology platforms and distinguishing aspect of our global quality innovation efforts is that in addition to our normal exchange.

Line extensions and refreshes and renovations, we will strive to launch three to five major need onboard new product innovations, but yet that can be scaled to $50 million to $100 million and sales and have strong gross margins sharp ESG food sales <unk> 3000, and Mr. Coffee is Elisa.

And two of this thinking.

Fourth accelerate international growth and improved profitability and <unk> continued to make progress on reducing complexity.

Controlling overheads and strengthening the balance sheet and in particular footprint and 21, offsetting the significant search and raw material inflation as well as labor and freight costs through a combination of productivity improvements and selective price increases.

We're still and the early stages of realizing the full potential of our business and see tremendous opportunity for value creation through focused execution of our strategic priorities and serving as a force for good in the world.

We feel good about the last three quarters and are confident about the second quarter 2021, as we see sales from consumption momentum continuing in April.

The second half of 2021 is difficult to predict given global on.

Certainties around COVID-19 and evolving consumer habits. Nevertheless, we're on.

We're optimistic and see more upside than downside.

I'd like to conclude by thanking up 31000 employees for their commitment.

Hard work and perseverance, and all of which made it possible to deliver such an incredibly strong outcome on.

And what's and outputs are now I'll turn the call to my partner in crime.

The $1 billion mine efficiency, Guru and complexity reduction Saar, one and early Chris Peterson.

Thanks, Ravi and good morning, everyone.

First quarter results were simply outstanding as the integrated set of strategies. We've put in place two years ago are driving accelerated financial results across all metrics.

Before getting into the details I want to provide a little color on the current operating environment and proactive choices, we're making we.

We are off to a much stronger than anticipated top line start in 2021 with healthy consumer demand early in the year, we expected and guided for a strong outcome. During the first quarter as a result of and strategic improvements we have made to drive profitable top line growth as part of our turnaround plan.

And three factors contributed to over delivery relative to our expectations.

First the U S stimulus package, which passed and March turbocharged already robust demand across many of our categories.

Second the vaccination right across the U S has been faster than anticipated, which led to more schools reopening their doors and person learning.

And finally operational improvements we've been driving across the company, particularly surrounding SKU count reduction operating efficiency and the ethanol demand planning process are paying big dividends.

Earlier this year, we made the proactive choice to invest and higher inventory levels on our top selling skus.

Because of the operating improvements we made we were able to add capacity without incurring any significant capital expenditures.

This allowed us to both meet the surge and consumer demand during Q1 and build inventory levels to support and improved top line outlook for Q2, and the balance of the year effectively we have created more agility within our supply chain to respond to shifts and demand with the hard work from the past two plus years clearly pay.

On.

The other changing dynamic has been inflationary pressure as the recent run up and costs, particularly on resin transportation sourced finished goods and labor has translated into approximately $150 million of additional expenses in 2021.

Our total gross impact of about $360 million.

Selective pricing actions across businesses that are most impacted by inflationary pressure.

The net result is that we are maintaining our operating margin expansion outlook for the year.

Pricing actions do not fully offset the inflationary cost pressure as we're using productivity savings and operating leverage as offsets as well.

Now turning to first quarter results Newell brands net sales increased 21, 3% year over year to $2 $3 billion, driven by core sales growth of 29%.

Foreign exchange more than offset the unfavorable impact from business and Yankee retail store exits.

It was the third consecutive quarter of core sales growth for the company.

Growth was broad based with each of our business units and four geographic regions growing on a year over year basis importantly.

And importantly core sales grew compared to both 2020 and 2019 levels.

Normalized gross margin contracted 60 basis points year over year to 32, 2% as fuel productivity savings and pricing were more than offset by significant inflationary pressure, particularly on RASM and transportation and labor costs nor.

Normalized operating margin expanded 410 basis points year over year to 10, 1% with a better than expected outcome driven by operating leverage resulting from strong top line results higher than anticipated fuel productivity savings and tight overhead cost controls.

Normalized operating profit roughly doubled year over year to $230 million.

Net interest expense increased by $4 million year over year to $67 million.

The normalized tax rate was 22, 4% above the year ago level of seven 1% as the company realized discrete tax benefits last year.

We grew Q1 normalized diluted earnings per share on more than three times year over year to 30.

Stronger than anticipated top line results and resulting operating leverage and addition to disciplined cost management and productivity and enables us to exceed our expectations.

Let's turn to our segments core sales for home appliances increased 38, 9% driven by growth and all major regions. This was the first quarter without contribution from the capital on cookware business as a reminder, cookware financial and operating results are now included in the food business within the home solutions segment.

Core sales growth for the commercial solutions segment increased 12, 9% with double digit increases across both the commercial and the connected and home and security business units.

Core sales for the home solutions segment increased 33, 8% driven by double digit growth across both the food and home fragrance business units the.

And the learning and development segment increased core sales 17, 3%, a strong rebound, which reflected double digit increases across both the writing and baby business units.

The outdoor and recreational segment also returned to core sales growth increasing seven 8%.

Operating cash flow was 25 million operating cash outflow was $25 million during the seasonally small quarter, reflecting an increase on working capital to support consumer demand increases.

Increases both in Q1 and Q2 and.

Importantly, 2021 is off to a strong start on the cash conversion cycle as we shortened it by about 13 days versus last year.

We continue to strengthen our balance sheet during the first quarter as the Companys net debt to normalized EBITDA leverage ratio moved down to three three times, which is 0.2 point improvement relative to year end 2020, and and <unk> nine point reduction versus the year ago period, we are steadily March.

<unk> towards our leverage target of three times and expect debt paydown as well as EBITDA growth to contribute to this outcome for perspective in Q1 normalized EBITDA on a trailing 12 month basis increased about 10% compared to last quarter.

During the first quarter the company redeemed the remaining $94 million of its 315% senior notes that were scheduled to mature on April 2021, and repurchased $5 million of its 385% senior notes due 2023.

We remain on a very strong liquidity position with over $2 billion.

And available short term liquidity, including $682 million of cash on the balance sheet.

Let me provide some context for our underlying assumptions for the balance of the year and how they've evolved since February.

The macro backdrop remains quite dynamic both as it relates to the pandemic as well as input cost fluctuations. While we are optimistic about progress on vaccine rollout and the impact of the latest U S stimulus on the consumer uncertainty remains particularly in the back half of the year when comparisons are tougher.

With stronger than anticipated momentum and the business and the first quarter, and thus far and Q2 as well as improved capabilities within our supply chain to address demand spikes. We are pleased to raised our full year outlook on top line. We continue to expect a stronger first half relative to the second half.

And the first quarter core sales grew not just on a year over year basis, but relative to 2019 as well on a similar note our updated outlook implies the core sales will be up versus 2020, and 2019, and both Q2 and for the full year for.

For the back half of 2021, we expect core sales to be up versus 2019 levels.

Here are the specifics on our outlook.

For the full year 2021, we are raising our net sales forecast by approximately $400 million to nine 9% to $10 1 billion, which represents 5% to 8% growth versus last year. We now forecast core sales growth of 5% to 7% up from our prior assumption of low single digit growth.

Although currency has gotten slightly less favorable relative to a few months ago. We continue to respect expect it to remain a tailwind and more than offset the unfavorable impact from closure of Yankee candle retail stores and other minor business exits.

Despite the meaningful uptick and inflation, we are still planning for normalized operating margin expansion of 30 to 60 basis points year over year to 11, 4% to 11, 7%.

We expect the combination of productivity pricing overhead savings and incremental volume leverage as a result of better top line growth to more than cover the increase and inflationary pressure.

We are still planning for higher advertising and promotion spending relative to year ago levels to support a strengthening innovation pipeline as well as our digital initiatives.

And there is no change and our assumption of a high teens effective tax rate.

And we're not factoring and any potential changes on the U S corporate tax rate policy at this time.

And our normalized earnings per share outlook moves up eight.

To $1 63 to $1 73 share count is still expected to be up slightly versus 2020.

Our operating cash flow outlook for the year remains strong and unchanged at approximately $1 billion driven by continued reduction and Newell's cash conversion cycle.

Q2 is off to a strong start and we are planning for net sales of two 5% to $2 $5 8 billion.

Which implies 18% to 22% growth year over year core sales are expected to increase 17% to 20% as we lap a 12, 6% decline from a year ago. As a reminder, and Q2, we are cycling against the most significant disruption from the COVID-19 pandemic.

Currency should be a tailwind helping to mitigate the impact from Yankee candle store footprint rationalization and minor business exits.

Our outlook for the second quarter reflects normalized operating margin expansion of 130 to 180 basis points year over year to 11, 5% to 12% as volume leverage and combination with productivity savings should more than offset the inflationary pressures as well as planned increases in advertising and promotional spending.

This outlook assumes that the normalized effective tax rate is and the high teens for Q2 with normalized earnings per share and a 41% to 45 range as compared to 30 from the year ago period.

We are energized by the overwhelming progress our teams are driving on the turnaround plan. We continue to take decisive strategic actions to improve the appeal of our brands and products and upgrade our operating effectiveness and efficiency. Despite.

Despite the disruption and volatility and the macros, we have not wavered from our strategic imperatives, which has put us on a much stronger footing.

Operator, let's now open up the Q&A session.

Thank you.

Good luck.

Question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

And so.

One to ask a question we will pause for just a moment to allow everyone the opportunity to signal.

Your first question is coming from Wendy Nicholson with Citi. Please go ahead.

Hi, good morning.

My first question actually have Q, if that's okay. My first is.

And the raised and the beat and is just fantastic and it looks like there may be more room for upside as we go through the course of the year just given how strong one and <unk> are supposed to be but Chris I was a little bit surprised you didn't raise the outlook for our operating cash flow. That's the only metric that it looks like you didnt bump up.

And I'm surprised by that so just a question of are you, making any incremental investments and working capital or is there. Some other headwind this incremental that we should be aware of and.

And then Rami just on the writing business.

Obviously easy comps to last year I'm, just wondering when you expect to see orders is it the second quarter or is it the third quarter orders and shipments when will we know whether the writing business not just for you, but the category as a whole.

Kind of been permanently impaired by COVID-19 and more people, even if they go back to classrooms and person are still using an iPad.

When will we have a sense of what that category really looks like thank you.

Chris are going to go first asphalt I'll handle the operating cash flow I think.

Our guidance on operating cash flow was still very strong we still expect to deliver in line with our evergreen model of about 100% free cash flow productivity. The first quarter is always the seasonally smallest cash flow quarter.

And given the strength and the revenue forecast and the uptick in revenue, we do expect a little bit more investment and working capital although for the year, we still expect working capital to be a help because we expect to make continued progress on our cash conversion cycle I think we're being prudent.

And our guidance on operating cash flow and we will see how the year progresses as we go forward.

Wendy Let me answer your second question the Batra writing.

First and foremost quite excited to see the momentum we started seeing a little bit.

And the last few months and consumption and writing and inventory levels are quite low as we ended the year and.

And it is great to see now both consumption.

And on.

Our own sales going up the decisive improvement on market share is very exciting let me give you three solid statistics should think about.

And make us optimistic number one as I mentioned in my prepared remarks, 61% of school districts are now back in pass on that.

It doesn't mean all of the students and Mac and that number is probably closer to 7%.

Okay to work well.

And then if you look at K through five it's actually in excess of 70% and as you know the CDC just came out to say and classrooms, the social distancing could be like three P. That's making it easier for schools and us teachers are getting vaccinated.

I think that total boding well there are some big school districts left.

We're waiting to see the swing, California, and New York and so I think what we're planning right now for a normal back to school season, we've talked to all on retailers desktop and planning for that and one thing.

And to note.

Despite the fact that the whole.

And our office side is still on hybrid.

And even the total channel of office very modestly grew in the first quarter, So thats, a little encouraging and.

And so the only one that for us and we look at pricing. We've got three really big piece of business back to school or school case for trial universities, and then offices I think we're quite confident on the schools from <unk>.

Getting more confident about universities, the big question Mark and.

And that portion of <unk> business is the offices at least this yet but with the innovation suffering and driving the market share that we're getting and don't forget. This business is not just U S global and and it goes beyond just total everyday writing when you look at <unk> the market share gains from <unk>.

Aching in Europe in the U S. The from.

Assumption increases and sales increase which we are getting I really think.

And Thats writing business is on.

And possibly and when I said in my prepared remarks, that's probably more upsides and downsides to me writing is really back on and it's a very well managed business that team is just outstanding so I feel very good overall.

And let's not forget the Brent and gross brilliant.

Brilliant gross margins of this business.

Yes, absolutely. Thank you. Thank you.

Thank you Randy.

Your next question is coming from Bill Chappell with Chris. Please go ahead.

Thanks, Good morning.

Good morning, Bill on <unk>.

I guess, yes.

A further update on the outdoor business.

And I understand and activity is picking up and the categories are picking up but this is the kind of the one category that would kind of on one of your segments that was kind of the last day turnaround. So maybe just where you feel in terms of shelf space in terms of market share in terms of innovation pipeline and are you back to where you would hope to be and.

Do we expect to grow category over the coming quarters.

Yes, that's a great question and bulk domain.

On the.

The candid answer is it's work in progress.

Because the three different businesses within outdoor recreation.

And that the outdoor equipment and the largest business and that is really doing well.

And the Coleman brands.

And Jim <unk>, and build cash and I really doing a great job turning it around and we're seeing also a real tailwind from the sense of $10 million more campers and just in the U S. You're seeing minority groups getting into <unk>.

Camping that they didn't and the past and our business in Japan and Asia Pacific is doing extremely well lot of innovations now were catching up with the tenants that don't dense and a great quarter and line that we got last year and now we've got some soft cooler and refreshes and the steel and biotech cooler so.

Quite positive about the outdoor equipment side, and so that and Thats the big piece of the business.

And so.

There are two other businesses for us and that is the beverage business, which as contango and Bubba and this business was did not get helped impact it was.

Headwinds with the pandemic because it's on on the <unk> business and.

And so it did suffer.

And we had fallen behind a little bit on innovation.

But we are turning the corner, we've got a new team on this they are better understanding the insights we've just launched three new lines.

And of hydration.

Staticky much better much better on the key points of spoke proof and temperature control and those I think will give us headwinds we're already seeing some upticks in April so I feel quite positive about the future of beverages and Bubba has always been a good brand and that's doing well so and we're being.

On the.

It's always had good distributions.

And that business, which is <unk>.

And on <unk>, our technical apparel business, but has struggled but we've got a whole new team in place and Jim has brought and some great people will put and merchants there revamped the line third towards the tail end of the yes, I think we'll start really seeing some improvements already.

This year, we started in the quarter, we started seeing a minor uptick on consumption Marvell dot com actually had a terrific quarter. So.

Do feel that's work in progress. So overall when you look at the three.

And.

Still it is it's not the same place that say a food is.

But I really think this team we have got a great team as you know Jim King from Timberland really understands that he has brought and terrific players. So.

So confident that by the end of this year, we will have this business humming too.

Great. Thanks, so much.

Your next question is coming from Andrea Teixeira with Jpmorgan. Please go ahead.

Thank you. So you had an impressive growth and appliance and cookware.

And as well and from solutions and particularly in Kansas.

Can you please help us understand the breakdown of volume against price mix, particularly on <unk>.

And it and you can unite and.

And given that appliances have a long cycle. How are you planning to lap those benefits from stay at home tailwind and.

And continuing obviously, you're embedding your guidance from deceleration attention and going negative.

I wanted to understand that perhaps there was just too.

Our long tail.

And thanks to innovation on pricing and other dynamics and then if you can also kind of help us with.

Baby also had a good impact and you cobalt and your presentation that you.

And you have this on.

Benefits from stimulus and how do you think this is shay.

<unk> four and given that we all know.

The headwinds from both from eight to play negative. Thank you.

Okay, Let me hit.

Yes.

Appliance was fast and then baby and.

Chris After I finish up this thing to you on that.

Feel free to so let's let's take appliances. This is.

Look I'm really pleased with the new team they are making good progress.

Theres no question, probably a ball on businesses the stimulus helped this business demand.

Just given the nature of the products and the price points and so having said that.

That was more on the U S. Because the strength of this business was really international which had just an incredible because while we were slightly above our expectations from the U S side. It was really the team has the ball out of the park internationally.

And I said standouts in Colombia, and Chile, Peru, Brazil does flow just huge huge numbers and because despite dropdowns and so on and that team created a real direct to consumer business and that is just getting huge momentum in Latin America. The team did take a price increase.

That obviously to your question about.

Volume price mix that helped a bit and Latin America.

In EMEA, and Asia Pacific and Asia Pacific and Australia, we are doing.

So you saw a little bit of pull forward for SAP and Australia.

But on the whole I'd say it was a very good international performance and U S. Don't forget we now have good innovations coming out like the ice coffee and your question about how do you sustain well, we're now putting out a full ice coffee line with prepay and so on coming out and the rest of the year we still.

Our disk gaining distribution remember last year, and we were just and one retailer and now we're going in and already everyone is clamoring to get it sorted and neatly.

The issue for us is getting the supply going on that so I think that is the appliance story.

Chris is there are there things you want to add and then I'll come back and his baby.

Only other thing I would say is.

When you when you look at the quarterly trends.

You have to look at the base period as well as the current period and.

And so we're looking at the business, both compared to 2020, and the 2019 and I think we're very encouraged.

And when we look at the business across both time periods. Because obviously, we are growing versus last year, but we're also growing versus two years ago, and I think that gets to the fundamental.

Turnaround progress that we're making as a company.

And the strengthening innovation pipeline that Ravi talked about.

And the SKU count reduction program, which is enabling us to operate with much stronger discipline.

I think are all contributing to the strong results.

One other thing Andrea and appliances, we didn't have a marketer for very long Chris has come in and really rebuilt the team we brought a great.

A marketing guy who used to be with SC Johnson and then.

So I think that team and.

And now a lot more confident.

About the future of appliances.

And I was perhaps six months ago or a year ago.

So and this performance is just indicative that theyre getting momentum on baby.

And the other question is tight and so.

A couple of things you still have immigration and that's helping and then when you look at in the U S.

But when you look at like Kids, one per core and so on and stayed pretty steady. So a lot of our products are not just for the infant side, but really are more on the dealer side and so we progress through the lifecycle baby, becoming child and and so on so I think that helps us second.

Power of the Great co brands is just fantastic I mean this is a leader is gaining share the innovations this deemed rarely that's three.

From car the Slimfast just great idea, but there are so many innovations coming and this new century.

Which is really going after millennials.

Very much about environmentally conscious and good price value. So and then we're now undertaking a whole effort on baby jogger.

This is one of those that we need to bring some price back to it so great feel very goodness of solid great business and don't forget we also have business and other parts of the world.

Our growth rates.

But rates are much better.

And then any disruption and just super helpful. You to play around.

Two major areas, but any any potential callouts in terms of like and.

And by the way nothing but impressed with your supply chain kind of COVID-19 from everything that we've seen everywhere I.

Any anything we may be.

Be aware of in terms of disruption that could hit your second.

Water or now from now on you get better in terms of supply chain.

Yes in terms of the supply chain, we continue to be operating and a very <unk>.

Disruptive environment because of contain.

Container shortages coming from Asia Port congestion.

And trucking shortages.

We are struggling and some locations to recruit labor to our plants that being said as I mentioned in my prepared remarks, we made a proactive choice.

Earlier, this year to build more inventory and invest more and inventory and our top selling skus.

And we've factored those disruptions into our supply chain and <unk>.

And so although our teams are still dealing with day to day disruption and and a number of areas of the supply chain, we are and a dramatically better position today than we were six months ago or nine months ago, We do expect it to be a difficult supply operating environment.

For the rest of the year, but we are very confident and I think you've seen the results that we've been able to demonstrate.

Bye.

Supplying the surge and core sales growth and Q1 and also if you look at our balance sheet. We've built significant inventory and Q1. So that were and are very strong position to be able to supply and take up our guidance for the year and for Q2 versus our initial expectations.

So still on still and area of focus, but but we are and a significantly better place them rebound.

This is excellent and thank you so much I'll pass it on congrats again.

Your next question is coming from Kevin Grundy with Jefferies. Please go ahead.

Great. Thanks, Good morning, everyone and congratulations on the strong quarter and and continued progress.

Quick housekeeping question and a broader question on capital allocation and a housekeeping question and just Pos trends and the month of April.

If you can provide that I think that would be helpful. And then the question on capital allocation, where you guys continue to make really strong progress to your credit on cash flow and reducing leverage but you should be below your leverage target or certainly close to it by the end of the year and.

And Ravi as you rightly pointed out there's still tremendous opportunity for value creation, which I think many folks would agree with so understanding it's a board decision with respect to share repurchases.

Are you currently thinking about.

Capital allocation when you get to your leverage target and what would sort of be the view against leaning and against buybacks, maybe even by the end of this year certainly if not next just given the opportunity in front of you and your comments there would be helpful. Thank you.

So let me quickly hit the consumption and I'll get Chris to talk about capital allocation, and then come back and give some philosophical and beyond that.

And consumption.

Kevin It's Ben.

Sure.

<unk> March was positive on March obviously spikes SB solve the stimulus we definitely saw big spikes April positive momentum continuing so.

I guess, that's basically all I can say.

And on capital allocation I think our view remains the same which is our number one source of investment.

Investment funds is to invest fully and the business when we see opportunities.

To drive significant return on investment and the business our second priority is to.

Pay the dividend and maintain our current dividend and our third priority is to reduce the leverage ratio and I think your point is accurate, we do expect to get to our long term leverage target by the end of this year, which is the three times leverage ratio.

I think we Havent said, what we what we plan to do after that point I think we've been so focused on getting to that point that we have a little bit of time still ahead of us.

That being said.

And what will guide our decision on capital allocation to certainly and view toward shareholder value creation.

Creation going forward and.

And the only thing I'd add there.

Building on work consent.

A lot of options. The good news is as long as $5 billion amount and continues to prove that he can spew out those billions, which I'm very confident and T. Rowe.

It gives us a lot of options number one we really are very keen on getting that debt level down and we're showing that after that and gives us a lot of options because the key is we've been and a turnaround right. So now I think we are actually seeing the end of the turnaround and so now we've got a saying what do we want on me when we grow up and.

How do we really take shareholder value to a huge level and how do you best deploy capital so and the second half of the yes. This the sort of thing that Chris and I are going to talk a lot about with our board and non CA are solid longer term strategy and we can then hopefully towards the end of the year, we'll have a better view on that.

Ravi Thank you for that but I appreciate it a quick point of clarification is it fair to say that return of capital to shareholders likely would be the bias as opposed to a return to M&A just given all the work that the company has done that the board has done to sort of rightsize the portfolio in recent years.

Yes, I would just be very quick comment and look for.

First let's digest this one and.

This team is Ron about delusions of grandeur and building and Empire, We've got great brands, let's get the full potential out of those and then we're going to worry about what we want to do later.

It makes sense. Thank you both good luck.

Your next question is coming from Steve powers with Deutsche Bank. Please go ahead.

Yeah, Hey, thanks good.

Good morning to you both.

Two questions from me.

From the commentary it seems like a lot of businesses are doing well others are still working towards improvement I guess, what I'm. Most curious about is if you can step back and just talk about aggregate market share momentum and whether when the dust settles on the on the full year you expect the total portfolio to be able to gain weighted average market share or if that's a.

Bit too ambitious for the state of the transformation with some thoughts there would be great and then secondly.

Chris I know there are a lot of puts and takes on inflation and pricing productivity and business mix.

And maybe I missed it but did you give a range or could you give a range on expected gross margin for the year.

Both of those will be helpful. Thank you.

Yes, let me quickly tackle the first one vial and.

And then as a doctor and Chris on gross margin. So Steve I think the thing right now because we've got a different set of portfolios each with their own hot buttons, and we're really looking at it brand by brand and category by category and there are some winners and where market share will be where we are.

Doing very well, so I think we've talked about pricing.

About half of our food brands and.

So I think.

Commercial difficult business to track because its so driven by distributors and so on but we're pretty confident we're on a leader and continuing to do extremely well there.

So baby clearly gaining share so I think and then this is not just overall capex. We also track how do we do on Amazon and stuff and that daily and we are getting this home businesses that are going to be tougher like appliances because of the work.

Our businesses are opening price point, so we may gain on units, but maybe not on dollars. Because there are a lot of brands that are very premium price. So that may be tougher so with our portfolio chapter talent, where they even looking overall is that meaningful the issue for us as each of our businesses.

What are the drivers so meaning what is the role of that business and how do we win.

Yes.

On the margin side, what I would say is that certainly we are seeing significant inflationary pressures I mentioned in the prepared remarks, it's about $150 million and worse than what we thought when we talked last in February.

That means it's a headwind for this year of about $360 million, which is roughly 350 basis points on the gross margin line of inflationary pressure.

We are offsetting that with fuel productivity savings, which are we're making incredibly strong progress on.

As I mentioned are implementing pricing not fully to offset inflation, but.

But across the categories.

And that are the most impacted by inflation and then we're driving operating leverage through strong top line growth and tight cost control. We don't guide on specifically what the outcome is for gross margin, but we do guide for operating margin and we expect the combination of those four factors to result in us.

Driving operating margin up for the year by 30 to 60 basis points and that compares to last year, where we grew operating margin as well if you recall when we started the turnaround plan and 2018, our operating margin was nine 1% reported.

And this year, we're guiding to 11, 4% to 11, 7% or 30% to 60 basis point guidance for this year is very much in line with our evergreen model. Despite the significant inflationary pressure and so the underlying progress that we're making is even stronger.

If you were to look sort of underneath the covers in terms of.

The progress from an operating efficiency and effectiveness standpoint across the company.

Okay. Thank you both for that if I could just circle back quickly on the first question Ravi is there a way to think about it in terms of percentage of the portfolio, that's holding or gaining share.

On.

If not that's okay, I'm, just trying to get a sense for whether you feel like it.

And the year.

A majority of that two thirds of it.

How much you feel like you are actually ahead of the curve on versus those businesses that are still coming up the curve.

Yeah look Steve I would just say on that.

We're gaining market share on writing, we're gaining market share on baby, we're gaining market share on on home fragrances to name a few.

Some of our businesses, we don't get market share data.

Because the coverage universe isn't as and broad enough. When you think about like commercial or our CHS, but we're very excited about the top line prospects and what we're driving and those businesses.

And then as Ravi mentioned.

Probably the business that we.

We still are making efforts on his appliances, where we're seeing green shoots.

But there is still more work to be done and.

The only other one like on the outdoor equipment I think we're doing well but.

We still have work to do on beverage and.

On technical and apparel.

Okay Fair enough. Thank you. Thank you both.

Your next question is coming from Joe I'll Debello with Raymond James. Please go ahead.

Thanks, guys good morning.

First question here, if I look at your EPS guidance.

Hi, and and.

Q1 by 16, Thank you raised the full year by about eight.

Better top line, we can play some of the cost pressures that youre seeing.

And with a million or sales incremental cost reduction and you called out this morning.

And I may not be fully offset so how should we think about that and.

And the second half of the year.

Yes.

That's a fair way of looking at it so.

We did over deliver and the first quarter. The biggest difference of why we didn't flow the fall over delivery in Q1 through to the full years because of the inflationary pressure and obviously there is a timing difference between the inflationary pressure and the impact on pricing, which really impacts the back half of the year, what I would say, though is that if.

And you look at the full year result.

We are still very.

Pleased with the progress we're making.

If you look at the first half we're going to be up versus on top line up versus prior year end up versus 19. If you look at the back half, we're going to be up versus 19.

And if you look at the margin progress, we're making we're very much in line with our evergreen model and if you were to look at the.

Core EPS growth on a tax adjusted basis, our guidance is for <unk> very strong.

Growth versus versus prior year and versus two years ago.

Yes.

Definitely understood and just if I can.

And it back and second one I believe and categories prior to the pandemic, we're growing on an average of around 1% or so annually. How are you thinking about that going forward given that you've mentioned earlier that some of the positive demand trends you're seeing on.

Likely sustainable and how does that look on better.

I think the outlook has gotten better and.

And certainly in the short term, what we're seeing particularly in the U. S is that household income is rising at an accelerated rate because of all of the fiscal stimulus and a lot of that is flowing into our category. So our category growth rates are clearly getting stronger.

And are taking advantage of that and generally growing faster.

And then the category growth rates and the majority of our businesses.

And I think that that's a testament to the underlying progress that we're making on our strategic initiatives as Ravi and I talked on the prepared remarks.

Is that long term, though or is that more and more transitory over the next few quarters.

I think this pandemic and.

And the second half still being so uncertain, we really don't know how the complexion of the world and the categories flow change. So I think it is very tough sitting today to say long term Hello, how these categories I think work you've got to think about us as.

Now we've created a capability to pivot and be very agile and look at the trends and leverage them and we're very committed to creating sustainable profitable growth and growing the top line.

So I think we will.

As we go we will just be nimble and figure that out, but it's very tough to say how is long term how these things kind of go.

But there are some things I would say look there are some businesses.

Whether it's food food containers organization solve these are going to stick cantaloupes arent going to stake writing is going to stake. So I think we're in many categories that we feel pretty good and thats, our long term prospects.

Got it thanks, Robert Thanks, Greg.

I think that.

Are we done so thank you so much everybody. We appreciate your questions on routes and outputs.

And thanks, everybody.

Thank you.

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

[music].

Okay.

[music].

Good morning, and welcome to the Newell brands first quarter 2021 earnings conference call.

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

Live webcast.

Is available and I are dot Newell brands Dotcom I.

I'll now turn the call over to Sofia and as VP of Investor Relations. Mr. Dennis you may begin.

Thank you good morning, everyone welcome to L brands first quarter earnings call on the call with me today are Ravi father, 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 we'll be making forward looking statements, which involve risks and uncertainties actual results and outcomes may differ materially I refer you to the cautionary language and risk factors available and our earnings release, our form 10-K, and other SEC filings available on our Investor Relations website.

For further discussion of the doctor's affecting forward looking statements. Please.

Please also recognize that today's remarks will refer to certain non-GAAP financial measures, including those who are referred to as normalized measures. We believe 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.

And as between GAAP and non-GAAP measures can be found in today's earnings release and tables as well as and other materials and Nils Investor Relations website.

Thank you and now I'll turn the call over to Ravi. Thank.

Thank you Sofia.

Barry Harvey and good morning, everybody and welcome to our call.

I'm pleased and honored to share the highlights.

On FOP and nominal first quarter results as food carrying forward the strong momentum from the back half of 2020.

Top line grew and.

Darren being trained and 1%.

As normalized operating profit doubled.

Otherwise earnings question tripled last since last year.

This is the third consecutive quarter of core sales growth for the company and by far the best resolved yet.

On a two year stacked basis core sales grew in the mid teens and.

Particularly encouraged that the first bar growth was in all eight businesses all four regions and.

All channels.

And populate the collective power of our iconic brands is evident and this performance.

And then Tom <unk>.

And our 20 brands demonstrating growth with Elster, Yankee candle, Coleman, rubbermaid, and Daimler and leading the pack.

On the top line.

Trend was truly broad based as seven out of eight business units.

And double digit price.

Home fragrance and home appliances business has struggled to show.

We were also really pleased to see that the writing business is moving past the pandemic related ones as more schools open up an impasse and learning.

The business returned to strong core sales growth and the first quarter mirroring the levels of the company.

All four geographic regions grew core sales and a double digit rate with international markets up nearly 27% and continuing to outpace North America.

In the U S. We experienced strong consumer demand throughout the first quarter, but the acceleration and the last months, we started to lap initial lockdowns from training and training in mid March and also saw lift and demand following the passage of the fiscal stimulus.

Shoppers continue to seek out home centric products as well as those that favorable plasma and wellbeing and outdoor activities.

With the gradual reopening of the economy. We're also seeing an uptick across home categories, such as writing that have been disproportionately hit by the pandemic.

We expect continued EBIT ocean of consumer behavior throughout this year as vaccination rates and mobility and crude at the same time, we believe many of the new habits consumer volume.

Fifth beyond the pandemic example at home cooking.

We expect the shift towards online shopping to have a lasting impact.

On the consumption trends and nuanced e-commerce sales growth accelerated into the mid $40 range. During the first quarter as global sales against penetration improved about four percentage points versus last year to approximately 21%.

E Commerce is a notable competitive advantage and and engine for growth from newer brands.

And I am thrilled to share that we have recently.

A critical role and this ABS, we appointed Mike gather.

As president of E Commerce, and digital he joined US from Pepsico, where he served as senior Vice President E Commerce marketing technology and data science.

Prior to that my expense 10 years at Amazon with Inc.

And so e-commerce expertise his technology premise data science and analytics capabilities and is on.

<unk> on zeal and intellectual curiosity and Mike will build on Newell strong E Commerce Foundation to make us a digital powerhouse and on omni leader.

I am pleased to report that the leadership team now is complete.

Built a team.

That is best and pass diverse and thinking and unified and strategic direction and will pave the way from lasting success.

Strength of the first quarter results reflect the progress we're making on the execution from strengthening our brands scanning innovations increasing distribution.

Improving customer relationships, leveraging consumer trends as well as macro tailwind.

The common theme and this quarter was the broad based strength and consumption.

<unk> sales growth across the entire portfolio share gains in several categories and regions and strength in international.

The home fragrance business deliver phenomenal results and the first quarter as consumption growth accelerated to about double the level from the back half from training training. In fact, this was by far our fastest growing business.

Bell.

From a core sales and.

PFS perspectives are reflection of pent up demand for and supply constraints and training trends.

Consumer continued to seek out moments hosted relative to in their homes and stay in.

After a more holistic approach throughout the.

We grow core sales growth.

More than double the rate and the overall company.

To put it and perspective home fragrance grew net sales at a double digit Craig both parts of this 2000 and timing.

And 2019, despite closure of about 150 stores during this timeframe and last year's exit from the fund raising business.

Okay.

We are driving strong growth and our direct to consumer channel through personalization and loyalty program set on maximizing lifetime customer value.

Our recent launch of Yankee candle and signature collection and the most meaningful redesign of the Yankee lining.

Is gaining traction we're on.

Not just focused on renting and capitals, we're gaining share and tracked channels, but also within the overall home fragrance category with an exciting pipeline of new products planned across.

The sleep deep user lacks amounts on our rates and center category.

Excuse me the food business, which now includes Gastar and cookware and cutlery.

Maintaining a strong growth momentum.

And sales increase and the trends.

Excuse me with a large portion.

O'neal still prepared and eaten into home.

It is not surprising that consumption has remained strong, particularly in the food storage and fresh preserving categories and I am.

Delighted to share that early in April Rubbermaid was named the most trusted food storage brand in Newsweek magazine water.

We've driven strong share gains on rubbermaid and are seeing solid traction on the brilliance gas and tried to include and Patrick storage line.

We continue to drive animated elevated demand for our accounting business, where we also built on our leading share position with ball, leading delay heightened consumer interest and gardening bodes well for continuation of this trend and we are continuing to bring new innovation and new users to the market and the first quarter of <unk>.

And our launch nesting gas the stacked together, which helps make storage more compact and reduced the amount of space needed from making gas by 30% food sales continues to do well, albeit 3000 innovation launched in July 2000, and training as already sold and 50000 units and it's moving the needle.

Home appliances delivered its strongest performance yet.

Sales grew 38% with double digit increases across all four regions as the category remained quite point.

In the U S double digit growth and consumption was evident across most subcategories, including cheated cooking blending coffee pain management and App purifiers as stimulus provided additional fuel despite the Lockdowns and Latin America posted very strong results across all countries with Brazil, Colombia, Chile and.

And Peru being the standouts similar consumer trends played out and Asia Pacific and EMEA, where we saw broad based sales growth during the first quarter. We continued to build on the terrific fall 2000, and pending launch of Mr. Coffee Iced coffee maker by expanding its distribution with additional rollout plans in place for.

Balance of the year as capacity comes online to meet demand is quickly becoming the number of on selling coffee and SKU and relevant retailers, where the product is available I.

And I'm pleased that this is another innovation thats gaining traction just last week crop up and celebrates its 50th anniversary. This year was recognized as the most trusted slow cooker, Bram and Newsweek and another exciting news and PD, Mexico awarded as tough as they've been our 2020 market share growth in the <unk>.

And electronic segment.

And the first quarter on our writing business rebounded nicely as core sales.

Grew at a strong double digit rate with broad based growth across writing and creating expressions labeling and fine writing businesses.

And finally, beginning to put the training and 'twenty pandemic related disruption on this business and view there.

While the category also returned to growth and the U S and in the past quarter Newell consumption growth.

And approximately double double the rate on the market in the segments. We compete as we gained meaningful share daimon capture at hour 400 basis points of incremental chat, while our share and Jeff brands increased by more than 13 100 basis points on the heels on the successful year ago.

Long term sharpie and Joe.

Sharpie as Dell has become a needle mover with excellent gross margin the fourth quarter expansion and our sharp ESG, our platform through sharp ESD and fashion barrels and cross blue and white as well as sharpie, SQL and metal barrels and gunmetal and Champaign are off to a promising start and already are among our top selling patents.

And the rebound and our writing business as well as the category is driven by the return of nearly 60% of schools and districts to invest and learn and cycling against the onset of the pandemic.

Similar dynamics played out and the UK, and Australia, and New Zealand, where our consumption growth significantly outpaced the market.

We continue to assume that offices may remain in a hybrid model for the balance of the year.

Sales growth from our baby business accelerated to mid teens range and in the first quarter as we experienced a significant uptick and consumption levels across our baby gear and baby care categories. The strong outcome was driven by a combination of healthy share gains by Greg Nook Nook in the U S stimulus.

And so on a cycling against comparatively depressed consumption levels and March trending trend as Lockdowns play implemented.

This team is knocking it out of the park, but cash.

<unk> e-commerce penetration of more than 50% of global sales and the first quarter up more than 700 basis points versus last year, both Greg and have continued to bring news to the market and Q1, two launches such as Graco Slimfast, three or three and one car seat and Knox based on IP.

<unk> and EMEA EMEA I'm also pleased to announce a new addition, top baby portfolio with the launch of century on <unk>.

Sustainable and stylish baby bond for young families.

Consumers continue to direct discretionary spending towards home improvement projects with home still being their hub, we're beginning to see traction and commercial demand for software products, such as cleaning costs, Stefan on containers and professional and labs.

Labor Lockdowns on Aro it slow global reopening and back to office is still a limiting factor and commercial categories.

And Kelly.

Within the food service travel and entertainment and hospitality verticals.

And as well as and washroom solutions.

We had good momentum on recent launches such as rubber made easy install standby seven and shed.

<unk> boxes, and real group as well as a robust innovation pipeline, we think commercial is very well positioned going forward.

The connected home and security business delivered double digit growth. The team is making considerable progress on our complete innovation overhaul of the smoke alarm product line as part of <unk> to one seven and through advanced technology listing leads and Iot and has made huge advances and automation.

And therefore as planned.

Similar to the rest of our business units outdoor and recreation started off training and training one on on a solid note as sales increased at a high single digit rate, reflecting growth and the outdoor equipment business with particular strength and the international regions in the U S consumption accelerated versus the second half of training training.

Driven by broad based demand across most of our growing footprint categories, such as coolers dense and stoves and consumers are tired of being cooped up inside and outside the core.

And all of the outdoors, although core sales as were still under pressure consumption for technical and pattern turned positive during the first quarter, we expect the beverage business to rebound as the on the <unk>.

Go activities pickup and more schools reopen and while it's still early days, we are seeing traction from the recent introduction of three new product lines and contiguous hydration portfolio.

<unk> continues to bring news to the market with an exciting assortment from new products launched and the first quarter, including Skydome 10 expansion expand soft cooler collection and the reunion steel belted Cuda and collection.

While the first quarter results came in ahead of our expectations and Chris will explain the key reasons, we contended with a fair amount of challenges as well, including port congestion and the impact of Tech, Texas storms enrollment heated and availability and a significant rise and inflationary.

Cost price challenges as well as demand spikes across many categories.

Supply chain teams are on.

And but excellence through these turbulent conditions and successfully manage and broad based demand centers.

Looking out into the remainder of training training on VR and laser focused on building on the solid momentum and the business as I've touched on arm continues to gain traction there is no change and our five strategic priorities that I laid out last quarter, which include first galvanize, our employees' behind our purpose to create.

And consumer obsessed customer focused organization that is digital savvy and committed to providing moments of joy and peace of mind for consumers second sustained top line growth.

And to improve customer service levels through a strong focus on forecast accuracy.

That would become an innovation engine by sharpening our focus on consumer insights and trends and implementing and enterprise innovation operating model and building cross business unit and technology platforms by distinguishing aspect of our global quality innovation efforts is that in addition to a normal extent.

<unk> and extensions and refreshes and renovations, we will strive to launch three to five major needle mover and new product innovation, but yet that can be scaled to $50 million to $100 million and say.

And have strong gross margins sharpies, Joe food sales were <unk> 3000, and Mr Coffee ice cream.

Victims of this thinking.

And fourth accelerate international growth and improved profitability and <unk> continued to make progress on reducing complexity.

Controlling overheads and strengthening the balance sheet and in particular for training 21, offsetting the significant search and raw material inflation as well as labor and freight costs through a combination of productivity improvements and selective price increases.

We're still in the early stages of realizing the full potential of our business and see tremendous opportunity for value creation through focused execution of our strategic priorities and serving as a force for good in the world.

We feel good about the last three quarters and are confident about the second quarter 2021, as we see sales and from consumption momentum continuing in April.

And the second half of 2020, one is difficult to predict given global and <unk>.

Uncertainty around COVID-19 and evolving consumer habits. Nevertheless.

And are optimistic and see more upside than downside.

I'd like to conclude by thanking our 31000 employees for their commitment hard work and perseverance and all of which made it possible to deliver such an incredibly strong outcome on.

And what's and outflows allow altana our call to my partner in crime.

And $1 billion mine efficiency, Guru and complexity reduction and Saar, one and early Chris Peterson.

Thanks, Ravi and good morning, everyone.

First quarter results were simply outstanding and does the integrated set of strategies. We've put in place two years ago are driving accelerated financial results across all metrics.

Before getting into the details I want to provide a little color on the current operating environment and proactive choices, we are making.

Three factors contributed to over delivery relative to our expectations.

First the U S stimulus package, which passed and March turbocharged already robust demand across many of our categories.

Second the vaccination right across the U S has been faster than anticipated, which led to more schools reopening their doors and person learning.

And finally operational improvements we've been driving across the company, particularly surrounding SKU count reduction operating efficiency and the ethanol demand and planning process are paying big dividends.

Earlier this year, we made the proactive choice to invest and higher inventory levels on our top selling skus.

Because of the operating improvements we made we were able to add capacity without incurring any significant capital expenditures.

On.

The other changing dynamic has been inflationary pressure as the recent run up and cost, particularly on resin transportation sourced finished goods and labor has translated into approximately $150 million of additional expenses in 2021.

Our total gross impact of about $360 million.

We plan to mitigate these headwinds through a combination of strong productivity savings driven by our fuel program operating leverage from the combination of strong revenue growth and tight cost controls and selective pricing actions across businesses that are most impacted by inflationary pressure.

The net result is that we are maintaining our operating margin expansion outlook for the year.

And the U S. We announced price increases and mid April across five of our business units, including food commercial outdoor and recreation baby and home appliances, which are expected to go into effect and June these pricing actions do not fully offset the inflationary cost pressure as we're using productivity.

Savings and operating leverage as offsets as well.

Now turning to first quarter results Newell brands net sales increased 21, 3% year over year to $2 $3 billion, driven by core sales growth of 29%.

Foreign exchange more than offset the unfavorable impact from business and Yankee retail store exits.

And was the third consecutive quarter of core sales growth for the company.

Growth was broad based with each of our business units and four geographic regions growing on a year over year basis Importantly, core sales grew compared to both 2020 and 2019 levels.

Normalized operating profit roughly doubled year over year to $230 million.

Net interest expense increased by $4 million year over year to $67 million.

The normalized tax rate was 22, 4% above the year ago level of seven 1% as the company realized discrete tax benefits last year.

We grew Q1 normalized diluted earnings per share and more than three times year over year to 30.

Stronger than anticipated top line results and resulting operating leverage and addition to disciplined cost management and productivity enabled us to exceed our expectations.

Core sales growth for the commercial solutions segment increased 12, 9% with double digit increases across both the commercial and the connected and home and security business units.

Core sales for the home solutions segment increased 33, 8% driven by double digit growth across both the food and home fragrance business units the.

The learning and development segment increased core sales 17, 3%, a strong rebound, which reflected double digit increases across both the writing and baby business units.

And the outdoor and Recreation segment also returned to core sales growth increasing 7%.

Operating cash flow was 25 million operating cash outflow was $25 million during the seasonally small quarter, reflecting an increase on working capital to support consumer demand increases.

Increases both in Q1 and Q2 and.

And importantly, 2021 is off to a strong start on the cash conversion cycle as we shortened it by about 13 days versus last year.

We remain on a very strong liquidity position with over $2 billion and available short term liquidity, including $682 million of cash on the balance sheet.

Let me provide some context for our underlying assumptions for the balance of the year and how they've evolved since February.

And with stronger than anticipated momentum and the business and the first quarter and thus far and Q2 as well as improved capabilities within our supply chain to address demand spikes. We are pleased to raised our full year outlook on top line. We continue to expect a stronger first half relative to the second half.

<unk> for the back half of 2021, we expect core sales to be up versus 2019 levels.

Here are the specifics on our outlook.

For the full year 2021, we are raising our net sales forecast by approximately $400 million to $9 nine to $10 1 billion, which represents 5% to 8% growth versus last year. We now forecast core sales growth of 5% to 7% up from our prior assumption of low single digit growth.

Although currency has gotten slightly less favorable relative to a few months ago. We continue to respect I expect it to remain a tailwind and more than offset the unfavorable impact from closure of Yankee candle retail stores and other minor business exits.

Despite the meaningful uptick and inflation, we are still planning for normalized operating margin expansion of 30 to 60 basis points year over year to 11, 4% to 11, 7%.

We expect the combination of productivity and pricing overhead savings and incremental volume leverage as a result of better top line growth to more than cover the increase and inflationary pressure.

We are still planning for higher advertising and promotion spending relative to year ago levels to support a strengthening innovation pipeline as well as our digital initiatives.

There is no change and our assumption of a high teens effective tax rate, we are not factoring and any potential changes on the U S corporate tax rate policy at this time.

Our normalized earnings per share outlook moves up eight to $1 63 to $1 73 share count is still expected to be up slightly versus 2020.

Our operating cash flow outlook for the year remains strong and unchanged at approximately $1 billion driven by continued reduction and Newell's cash conversion cycle.

Q2 is off to a strong start and we are planning for net sales of two 5% to $2 $5 8 billion.

Currency should be a tailwind helping to mitigate the impact from Yankee candle store footprint rationalization and minor business exits.

Our outlook for the second quarter reflects normalized operating margin expansion of 130 to 180 basis points year over year to 11, 5% to 12, 8% as volume leverage and combination with productivity savings should more than offset the inflationary pressures as well as planned increases in advertising and promotional spending.

This outlook assumes that the normalized effective tax rate is and the high teens for Q2 with normalized earnings per share and a 41% to 45 range as compared to 30 from the year ago period.

Despite the disruption and volatility and the macros, we have not wavered from our strategic imperatives, which has put us on a much stronger footing.

Operator, let's now open up the Q&A session.

Thank you.

Ask a question please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Ken.

One to ask a question we will pause for just a moment to allow everyone the opportunity to signal.

Your first question is coming from Wendy Nicholson with Citi. Please go ahead.

Hi, good morning.

My first question and actually have two if that's okay. My first is.

The raise and the beat and is just fantastic and it looks like there is maybe more room for upside as we go through the course of the year just given how strong one and <unk> are supposed to be but Chris I was a little bits of price you didn't raise the outlook for our operating cash flow and thats. The only metric that it looks like you didnt bump up on.

And I'm surprised by that so just a question of are you, making any incremental investments and working capital or is there. Some other headwind thats incremental that we should be aware of and then Rami just on the writing business obviously.

Obviously easy comps to last year I'm, just wondering when you expect to see orders is it the second quarter or is it the third quarter orders and shipments when will we know whether the writing sort of business not just for you, but the category as a whole.

Kind of been permanently impaired by COVID-19 and more people, even if they go back to classrooms and person are still using an iPad.

When will we have a sense of what that category really looks like thank you.

Chris line to go first.

I'll handle the operating cash flow I think.

And our guidance on operating cash flow and we will see how the year progresses as we go forward.

Wendy Let me answer your second question about writing.

First and foremost quite excited to see the momentum we started seeing a little bit.

And the last few months and consumption and writing and inventory levels are quite low at the end of the and.

It is great to see now both consumption.

And.

Our own sales going up the decisive improvement on market share is very exciting let me give you three total statistics should think about.

And make us optimistic number one as I mentioned in my prepared remarks, 61% of school districts and now back in pass on that.

It doesn't mean all the students have back and that number is probably closer to reported 7%.

Both K through 12, and then if you look at K through five it's actually in excess of 70% and as you know the CDC just came out to say and classrooms, the social distancing could be like three P. That's making it easier for schools and us details on getting vaccinated.

I think that total boding well there are some big school districts.

We're waiting to see the swing, California, and New York and so I think we are.

And planning right now for a normal back to school season work.

Talk to all on retailers desktop play.

And for that and one thing too.

To note.

Despite the fact that the whole.

The office side is still on hybrid.

And even the total channel of office very modestly grew in the first quarter. So that's a little and hydrogen and so the only one that for us when we look at writing we've got three really big piece of business back to school or school case for trial universities and then on.

Offices, I think we're quite confident on the schools from.

Getting more confident about to universities, the big question, Mark and that.

A portion of our business as the offices at least this yet.

But with the innovation and stuff, we are driving the market share that we're getting and don't forget. This business is not just U S. It's global and.

And and it goes beyond just total everyday writing when you look at <unk> the market share gains, we're making and Europe in the U S.

Consumption increases and sales increases we are getting I really think.

And that's writing business is on.

<unk> and when I said in my prepared remarks, there's probably more upside than downside to me and writing is really back on and it's a very well managed business that team is just outstanding so I feel very good overall.

And let's not forget the Brent and gross.

Brilliant gross margins on this business.

Yes, absolutely. Thank you. Thank you.

Thank you Randy.

Your next question is coming from Bill Chappell with Chris. Please go ahead.

Thanks, Good morning.

Good morning, Bill on a go.

I guess.

A further update on the outdoor business.

I understand and activity is picking up and the categories are picking up but this is the kind of the one category that was kind of the one of your segments that was kind of the last day turnaround. So maybe just where you feel in terms of shelf space in terms of market share in terms of innovation pipeline and are you back to where you'd hoped to be and.

Do we expect to grow cash.

Category over the coming quarters.

Yes, that's a great question and bulk domain.

On the.

The candid answer and it's work in progress.

Because net three different businesses within outdoor recreation net.

Outdoor equipment and the <unk> business and that is really doing well.

The <unk> brands.

Jim for Tommy and build cash and are really doing a great job turning it around and we're seeing also a tailwind from the sense of 10 million more campers and just in the U S. You're seeing minority groups getting into cash.

Quite positive about the outdoor equipment side, and so that and Thats the big piece of the business.

And so.

There are two other businesses for us and that is the beverage business, which as contango and Bubba and this business.

It did not get helped in fact, it was a headwind with the pandemic because it's on on the <unk> business and so it did suffer and we had fallen behind a little bit on innovation.

And we're turning the corner, we've got a new team on this they are better understanding the insights we've just launched three new lines.

And of hydration.

Aesthetically much better much better on the key points of spoke proof and temperature control and dose I think will give us headwinds we're already seeing some upticks in April so I feel quite positive about the future.

Beverages, and Bubba has always been a good brands and Thats doing well, so and we're being.

And it's always had good distribution and the third business, which is Mama.

And ex officio our technical apparel business that has struggled but we've got a whole new team in place and Jim has brought on some great people will put and merchants. They are revamped the line Sir.

Towards the tail end of the yes, I think we'll start really seeing some improvements already this year, we started and the quarter. We started seeing a minor uptick on consumption Marvin dot com actually had a terrific quarter.

So I do feel that's work in progress. So overall when you look at the three.

<unk>.

I still.

It's not the same place that say a food is.

But I really think this team we've got a great team as you know Jim came from timberland really on the stance that he has brought and terrific players. So confident that by the end of this year.

This business humming too.

Great. Thanks, so much.

Your next question is coming from Andrea Teixeira with Jpmorgan. Please go ahead.

Thank you. So you had an impressive growth and appliance and cookware and as well as home solutions and particularly in Kansas.

Can you. Please help us understand the breakdown was volume against price mix.

Particularly as you innovate and you've immunized.

And given that appliances have a long cycle. How are you planning to lap those benefits from stay at home tailwind and.

And continuing obviously you embedded in your guidance from deceleration potentially negative, but I wanted to understand that you have there.

And just too low.

Long tail.

Potentially on location.

And all the dynamics and then if you can also kind of help us with.

And also had a good impact and you called out in your presentation that.

You have these.

Benefits from stimulus and how do you think this is shaping for and given that we all know EBITDA.

And the headwinds from both from eight to play negative. Thank you.

Okay, Let me hit.

Yes.

And our clients as fast and then baby and.

And Chris after I finish of this thing to you on that.

Feel free to so let's let's take appliances. This is.

Okay, and I'm really pleased with the new team they are making good progress there.

And there's no question, probably a ball on businesses. The stimulus helped this business commenced just given the nature of the products and the price points and so having said that.

And that was more on the U S. Because the strength of this business was really international which had just an incredible because while we were slightly above expectations from the U S side. It was really the team has the ball out of the park internationally.

And I said standouts in Colombia, and Chile, Peru, Brazil, thus far just huge huge numbers and because despite lockdowns and so on and that team created a real direct to consumer business and that is just gained huge momentum and Latin America. The team did take a price increase.

That obviously to your question about.

Volume price mix that helped a bit and Latin America.

In EMEA, and Asia Pacific and Asia Pacific and Australia, we are doing and SAP. So.

So you saw a little bit of pull forward for SAP and Australia.

But on the whole I'd say it was a very good international performance and U S. Don't forget we now have good innovations coming out like the ice coffee and your question about how do you sustain well, we're now putting out a full ice coffee line with crap pay and so on coming out and the rest and we still.

Or just gaining distribution and remember last year, and we were just and one retailer and now we're going in and already everyone is clamoring to get it sorted and neatly.

<unk> for us is getting the supply going on that so I think that is the appliance story.

Chris is there other things you want to add and then I'll come back and hit baby.

Now the only other thing I would say is.

I think when you when you look at the quarterly trends.

To look at the base period as well as the current period.

And so we're looking at the business, both compared to 2020, and the 2019 and I think we're very encouraged.

When we look at the business across both time periods. Because obviously, we are growing versus last year, but we're also growing versus two years ago, and I think that gets to the fundamental.

Turnaround progress that we're making as a company.

And the strengthening innovation pipeline that Ravi talked about.

The SKU count reduction program, which is and.

Enabling us to operate with much stronger discipline.

I think we're all contributing to the strong results.

One other thing Andrea and APA.

Alliances we didn't have a marketer for very long Chris has come in and really rebuilt the team we brought a great.

A marketing guy who used to be with SC Johnson and.

So I think that team and.

And now a lot more confident.

About the future of appliances.

And I work, perhaps six months ago on a year ago.

So and this performance is just indicative that theyre getting momentum on baby locked the perennial question is but it's right and so.

On a couple of things and you still have immigration that's helping and then when you look at in the U S.

But when you look at like kids, one for corn and so on and stayed pretty steady. So a lot of our products are not just for the infant side, but really are more on the dealer side and so we progress through the lifecycle baby, becoming child and and so on so I think that helps us second.

On the grant co brands is just fantastic I mean this is a leader is gaining share the innovations. This deemed really that's three and one car. The slimfast just great idea, but there's so many innovations coming and this new century.

Which is really going after millennials and very much about and environmentally conscious and.

And good price value. So and then we're now undertaking a whole effort on baby Jogger, which this is one of those that we need to bring some right back to it so very feel.

Feel very goodness of solid great business and don't forget we also have business and other parts of the world.

A growth rate.

But rates are much better.

And then any disruption due to Super helpful. You took those around.

And two major areas with any any potential callouts in terms of like and Baidu.

And by the way and nothing but impressive to see your supply chain kind of COVID-19 from everything that we've seen everywhere.

And anything we may.

Be aware of in terms of disruptions that could hit your second quarter or now from now on you get better in terms of supply chain.

Yeah in terms of the supply chain, we continue to be operating and a very.

Disruptive environment.

And because of contain.

Container shortages coming from Asia Port congestion.

And trucking shortages.

We are struggling and some locations to recruit labor to our plants that being said as I mentioned in my prepared remarks, we made a proactive choice.

Earlier this year.

To build more inventory and invest more and inventory and our top selling skus.

And we've factored those disruptions into our supply chain and plan and so although our teams are still dealing with day to day disruption and.

And a number of areas of the supply chain, we are and a dramatically better position today than we were six months ago or nine months ago, We do expect it to be a difficult supply operating environment.

For the rest of the year, but we are very confident and I think you've seen the results that we've been able to demonstrate.

Bye.

Supplying the surge and core sales growth and Q1 also if you look at our balance sheet. We've built significant inventory and Q1. So that we are and are very strong positioned to be able to supply and take up our guidance for the year and for Q2 versus our initial expectations.

So still and it's still an area of focus, but but we are and a significantly better place than we've been.

This is excellent and thank you so much I'll pass it on and congrats again.

Your next question is coming from Kevin Grundy with Jefferies. Please go ahead.

Great. Thanks, Good morning, everyone and congratulations on the strong quarter and and continued progress.

Quick housekeeping question and a broader question on capital allocation and the housekeeping question is just Pos trends and the month of April.

And we pointed out there's still tremendous opportunity for value creation, which I think many folks would agree with so understanding it's a board decision with respect to share repurchases. How are you currently thinking about.

Capital allocation when you get to your leverage target and what would sort of be the view against leaning and against buybacks, maybe even by the end of this year certainly if not next.

Given the opportunity in front of you and your comments there would be helpful. Thank you.

So let me quickly hit the consumption and I'll get Chris to talk about capital allocation and then come back and give some philosophical view on that.

And on consumption.

Kevin It's Ben.

And we throw out John Pat March was positive on March obviously spikes SB solve the stimulus we definitely saw big spikes April positive momentum continuing so.

And.

I guess, that's basically all I can say.

And on capital allocation I think our view remains the same which is our number one source of investment funds is to invest fully and the business when we see opportunities.

To drive significant return on investment and the business our second priority is to.

<unk> pays a dividend and maintain our current dividend and our third priority is to reduce the leverage ratio and I think your point is accurate, we do expect to get to our long term leverage target by the end of this year, which is the three times leverage ratio.

I think we Havent said, what we what we plan to do after that point I think we've been so focused on getting to that point that we have a little bit of time still ahead of us.

That being said.

What will guide our decision on capital allocation is certainly a view toward shareholder value.

Creation going forward and.

The only thing I'd add there.

As building on what Chris said.

A lot of options the good news for us.

As long as 5 billion dollar amount and continues to prove that he can spew out millions, which I'm very confident he will.

How do we really take shareholder value to a huge level and how do you best deploy capital so and the second half a day, yes. This the sort of thing that Chris and I are going on a lot about with our board and non CA or sort of longer term strategy and we can then hopefully towards the end of the year, we'll have a better view on that.

And from Ravi. Thank you for that both I. Appreciate a quick point of clarification is it fair to say that return of capital to shareholders likely you would be the bias as opposed to a return to M&A and just given all the work that the company has done that the board has done to sort of right size the portfolio in recent years.

Yes, I would just be very quick comment and look for.

First let's digest this one and.

This team is Ron about delusions of grandeur and building and Empire and we've got great brands, let's get the full potential out of those and then really worrying about what we wanted to do later.

Makes sense, Thank you Bob and good luck.

Your next question is coming from Steve powers with Deutsche Bank. Please go ahead.

Yeah, Hey, thanks, good morning to you both so.

Two questions from me.

And from the commentary it seems like a lot of businesses are doing well others are still working towards improvement I guess, what I'm. Most curious about is if you can step back and just talk about aggregate market share momentum and whether when the dust settles on the on the full year you expect the total portfolio to be able to gain weighted average market share or if that's a bit.

<unk> ambitions for the state of the transformation with some thoughts there would be great and then secondly.

On.

Chris I know there are a lot of puts and takes on inflation and pricing and productivity and business mix.

And maybe I missed it but did you give a range or could you give a range unexpected gross margin for the year.

Both those would be helpful. Thank you.

Yes, let me quickly tackle the first one and then.

And at our focus on gross margin so Steve I think the thing right now because we've got a different set of portfolios each with their own hot buttons, and we're really looking at it brand by brand and category by category and there are some winners and where market share will be where we are doing.

Very well, so I think we've talked about pricing.

We've talked about stockpile food brands and.

So I think.

Commercial difficult business to track because its so driven by distributors and so on but we're pretty confident where and a leader and continue to do extremely well there.

So baby.

And clearly gaining share so I think and then this is not just overall capex. We also track how do we do on Amazon and stuff and that clearly we are gaining share this home businesses datacom and tougher like appliances because from.

Our businesses are opening price point, so we may gain on units, but maybe not on dollars. Because there are a lot of brands that are very premium price. So that may be tougher so with our portfolio.

Chapter talent, where they even looking overall is that meaningful the issue for us as each of our businesses. What are the drivers from winning what is the role of that business and how do we win.

Yes.

And on the margin side, what I would say is that certainly we are seeing significant inflationary pressure as I mentioned in the prepared remarks, it's about $150 million worse than what we thought when we talked last in February.

It means it's a headwind for this year of about $360 million, which is roughly 350 basis points on the gross margin line of inflationary pressure.

We're offsetting that with fuel productivity savings, which are we're making incredibly strong progress on.

As I mentioned are implementing pricing.

Not fully to offset inflation, but.

But across the categories that are the most impacted by inflation and then we're driving operating leverage through strong topline growth and tight cost control. We don't guide on specifically what the outcome is for gross margin, but we do guidance for operating margin and we expect the combination of those food.

Factors.

The result, and us driving operating margin up for the year by 30 to 60 basis points and that compares to last year, where we grew operating margin as well if you recall when we started the turnaround plan and 2018, our operating margin was nine 1% reported.

Even stronger.

We're to look sort of underneath the covers in terms of.

The progress from an operating efficiency and effectiveness standpoint.

Cross the company.

Okay. Thank you both for that if I could just circle back quickly on the first question Ravi is there a way to think about it in terms of percentage of the portfolio, that's holding or gaining share.

Sure.

If not that's okay, I'm, just trying to get a sense for whether you feel like youre exiting the year on.

A majority of that two thirds of it.

Do you feel like you are actually ahead of the curve on versus those businesses that are still coming up the curve.

Thank you, yes look Steve I would just say on that.

We're gaining market share on writing, we're gaining market share on baby, we're gaining market share on on home fragrances to name a few.

Some of our businesses, we don't get market share data that because the coverage universe isn't as and broaden up when you think about like commercial or our CHS, but we're very excited about the top line prospects and what we're driving and those businesses.

And then as Ravi mentioned.

Probably the business that.

We still are making efforts on his appliances, where we're seeing green shoots.

But there is still more work to be done and the only other one like on the outdoor equipment I think we're doing well, but we still have work to do on beverage and.

And.

On technical apparel.

Okay Fair enough. Thank you. Thank you both.

Your next question is coming from Joe I'll Debello with Raymond James. Please go ahead.

Great. Thanks, guys good morning.

The first question and if I look at your EPS guidance you beat the high end.

And Q1 by 16, you raised the full year by about <unk>, even with a better top line, which implies that some of the cost pressures that youre seeing the $150 million or sales incremental cost price and you called out this morning.

And I may not be fully offset so how should we think about that and.

And the second half of the year.

Yes.

That's a fair way of looking at it so.

We did over deliver and the first quarter. The biggest difference of why we didn't flow the fall over delivery in Q1 through to the full year is because of the inflationary pressure and obviously there is a timing difference between the inflationary pressure and the impact on pricing, which really impacts the back half of the year, what I would say, though is that if.

And you look at the full year result.

We're still very.

Pleased with the progress we're making.

If you look at the first half we're going to be up versus on top line up versus prior year end up versus 19. If you look at the back half, we're going to be up versus 19.

And if you look at the margin progress, we're making we're very much in line with our evergreen model and if you were to look at the.

Core EPS growth on a tax adjusted basis, our guidance is for is for very strong.

And growth versus versus prior year and versus two years ago.

Yes.

Definitely understood and just if I could ask the second one I believe and categories. Prior to the pandemic, we're growing on an average of around 1% or so annually. How are you thinking about that going forward given that you've mentioned earlier that some of the positive demand trends, we're seeing are likely sustainable how does that look like.

Peter.

I think the outlook has gotten better and.

Certainly on the short term.

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