Good morning and welcome to Newell Brands Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time scheduled for the call, please limit yourself to one question during the Q&A section. As a reminder, today's conference is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Nancy O'Donnell, Senior Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Thank you. Good morning everyone. Welcome to Newell Brands third quarter earnings call. On the call with me today are Ravi Saligram, our President and CEO and Chris Peterson, our CFO. During the course of today’s call, we will make forward-looking statements. These forward-looking statements involve risks and uncertainties, actual results or outcomes could differ materially from management’s expectations. I refer you to cautionary language available in our press release and in the Risk Factor section of our latest form 10-Q for further discussion of forward-looking statements. Please also recognize that we will refer to certain non-GAAP financial measures, reconciliations between GAAP and these normalized measures can be found in today's earnings release table as well as on the Investor Relations website and in our latest Form 10-Q Now I'll turn the call over to Ravi.

Thank you, Nancy. Good morning everybody, and welcome. I'm absolutely delighted to have joined Newell Brands and I'm excited about the company's future. In the first 30 days of my listening tour, I visited a e-commerce group, the design center, two manufacturing plants and all seven businesses, during which I've had an opportunity to review our product lines, the state of the business, as well as conduct town halls where I've addressed over a thousand employees and met with nearly 150 employees in small group settings. Let me share my early read on the company. We have dedicated and passionate employees, who want to win. I admire their resilience. They've gone through a lot of churn in the past two years. We can maximize their potential and drive better outcomes through strong leadership, and providing clarity and stability of direction and priorities. We have an opportunity to optimize our organizational structure to better leverage our scale, functional capabilities and provide continuity to our go-to-market approach with our top customers. We need to find the appropriate and harmonious balance between being centralized and decentralized without causing significant internal disruption. We have an opportunity to better integrate our businesses and create a common unified go-forward bringing Newell culture. We will work hard to create an external focus, improve employee engagement, and develop aligned cohesive teams. To this end, I will point to Steve Parsons as our new CHRO, and he joined a week after I did. Steve partnered with me in turning around OfficeMax and is skilled at leveraging human capital, and attracting top talent. We have iconic brands with strong equity that are household names. However, several need to be refreshed and rejuvenated through timely and meaningful innovation that appeal to today's consumer. We will also work on strengthening channel management…

Thanks Ravi, and good morning everyone. The Q3 results we announced this morning reflect a strong quarter of progress. We are making decisive and strategic choices to turn the company around, and drive shareholder value. And we are encouraged with the results thus far, and the building momentum within the organization. It's still early days, but we have a number of positive proof points to share with you today. The financial results were in line or ahead of our expectations across all key metrics. For the second consecutive quarter, four out of seven operating divisions delivered core sales growth. We made further headway on productivity and cost controls, which translated into better than anticipated margins and earnings per share. And year-to-date operating cash flow of $424 million more than doubled relative to the prior year, reflecting strong execution on working capital initiatives. The organization is getting back into the rhythm of consistent delivery. These strong results give us the confidence to raise our full year outlook for both normalized EPS and cash flow from operations. From a strategic perspective, we are making progress on all five pillars of the turnaround plan to position Newell brands for long term success. One of our most important strategic objectives is to return the company to sustainable and profitable sales growth. We're focused on five key themes, including launching compelling and differentiated innovation, implementing omni-channel marketing, strengthening customer relationships, driving eCommerce share gains and accelerating the international business. We believe that retooling and upgrading our innovation and marketing approach and moving to a digital first mindset are critical to returning the company to core sales growth. This is also a key to increasing our brands relevance and ensuring that we are driving purchase intent across all channels where consumers shop. We are revamping our…

Okay. Thanks, Chris. Before we turn it over to the operator for Q&A. I just would like to remind you that we're going to ask each caller to limit yourself to just one question. We're going to try to wrap it up on time and at the same time fit in as many callers as possible. So thanks for your cooperation and operator, we're ready to take questions now.

Yes, Ma’am thank you. [Operator Instructions] Our first question comes from Wendy Nicholson with Citi Investment Research.

Hi, good morning. My question picks up Chris on what you were just talking about with 2020. In Ravi’s comments there was a lot of discussion about how there's a need for more innovation, there's a need for a lot of work. But I know, the turnaround is sort of in full swing on, and we've been talking about bringing more innovation to some of these categories for a while. So bottom line, do you think 2020 is going to see core sales growth, or do we have another year of declines in core sales? Thanks.

Yes. I think as we think about 2020. I think, what I said is that we're expecting to show sequential improvement in 2020 versus 2019, but consistent with Ravi in my view we have a couple of businesses, notably Appliance & Cookware and outdoor and rack that I think are going to be multi-year turnarounds because we need to rebuild the innovation pipeline in those businesses and those businesses are both competing in about 35 product categories. So I think it's too early for us to give numerical guidance, but I expect that you'll see us deliver sequential improvement versus this year. I don't expect us to be to the full potential of the company until we get the Appliance & Cookware and Outdoor & Rec businesses turned around. Importantly though, I do think we're also going to make progress on operating margins as I mentioned. And I think that, that you'll see us from an operating cash flow standpoint do even better next year than this year.

And I assume….Yes.

Yes. Wendy I -- sorry Wendy. Yes I don't want you to take my comments amiss in the sense. I think Chris articulated it very clearly that we will continue to improve. But the tale of 2 cities is a very real issue. And that also applies when you think about we're not sort of an 80-20 rule company. We've got tail channels tail customers tail categories. So we either need to really start growing very fast in the businesses that we're growing and we'll continue to push on that and then find ways to mitigate the declines. So I think it will just be a matter of -- it's not if it's just when. And because we are very confident that this will -- we will get to growth it's just a matter of when. And -- but all our efforts are laser-focused on that. But in the meanwhile I think all the things Chris said this is a very good picture of continuing improvements on a lot of metrics not just on the growth side you should look at the cash flow and the operating margins and the like.

And fair to say though the stuff you were talking about with the international opportunity which is very exciting and it's something I think we've been waiting for it for a long time. But logically that type of growth is more like a 2021 and longer term that's not something where a light switch can be turned on and add much to the top line next year. Is that fair?

I think look we've got -- I think Chris referred to this in his remarks already because there are pockets of growth where we're growing and in Latin America and I think I referred to it in my remarks as well. But you're right that the big international opportunity which is more long term you can't just return something. Having been president of international in a couple of different companies the biggest thing with international is people capabilities making sure you pick the right drive countries so that you don't have flags on maps and really driving for depth rather than breadth. So it will take us time. But I do think our brands are well suited for the international opportunity. That is very key that -- whether you think about India or China and the kinds of businesses we have with Baby and Writing. These are all tremendous places where population growth is occurring. And I think long term this is a fabulous opportunity

Got it. Thank you very much.

Our next question comes from Bill Chappell with SunTrust Robinson Humphrey.

Thanks. Good morning.

Good morning, Bill.

Just kind of a thought on the outlook for the upcoming holiday season. Just trying to understand especially some of your seasonal businesses like Home Fragrance like Appliances. I mean do you feel you're set up fairly well? I guess in particular do you expect Home Fragrance to continue that growth as you go into the holiday season? And -- or is this more of a there's a lot of things that are in transition you probably weren't fully prepared to get ready for this holiday season so we'll see more step change going into next year?

I think on the Home fragrance business we've really turned the corner. So Home Fragrance has delivered core sales growth both in Q2 and Q3. I think we're very well positioned for the fourth quarter. And you can see that we're gaining distribution at our -- at major retailers as we're transitioning the business away from a purely retail store-focused business to more of an omni-channel model with wholesale playing a bigger role. So I expect on Home Fragrance that we're very well positioned and you'll see us well positioned to have a strong holiday season in that business.

Bill I'd just add a quick thing to that. I did my review there. And this was a great example where the leadership works and the team there is very cohesive. And what I like is their strategic shift to redefine the business from Yankee Candle to real Home Fragrance business and they're looking at different opportunities. And so I think we can -- I think that business has a lot of legs.

And just….

The only other thing I would -- go ahead Bill.

I was just saying just to follow-up. I mean there's been transition risk of moving and you still have a fair amount of stores would you say that's largely behind you?

Yes. So this year we're going to -- we've closed 75 stores to date. We generally closed stores after the holiday period because the way to maximize value is not to close stores going into the holiday period. I would expect that we'll continue to close underperforming stores at the beginning of next year and focus on the stores that are profitable. But what's exciting is that the growth that we're seeing in wholesale is more than offsetting that from a core sales perspective. And so I think that business is well positioned. We're also back to growth on eCommerce in that business. And so both on our direct-to-consumer site and through e-retailers we're back to core sales growth. So I think we're navigating that shift well. And the other piece on that shift in addition to the top line is that the margin improvement in that business is substantial because the business we're shifting out of underperforming stores is shifting to channels where we make significantly higher operating margins. And so that business this year will be up and operating income very strong double digits.

Yes, sorry for my [Indiscernible] question.

No problem.

Your next question comes from Rupesh Parikh with Oppenheimer.

Good morning, and thanks for taking my questions. So I want to go back to Ravi your comment on the brand refreshes. I was curious which brands do you think have the most urgency from a refresh perspective. And then I was also curious in terms of how you think about the time line in terms of how long it could take for a brand refresh.

Yes. Rupesh good morning good to hear your voice again. So Rupesh I think look the 2 businesses that are challenged are Outdoor and the Appliance business. Clearly we've got some brands that were really very prominent in yesteryear we need to update them. Coleman would be one definitely and it's a great brand with a great reputation. But I just think that with the competition that we have had both at the higher end with Yeti and lower end with Igloo we just need to get on top. But the brand equity is great. Consumers love the brand. We are doing good marketing things in terms of going to festivals and stuff but we need a little bit more product innovation. And we've already got that going. But I think there's more work to be done. I think on the appliance side if you take a look at like something like Mr. Coffee. And I think that's another brand that while we put out different things out there I think that's a brand that we need to think through. I think Calphalon is a great brand and a terrific brand. We just need to get the channel segmentation right and just figure out how we take it to the next level. So those would be just a handful that I would say. The last one I'd say is Contigo which is a terrific brand. I remember it from my OfficeMax days when it was a pioneer in that segment. I just think they have a lot of potential there. And so we need to drive that a lot harder and a lot faster.

Great, thank you best of luck with the efforts.

Your next question comes from Steve Powers with Deutsche Bank.

Yes, thanks. Good morning. First off Ravi welcome and thanks for your opening comments. I guess as you and Chris think about the path ahead it just seems listening to your prepared remarks and the Q&A thus far that there's so much change in flight. Lots of discrete needs across numerous -- lots of discrete needs and numerous initiatives under way across just all of the company's various business lines. And to your point geography-by-geography overseas. So I guess the question is to what extent are you able to step back and view the company's turnaround as one cohesive program versus just a huge program office of smaller turnarounds? And to the extent that there is one program how would you summarize the most critical variables toward continued success as you think about 2020?

So let me start with it and then I'll let Chris take shot at it as well. So Steve I think one thing -- I'll start with your underlying premise about a lot of change. There is no question that this company has gone through a lot of churn in chain and a lot of disruption. So as I come in new the thing that I'm telling myself and all our employees and management team is if we decide to make any change we need to think about the prize with the Z and the price that we pay for it. So is the prize that we're going to get by making any change worth the price that we'll pay? So the cost benefit. So really we'll not be making changes for the just sake of changes. And so I think that will be very critical. I do think that when you're in a turnaround there are different levers you need to pull. And -- but central to this really to me is that hey we've got -- if you think about 3 buckets we've got to get growth and that growth will come through innovation. You've got to get cost down and efficiencies which will help the margins. So a lot of the things in terms of simplification whether it's SKUs systems all of that just goes into becoming a more efficient organization. And then cash flow. So really those are the buttons. We're just trying to -- there may be different initiatives but we're very clear that there is a cohesive program here and it is not just a project management office that is just churning out. Because look one of the things -- one big change that Chris already started and I'm going to continue this is not going to be a consultant-driven organization. This is going to be run by operators who have a very clear view of both the short term and the long term. Chris?

Yes the only thing I would add to that Steve is that when we -- when I came in about a year ago I went through a listening tour similar to what Ravi is doing and we put in place a turnaround plan that we've been executing against for probably the last nine months. And that turnaround plan which I laid out at -- in previous earnings calls and conferences is very focused on the 5 things that we talked about here and that Ravi mentioned as well. And I think we've had consistency in that turnaround plan over the last nine months. And so it hasn't been a student body left or a student body right. The tactics underneath it we're continuing to monitor and we're driving a lot of different change with regard to complexity reduction productivity initiatives a change in how we develop innovation and interact with the consumer. But I think all of those things are in the right direction. And what I'm excited about is that with Ravi coming in I think we'll make it even sharper. And I think we can move forward in a very positive way. And we're already seeing the results. This is the third quarter in a row that we've met or beat our plan and expectations on all financial metrics. And so we're 3 for 3 which begins to rebuild credibility as we go forward here.

So I'll just add 2 quick points. When I came in and during the course of time as I was interviewing I had a chance to look at the turnaround plan. I really think it's very sounded and it's just back to basics. This is not rocket science. And one can say "Hey do you need a highfalutin strategy model?" We've got good brands. We have good people. We just need to execute and be laser-focused on a few things and do them well. My job when I come in part of it is to really inspire our employees to do their best. That I think I am -- I fervently believe that employees are at the heart of our business. And we've not I think yet today galvanized the full potential of our employees and how do we get them to believe that there is a great future and that it's additive. And that 30000 employees is actually equivalent to 300000 because you're taking all their power and getting them very focused on a few things. And my job is to with the management team help explain bring it down to the basics. So -- and that starts with let's get focused on the consumer get focused on the customer let's understand the trends get on top of it quickly. Speed is very critical in all of this and be ahead of the curve. And over time once we get the turnaround effected look -- we'll look at the next phase. Then we may want to -- for the next growth phase. But right now back to the basics turnaround is what we need to do.

Okay, thanks so much for all that I'll pass it up.

Your next question comes from Joe Altobello with Raymond James & Associates.

Good morning. Thank you Ravi for your high-level thoughts earlier on the opportunities that you see at Newell. You did emphasize the need for stability in the organization obviously. And so just to be clear should we interpret that as there's unlikely to be any major changes in the transformation plan? And again I realize it's early days but perhaps some mid-course tweaks here and there over the next few quarters.

Joe thank you for that. Look I think I would not -- because there are 2 plans around I think there was an old transformation plan and that is not what I'm referring to. I'm being very crystal clear that it's the turnaround plan that Chris has articulated and talked about each component which is a back to basics hey let's get this company on the right footing. So because transformation is too highfalutin a word for me I'm -- you've got to be very careful about that. We are in the throes of our turnaround get the basics right. And yes I think all the tenets of that make a lot of sense so there is no point in changing when there's no need to and we're making terrific progress. Now some of the execution will -- and the tactics over time we'll learn and we'll improve. So for instance social media. We just are nascent. We got started on it. Now how we do it we may want to change. I may make some structural tweaks but there are tweaks they're not going to be wholesale changes. Leadership team we have a good leadership team. I may make changes where I feel it's necessary. But what you're not going to see is a complete upside down because I don't think that is right for the company at this stage. We're on a good path we just need to build on that momentum.

That's very helpful. And just shifting gears to North America. Core sales were down 3.8% in the quarter. I think that was pretty similar to the number that we saw last quarter despite increased A&P investments and the strong growth that you guys saw in eCommerce. Was that just a tougher compare? Or was that also due to the inclusion of Rubbermaid Commercial in the quarter?

It was a little bit of both. So let me just address that. So if you look at the total company's core sales growth of negative 2.5%. while we're not satisfied with that number it did represent on a two-year stack basis about a 450 basis point improvement in Q3 versus Q2 speaking to your point on tougher compare and that's certainly true in North America as well. If you look at our guidance for Q4 that represents about another 250 basis point improvement and the two-year stacked core sales growth trend versus Q3. So although we're still guiding in Q4 down 2% to 4% we're cycling through tougher compares and we're making sequential progress on our two-year stacked growth trends. The higher A&P in Q3 was largely spent behind the Writing business and I think we were very happy with the results from that. Because Q3 is the all-important back-to-school season for the Writing category and we won the Writing category during the back-to-school season. So we grew market share in the back-to-school season in the core Writing business and grew core sales per division. The core sales for the division doesn't show the extent completely of how much we won during the back-to-school season because it was somewhat masked by the Slime trend coming off. But the A&P spend certainly played a big role in that effort. So I think we were pleased with the results from that. It doesn't mean we're not going to look at how do we make it better and more effective going forward. But the core sales came in at the high end of our guidance range and we're excited about the sequential progress we're making and expect to continue.

Your next question comes from Lauren Lieberman with Barclays Capital.

Great, thanks. Good morning. As you talked about this is -- let's not sort of overcomplicate this in terms of what we need to do and not have a big highfalutin strategy and so on which I really appreciate let's execute on these brands. One of the things when I looked back over the last couple of years that has I think caught these great brands by surprise is the -- is just competition. Sort of that Newell wasn't the only company giving attention to these categories through innovation through addressing emergent consumer needs. So Ravi how are you thinking about that side of the house? Sort of beefing up the consumer and competitive insight and intelligence capabilities to really make sure that you don't fall behind again because that's where the hole you're digging out of right from a growth standpoint.

Yes Lauren. Thank you for that. Look I think the most important thing for this is you've got to have your organization and your teams have an external focus versus an internal focus. These problems start when you are looking very inwards. In the last several years with the acquisition with structural changes which might not have made sense there was also divisions on a development delivery organization that might not have optimized things. I just think that we've got to get our teams to have that winning spirit and just get on top of trends. Because a lot of these trends we should have seen. And it burns me up that we missed some of them and I've only been here a month. And I want every employee to feel that way because in consumer brands you got to have the obsession that you want to delight the consumer and you always got to be ahead of them. So insights become very important. Social listening becomes very important and not being steeped in the past. So you've got to get a 360-degree view of how the consumer is moving and anticipate and make sure that your innovation cycle is speeding up toward that. The second part of it is focus. Because look you can't -- every innovation is not going to be a needle-mover. So you've got to also have new news. Sometimes it may just be a packaging refresh. Sometimes it may be just how you talk about the brands. But there's always got to be new news in a category in a business where there's discretionary purchase patterns. So we're going to ramp this up. It's going to take us a little bit of time. And we are in different stages in different businesses. For instance Writing where they have the year of the pen. I'm very excited about the things they're doing. And especially with Sharpie and stuff like that. So I just think they're in different stages. We will get this cranked and go forward. Because I hate to lose out to the competition because that means we were asleep at the switch and we're not going to let that -- it will take us time to get there but we're going to rev this organization to really have that competitive spirit and that obsession with the consumer and customer because you've got to make sure your innovations are as important and favored by the customer and not just for the consumer. So if you get the price point right the safe channel segmentation's right etc.

Your next question comes from Nik Modi with RBC Capital.

Yes, thanks. Good morning, Ravi I just was hoping you can provide some thoughts on your background with OfficeMax and Ritchie Bros. And maybe some best practices or learnings from your experience at those companies especially as a Newell customer at OfficeMax and how you think you can apply those experiences to what you see at Newell today.

Thank you Nik and it's good hearing your voice again. So Nik I'd say it's a product of a few things the experiences. So I have been in -- I've lived in 6 countries worked across 6 different categories and -- or 6 totally sectors both B2B B2C SC Johnson where my consumer packaged goods came in. But look the key thing for me is when you get into a company to always start with a clean slate and say what is the situation here versus do -- oh I did that there's a -- don't be formulaic in your approach. That's number one. There's a second philosophy which is people come first. You truly got to believe that your people are your biggest asset. And to me it's not about always a you've got to have only the best people but how do you bring out the best in people. Because that is very very important. And I don't think we have really maximized that potential at Newell. We will go break down the silos and break down all of this -- we've got to fully culturally integrate the company. And I did that at Ritchie Bros. when we bought OfficeMax. The third is to make sure that especially if these companies for one successful leadership complacency sets in. And you start thinking you believe in your own stuff and that's when you miss the innovation. It's someone in the garage who comes up with things. And you have set paradigms whereas the person outside is thinking in a different lens. For me the fact that I've worked in so many categories helps me look at patterns and say how do you take disparate and view them into one single pattern. So the other thing I'm very respectful I…

Your next question comes from Kevin Grundy with Jefferies.

Thank you. Morning, everyone. Welcome Ravi. Ravi I wanted to come back to a portfolio question. It sounds like you're reasonably comfortable with the portfolio as it currently stands. You also mentioned though that the company will be in the process of doing a deep dive on Appliances & Cookware as well as Outdoor & Rec. So I'm just curious does that leave the door open for potentially some strategic considerations there? At that point when you're down with the strategic review is it possible that you do decide to divest those businesses? How do you view the attractiveness of those categories now and the brand's positioning they're in? It sort of begs the portfolio questions a company should be in the businesses that they're in and not necessarily the ones that they are in. If the company's balance sheet was in a different position today would you buy either one of those businesses? Arguably the answer to that may be no. So I'd be curious to get your thoughts there. And then a quick housekeeping Ravi is it your intent to provide long-term targets sales profit earnings growth etc.? And if so when should investors expect that?

Okay. I'll answer the first question. And then I think Chris mentioned that the divestiture program is done. And look I think at this point we're quite happy with the portfolio overall. But within the portfolio because we've got -- so for instance Appliance & Cookware we have 36 categories. So -- and we're kind of leaders overall but we've got to look at hey can we really have best in particular segments. And are there certain things that we may want to evaluate do they make sense to still be in. Because it's very tough when you say we've got to conquer all 36. So we may want to -- we'll evaluate certain categories should we prune some. There's also some things that just don't make sense. Like in Germany I've just learned we've got a condom brand. And really that's not strategic to us. So those are the kinds of things that we may want to sharpen our focus. So it's a sharpening of the focus. I think it's premature for us to really come to any conclusions that just because these 2 businesses are at this stage not firing on all cylinders that there shouldn't be a conclusion that they're not part of the portfolio. We have to look at it get the turnaround plans. Because they have good brands. These are all highly reputable brands. And look I worked in my past with a lot of brands that were icons. Holiday Inn as an example. And so it is just how do you restore them and how do you make them relevant and current. Chris do you want to add to that?

Yes. I'll just say on the guidance point we'll provide guidance for next year for 2020 on the next earnings call which is our normal cadence. And I think we laid out at CAGNY sort of long-term aspirations last year and I don't think -- relative to the benchmarks I don't think anything has really changed versus that. So that will be our plan relative to updating guidance for next year and beyond.

That is all the time we have today for question-and-answer session. I will now turn the call back to Mr. Saligram for closing remarks.

Thank you very much everyone. I really appreciate your being on the call and your interest in Newell. I believe that our future is bright. And with that onwards and upwards. Thank you.

Thank you everyone. This concludes today’s teleconference. You may now disconnect.