Good morning, and welcome to Newell Brands Third Quarter 2023 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 your questions. [Operator Instructions] Today’s conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Sofya Tsinis, Vice President of Investor Relations. Ms. Tsinis, you may begin.

Thank you. Good morning, everyone. Welcome to Newell Brands third quarter earnings call. On the call with me today are Chris Peterson, our President and CEO; and Mark Erceg, our CFO. 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, and we undertake no obligation to update forward-looking statements. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10-K, Form 10-Q and other SEC filings available on our Investor Relations website for a further discussion of the factors affecting forward-looking statements. Please also recognize that today’s remarks will refer to certain non-GAAP financial measures, including those we refer 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 between GAAP and non-GAAP measures can be found in today’s earnings release and tables that were furnished to the SEC. Thank you. And now, I’ll turn the call over to Chris.

Thank you, Sofya. Good morning, everyone, and welcome to our third quarter call. We had mix results in the third quarter. We made significant progress delivering against the five major priorities we established at the start of the year as well as deploying and actioning the new integrated corporate strategy. At the same time, we were disappointed core sales declined 9.2% during the quarter. Let me take these each in turn, starting with the five priorities we laid out at the start of the year. First, year-to-date, we delivered excellent results on operating cash flow, which improved more than $1.2 billion versus last year, largely due to significant progress on inventory reduction. The stronger than anticipated performance thus far has given us confidence to raise our outlook on cash flow for the full year. Second, during the third quarter, gross margin reached an inflection point, expanding 170 basis points year-over-year with the fuel productivity program along with pricing serving as the driving force. We continue to expect record productivity savings in 2023 with year-over-year gross margin improvement continuing into the fourth quarter. Third, we’ve completed the Project Phoenix organization design changes with all markets moving to the One Newell approach. We are on track to realize $140 million to $160 million of pre-tax savings this year and $220 million to $250 million on an annualized basis. Fourth, we are moving at pace with the simplification and SKU count reduction work across the organization and are on track to end the year with less than 25,000 SKUs, down from about 28,000 last year and over 100,000 at the end of 2018. Finally, the new operating model with three segments, a centralized manufacturing and supply chain and a One Newell approach with our top four customers and across the geographies is now…

Thanks, Chris. Good morning, everyone. Third quarter net sales and core sales both declined approximately 9%, largely due to the same macroeconomic headwinds we’ve been wrestling with since the third quarter of last year. However, on a more positive note, we continue to make significant progress improving the structural economics of the business during Q3 with Newell’s normalized gross margin improving 170 basis points versus last year and 140 basis points sequentially to 31.3%. A 500 basis-point contribution from fuel productivity savings and meaningful pricing actions taken across roughly 30% of our U.S. business, primarily in the home and commercial space, more than offset the significant headwinds from inflation and fixed cost absorption. Despite excellent productivity work by the team as well as strong savings from Project Phoenix, which amounted to $49 million in the quarter, normalized operating margin contracted 220 basis points versus last year to 8.2%. Most of the contraction in third quarter normalized operating margin was driven by higher incentive compensation charges. As you may recall, incentive compensation was revised sharply lower during Q3 last year, making current period comparisons very difficult. During the third quarter, net interest expense increased $12 million versus last year to $69 million due solely to higher interest rates because net debt was down nearly $500 million year-over-year and down nearly $400 million year-to-date. The discrete tax benefit originally expected in the fourth quarter was captured in the third quarter, yielding a normalized tax benefit of $73 million, which in combination with the other elements we just went over, brought normalized diluted earnings per share in at $0.39 and drove a significant upside in normalized earnings per share relative to the $0.20 to $0.24 outlook previously provided. Turning to operating cash flow. Strong progress on inventory management allowed us to generate $679…

[Operator Instructions] Our first question comes from the line of Chris Carey with Wells Fargo Securities.

So I just want to talk maybe high level. Can you just talk about the evolution of how you would expect to manage the business? I think right now is very much a focus on free cash flow and the balance sheet and over time, as sort of these macro headwinds and other kind of competitive dynamics ease, then the focus can perhaps turn a bit more back to the income statement, delivering earnings, right? So, just maybe the tension in the organization between those two things. And I guess the question underlying that is the performance that we’re seeing right now, how much of that is due to you making certain decisions in favor of the balance sheet and cash flow as opposed to again the income statement, given the priorities right now? Thanks.

Yes. Thanks for the question. So let me try to provide a little bit of commentary on that. And you’re right, we did, at the beginning of this year, as we said in the prepared remarks, prioritize cash flow and gross margin improvement and structural economic improvement in the business. And we’ve made a series of choices to try to drive that. You’ve seen our inventory is down, I think, around $850 million versus the same time last year, which is a massive improvement, which is driving the operating cash flow to be $1.2 billion better year-to-date this year versus last year. You’ve also seen that we’ve turned the business to now driving gross margin improvement this quarter of 170 basis points, and we expect gross margin in Q4 to be up even more than that versus a year ago. And some of those choices are things like the July 1st price increase that we put in the market where as Mark commented on, we priced structurally unattractive businesses. And in some cases, what we’ve seen is retailers have accepted those price increases, consumers have accepted those price increases and the structural profitability of those businesses improved. In some cases, we’ve lost distribution on those businesses, but it was effectively zero margin business that we’ve walked away from. And so, we think that what we’re doing is improving the long-term quality of our portfolio consistent with the strategy that we’ve deployed focused on the top 25 brands, top 10 countries. At the same time, we are very focused on the capability improvement actions that I mentioned around consumer understanding, brand building, innovation which we believe can get the Company back to market share growth more broadly than where we are today. We are growing market share today on a number of our leading brands, brands like Sharpie and EXPO and Rubbermaid and Crock-Pot and Ball, but we’re not growing market share across a broad enough set of our brands, and we aspire to do that so that when the macro environment turns, we are positioned with leading brands that are growing market share and in a position with a more structurally attractive business. And that’s really the -- how we’re thinking about the trajectory going forward.

And one quick follow-up. Just as you think about this dynamic of over the next 12 to 18 months, that core sales, for example, would remain under pressure, how much of that is a function of category growth, market share performance versus things that you think you need to do in the organization to create a cleaner, maybe smaller, more profitable foundation for the longer term?

Yes. I think the majority, as I mentioned in the prepared remarks, this quarter, about 80% of the core sales decline was really driven by market contraction and retailer inventory actions. But there’s 20% that’s related to us not having the front-end capabilities where we want them and walking away from some of these structurally challenged businesses. I think, as we go forward, you’re going to see that 20% bucket improve dramatically as the strategy and the capability investment starts to take shape. And we believe that’s going to turn into a positive rather than a headwind over the next 12 to 24 months. The category growth dynamic is hard to predict, as we’ve said repeatedly. But I do think that the category growth dynamic, from a macro standpoint, some of the dynamics that are driving that are coming to an end. We believe that retailer inventory destocking is largely behind us at this point, for example. The consumer -- underlying consumer pressure that’s causing consumers to prioritize spending on food, essentials, and away from durable and discretionary categories is harder to predict.

And our next question comes from the line of Andrea Teixeira with JP Morgan.

So, I wanted to go back to this point about growing share. You mentioned it’s not enough to grow share in a declining category, which I appreciate the honesty. But, could it make sense to perhaps sell some of the businesses? I know you’ve been through a lot of rationalization over the years since the Jarden acquisition. But wondering if some of these other businesses, even though they may have cash flow there that you can sell but perhaps be more, I think, choiceful from what you can keep or what you cannot. And I understand that you just mentioned about 20% of what you saw in the decline of core sales have been from not having capabilities or having made choiceful decisions for distribution on things that are not -- they are not so profitable. So, I wanted to just go back and see if number one, you can, there is space for divestitures or it’s going to be like -- it’s not like a full business, and therefore, it’s more you getting out of some of these categories or some of these SKUs. And how far along in this process you believe you are? Because I understood that you’ve been doing this all along from reducing the very massive reduction in SKUs. So, I was wondering why it’s taking so long, or is that something that you realized like you have to continue to do in order to improve profitability?

Yes. So, let me try to provide some perspective. So, when we announced the strategy in June, we had -- at that point in time, we had 80 brands that we were selling across the Company. The 80 brands that we were selling largely fit within the Company’s portfolio because they are branded products that are sold based on the same capability set of consumer understanding, innovation, brand building, applies to all of the 80 brands. And they’re largely distributed through the same retail channels across the world. And so we feel like we’ve got now a portfolio from the divestitures that have been completed over the last five years that fits together and where there is scale that can be leveraged. We’ve also made important progress on the supply chain and the back office to get things on to one IT system, to get things into one distribution network with the Ovid program, et cetera, so that we believe, in most cases, we are the best owner of those brands. So, we continue to look at is the portfolio the right thing and is there value to be unlocked? But to date, we have not seen that there’s a big opportunity to break up the portfolio and drive value because we believe the dissynergies and the tax impact would overwhelm any value we would get from a major divestiture. That being said, we also very clearly said that we don’t think 80 brands is the right answer. And so, as part of the strategy, we said we’re going to prioritize the top 25 brands because they represent 90% of the sales and profit of the Company. We are moving at pace since we announced that strategy in June. And as I mentioned in my prepared remarks, we expect to be down from 80 brands down to 60 by the end of this year. So, that’s already a meaningful reduction in the number of brands in the portfolio, and we think we’ll continue to reduce the number of brands over time. As we look to how are we reducing the number of brands in the portfolio, largely what we’re doing is we’re converting shelf space that we have on these smaller, less consumer-relevant brands into shelf space on our bigger, more profitable, more consumer-relevant brands. But it takes a little bit of time to do that because retailers reset their shelving typically on an annual basis, and we don’t want to create holes across shelving. And so, we’ve worked up a plan to sort of migrate this shelf space over time from these small brands that we will be exiting into a more streamlined portfolio focused on the top 25.

And our next question comes from the line of Bill Chappell with Truist Securities.

Just kind of keeping it, as it seems to be, on the kind of a high-level conversation this morning. This is now, I guess, kind of the third cut to top line this year and I know that things change with your kind of new outlook midyear. But trying to understand how forecastable your business is right now with -- and the kind of merits of doing so many things to try to rightsize the ship when the macro environment is so kind of volatile. And when I say that, I mean, you talked about lowering the number of brands by 20, replacing, I think, a third of the brand managers in the past six months, SKU reduction, Project Ovid, project -- there are a couple of other projects in there. And at the time when it doesn’t seem like anyone in the categories you play in can really forecast kind of post-pandemic recovery or new normal. So, I’m just -- maybe you could touch on, do you worry that you’re doing too much or that with all these changes happening, that forecastability isn’t going to be that great for six months until we kind of see how things sit, or is this just something you had to do and it’s kind of a rip the band-aid type moment?

Yes, it’s a good question. It’s one that we talk a lot about with the Board and with the management team inside the Company. If you look at the core sales growth of minus 9% in Q3, and I think we had guided down 5% to 7%, so we were 3 points off at the midpoint of the range versus the actual, that 3-point miss was really entirely driven by market growth, which came in weaker than we expected. And that gets to your point of it’s a challenging environment to forecast the market and consumer offtake right now. That being said, we believe, from the capability assessment work that we’ve done and the strategy that we put in place, that we need to improve these capabilities because at some point, this market will turn and the macro environment will not be as negative as it is now. And we want to make sure when that happens that we are fully positioned to take advantage of that with a portfolio of leading brands that have the ability to consistently grow market share and drive market growth in what eventually will be a better macro environment. But, we recognize that the macro environment right now is very difficult to forecast. We’re trying to run the business on a scenario planning basis with wider ranges of possible outcomes, given that dynamic. But it doesn’t cause us to slow down on the capability improvement actions that we need to drive because we believe that those need to happen irrespective of the macro environment.

Got it. Is that -- I mean, when I’m listening to the initiatives and stuff like that, I mean, the way you look at it is, they’ve all been announced and in our process. It’s not you’re continuing to look for new initiatives or new ways to change the business. It’s, we just got to keep pushing forward with the original kind of reorg.

That’s exactly right. So there’s -- from the capability assessment, which was comprehensive that led to the strategy, there’s been no change in the strategy or in the initiatives that we’re driving to try to drive the capability improvement. And many of them are now well underway. Some of them have actually already been completed, not all, but it’s not that we’re adding new things on to the list. We’re driving the plan that we put in place as part of the June strategy review.

Got it. And then, one just follow-up on the Writing instruments, I mean, that was a category that had at least low to mid-single-digit growth for many years prior and going into the pandemic. Obviously, the pandemic changed everything with back-to-school and what have you. As we’re getting back to a more normalized environment, is this a long-term mid-single-digit growth or low to mid-single-digit growth category, or is it more mature now and it’s maybe not as opportunistic as it used to be?

Yes. We’ve looked at that, at the Writing category growth over the last 5 years, over the last 10 years, over the last 20 years. And over -- if you normalize out sort of the COVID blip, it’s been a category that’s been growing kind of low single digits on a global basis. So, we think that that’s the right place for it to be. I don’t think it’s a mid-single-digit growing category. I think it’s a low-single-digit growing category. And that’s our view of what we think is likely on a normalized basis going forward.

And our next question comes from the line of Peter Grom with UBS.

So, I appreciate all the commentary on ‘24 and I’m sure we’ll get more concrete guidance in February. But is there any way to frame the degree of margin expansion that you’re kind of expecting just because -- should we expect kind of the 4Q exit rate, which is pretty substantial to continue? Should it be a bit more subdued than that? Just because given the top line commentary, higher interest, tax rate, if it’s less robust, that would imply a pretty substantial step down in EPS. So, I’m not trying to pin down guidance or anything but just it would be helpful to just try to understand directionally how we should be thinking about it.

Yes. Let me offer a few thoughts as it relates to that and maybe I can even reinforce some of the commentary about the current year gross margin progression. We’re really excited by what’s happening on the gross margin front, right? We said we have to improve the structural economics of the business and we’ve been getting after that in quick order here. And you’re seeing that in the fact that we’ve improved sequentially from Q1 to Q2, Q2 to Q3, and we’re calling for a very large continued progression on gross margin from Q3 to Q4 of this year, which we do think will put us into a good launchpad going into the following year. It’s notable that this is the first time gross margin expanded since the second quarter of ‘21. And it’s driven in part by the fact that our fuel productivity savings this year are running at almost 6.5% of COGS. And that’s not a coincidence. I mean, that’s nearly 2x what we’ve normally seen in most years. It traces back to Project Phoenix and the decisions to restructure the business, so that the supply chain is a unified force as is procurement, and that’s lending itself to all kind of additional opportunities that we’re seeing. That strong progression is really what’s allowing us to call in the fourth quarter for that gross margin to expand and more importantly, the normalized operating margin based on the commentary we provided is expected to be up, as I said, 290 to 390 basis points. I mean, that’s a huge move in the right direction. So I know it’s difficult to see all that underneath the surface when you’re looking at the top line compression driven by market contraction and trade destocking principally, but it’s most certainly there. We haven’t provided any specifics on gross margin for next year and we won’t at this time. But we have said that if we look at our evergreen targets of growing op margin 50 basis points per year, we think will be certainly at or above that next year, and most of that will be driven by continued gross margin progress that we’re making.

Got it. That’s really helpful. And then, just following up on the category performance, which obviously has been called out several times as a big driver of the weaker 3Q. Can you maybe just give us some color on how that really progressed through the quarter? Did it get worse as we kind of were later in August and into September? And have category trends further slowed here into October?

Yes. I think, as I mentioned before, that really the driver of the core sales miss versus our guidance in Q3 was the market contraction rate, which came in about 3 points higher than what we expected. We did see that September was the weakest quarter -- or weakest month of the third quarter. And so, we did see the trend in terms of market contraction accelerate into the back part of the quarter. And obviously, we’ve got some view of the first part of October, and that is running very much in line with our guidance for the fourth quarter. So, that’s a bit on the sort of the inner quarter play.

Yes, if I could, I think it might be helpful because obviously in Q3, as Chris indicated, we saw our core sales down by 9%. For the fourth quarter, we’re effectively saying that we think that our core sales will be down somewhere between 14% and 11%. And I think it might be instructive to try and kind of decompose that for everybody here on the call today. So in both Q3 and Q4, we expect the market to continue to contract. Based on our analytics, we think that will be somewhere mid-single digits to high-single digits, for the sake of argument, let’s call that somewhere down 6% to 7%. That will be true both in the third quarter and we think in the fourth quarter. Trade destocking, we’re getting towards the tail end of that. We think it was somewhere between minus 1% and minus 2% in Q3. We think that will carry over to Q4 as well. And as Chris indicated, there was a certain element of share loss that we incurred, let’s call that 1 point. And if you do that math on Q3, you’ll see that that’s roughly down the 9% that we obviously just printed in our release. The only two things that are then different in Q4 is, as Chris indicated, we did take pricing action on 07/01. This is part of our enhanced capabilities to actually do more data analytics. You’ll recall that we actually literally looked at the structural economics of 6,000 discrete SKUs and being able to make those pricing actions. So, they were very, very targeted and they were in the right places, but we will lose some distribution as a result of that. And in Q4, we think that might be 1 point or 2. But again, this is where we’re economically indifferent because the structural economics were so poor that the pricing actions needed to be taken and if the business falls away, it falls away and then the supply chain will make up the differential. The other piece that is really playing into it and gets back to a question that was asked earlier that Chris provided an answer to, is we have about 2 points in the fourth quarter where we think we’re going to have less deep discount promotions because what we’re doing now is making the tough calls today to make sure we set the launchpad properly for ‘24. And so, we’ve had a lot of promotions in the fourth quarter historically where, frankly, we didn’t make any money. And so what we’re doing is we’re walking away from these structurally untenable decisions that were made in the past to get ourselves on good footing. And from there, we can grow our way back out based on the capability work that’s being done.

And our next question comes from the line of Brian McNamara with Canaccord Genuity.

Congrats on the really strong improvement in cash flow. A question we often get asked is if and when we’ll see top line growth at Newell again. You’ve mentioned that sales will be down again next year. So, I guess, what should give investors confidence that you’ll reach those evergreen targets in 2025?

Yes. I think on that question, it’s one that we ask ourselves often as well. And I think when we laid out the strategy, we were very clear that this was going to be a multiyear strategy. And we said that we expected for the next 4 to 6 quarters that we would be below the evergreen target on core sales growth because of the capability investment that was required to get the company back to sustainable core sales growth. We are very much on track with the capability improvement actions that we’ve taken. I feel very good about the progress we’ve made over the last four months since we announced the strategy. We’re only four months into the strategy, but I think we’re making incredibly fast and strong progress against that. The piece that is sort of overwhelming that at the moment is the market contraction and the retail inventory actions. But we believe that at some point, those are going to weigh. As I mentioned, it’s hard to predict when that’s going to be. As Mark said in his prepared remarks, as we think about next year, we think core sales is likely going to be down next year, but we expect it to be sequentially better next year than this year. And we’re very bullish on the progress we’re making on the strategy, on the capability improvements. We think we’ll be -- we’ll have green shoots to point to in ‘24 from that work that will help improve the trend. And we think in ‘25, we’re going to be in a much better place.

Got it. And then secondly, with the 20 brands you’ll lose by the end of the year as you reallocate shelf space with your retail partners, are those largely being discontinued or are any of them being sold or licensed or other? Thanks.

Yes. I would say that probably 80% to 90% are just being discontinued. There are a handful that we are licensing, and there’s one or two that we are actually going to sell. They won’t be material sales but we are looking at all three alternatives as we go through this. In some cases, we have brands that might be $2 million of revenue and the right answer is just to discontinue the brand because it’s not worth it to go and try to sell them. In other cases, we have brands that are more meaningful that are either a country-specific brand that doesn’t really add to the portfolio and we don’t think is leverageable. And those are the ones that we’re looking to sell. An example there is we have a brand in Italy called Millefiori, which is a home fragrance brand. It’s largely distributed only in Italy and we’ve reached a sale agreement on that brand, where we expected to close the sale of that brand this quarter.

Our next question comes from the line of Olivia Tong with Raymond James.

First question, just given obviously the focus on cash flow, if you could talk about what that implies with respect to your commitment to the dividend at current levels.

Yes. Look, I think we feel pretty good about where we are. We made an intervention earlier this year to rightsize the dividend. We said that our strategy as it relates to that is to be somewhere in the 30% to 35% dividend payout ratio, and we’re going to continue to tackle along with that going forward. So we feel really good about our cash position. I mean, it’s important to note that we paid down a significant amount of debt. So far, net debt is down $500 million year-over-year, $400 million year-to-date. So, we feel really good about the work that we’re doing. The other thing I would just take this opportunity to point to out and speak out to is you’ll recall that our inventory kind of peaked at $2.6 billion in the third quarter of last year. And as we go forward and kind of do our year-end projections, we think by the end of this year, we’re going to have literally drawn down inventory by $1 billion on top of the market contraction that we’re obviously contending with. So the fixed cost absorption from having that market contraction and the trade destocking and our self-selecting decision to basically hold back production in order to kind of clear the inventory, release the cash and then set the right base point for the next years going forward is really quite notable. The other thing that we haven’t talked about as much is just the carryover inflation effects that we’ve had to incur because of the way we do our inventory costing. At the end of last year, when we saw inflation running high single digits, this year kind of low single digits, we suspended an awful lot of inflation charges into our inventory balance. And over the first, second and third quarters of this year, we’ve been bleeding out that value in effect. And it’s honestly been over $200 million of inflation that was basically incurred in the prior year that’s now basically being bled through the P&L this year, which at the end of the third quarter here, it now stops and it actually reverses and starts going the other way. So we feel really good about our cash position, we feel really good about our gross margin position, and we’re excited about the difficult decisions we’ve been taking to set the business up for success in the future as we then make the capability investments to really start driving the front end of the operation.

Got it. And then, it sounds like ‘24 is obviously -- the challenges are expected to continue. As you think about a lot of the moving pieces, eventually, would imagine that innovation and focusing on innovation in order to drive sales recovery will become part of the plan. Can you talk about that and other actions that you can take in the interim that can improve your ability to combat the tough environment maybe a little bit more? You briefly talked about the back-to-school categories but maybe some more specifics around some of the other moving parts within the division, ones that you think can recover faster versus ones that will clearly still have structural challenges that will take even more time to address. And just walking through sort of the different businesses and thinking about the recovery path. Thank you.

Yes. So, let me try from a company standpoint first, which is I think where you started. So we are doing a tremendous amount of change to get the front-end capability in a place where we think we can consistently drive market growth and market share gains in the categories in which we compete. And we talked about, in my prepared remarks, the innovation process that we put in place. We’re putting in place a brand management structure. And importantly, it’s not just the brand manager but we’re also putting multifunctional teams against the top 25 brands, which did not exist before. We’re putting in place a selling capability that is a new selling capability focused on going after incremental distribution opportunities, which we believe there are a significant amount of. We’ve started to put in place now a measurement system to look at our distribution, our selling, our merchandising and our promotion, which many other CPG companies have but we were not measuring. And what we’re finding is that in many of our categories, our share of shelf is below our market share. So, we think we’ve got a big opportunity to change the retail environment to get our brands more appropriately distributed. We also are focused on something that we’re calling internally pillars of competitive advantage. And we’re starting to measure our brands and our products against superiority on product performance, on packaging and claims, on brand communication, on retail execution, both in-store and online and on value from a pricing standpoint. And when I say value, I’m not talking about low price. I’m talking about representing a good value for the feature benefit set that we’re offering, really focused on the MPP-HPP part of the market. And that all is new capability with KPIs that we are…

And our next question comes from the line of Lauren Lieberman with Barclays.

You’ve covered so much ground. But I just thought maybe it would be interesting to ask about dialogue with retailers. So, you talked about 2 points less in the fourth quarter from eliminating some of these money-losing promotions. But retailers also lose on that. I mean, it’s good for your P&L, obviously, and better for the health of the business long term but that does detract a bit from retailer trends in some of these categories. So I guess what can you tell us about the conversation with retailers, how they feel about the time line of progression, some of the band-aid ripping off you’re doing in the near term? And how are they factoring into their sort of planning for next year and thoughts about category growth? Thanks.

Yes. Thanks, Lauren. And it’s been a big focus of ours, as we’ve talked a little bit about in the past, and it continues to be. I’ve had top-to-top meetings with several of our top retailers, both in the U.S. and internationally. And as we’ve done those meetings, I would describe our relationships as very strong. And I would say our relationships with retailers today are significantly better than where we were two years ago. And the reason for that is really the implementation of Ovid and the simplification work that we’ve done. This may be a little bit in the weeds, but if I take an example of our largest retail customer, we used to operate with them with 23 different legal entities, 23 different vendor numbers. We would ship them. We would force them to provide 23 orders. We’d ship them 23 different LTL shipments. It was confusing, chaotic, and we didn’t have one voice to that customer. And that’s -- I could have picked any number of customers where that was the case. If you look at where we are today, we interface with them with one legal entity, one vendor number. We’ve converted our shipments from what was probably in the 20s, on 20% full truckload to now 80% full truckload shipments. So, we are a dramatically better supplier to retailers and they recognize that and seen the improvement that we’ve made. And we are the largest -- in most of our retail customers, the largest general merchandise supplier to them. They want us to win. They recognize the journey that we’re on and they’re leaning in to help support us. We’re not making any of these choices in a vacuum. When we make these choices to improve the structural economics, we have very open dialogues with our retail customers so that we don’t surprise them, we don’t leave them in a bind. But we’ve got to make the right choices for Newell, and we’re trying to do this in a way that’s a win-win partnership with them. And I think largely, the retail -- our largest customers are very supportive of that.

And our final question comes from the line of Filippo Falorni with Citi.

First question on the inventory side. You guys both mentioned that you feel like you’re at the tail end of the inventory reductions. I guess what gives you the confidence that that’s the case, in case the categories from a consumption level were to continue to be soft? Is there any risk of a further reduction into next year? And then, from a -- second question on a pricing standpoint. I know your price actions were justified, but to what extent your worst market share performance was driven by competitors not following on pricing? If you can comment on that would be great. Thank you.

Yes. Let me start with the inventory. So one of the things that we do is we measure weeks of coverage at our top retailers. And we get the data directly from the retailers of how much inventory they have on hand. And as we saw their weeks of cover accelerate last year when the market shifted in Q3 of last year, we’ve now seen their weeks of cover come back down. And actually, as we’ve implemented Ovid in the U.S. market, our delivery times are much -- are also much shorter, which has allowed them to reduce weeks of cover even more. And so, from our view of weeks of cover, we believe that largely the weeks of cover are in a good place and we think retailers would be taking significant out-of-stock risk if they go lower on weeks of cover. To your question on if the consumption continues to go down, couldn’t that allow -- because you maintain the same weeks of cover, could that allow another amount of inventory reduction? The answer to that is yes, but it’s not going to be anywhere near the magnitude of what we’ve seen over the last 9 to 12 months. On the pricing question, I think that we have largely led pricing because we are the market-leading brands in most of the categories in which we compete. I would say broadly, we’ve seen competition follow for the most part because everybody was dealing with the same input cost inflation and there wasn’t really an opportunity for them not to follow. However, there are selective cases and selective businesses where we priced and competition has not fully followed. And we are monitoring those situations. And if we need to, we will react appropriately to make sure that we’re maintaining our market share.

Thank you. This concludes today’s conference call. Thank you for your participation. A replay of today’s call will be available later today on the Company’s website at ir.newellbrands.com. You may now disconnect. Have a great day.