Good morning, and welcome to Newell Brands' Fourth Quarter and Full-Year 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 questions. [Operator Instructions]. 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 Sofya Tsinis, VP of Investor Relations. Ms. Tsinis, you may begin.

Thank you. Good morning, everyone. Welcome to Newell Brands year-end 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 year-end call. I want to start with a brief recap of the significant progress we have made during 2023 on the turnaround agenda. In June, we introduced and deployed a comprehensive new corporate strategy, which focuses on disproportionately investing in innovation, brand building and go-to-market excellence in our top 25 brands and top 10 markets as part of a clear set of where to play and how to win choices. These choices were informed by a thorough and brutally honest company-wide capability assessment we conducted earlier in 2023 and which unveiled gaps in Newell's front-end commercial capabilities. Following deployment of the new corporate strategy, we proceeded to fully cascade and integrated into business, region, brand and functional strategies to ensure clarity and consistency of direction across all areas of the company. Last month, we announced additional changes to our operating model designed to accelerate progress in key capability areas such as innovation, brand building and go-to-market excellence while driving even further standardization and scale efficiencies across the supply chain and back-office functions. As part of this evolution, we have now stood up a cross-functional brand management organization and for our top 25 brands established multifunctional brand teams, spanning brand management, consumer and shopper insights as well as finance, customer strategy and planning and supply chain functions. This move allows holistic support for each brand, keeps consumers at the heart of all we do and ensures appropriate financial and operational rigor is in place to drive on our ambitions. Building on the success of the One Newell approach with Newell's top four customers as part of the organizational realignment, we centralized domestic retail sales teams under our Chief Customer Officer. Further reinforcing our partnerships, simplifying interactions and allowing for additional joint…

Thanks, Chris. Good morning, everyone. While core and net sales were better than expected at down 9%. We believe the most important financial story of the fourth quarter is the dramatic improvement achieved in the underlying structural economics of the business as evidenced by a 570 basis point improvement in normalized gross margin versus a year ago. Simply put, the targeted interventions we have made to improve the underlying structural economics of the business, such as the July 2023 high single to low double-digit pricing action on roughly 30% of our U.S. business, primarily in the Home & Commercial segment as well as the reduction in the manufacturing labor force across selected sites are clearly showing up in the financials. The company's fourth quarter normalized gross margin of 32.3% represented a 100 basis point improvement sequentially and the second consecutive quarter of year-over-year expansion despite sustained pressures on volumes. Remember, as Chris mentioned earlier, approximately 80% of our reduction in core sales this year was due to retailer inventory actions and category contraction. The resulting lower volumes when combined with nearly $700 million of inventory reduction, which we unilaterally removed from the system throughout the course of the year had a significant impact on capacity utilization and makes the over 500 basis points of productivity delivered in the fourth quarter by our exceptionally talented supply chain organization even more impressive. On the SG&A front, meaningful savings were also realized with Project Phoenix providing $53 million of benefit in the fourth quarter, which helped partially offset higher incentive compensation and the deleveraging impact on SG&A from a weaker top line. Fourth quarter normalized operating margin increased 280 basis points to 7.7%. Encouragingly, this is the first time normalized operating margin has expanded since the second quarter of 2022, which we believe…

[Operator Instructions] Your first question comes from Filippo Falorni of Citi.

Hey, good morning everyone. So clearly, like there's been a lot of external challenges in your business. I guess on the top line front, can you give us a sense of what confidence you have or what visibility you have in the top line trajectory here, particularly as you start cycling some of the inventory reduction last year? Thank you.

Yes. Thanks, Filippo. Let me take that. I think as Mark alluded to in the prepared remarks, we are expecting a sequential improvement in top line performance in '24 versus '23. And if you look at the sales guidance, there's really three things that are in the sales guidance. We're expecting the market growth rate to be down low single-digits, which is an improvement versus 2023 where the market growth was down high single-digits. We're expecting about two points of headwind from proactive decisions we've made to exit unprofitable businesses, which we believe is a good business decision. And then we've got about two points of headwind from FX and category exits the majority of which is FX related. I think if you go underneath that view, I would say that there's some very positive green shoots that we're expecting next year. So if you look at 2023, we grew market share on about eight of our top 25 brands. We're expecting that number to increase as we go into 2024 into the low teens, driven by the capability improvements that we put in place. If I just take innovation as an example, now that we've established a tiering system of Tier 1, Tier 2 initiatives, which are the largest initiative categories. In 2023, we had zero Tier 1 and 2 initiatives that were launched in the marketplace. In 2024, we have 8. The first one we started shipping a few weeks ago is Sharpie creative markers, which we're very excited about. It's a new category entry for us, acrylic markers that really pop on light and dark surfaces. You can go to sharpie.com and see more about it. But this is the first of what will be a series of innovations that are starting to come to the market.…

That's super helpful. I will pass it on.

Thank you. Next question?

Your next question comes from Peter Grom of UBS.

Thanks, operator. Good morning everyone. Maybe two quick ones for me. Just first on the credit or the amendment of the credit agreement. Can you maybe provide some background on the changes in the covenants? Is there anything to read on why the metrics themselves are changing? I know you mentioned the more of that risk in Q4, but could they have been an issue as you were looking ahead? Just given the commentary on kind of the cadence of cash flow? And then, I guess just second, turning to the business, obviously, some good progress given here on the gross margin line. But can you maybe frame how we should think about the opportunity from here? I think you mentioned less robust improvement versus 4Q, but just longer term, is that kind of high 30% target still achievable? And if so, can you maybe provide some guardrails around when you could achieve that? Thanks.

I'll just say a few words about the new facility that we put in place. But I think it's important to take a step back and understand that it's all predicated upon the work that we've been doing with respect to cash, generally speaking, right? This past year, we increased our cash flow by $1.2 billion year-over-year. We paid down $500 million worth of debt. We feel very good about the way we've been managing the company's balance sheet as we were looking to see what we needed in the way of financial flexibility for fiscal '24, we looked at our current facility and decided that we'd be better served by having a secured facility in place that, yes, did bring with it some additional covenants to replace the existing ones that were out there. If you want to get more specific on that, we can let Sofya follow-up with you individually on that. But I think the bigger message here is that cash flow was strong, exceedingly strong in the year just ended. We have really great plans in place to continue to extract and drive out our cash conversion cycle so that our working capital continues to improve year-over-year. And by the end of the year, we'll have reduced our leverage ratio even further than where it currently sits.

On the gross margin side, what I would say is we still believe that the right long-term target for the company is sort of the high 30s gross margin. I think we had talked previously about a number of 37% or 38%. We ended 2023 with gross margin flat versus 2022 at about 30%. If you look at the guidance for next year of 100 basis points of improvement in Op margin, we're expecting gross margin to be up more than that. And the reason is because we've proactively chosen to exit structurally unattractive parts of the business, number one. Number two, we continue to drive record productivity savings across the initiative, across the portfolio. And number three, we are innovating in terms of gross margin accretive innovation. So for example, if you look at the eight Tier 1 and 2 initiatives, that we have planned to launch this year, every one of the eight initiatives is a significant improvement to gross margin versus the business that it's in. And so we expect to start driving mix benefit as the innovation portfolio ramps up as well. And we think those three things, when you put them together will drive gross margin higher than the 100 basis points that we're guiding on operating margin. We are choosing to take advertising and marketing expense higher as a percent of sales in '24 because we have an innovation pipeline to actually spend money behind and get a good return on. So, as we've talked previously, as the capability investments and the capability work ramps up. You're going to see us try to drive gross margin faster than operating margin and invest some of the money back both in dollar terms and as a percent of sales in increasing our A&P ratio, and that is part of the plan for '24.

Thank you. One moment for your next question. Your next question comes from Olivia Tong of Raymond James.

Great. Thanks. My first question is just around if you could just sort of talk a little bit more about the different initiatives you discussed earlier to drive better sales mix, in particular with some higher advertising behind the new innovation. Could you talk about when these things hit the P&L to give us a view on sort of the quarterly cadence of the organic sales improvement as the year progresses going from that down 8% to 6% to finishing the year down 6% to 3%? Because obviously, there are a lot of initiatives, but timing would be helpful. Thanks.

Yes. So what I would say is that the eight breakthrough initiatives our Tier 1, Tier 2 initiatives that we're launching this year will build during the year. The other thing that's important to note about these eight, Tier 1 and 2 initiatives is they're not just a one-and-done thing. These are multi-year platforms that will begin to build and drive growth, not just this year, but for the next several years. If you look at what we're guiding to in Q1, we're guiding to a 6% to 8% core sales decline, and we're expecting the year to be 3% to 6%. So I do think you're going to see Q1 be the weakest quarter during the year. And the balance of the year, we expect better core sales performance. I mentioned that one of the top or the Tier 1, 2 innovations, the Sharpie Creative Markers, we started shipping a few weeks ago. That will show up in stores in March, we'll turn on advertising, and we've got a full marketing campaign behind it that will start in March as well. The balance of the innovation is really sequenced more in Q2, Q3. And so you'll see those start to build as we go through the year. Likewise, the new business development, where we've had some significant wins will build as we go throughout the year. And I think, so we're pretty excited about the rate of improvement that we're driving on the capability improvements on the innovation funnel. And I think you'll begin to see that show up in the top line as we move through the year.

The other thing I'd like to add, if I could, because I don't think we talked about our international business enough is the fact that our international business has been performing better than the U.S. market over the past year, and we actually are really excited because as we look at our '24 planning process, the international business is expected to actually be up year-over-year. So we have at this point about 40% of our business outside the U.S., and there's a really good story there to tell.

Great. Thank you. Best of luck.

Thank you.

Your next question comes from Bill Chappell of Truist Securities.

Thanks. Good morning.

Good morning, Bill.

Chris, help us understand how these businesses get back to growth? And I guess, [indiscernible] fears of that you've done so much cutting. Are you doing so much cutting and exiting and stuff like that that it's years before we can really see total company growth? And I guess first question is, what's your outlook for the actual categories to do this year? I mean, are you expecting the key be it Outdoor, be it Writing, be it Baby, be it Kitchen to be down as a category this year? Or is it more just your exits? And then the second question is do you see on the horizon kind of total company growth? Or is there any concern that you're going too far?

Yes. Thanks, Bill. I think the thing, if you sort of parse out what we're saying on the guidance, we're planning the category growth rate or the market growth rate to be down low single digits. We've made proactive choices to exit about two points of business, and that effectively are the two drivers of the core sales growth guidance. If you back up from that, what that means is that from a market share standpoint, excluding, or excluding the choiceful exist, we're effectively guiding that our market share is going to be flat this year, excluding the choiceful exits that we're making. And that's because the capability improvement actions are coming online, and we expect that to begin to show up in tangible financial results. So we don't like to give guidance beyond a year. But if you look at that trajectory that we're on, if you go into '25, the choiceful exits that we're making should be behind us by the time we get into '25. And so that is unlikely to be a headwind for '25. At the same time, it's hard to predict what's happening in the categories, but I think a lot of the outside experts would suggest that the category growth rate may turn more positive in '25, and we expect our capabilities to be even stronger heading into '25 versus where they are today. And so I mentioned that in '23, we grew market share on eight of our top 25 brands. We think we've got line of sight to do that on about half of our market of our top 25 brands in '24, and I expect we're going to grow market share on more than half of our top brands in '25. And so we see a path for significant financial improvement. We see a path back to sustainable and profitable growth. We said when we unveiled the new strategy that this was going to be a multi-year journey because of the capabilities that needed to be built on the front end. But I can tell you inside the company that the capabilities we're building on innovation, on brand building, on new business development, on go-to-market, on international, the changes that we're making in the operating model, the talent upgrade, the clarity of the strategy, all of those things are in place and starting to contribute. And we think we're on that trajectory. The thing that is a little bit more uncertain is what happens to the rate of market growth. We've tried to be prudent in our forecast in our guidance by saying it's going to be down low single digits is our assumption for this year. I will say it's early days, but just looking at the January results, we're running a little bit ahead of our plan in the month of January, but we're not going to get ahead of ourselves based on one month and January is a light month.

Got it. And I guess just to follow-up, I mean, how do you take something like Baby that was down double-digits probably as a category last year and you're kind of probably forecasting in mid-single digits this year. I mean, I don't think the birth rate has changed that much. I don't think your market share has changed that much. I mean, how do you look at these, your core categories, should they be normalizing and getting back to kind of pre-pandemic trends in '24? Or is it just, we're taking as we see it. And until that happens, we're just going to assume it looks more like 2023?

Yes. I think they're going to normalize a little bit in '24, but our view from an overall macro standpoint is that the consumer remains under pressure because of inflation. And you have to, although in the headlines, you see a lot of commentary about consumer spending holding up very well, which is true. A lot of that consumer spending is being directed to either Services spending or Essentials, which is food and essential categories. And most of the forward-looking people that we get data from would suggest that durable and discretionary categories although there, the market growth rate is projected to improve versus '23, it's still likely to remain under pressure in '24. I will say that if you talk to those same external people, which we do a lot, most of them are predicting that, that's going to change when we get into '25 and even more so into '26 although it's hard to predict that far out. And so we're trying to be prudent. We're trying to take the things that are in our control. You mentioned the Baby category, which was particularly negatively impacted in '23 because of the Bed Bath & Beyond and buybuy BABY bankruptcy. One of the things that we're doing with our new business development team is we are expanding and opening up new retail customers into that Baby channel with Graco as the lead brand. And so we're pretty excited about what you're going to see going forward. We can't say too much about it right now, but there are things that we are doing to try to get the category back to growth that I think are going to help market growth and help Newell's market share at the same time. We also have an opportunity in that business to expand a little bit more internationally, because we're very U.S. centric, and there's a lot of babies outside the U.S., a lot more outside the U.S. than there are inside the U.S. And so we have a couple of exciting country launches planned in that business already for '24.

Got it. Thanks so much for the color.

Thank you.

Your next question comes from Lauren Lieberman of Barclays.

Great. Thanks. Good morning everyone. Was just curious to talk a little bit about general merchandise trends in the U.S. We've had retailers call out some deflationary trends in the category, which of course would be a very broad category, so I know it's difficult to generalize. So just curious kind of what you're seeing and how you're thinking about pricing dynamics? Whether it's a step-up in promotional activity that may be encouraged by retailers to kind of drive a little bit more activity this year in the U.S.?

Yes. Thanks, Lauren. So we are having active discussions with retailers on this topic. As we said in our prepared remarks today, our input costs, we are expecting to go up in '24, not down. So we are not seeing broadly deflation in terms of our input costs. That being said, what we have baked into our guidance is a low single-digit inflation rate. That's really driven by three things, which is labor cost, a little bit of transportation inflation and a little bit of resin inflation. It's a more normalized inflationary input cost inflationary period. And so as we've had discussions with retailers on this topic, I think they understand that our businesses are not ones that we're seeing deflation. And so we're not planning any significant price reductions or rollbacks as we go forward. And we're not seeing that really in the competitive environment of what we compete in either. I think there are other parts of general merchandise where that may be the case, but not in the categories in which we compete.

Okay. Great. And then I know you said that you mentioned there's just new leadership for Outdoor, but it might be a wait and see might be the answer, I guess. But just curious kind of what's been going on there? The sales have been very weak. Just curious kind of anything you can articulate about steps being taken to turning the business around? Kind of why those sight there. But again, I understand if it's a wait and see, because we just announced management change too?

Yes. So the Outdoor & Rec business is our -- is the business that's the most in need of a turnaround of any of our segments. So when we did the capability assessment, it became very clear that because each of our businesses in the past were not managed consistently, and we're putting in those consistent processes now. They all started from different starting points. And so if you look at where the businesses are on the journey, Outdoor & Rec has the furthest to go with regard to improving its ability to innovate, brand build, brands communicate and drive retail excellence. The additional thing I would say on that business is that, that was the business that had more of their business, particularly in the U.S., and opening price point categories that were structurally challenged. And so we have taken significant action in Outdoor & Rec. I'm very excited about the category in the long-term, because I believe that it is a category that we can drive significant growth. It's responsive to innovation and all of the capabilities we are building should be applicable in that business. In order to drive that, we haven't just brought in a new leader of Outdoor & Recreation, but we've effectively brought in a completely new marketing team, a new sales leader, a new CFO, and we've announced we're moving the business from Chicago to Atlanta. And so we are making a significant intervention to upgrade that business. I do think if you look within the segments, and obviously, we don't provide guidance at the segment level. I would expect the Outdoor & Rec turnaround from core sales decline to core sales growth to take longer than what you're going to see in Learning & Development or in Home & Commercial. And so, but I do expect already some improvement in '24 relative to the growth rate versus '23 in Outdoor & Rec, but it will likely be a laggard relative to the other two segments because of the amount of capability improvement work that we have going on in that segment.

Okay. Great. Thank you so much.

And our next question comes from Andrea Teixeira of JPMorgan.

Thank you. Good morning. I was hoping if you can comment in terms of how conservative you have been, I understand as you start up this guide, right, and how understandably what has happened every quarter last year, you had to reduce guidance, but also thinking about the category, you just spoke about some of the Outdoor, but maybe what are your expectations of the core categories going forward? Be it obviously Writing & Appliances. Some of that. And also some of the Commercial segments where there is some resilience there, I understand, anything that you can share as far as you look through more of the top line now that kind of the cost section of it seems to be more under control. In particular, as you were saying, we are benchmarking market share performance and new leadership in terms of getting this category sorted out in market share. If you can kind of give us the state of the union for these other key categories that will be wonderful? Thank you, Chris.

Yes. Thanks, Andrea. I think we're trying to be prudent in the guidance is the way I would describe it. It is a volatile time period. It's hard to predict exactly what's going to happen in the macroeconomic environment, and we certainly don't have a crystal ball that is unique or better than anybody else. I think probably the biggest assumption that we're making is that the markets are going to be down low-single digits, which is an improvement in '24 versus what we saw in '23 where it was high-single digits. As I said, so far, in the month of January, we're running slightly ahead of plan, but it's too early to declare victory after one month. If you look at the business units, I feel very good about our Writing plan heading into this year. We have strong innovation. I mentioned the first of the eight Tier 1 and Tier 2 innovations, the Sharpie Creative Markers that are launching this year, which is a new category for Sharpie that we have high hopes for. I also have high hopes for Baby this year. I think we have a bounce-back plan in place in that category. And I think that category has normalized significantly last year from the buybuy BABY bankruptcy. On the Home & Commercial business, we've done, which would include Kitchen, Home Fragrance and Commercial, we've done a lot of work to reset the margin structure in that business, particularly in Kitchen, and you can see that coming through in the gross margin and operating margin results in the back half of last year. And I think that business, particularly the Kitchen business has some exciting innovation that's coming this year. The Commercial business is a more stable business that we are going sort of from strength to strength. We expect that business to be more flattish this year versus last year. And then I mentioned the Outdoor & Rec business is probably the business that is going to be the most challenged this year because of the time it's going to take us to fully get the capability build in place and have that show through in terms of financial results.

The other thing I would add, if I could, because we recognize the need to have better forecasting capabilities is, this is part of the capability set that we've brought to bear. So for example, the sales force is now using anti-plan in order to really discretely have sales walks that build up on discrete building blocks quarter-to-quarter brand-by-brand. We've taken the best-in-class practices from different business units and applied those broadly. So the capability set that we're putting in place leverages scale, but it also allows us to get much more granular on our buildups.

That is super helpful. And how about R&D, is there any indication of putting more money behind R&D this year and getting understanding Kitchen, Chris you mentioned more innovation, but across the board, given that you're coming off of a moment where you were focusing on improving profitability, is that any indication of that?

Yes. We, that is baked into our plan. So, and perhaps I should have spent a little more time on that. But the organization realignment that we announced in January, where we announced that we were changing the operating model to better enable brand management, U.S. selling, new business development, international, et cetera. Also R&D is part of that effort. So, as part of that realignment, we announced a net head count reduction of 7%. But if you look within that, we actually reduced head count by more than that, and invested back resources in areas where we needed to invest back from a capability standpoint. And one of those areas was R&D and is R&D. And so within R&D, we are investing more resources in terms of headcount. We are focusing that head count on platform technologies that can span across Newell. And these are things like material technology that spans across multiple business units. We're not going to disclose all of them here because some of them are competitively sensitive. But we do have a plan to upgrade the contribution and the investment in R&D specifically, and that is part and parcel to improving the innovation pipeline, and it's baked into our guidance and our operating model change that we announced earlier this month, earlier this year.

Very helpful, Chris. Thank you both.

Our next question comes from Brian McNamara of Canaccord Genuity.

Hey, good morning. Thanks for taking our question. Maybe one for Chris. We're about eight months into this new strategy and these turnarounds typically take more time than investors want. I'm curious your view on the progress made so far relative to your initial expectations? What's been better than expected or easier and what's been more challenging? Thanks.

Yes. Thanks, Brian. I think we're very excited about the progress made. We've moved at incredibly rapid pace to do the capability assessment to launch the strategy to cascade the strategy. We've changed the operating model. We've upgraded talent. All of those things have gone, frankly, incredibly well and incredibly quick. I think the piece that is still ahead of us that I wake up every morning thinking about is how do we operationalize this and build it into the culture of the company, because and that's the work that I referenced when I talked about the top priority heading into '24 of operationalizing the new strategy and the operating model, because I think we now have an outstanding executive committee, which is my set of direct reports, that is driving the change, driving urgency in implementing the strategy. What we need to do now is embed that throughout the entire 25,000 people that are working at Newell so that we are all operating in a consistent direction and we make the culture change to a performance-oriented outcome-based organization structure. We're seeing good signs of that. I just want to see it more broadly across the company. And I think that's what we're trying to do as we head into this year.

And just a quick follow-up. Are there any categories you're seeing shelf space increase at retail? And if not, what are you guys bringing to the table today relative to the competitors you have to displace?

Yes. We are seeing shelf space increases in a number of our businesses. And we, because the line reviews for 2024 have largely been completed, we have pretty good visibility to that. So as an example, and I keep coming back to the Sharpie Creative Marker example, but the retailer acceptance behind that initiative has been very strong. We expect to gain incremental shelf space as a result of that initiative. We're also working with a number of retailers on category reinvention that we believe can trigger not only market growth, but market share growth for Newell at the same time. The new business development program, I mentioned is coming online, and we've got some good examples of gaining incremental distribution. One that comes to mind, for example, is we have a terrific product on Rubbermaid Brilliance, which is a food storage product. Well, the new business development team went and sold that product into the container store. So we're now listed at, the Container Store. We were not doing business with The Container Store previously as an example. And I could go through 15 or 20 of those types of examples where we're starting to get on the field with a broader set of retailers and gaining shelf space, and we think that trend is going to accelerate as our new business development capability improves, as our category management capability improves, as our innovation pipeline improves and as our brand-building capabilities continue to accelerate. So that's the goal. And I think we'll talk more about those examples as we go forward here.

Thanks very much. I appreciate the detail.

Our last question today comes from Steve Powers of Deutsche Bank.

Hey, thanks. Good morning everybody. Two questions. Mark, just one for you, just to clarify. You mentioned international, the expectation in international will be up this year. I guess was that just a core sales comment? Or is it, is there a prospect of U.S. dollar growth being positive to kind of offsetting FX, number one? And then Chris, maybe for you. Just, you talked about the sequential improvements relative to the starting point in the first quarter through the year. I guess trying to figure out how steep that curve is and what you contemplate as an exit rate on the year, at least at the high end of guidance, is there a prospect of you exiting in positive territory exiting the year? Or are we more expecting declines all the way through the year and therefore, exiting at a lower rate as we go into '25? Thank you.

So real quickly, as it relates to the international business for fiscal '24, yes, we expect core sales to be up mid-single digits, and we would expect net sales to also be up when all is said and done. One quick thing before Chris takes the back half of your question that I think is important, because we are as impatient for progress as the investment community is, but we really believe that meaningful progress was made during the course of '23. If you go back and look at our gross margin and our Op margin in '22, they're both down 180 and 160 basis points, respectively. During '23, our gross margin inflected in the third quarter and during '23 our op margin inflected in the fourth quarter. And during '24, both gross margin and Op margin are going to be up strong despite the fact that the remaining sales compression on the top line. So we are working through this process deliberately as we indicated we would with fiscal year '23 to being a year in which we had to put some basic fundamental stuff in place. We have now put those capabilities in place. We've upgraded the talent across the organization and changed the ways of working and you're going to start seeing real signs of that because the growth rate, while still down in '24, it's going to be appreciably better than it was in the prior period. And the financials are going to continue to improve structurally. And so by the time we get out to '25, we should be hitting on all cylinders, and we're actually quite excited about it.

Yes. I think relative to the guidance question, the base periods remain a little bit choppy because of retailer inventory destocking timing, shipment timing, et cetera. And so what I would say relative to the guidance is that we expect core sales growth to be better after Q1 in the balance of the year than we expected in Q1, as we've said. I think it's premature for us to talk about guidance by quarter between Q2, Q3 and Q4 at this point. And it will be a little bit choppy, but we certainly expect Q1 to be the weakest quarter of the year from a core sales growth perspective, core sales to improve after Q1. And I think we'll stop there, and we'll continue our normal guidance pace of updating on the quarterly guidance at the beginning of the quarter. But because our focus is really on driving, as Mark said, the sequential improvement in core sales growth from negative 12% in '23 to down 3% to 6%. And remember, within that 3% to 6%, there's two points of stuff we proactively chosen to exit. And so if you were to exclude that, which we haven't not done from core, we're really guiding sort of down one to four in the areas that we're focused on for '24. And I think that's what gets us excited about the trajectory as we move through the year and think about where we're going to be over the course of the year as we head into '25. So thanks, everybody for joining. And we'll follow-up with anybody as always, after the call.

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.