Newell Brands Inc. (NWL) Q1 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to Newell Brands First Quarter 2026 Earnings Conference Call. [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 Joanne Freiberger, SVP of Investor Relations and Chief Communications Officer. Ms. Freiberger, you may begin.

Thank you. Good morning, everyone, and welcome to Newell Brands First Quarter 2026 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 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. Today's remarks will also refer to non-GAAP financial measures, including those referred to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP. Explanations of these non-GAAP measures and 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 with that, I'll turn the call over to Chris.

Thank you, Joanne. Good morning, everyone, and welcome to our first quarter earnings call. We had a strong start to the year with Q1 results ahead of expectations across all key financial metrics. All 3 segments delivered core sales growth above plan, with the Learning & Development segment returning to core sales growth. Core sales at minus 3.5% improved both sequentially and versus a year ago for 2 primary reasons. First, we experienced better-than-expected consumer demand for our products driven by improving point-of-sale and market share trends, which we believe is directly related to our focus on innovation and higher levels of advertising and promotion support. Stronger consumer demand was most pronounced across the U.S. brand portfolio, where 6 of our top 10 brands gained market share in the first quarter. In addition, for the first time in over 4 years, 6 of our top 10 brands delivered year-over-year point-of-sale growth and 7 top 10 brands improved their sequential trajectory versus the fourth quarter. These notable proof points provide clear evidence that our new innovation strategy and heightened levels of A&P investments are having the desired effect, namely allowing Newell to once again engage and delight consumers with high-quality products that deliver real solutions and benefits with strong consumer value. As we discussed at CAGNY, 2026 is the first year since we initiated our turnaround strategy that we have a robust consumer-relevant innovation pipeline supported by competitive A&P levels and strong retail activation plans. During the course of the year, we plan to launch 25 Tier 1 and Tier 2 innovations, up from 18 last year, and those innovations span every one of our businesses. Importantly, we are now bringing to market fully vetted consumer-preferred ideas that are designed to improve value, expand usage occasions and give retailers more reasons to support our brands. Those efforts are translating into better point-of-sale results, improved share trends and stronger distribution opportunities. The second reason, first quarter core sales came in better than expected was a net pricing benefit related to customer programs due to better claims experience and improved deduction management. Our focus on improving the return on investment of our customer spending and improving operational discipline and spend management is paying off. These 2 items, which led to top line overdelivery, drove normalized operating margin above our outlook even after increasing A&P investment compared to prior year. Normalized earnings per share came in $0.03 better than the upper end of our guidance range due to higher-than-expected core sales, better-than-expected normalized operating margin and a lower-than-expected first quarter effective tax rate. From a segment perspective, Learning & Development was the strongest part of the portfolio in the quarter. The segment returned to core sales growth led by Baby, which grew 4.9% in the first quarter, supported by strong consumer demand, positive POS trends, innovation and share gains. Both Home & Commercial and Outdoor & Recreation exceeded plan and improved sequentially. Based on these solid first quarter results, we remain confident that Newell's strategy is working. At the same time, the external environment remains dynamic, particularly as it relates to petro-based cost inputs and tariffs. So let's spend some time on each of those 2 important areas. Currently, we see an additional approximately $50 million of commodity and transportation inflation versus our original plan with higher resin costs accounting for about 60% of the total increase. That said, unfortunately, resin is now a much smaller part of Newell's overall cost structure. For perspective, direct resin purchases represent roughly 5% of 2025's total cost of goods sold, which is down materially from about double that level historically. And our sourcing and supply chain teams manage our resin exposure through established contract structures rather than spot market purchases. This provides better visibility, reduces exposure to short-term spot market volatility and creates some lag time in how costs flow through the P&L, which gives the business more time to respond. Moving to tariffs. The framework has shifted materially since our last call. IEEPA tariffs were invalidated. New tariffs under Section 122 were put in place at a temporary 10% replacement rate. Existing tariffs under Section 232 were revised and new Section 301 investigations are now underway for potential new tariffs. The tariff environment clearly remains very fluid with a few important things to note. First, our initial outlook assumed a higher tariff baseline. So the current tariff regime is actually a help versus our going-in expectations. In fact, we believe tariff help will offset about 50% of the previously mentioned incremental commodity hurt with the remainder being offset by higher levels of productivity savings and targeted price and promotion adjustments where necessary. Second, the best-in-class sourcing, manufacturing and trade capabilities we have built over the past several years have positioned us well on a relative basis versus competition. For example, we have reduced China-sourced finished goods from a peak of roughly 35% of global cost of goods sold to under 10% and our remaining China exposure, principally in Baby gear, is an industry-wide challenge, not one unique to Newell. In addition, our highly automated domestic manufacturing footprint creates what we believe is a structural tariff cost advantage across 19 product categories. Third, and before moving on, I want to recognize Newell's Trade Expertise Center, TEC, as we call it, is a highly professionalized centralized capability that brings together trade compliance, policy intelligence, analytics and operational execution to ensure Newell stays compliant, keeps goods moving seamlessly across borders and responds quickly and efficiently as trade policy changes. To close out this section, please note that we will actively pursue tariff refunds related to approximately $120 million of IEEPA tariffs paid in 2025 and neither our Q1 actuals nor our outlook include any benefit from these potential refunds. Having touched on first quarter performance and what we are seeing and expect relative to commodity cost and tariff impacts, I want to turn to the overall Consumer & Category Environment and how we see our top line growth prospects for the balance of the year. Consumer spending in the categories in which Newell competes came in slightly better than we expected in the first quarter at down 1%. We continue to see category growth from high-income consumer cohort being slightly more than offset by declines from low-income consumers. Additionally, it appears the tax refund stimulus boost is largely offsetting higher fuel and energy costs so far. Importantly, consumers are still responding when the value proposition is clear. When innovation solves a need, trusted brands are well supported, price and value are appropriately balanced and retail execution is strong. Coming into the year, we assumed our categories in aggregate would decline about 2 percentage points. However, based on what we saw in the first quarter, we're now assuming a 1.5% category decline for the full year. This slight improvement in underlying consumer and category dynamics when coupled with better-than-expected first quarter results and what we know about the strength of our innovation, marketing and distribution plans for the balance of the year puts us in a position to predict a return to top line growth in the second quarter. Additionally, given the stronger-than-expected first quarter results and our second quarter outlook for core sales growth, we are also raising our full year outlook for net sales, core sales and normalized earnings per share. Before closing, I want to thank all of the Newell employees for their dedication to the turnaround effort and their agility and resilience in dealing with a dynamic operating environment. With that, I'll turn the call over to Mark to walk through the financials and outlook in more detail.

Thanks, Chris. Good morning, everyone. First quarter 2026 net and core sales declined versus a year ago by 1.1% and 3.5%, respectively, with 2.7 points of favorable foreign exchange and 0.3 points of exits and other impacts accounting for the difference between net and core. Normalized gross margin in the first quarter expanded by 70 basis points to 33.2%. Gross productivity and favorable net pricing actions more than offset cost inflation, tariff costs and lower volume. Normalized overhead dollars were slightly lower year-over-year as we continue to execute against the previously announced global productivity plan. During Q1, we recorded $6 million of restructuring charges, bringing cumulative charges under the plan to $46 million. We continue to expect total restructuring and restructuring-related charges associated with the plan of approximately $75 million to $90 million, the rest of which should be largely incurred by the end of 2026. As expected, A&P as a percentage of sales was just north of 5%, which was about 30 basis points higher than a year ago as we continue to invest behind the strongest innovation program Newell has fielded since at least the Jarden acquisition. All of this brought Newell's normalized operating margin in at 4.8%, which was 30 basis points above a year ago and ahead of our expectations. As Chris indicated, we did record approximately $25 million of net pricing benefit, which flowed through the balance of our first quarter P&L due to a refinement of estimates related to customer programs, reflecting better claims experience and improved deduction management. This benefit contributed about 160 basis points to core sales growth and about 110 basis points to our gross margin rate for the quarter. In English, this means that the work we have been doing to generate a better return on our annual invoice to net investment in the U.S. of roughly $1 billion is starting to pay off. That work began several years ago with Ovid, which consolidated 23 separate U.S.-based legal entities into one go-to-market organization. It has subsequently continued with the implementation of a customer trade fund management system and improved deduction management software. Going forward, we will continue to strive to improve the return characteristics of our customer programs, which may actually result in more trade fund dollars being invested, but in a more efficient and optimal manner than in the past. Net interest expense of $84 million represented an increase of $12 million from the prior year, and we reported a 0 normalized effective tax rate on the quarter. The combination of all these factors resulted in a normalized $0.05 loss on diluted earnings per share, which was ahead of the guidance we provided during our last earnings call. From a cash standpoint, operating cash was an outflow of $233 million versus an operating cash outflow of $213 million in the year ago period. Please note that Q1 historically is always the smallest quarter of the year due to seasonality, so this cash performance is not unusual or unexpected. Our net leverage ratio for the quarter was approximately 5.4x based on net debt of $4.8 billion and trailing 12-month normalized EBITDA of $881 million. This compares to approximately 5.3x in Q1 of 2025 when we had $4.7 billion of net debt and $884 million trailing 12-month normalized EBITDA. Having covered first quarter results and before providing our full year and second quarter outlook, let's take a few minutes to discuss commodity costs and tariff impacts in a bit more detail. Following the start of Operation Epic Fury, oil, using WTI as the benchmark, increased from a pre-conflict average of about $60 to $65 a barrel to a peak of $113 before retrenching slightly. This directly impacts Newell in 2 ways. As indicated earlier, resin purchases represented about 5% of 2025 total company cost of goods sold and the price of polyethylene and polypropylene are directly tied to the price of oil. Using polyethylene as an example, because it represents more than 50% of our total resin use, the average price we paid during the first quarter was very comparable to the prior year. However, for the balance of the year, we are currently assuming the cost per pound will be up about 40% versus a year ago and about 40% higher than what we paid during the first quarter of 2026. The second way the price of oil directly impacts Newell is inbound and outbound freight, which represents about 3% of 2025 total company cost of goods sold. In this case, the average price of a gallon of diesel during the first quarter of 2026 was about $4, which was up a modest 3% versus a year ago. That has changed rapidly, of course, and we are now assuming diesel will average about $5 per gallon for the balance of the year with the price peaking during Q2 before gradually tapering off throughout the second half of the year. Because resin is an input component that gets converted into finished goods and is subsequently inventoriable, the incremental P&L impact is expected to be weighted more towards the back half of the year, whereas since diesel and bunker fuel is essentially expensed as incurred, often in the form of a fuel surcharge, they have a more immediate effect on the P&L. To boil all this down and based on the assumptions we are currently using, commodities and transportation are now expected to add about $50 million of incremental cost to 2026 versus our original budget. But that is likely to change. So from a sensitivity standpoint, we can offer you the following. All else being equal, every $5 move in the per barrel price of oil up or down equates to about $5 million of either incremental cost, which we would develop plans to offset or benefit, which we could choose to reinvest or drop to the bottom line. It is also worth noting that there is some good news because while commodity costs have risen meaningfully, we expect about half of this negative impact to be directly offset by lower tariff costs. Recall that during 2025, we incurred $115 million or $0.23 per share of new tariff-related P&L charges, $0.02 in the second quarter, $0.11 in the third and $0.10 in the fourth. At the start of 2026, we expected to incur $146 million or $0.30 per share of comparable tariff-related P&L charges. Those charges were forecasted to present themselves as follows: $0.065 in each of the first and second quarters, $0.09 in the third quarter and $0.08 in the fourth quarter. As we stand here today, with all the changes we are aware of and with the key assumption that when the current 10% Section 122 tariffs expire, they are replaced by some combination of new tariffs that on average carry a 15% effective rate, we now expect to incur $120 million or $0.24 per share of P&L tariff-related costs, which is $26 million or $0.06 per share better than originally expected. To help complete your models, our estimated 2026 P&L tariff impact is $0.10 in Q1, $0.07 in Q2, $0.05 in Q3 and $0.03 in Q4, all of which is off by $0.01 due to rounding. Finally, to wrap this section up, please note 3 things. First, I just stated that the Q1 2026 P&L impact from these tariffs was $0.10, and our original estimate was $0.065. Q1's tariff impact ended up higher than expected, but that was primarily a function of sales coming in stronger than planned for certain tariff-impacted categories. In other words, we sold more inventory than anticipated in these categories, which brought forward tariff costs that have been held in inventory at the end of last year. Second, with respect to the potential IEEPA tariff refund we are entitled to, we are accounting for this under a loss recovery model. Under that framework, a receivable can only be recorded when recovery is both probable and reasonably estimable. As of March 31, we did not record a receivable given remaining uncertainties, including the appeals process and implementation of the refund process itself. Thus, our current earnings and operating cash flow outlook does not include any impact from potential IEEPA tariff refunds, including refunds related to approximately $120 million of IEEPA tariffs paid in 2025. Third, while there is a gap between the incremental commodity hurt we expect to incur and the incremental tariff help we now anticipate, plans are in place to make up the balance through a combination of gross productivity, disciplined cost management actions and where necessary, select and targeted net pricing actions. Turning to our outlook and based on our first quarter overdelivery and projected sales growth over the balance of the year, we are raising our full year estimates for net sales, core sales and normalized earnings per share. Specifically, net sales are now expected to be between flat and positive 2% compared with our previous expectation of negative 1% to positive 1% and core sales are now expected to be between negative 1% and positive 1% compared with our prior expectation of negative 2% to flat. The outlook for normalized operating margin remains unchanged at 8.6% to 9.2%. We continue to expect an effective tax rate in the high teens and the bottom end of our normalized diluted earnings per share range has been increased by $0.02, bringing the range to $0.56 to $0.60 versus $0.54 to $0.60. From a cash standpoint, as previously disclosed, Newell Brands decided to terminate its U.S. nonqualified defined benefit plans. These were specialized nonqualified plans for certain participating former senior executives and are separate from our broad-based employee benefit programs. As part of the process, we are liquidating the associated life insurance assets. And as a result, Newell expects to generate an incremental $60 million of cash by the end of the year, which will be recognized as cash from investing activities. Given this additional cash infusion, we have been leaning in on inventory purchases to bring in more inventory at what we believe will ultimately be lower tariff rates and to ensure adequacy of supply as business trends improve. Consistent with this, while we are leveraging our operating cash -- we are leaving our operating cash flow range for the full year at $350 million to $400 million, we now expect to be towards the lower end of that range. CapEx is still being planned against a $200 million budget for 2026 versus a historical run rate of about $250 million, now that several large ERP integrations and supply chain projects have been successfully completed, and we continue to have plans to reduce our year-end leverage ratio by about half a turn. For the second quarter of 2026, we expect both net and core sales to be flat to up 2% behind consumer-relevant innovation, net distribution gains and higher levels of A&P support. Normalized operating margin is projected to be between 9.6% and 10.2% and normalized diluted earnings per share is projected to be in the range of $0.16 to $0.19. Please note that second quarter normalized operating margin and normalized earnings per share include approximately $25 million of incremental year-over-year tariff costs, considerably higher diesel costs and an expected year-over-year increase in advertising and promotional support, both in absolute dollars and as a percentage of sales. In closing, first quarter results were better than planned across all key metrics, with all 3 segments delivering core sales above our expectations. While we continue to face a dynamic cost and tariff environment, the capabilities we have built and the agility and dedication of the Newell team gives us the confidence to raise our full year outlook for net sales, core sales and normalized EPS while maintaining our operating margin outlook as we continue to prioritize cash generation and deleveraging as we seek to fully unlock the value of Newell's portfolio of leading brands for our shareholders. Operator, we'll now open the call to questions.

[Operator Instructions] And our first question will come from Lauren Lieberman with Barclays.

I just wanted to first talk about the decision of what you're seeing in terms of category growth and the more optimistic outlook. There's a question of whether or not tax refunds were maybe helping consumers a bit in the first quarter, and now we've got raised higher gas prices. So just, I guess, what you're seeing that gives you the confidence to raise that category growth outlook at this point in the year?

Yes. Thanks, Lauren. And what I would say is, as I mentioned in the prepared remarks, through year-to-date through the first quarter and actually what we've seen so far in April, the category growth that we've seen has been negative 1%. As you know, we planned the year going into it at minus 2%. We decided to move the plan for the year up to minus 1.5%. So it was like -- it was sort of 0.5 point. That doesn't really assume that the balance of the year moves off that minus 2% assumption. It's more about the experience through the first 4 months being at minus 1% there. So it was a factor in our decision to raise the core sales growth guidance. And I think you're right, from what we can tell, the tax refunds, much of which came into the market in March and April, do appear to be offsetting the consumer impact from gas and energy. I would say the bigger factor, though, that caused us to raise our core sales growth outlook was the underlying improvement in the business and additional distribution wins that we've received since we reported a couple of months ago. So we're continuing to win broader distribution gains. We're continuing to win more display presence. And that -- probably that real improvement, coupled with what we've seen year-to-date on category growth was the reason why we felt comfortable going forward with the raise in guidance. The other thing I would say on the core sales guidance range is we could have gone further in raising it, but we didn't want to get ahead of our skis given that the first quarter is generally our seasonally smallest quarter. So we think we've taken sort of a prudent approach of reflecting what we've seen, what we know from the consumer response to our innovation and distribution and wins and category growth year-to-date, but also not counting on the environment being significantly better for the balance of the year.

Okay. So helpful. One just quick follow-up. Some of the new product activities that you had at the end of 2025, I'm thinking in particular around Yankee Candle, would you say that shelf sets and presence is now kind of on all those fronts as you expected? I think that was part of the disappointment in the second half of last year? Was it some of that just took longer to get into place? Would you say everything is now kind of as you'd originally expected just with a bit of a delay?

Yes. I think that's right. On Yankee Candle, I think we launched it last summer, and it took longer to get those shelves into a good place than what we thought. I think that has now resolved itself, and we feel like the shelf is in good shape on Home Fragrance. We had a very strong Q4 in the Home Fragrance business with core sales growth, which, as you know, is the biggest season there. We did -- we sold so much actually in Q4 that we didn't have as much to liquidate on sale in Q1 this year. So you'll see Q1 was sort of down a little bit in Home Fragrance, but that's largely because we weren't liquidating as much sale in product. The other thing I would say importantly, as we think about go forward, we've got -- as we mentioned on our last call and at CAGNY, a lot of the innovation that we're launching this year and a lot of the distribution wins that we expect this year are setting in the second quarter. And so we remain very much on track for those. And that also is giving us confidence to predict or to guide that the current quarter, Q2 is going to be the quarter that Newell returns to core sales growth.

And the next question is going to come from Andrea Teixeira with JPMorgan.

So I was just hoping to see if you can comment on the pricing strategy now that resins are higher. I understand that you had to invest some of, I believe, in the Rubbermaid containers, given that your competitors did not follow. And I was just hoping to see in your new range, what are you assuming for that? And then I understand, Chris, as you said now, the first quarter is a small quarter. But as you set up for back-to-school and now the back-to-school, I mean, now that the Writing business is back to growth and you're calling to a second quarter inflection. What are the drivers of that inflection? Is that still the momentum in Baby? Or is that any other -- like as you think about the categories, which categories are recovering and will drive that inflection, please?

Very good. So on pricing, we have not announced -- as we said on the last call, we did make pricing adjustments on the Rubbermaid Food Storage business and on the Baby business, the Baby business primarily because the tariff rate went down, Rubbermaid Food Storage to be more competitive about 5 or 6 months ago. And those have been in the market and those are performing well. Both of those businesses are accelerating. In fact, over the last 6 months, we're up several hundred basis points in market share on Baby, on the Graco business. We are -- we have had the strongest market share gains driven by innovation with things like the Graco 360 EasyTurn 2-in-1 rotating car seat as well as the SmartSense Swing and Bassinet that continue to drive that business forward in a very positive manner. As we look forward on pricing, I think as we tried to allude in the prepared remarks, while we have $50 million or so of incremental commodity cost headwind from resins and transportation costs primarily, we think that about half of that is going to be offset from tariff benefit. We also think that we're going to drive additional productivity actions across our supply chain and across our overhead base that are going to help mitigate that commodity cost effort as well. And then there is a remaining piece. And so we're in the process of looking at that across the portfolio to see which parts of the portfolio might we take pricing adjustments. What I would characterize going forward is it's likely that we will take some pricing actions. It could be through reducing our invoice to net spend in our promotional depth. It could be through list price increases. But I believe it will be very selective in the portfolio as opposed to broadscale pricing at this point because we just don't think we need that. On your second question on the inflection, I would say a couple of things on that. The first thing I would say is one of the things that I'm excited about is in the first quarter, our POS trends were actually stronger than our core sales growth. So when we look at the consumer offtake trend, the consumer offtake trend was a couple of points better than the core sales growth in Q1. And as I mentioned in the prepared remarks, we had 6 of our top 10 brands that drove market share growth in the quarter. So that bodes well for replenishment orders heading into the second quarter is the first thing. Second thing I would say is we've got a lot of our innovation that is in early stages of being launched, and we've seen very strong response to it. The Coleman Snap 'N Go cooler, we've raised our forecast on that innovation 5 times in the last 3 months in terms of the projection for that product. We continue to keep raising our projection on some of the Graco car seats, on Sharpie behind some of the new colors and tip sizes and other innovations. We also continue to secure additional distribution wins. And so when I look at the inflection in the second quarter, the businesses that I would expect to be the biggest contributors to that inflection are likely to be the Writing business, the Baby business, the Outdoor & Recreation business as well as the Kitchen business. And I think all 4 of those businesses are positioned with the innovation, distribution gains that we have to drive meaningful progress. Final point I would make is that the international business, which for largely shipment timing reasons, got off to a slower start in Q1. We do expect that business to be a stronger contributor in Q2 than it was in Q1. So those are kind of the things that give us confidence to guide that Q2 is going to be the inflection point.

The other thing I think it's important is you might recall about a year ago at this time, we had basically believed that we were going to positively inflect at some point during the back half of last year as well. Then the tariff regime came in, and we were forced to take pricing on April 1, on May 1 and on July 28 because we had to move quickly in order to remediate the $115 million of P&L impacts coming in from those tariffs. Those prices obviously are now effectively in the base, and many of those haven't even fully annualized yet. So to Chris' point, this additional $50 million of commodity increases that we have to contend with, we think a very small sliver of that might have to be addressed by very targeted pricing actions. So we don't see, based on where commodities sit today and where tariffs sit today, us needing to make any major interventions that would then disrupt the positive share and POS trends that Chris just cited.

And the next question will come from Olivia Tong with Raymond James.

Great. One short-term question, and then I have a follow-up. But your Q2 EPS guide obviously implies a fair bit of cost inflation and margin challenges given the commodity and cost environment. Is that the only reason for the margin change? Or is there -- given the strength and confidence in your top line expectations, did you assume any additional spending in there? Or is that just the flow-through of cost inflation? And then I have a follow-up.

Yes, it's a great question. So there's really 3 things I think I would speak to. One, we already addressed in part, which is to say that last year in Q2, we had $0.02 of tariff P&L impact. This year, we're predicting it to be $0.07. So that's a full $0.05. The other thing, obviously, is this commodity increase of $50 million. That $50 million, which, as we talked earlier, was probably about $30 million of resin and $20 million of diesel presents itself over the course of the balance of the year. These are very rough numbers, but about $10 million of that is probably going to impact us in Q2, $25 million in Q3 and $15 million in Q4 just roughly is one way to think about it. And then the other thing, of course, is we continue to invest behind A&P, and we expect A&P in Q2 to be up a fair bit. So we're continuing to invest behind the business because we've been rebooting the business over the last many years. We feel like we're really getting traction now across the innovation side of the house, across the retail execution side of the house, the distribution gains that Chris has cited, we think the POS trends are reflecting that. So that's -- those are primarily the 3 reasons why you see that on the EPS side as it relates to Q2.

Yes. The biggest driver, as Mark said, is the tariff thing because tariffs go from effectively a year-over-year headwind of $0.05 a share in Q2 to in the back half, a material improvement in Q3 and Q4 because of the timing of when tariffs were implemented and all the changes that have been made. So if you were to strip out just that tariff impact, I think you'd see a much stronger performance on the operating margin side and on the bottom line compared to the prior year.

Yes, it's a $0.13 differential in the back half just on the tariff piece alone.

Got it. That's helpful. And then we've talked a lot in the past about your domestic manufacturing. And just wanted to ask you a little bit more about your ability to flex that to the extent that competition gets into sourcing challenges or what have you, greater exposure to nondomestic manufacturing, et cetera. Can you talk about the changes that you've made over the last few years in standing up those -- your domestic facilities so that should there be more demand or constraints amongst competition that you can step up if that's the case?

Yes. It's a good question, and it's one that we've been working on. We've spent the last really 6 or 7 years automating a lot of our U.S. manufacturing footprint. So as I mentioned, we have 15 manufacturing plants in the U.S. and 2 that are USMCA compliant in Mexico. And all of those facilities, we've been embarking on automation. And when we've done the automation, and I think we gave an example in the Writing plant in Tennessee, where we've moved the line speed from 150 units a minute to 500, and we've gone from 6 or 7 workers that were hired on the line down to 1. But as we've done that automation, we did it sort of on a return on investment model that assumed a constant volume. But what it effectively did was gave us excess capacity in the U.S. factories. So today, in most of our U.S. manufacturing plants, we have the ability to scale up relatively quickly to compensate for supply disruption. And we do think -- we haven't baked that into our guidance, but we do think that there is a real possibility of supply disruption, particularly for those companies that are overly dependent on Asian sourcing because of supply constraints in some key materials that may manifest themselves there. And so we can react relatively quickly. I would say if we had an order that was a material upside order because a competitor ran into trouble. And we've seen a couple of those so far in select categories. We can probably ramp up within 3 months or so, generally speaking, across our U.S. manufacturing footprint. And so I do feel like that's a big opportunity for us as those present themselves.

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, and have a great day.