SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 Newell Brands Inc.

6655 Peachtree Dunwoody Road

Atlanta, Georgia 30328

 October 4, 2024

Via EDGAR

 Division of Corporation Finance

Office of Trade & Services

 U.S. Securities and Exchange
Commission

 100 F Street, N.E.

 Washington, D.C. 20549

Re:
 Newell Brands Inc.

Form 10-K for the Fiscal Year Ended December 31, 2023

Filed February 21, 2024

Form 8-K dated February 9, 2024

File No. 001-09608

Ladies and Gentlemen:

 This
letter responds to your comment letter dated September 26, 2024 (the “Comment Letter”) to Newell Brands Inc. (the “Company”) related to the Company’s prior responses to your
previous comment letter dated September 9, 2024 from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”), in regard to the
above-referenced Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”) and Form 8-K furnished
February 9, 2024 (the “Form 8-K”). References to the “Company,” “we,” “us” and “our” refer to Newell Brands Inc., a Delaware
corporation.

 Below are the Company’s responses. For your convenience, the Staff’s comments as set forth in the Comment Letter
are repeated below.

 Form 8-K dated February 9, 2024

Exhibit 99.1

 Reconciliation of GAAP and Non-GAAP Information (Unaudited), page 13

1.
 We have reviewed your response to comment 4. Despite the circumstances indicated in your response, credit
losses related to customers and lower of cost or net realizable value adjustments to inventory appear to represent normal, recurring operating expenses necessary to operate your business as addressed in Question 100.01 of the Compliance and
Disclosure Interpretations for Non-GAAP Financial Measures. In this regard, in future filings, please remove these components from your adjustment.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 October 4, 2024

 Page
 2

 Response: In response to the Staff’s comment, the Company acknowledges that
credit losses related to customers and lower of cost or net realizable value adjustments to inventory are typically considered operating expenses that arise from time to time in the ordinary course of business, and therefore are not typically
reflected as adjustments to non-GAAP measures. However, the Company believes that its write-downs of accounts receivable ($9 million) and inventory ($11 million), which relate to the bankruptcy of a customer
and regulatory restrictions banning the salability of certain of its products in certain jurisdictions, are of a nature and magnitude that renders them an unusual and infrequent occurrence. Absent exceptional circumstances, the Company considers an
event to be infrequent where (i) there are no similar charges or gains occurring within the previous two years and (ii) similar charges or gains are not reasonably likely to reoccur within the two subsequent years thereafter, which the
Company believes was the case for both matters discussed herein.

 Bad debt reserve: As indicated in our initial response, the last
time the Company reflected a bad debt expense arising from a customer bankruptcy as a non-GAAP adjustment was during 2018. Despite the Company’s belief that this
non-GAAP adjustment complies with the guidance in Question 100.01 of the Compliance and Disclosure Interpretations (“CDIs”) for Non-GAAP
Financial Measures, the Company acknowledges that it will remove the adjustment for the above-referenced bad debt reserve from its non-GAAP measures when and if any relevant period is presented in the future.
The Company also acknowledges that it will remove the non-GAAP adjustment previously presented for the quarter ended March 31, 2024, which relates to the recovery of the aforementioned bad debt that was
received from the international customer as administered by the bankruptcy court. The Company will present this change commencing with the Company’s third quarter earnings release furnished on Form 8-K
for the quarter ending September 30, 2024 (specifically, for the nine-month period ending September 30, 2024) and on a going forward basis, as necessary.

Inventory reserve: The Company respectfully disagrees with the Staff’s position to remove the
non-GAAP adjustment for the write-down of inventory arising from the regulatory restrictions impacting the sale of its products. The Company believes that it is not only the nature but also the frequency and
effect an item has on its underlying operating results and period-over-period comparability when determining whether an adjustment should be presented as a non-GAAP adjustment. The Company recorded this
inventory write-down due to the adoption of regulatory restrictions in various jurisdictions that banned the sale of certain products containing specified substances and, in the Company’s case, rendered such items effectively unsalable in the
United States. While changes in governmental regulations occur in the ordinary course of business, the Company is not aware of a similar situation, where a product ban required an inventory write-down of this magnitude, occurring in its history. The
Company believes this specific inventory write-down to be a non-recurring, non-cash operating expense that has not occurred repeatedly or even occasionally and, as such,
the presentation of this matter as a non-GAAP adjustment complies with the guidance in Question 100.01 of the CDIs for Non-GAAP Financial Measures. The Company therefore
believes that the presentation of this write-down of inventory as a non-GAAP adjustment is appropriate.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 October 4, 2024

 Page
 3

2.
 We reference your response to comment 5 related to restructuring-related costs. For the
$86 million restructuring-related adjustment to cost of products sold and the $13 million restructuring-related adjustment to selling, general and administrative expense, please quantify each of the underlying adjustments indicated in your
response. Please also respond to the following comments to help us better understand the nature of the amounts and your consideration of the guidance in Question 100.01 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures in determining that it was appropriate to adjust for each of the items in the adjustment.

•

 Regarding the adjustment for accelerated depreciation, please explain the nature of the underlying assets,
whether the assets continue to be used in operations, and when you intend to retire the assets;

•

 Explain the nature of the duplicative costs pending facility closure or exit of business activity, including
how you calculated the amount that is duplicative and explain how you determined that these are costs to exit businesses or sites;

•

 Tell us the nature of the services provided by the consultants; and

•

 Explain the asset valuation adjustments and disposal gains or losses, including the nature of the assets,
means of disposal, and when and why the assets were impaired.

 Response: The following table presents
restructuring-related costs classified in cost of products sold and selling, general and administrative expenses (“SG&A”) by the underlying adjustments indicated in the Company’s response for the
twelve-months ended December 31, 2023:

 Restructuring-related costs:

Classified in
Cost of
Products Sold

Classified in
SG&A

Total
Restructuring-
Related Costs

 Asset valuation adjustments and disposal gains or losses

$
59

$
(6
)

$
53

 Accelerated depreciation

21

10

31

 Duplicative costs pending facility closure or exit of business activity

6

5

11

 Consulting costs

— 

4

4

 Total

$
86

$
13

$
99

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 October 4, 2024

 Page
 4

 As discussed in our response letter dated September 20, 2024, the Company is in the process of
implementing a multi-prong transformative agenda, which involves various restructuring and organizational initiatives designed to, among other things, transform the Company’s
go-to-market capabilities, improve customer service levels and drive operational efficiencies; improve the Company’s cost structure and operating margins; leverage
the Company’s scale to reduce complexity, streamline its operating model and drive operational efficiencies; and strengthen the Company’s front-end commercial capabilities. These initiatives include
the following:

•

 Project Ovid, which completed its first phase go-live in 2022 and its
second phase go-live in 2023, and was designed to optimize the Company’s distribution network by creating a single integrated supply chain from 23 business-unit-centric supply chains.

•

 The Network Optimization Project, initiated in 2023 and expected to be substantially implemented by the end of
2024, which incorporates a variety of initiatives, including a reduction in the overall number of distribution centers, an optimization of distribution by location, and completion of select automation investments intended to further streamline the
Company’s cost structure and to maximize operating performance.

•

 Project Phoenix, initiated and substantially implemented in 2023, which incorporated a variety of initiatives
designed to simplify the organizational structure, streamline the Company’s real estate portfolio, centralize the Company’s supply chain functions, which included manufacturing, distribution, transportation and customer service, transition
to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs.

•

 The Company’s organizational realignment, implemented in the first quarter 2024 and expected to be
substantially implemented by the end of 2024 (subject to local law and consultation requirements), which incorporates various operating model changes, including standing up a cross-functional brand management organization, realigning business unit
finance to fully support the new global brand management model, further simplifying and standardizing regional go-to-market organizations, and centralizing domestic
retail sales teams, the digital technology team, business-aligned accounting personnel, the Manufacturing Quality team, and the Human Resources functions into the appropriate center-led teams. The
organizational realignment will also further optimize the Company’s real estate footprint and pursue other cost reduction initiatives.

The restructuring-related costs described below are a direct result of the Company’s restructuring actions and exit activities that are necessary to
effect this transformation, including facility closures and operating model changes, and they do not reflect normal facets of the Company’s ongoing operations as contemplated by Question 100.01 of the Compliance and Disclosure Interpretations
on Non- GAAP Financial Measures.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 October 4, 2024

 Page
 5

 Accelerated depreciation: The assets associated with the adjustment for accelerated depreciation
charges include buildings such as distribution centers, warehouses, manufacturing facilities or offices used for sales and administrative purposes; leasehold improvements; or machinery and equipment, where such accelerated depreciation charges
relate directly to an underlying restructuring action or exit activity. Accelerated depreciation represents the incremental depreciation expense realized in the relevant period arising from the difference between the asset’s original useful
life and the shortened remaining useful life as a result of the restructuring action or exit activity. The remaining useful life, which is determined at the time the restructuring action or exit activity is approved and is on average is no more than
twelve months, is generally the period from the commencement of the action through the anticipated exit or cease use date of the underlying asset, at which point the asset is no longer in operation and is retired. The Company believes accelerated
depreciation represents an incremental non-cash charge that is directly attributable to a restructuring action and would not have been incurred absent the action.

Duplicative costs pending facility closure or exit of business activity: Certain of the Company’s restructuring actions result in the closure and
consolidation of one or more existing facilities into one or more new facilities, as well as changes in the operating model of certain functional activities. As a result, the Company sometimes incurs duplicative operating costs pending the
commencement of the new facility’s operation or the commencement of the new operating model until completion of the restructuring or exit activity and corresponding transition to the new facility or operating model. The period of incurring
duplicative costs is generally short term in duration and on average is no more than six months. The duplicative costs include primarily one-time freight costs associated with relocating inventory, start-up costs to get the new facility ready for operations, employee compensation expense including salary and benefits as well as retention bonuses for certain employees, and third-party transition costs
associated with outsourcing of certain global business services. The Company believes these duplicative costs represent incremental charges with no ongoing economic benefit that are directly attributable to a restructuring action or change in
operating models that would not have been incurred absent the action or change.

 Consulting costs: The
non-GAAP adjustment for restructuring-related costs includes only those consulting costs which are directly attributable to one or more restructuring actions or exit activities. For the twelve months ending
December 31, 2023, such costs primarily related to planning for the Company’s Network Optimization Project with respect to its distribution network and restructuring actions associated with certain of the Company’s manufacturing
facilities.

 U.S. Securities and Exchange Commission

Division of Corporation Finance

 October 4, 2024

 Page
 6

 Asset valuation adjustments and disposal gains or losses: The following table presents asset valuation
adjustments and disposal gains or losses classified in cost of product sales and SG&A for the twelve-months ended December 31, 2023, which are included in the Company’s non-GAAP adjustment for
restructuring-related costs noted above:

 Asset valuation adjustments and disposal gains or
losses:

Classified in
Cost of
Products Sold

Classified in
SG&A

Total
Restructuring-
Related Costs

 Inventory write-downs

$
40

$
— 

$
 40

Construction-in-progress impairment
charges

7

— 

7

 Lease expense associated with
right-of-use asset facility exit costs

8

10

18

 Costs associated with decommissioning assets

5

1

6

 Gain on disposition of assets associated with restructuring action

(1
)

(17
)

(18
)

 Total

$
59

$
(6
)

$
 53

 Inventory write-downs: Prior to closing a manufacturing facility, distribution center or warehouse as a result of a
restructuring action, the Company is required to clear all of the inventory from the location, either through donation, destruction, relocation or liquidation, prior to exiting the facility. In 2023, the Company incurred charges to write-down the
value of inventory as a result of inventory clearance at facilities slated for closure, as described below.

 The Company closed four domestic
manufacturing facilities in 2023 pursuant to an approved restructuring plan or exit activity. The Company considers many factors including its manufacturing capacity, demand planning, and current customer orders, as well as historical order
activity, to determine the level of raw materials and work-in-process (“WIP”) that would be required to manufacture a sufficient quantity of
finished goods prior to the closure of a man