Newell Brands Inc. (NWL) Earnings Call Transcript & Summary

I'm Steve Powers, Head of Deutsche Bank's U.S. consumer goods research, and I'm thrilled today to welcome Newell Brands back to the conference. Joining us today from Newell are Ravi Saligram, Newell's President and Chief Executive Officer; and Chris Peterson, Newell's Chief Financial Officer, President of Business Operations and as dubbed by Ravi, the billion dollar man, given the admirable free cash flow he's helped usher in over the past couple of years. Ravi, Chris, thank you both for joining us. Before we begin, just a logistical point for those listening in. For those of you joining in via the conference portal, you should see the ability to submit questions in the window in front of you. Please feel free to make use of that at any time given our discussion and I will do my best to integrate them as we go. With that, Ravi, Chris, thank you again.

And to get us started, maybe you can just both land on this. You've each had relatively brief, yet, I think, pretty amazingly eventful tenures at Newell. In the process, Newell become one of the more notable turnarounds in U.S. consumer goods and successfully so from my perspective. Just when you reflect upon that, like what do you think has been the proudest set of accomplishments that you've had over these past couple of years? And then secondarily, what gets you most excited as you think about the path forward?

Great. Steve, thank you so much for having us. And look, I -- before I get started on your amazing question, which will be an honor to -- I have to give a certain [indiscernible] warning, unless I want to [indiscernible] my IR person and legal people. So please note that today's remarks may include forward-looking statements about Newell Brands. Actual results may differ materially from the forward-looking statements due to factors listed in our SEC filings. The available reconciliation of non-GAAP measures can be found on our website. So now that we've got that out of the way, let's get to the heart of your question. It's been a tremendous journey over the last [ decade ] or so. And you see -- I think we have faced the pandemic -- we've had social justice issues come in and our teams have gone through a lot. How the company, overall, our 31,000 employees have fared during the pandemic has just been incredible. We've had a turnaround going but we addressed employee safety, our frontline people were [indiscernible]. And to me, the benchmarks are we had slumped to $5 billion in market cap. And in less than a year, we've turned it around and now about $12 billion, and that's really due to an incredible team effort. So I'd say a lot of credit -- one of the things I'm very proud about is this new leadership we've created, and they don't appear. So they have their own names in addition to Chris' billion dollar man moniker, but each one of them is a superhero in their own right. And it is the collective team power. I really feel that they're one of the best teams in CPG. We've got a great structure that we're operating on, our hybrid structure that's driving innovation, e-commerce penetration. And really, to see that for a company that was declining the second half of last year that we grew 6% and in the first quarter, 21%. And the first quarter was notable because it was all businesses, all geographies. 18 out of our 20 top brands grew and many of them grew market share. I think, really it's quite a feat, and I'm very proud of the team. When I look forward, I just think that we're getting started. I think there's a lot of opportunity in terms of driving e-commerce penetration, becoming an omnichannel expert, driving innovation, which we've already got started on. So I think there is tons of opportunity to drive shareholder value.

And I would just add from my perspective that I think over the last 2.5 years, when we put the turnaround plan in place, we put in place an integrated set of strategies that really the company and the team is making progress on all fronts. As Ravi mentioned, we've returned the company to core sales growth, which was one of the planks of the strategy. We've increased our operating margins through overhead cost savings and fuel productivity savings against the gross margin line. We've also turned the company into a cash flow generator with free cash flow productivity greater than 100%, both over the last 2 years and on track again this year. We've strengthened the leadership team, as Ravi noted, and we've improved the portfolio of businesses in which the company competes. And so making progress on a broad array of turnaround strategies, I think, is what's gotten the company back on its feet again. And I would -- I share the same thought that Ravi had, which is we still have a ton of opportunity ahead of us, and I think we're gaining momentum.

Great. Ravi, for you, probably, I think right now, set against that momentum that you've built, everyone is very cognizant of questions around the pacing and the shape of recovery from here as vaccinations take route. What is your latest perspective on that and maybe how it varies across key geographies for you because I think the pandemic backdrop is very different across geographies? And how is that recovery pattern likely to impact your various categories and brands across different channels?

Great. Let me start with the RFO market in terms of -- the U.S. vaccinations are proceeding well. The fact, I think that over 50% of eligible population is vaccinated. And so that has really -- I think even offices are beginning, I think, to probably open up a little sooner than expected. But the bright light is that schools, at the end of this season, was already at about 70% in classroom, and we expect pretty much a full reopening. And now cities like New York City, et cetera, said they will open up and will not have hybrid models. That has a very major impact on our Writing business to see schools back up again. Last year, during the pandemic, obviously, the writing business was very soft. And that's our highest gross margin business. And to see that leaping forward and we saw that already in the first quarter where it had tremendous growth, and we're just seeing that -- so I think [indiscernible] back-to-school season. But in terms of other trends in terms of other categories, I'd say, your -- the home and hub trend, which has probably been the predominant one, I think, will continue. Maybe not at the same intensity post pandemic, but I think these habits are not going to change radically, people wanting to cook at home with fresher ingredients and millennials getting in and Gen Z getting into cooking and sharing those things on Instagram, et cetera. It's also formed a common bonding. And even if people start going back to offices, there will be more of a hybrid viewpoint. So I think home is really -- people have spent on whether it's appliances, whether it's on redecorating. So I think that is a positive trend for us [ and more ] and that will have a positive impact, I think, at -- for our Food business, our Home Appliance business, maybe more normalized because they're going to comp stronger comps as we proceed over time, but still, I think, good trends. And I think with the shift to suburbs and more millennials buying homes in the suburbs and a ship growing on that. And now I think the number of new homes is really the inventories coming down. So that bodes well for like our fire alarm business, the first of that and for other businesses that are centered around the home. So I'd say on the whole, fairly positive. And the last one I'd say is our Commercial business, where certain verticals like restaurant and hospitality were negatively impacted. And then as offices open up, I think our whole washroom business, those will all start growing. So with our portfolio serving the United States, I feel optimistic. Now I think around the world, we're seeing -- probably Asia is the most troublesome one because of what's happening in India right now and in Malaysia, et cetera. But those regions are not very big for us. But Australia and New Zealand is an important region for us and they have been doing pretty well throughout the pandemic, and so that's the strength. And Lat Am, while the countries have really not progressed as much on vaccination, we'll figure out ways around it. And we've really done a great job in Brazil and in Mexico and so on. So I think that -- and we've really addressed it through online. So I think that's a positive. In Europe, I think vaccination rates are building. So I think that will be a good recovery. So overall, the macro is in our favor. Of course, you've got some negatives, which we talked about on our call on the first quarter about inflation, about [indiscernible], about transportation, freight, et cetera. But those have already been accounted for and we're taking actions.

Yes. Thank you. And actually, I was going to go there next because alongside recovery, rising inflation and some of the others you just mentioned, Ravi, have been very topical and are probably the #1 concern for investors. What -- I guess, Chris, what is Newell's latest cost inflation outlook? And we'll talk about productivity in a moment. But in which businesses and to what extent are you pursuing pricing in response?

Yes, sure. So just as a little bit of background, when we reported our first quarter at the end of April, we increased our outlook for inflation this year to $360 million of headwind. And that headwind is really driven by 4 things that are all about equal. One is resin costs, which have spiked following the Texas weather situation. Second is labor cost, which is rising, particularly for factory and distribution center. Third is transportation costs, primarily around ocean freight, but also trucking in the U.S. with diesel fuel prices up. And last is for our source finished goods business with the Chinese currency strengthening, we're seeing price pressure there. To offset that $360 million headwind, we're doing a number of things. The first is we've implemented, as you know, fuel productivity savings. And that fuel productivity savings program is a broad program with thousands of projects across the company. It's an ecosystem that we've put in place over the last 3 years that we've ramped up and last year took out 4% of our cost of goods sold base. This year, we're on track for it to take out about [ 3.5% ] and our goal is to do that year after year. So the primary thing that we're doing to offset inflation is driving productivity in our supply chain. And we have a whole significant amount of initiatives to do that. The second thing we're doing, as you say, is pricing. And we've taken pricing, we've announced pricing on 5 of our 8 business units, and they include food and commercial where the resin is more intense in those businesses, Home Appliances, Outdoor & Rec and Baby, which our more source finished goods is a bigger part of those businesses. The pricing we've announced has largely been announced in April for most of the businesses, and it goes into effect in June. I would say that we are not pricing to fully offset inflation. We're only pricing for a portion of it. But the combination of the productivity savings plus the pricing, and then the third component is we're guiding for 5% to 7% core sales growth this year as a company, which gives us volume leverage. And we are tightly controlling overhead cost and fixed cost in the supply chain, which is also helping. And so when you put all of that together, our guidance assumes 30 to 60 basis points of operating margin expansion this year despite probably the highest inflationary environment we've seen in 4 or 5 years at a minimum.

Yes, yes. And to follow up on that, have the headwinds that you've incurred from freight, from tariffs even before the pandemic and now COVID-induced supply chain disruption that you had sporadically over the past year, has that caused you to rethink your manufacturing footprint or your supply chain beyond going [ into fuel ] assumptions? And if so, maybe you can elaborate on that. And then when you step back from it all, you've got aspirational gross margin and overhead targets out there, 37% to 38% on the gross margin line and 16% to 17% overhead as a percentage of sales, respectively. How should investors dimension just the time line to potentially hit those aspirations?

Sure. So on the supply chain, I would say it hasn't cost us fundamentally to rethink about it. But what we've done is we've gotten more aggressive at going after what we think the opportunity is. And the opportunity, as we've gotten into it, I think, is bigger than what we thought when we started the turnaround journey. I'll give you a couple of examples. First, I would say we've discovered a major opportunity in automation. And so we believe that with the price of cobots and robots coming down, we're seeing opportunities to invest capital in automation in our supply chain where we're seeing 40%, 50%, 60% rates of return. That also has the benefit of reducing our reliance on the labor force by automating a number of jobs, which also has the benefit of over time, repatriating some of our supply chain back into the U.S. I don't think this is going to be a dramatic shift, but we're already seeing opportunities, and we're already going after that in a more aggressive way than we were previously. That's part of our fuel productivity savings effort. And I think that sort of will add resiliency to our supply chain. Relative to the gross margin target, I think when we did the benchmarking, we said 37%, 38% was what we thought our peers were generating. And I think last year, we generated about 33%. So we've got 400 to 500 basis points of opportunity. It's being a little bit masked because of the inflationary pressure, but I think you're going to see us grow -- we've said 50 basis points of operating margin a year is our evergreen model. I think we've got a line of sight to grow gross margin much faster than that on an annual basis. And then what we're planning to do is invest some of that money back in the form of higher advertising and marketing spend as our innovation pipeline ramps up.

Great. Okay. And we'll get to innovation in a moment. But Ravi, you mentioned, in response to just a question a couple of minutes ago, the concept of home is hub and how you thought some of that would -- at least some of that would endure for the reasons you cited. How are you balancing ongoing investment in businesses that have benefited from at-home trends over the past year versus those that are poised for recovery? So which businesses are getting the most incremental investment as we stand here today? And is that likely to change over time? And how are you thinking about that?

Yes. I think the good news, I think, for us is that [indiscernible] was that despite Writing being soft in 2020, our other businesses showed up and what I mentioned about the second half. So there's some resilience in this overall portfolio. Having said that, as we are now -- we do have some sites that, hey, the tail around hopefully, will not be forever and we're really thinking about how we shape the company. And where we just had a strategy [ offsite ] for the team and thinking about the role of each business because each business has to have a distinct way that they'll drive shareholder value. And so not all businesses are going to be treated the same way because they have different roles. And so the way we look at it is, and we take a long-term view obviously in the context of consumer trends and so on. But what's clearly coming out is, look, we've got some great brands in the whole Food business with strong gross margins. The same is true for our Writing business, which is now bouncing back greatest, the best gross margin business we have. So that's the second one. Home Fragrance has been a fantastic business. What we've seen in the first quarter, it was the star of the show, 45% growth or so. And so it's really because there is -- I think as people are really -- with their stressed out life, this is being such a big role in terms of serenity, et cetera. And again, that business has high gross margins. And then our Commercial business, thank God we didn't try to sell that, has been a real good growth business. When you look at those 4 businesses, their strong growth drivers, but they also have -- the first 3 have very strong gross margins. Commercial, we obviously have opportunity to improve the margins. So those with high gross margins and brands with high gross margins are where we're going to put more focus on advertising and keep driving it in where the consumer trends are. In terms of businesses like Baby, which is a very solid business, our Connected Home and -- love a solid business. We'll keep trying to drive distribution gains. Baby is driven through e-commerce anyway, 50% of Baby's global sales and now we have e-commerce penetration. So there is more e-comm investment. And then our 2 businesses, Appliances and Outdoor, which were in -- when I started out, were more question marks and turnaround. I think the teams have done a super job of getting momentum. The Outdoor business -- the core Outdoor business with the Coleman brand is in much better shape today. And last year, what we saw was growth in its 120th anniversary year. And then Appliances really grew much more than we expected, and then we saw tremendous growth in the first quarter. But those businesses, because they are a little bit lower on the gross margins, there is that continuous improvement, how do we drive gross margin. So to answer your question very directly, we look at the portfolio as a whole and say, how does the whole become greater than the sum of the parts and then invest behind the businesses that have both growth potential, gross margin potential and then -- and given that each -- we are like a soccer team. Each business has its role and we play to win together as a team and the pandemic sure did some [indiscernible].

And the -- as I think about your businesses, the business -- the portfolio had some pretty stark seasonal differences across your different brands. And historically, the lead time to get new products to market was longer because you were kind of investing for the next annual season. How have you grappled with that in this fast-moving environment? Have you found ways to speed the innovation cycle, to speed capital allocation decisions to be able to pivot to what have become very rapidly changing dynamics in which, frankly, very well likely, will continue to surprise, at least as we get over the next 2 to 4 quarters of recovery?

Yes, Steve, that's a great question. So I think, first, it goes back to our organization model. Moving to a hybrid mark, where each of the businesses is focused front-facing, meaning consumer and customers. And the back, we try to unify for reducing complexity for operational excellence. So with this tremendous focus of our businesses on the consumer and we're putting a lot more effort on really getting the social listening, trend spotting and understanding trends so that we can pivot very quickly and also make good investment decisions. In the past, I think there was a very centralized model, particularly on innovation, which made it very bureaucratic and slow. So we'll completely change that, and we've empowered our business unit heads to really -- what we've done is put our innovation operating model together, which we're saying, hey, the model has to be executed well, but leaving the decisions to the people who know the businesses the most. That speeds it up. So we're also putting a lot of effort on experimentation, try things, especially on the online, try it and see where it goes. But also, when you start seeing the trend, chase it. So examples would be Mr. Coffee Iced. When we started it, it's a bit of a sleeper. We started recognizing the trends and that team said, "Wow, hey, with all the Starbucks and everything [ approach ], let's go after it." And they really pushed it. And now we're adding line extensions to it and it's becoming really a great innovation. The same with FoodSaver VS3000, that is more planned and thought out for sous vide, but that's become -- we saw the need as home becomes hub. So I think you've got -- and then despite the pandemic, Sharpie S-Gel was a very well thought out of innovation. And when we saw how things -- we knew we had that. We drove that through great distribution, et cetera. So I think agility is a very big factor. The last thing I'd say, Steve, is now we're really working on innovations on a 3-year cycle. And we are also partnering with our key customers on those 3 years, the joint business planning and saying, "Hey, we've got to look at that so that we don't surprise our customers." That's been a great change and our customers are welcoming that. And sometimes, we put NDAs with them and say, "Hey, this is what we're thinking, what do you think?" So I think with the improvement in relationships with customers, getting more foresight and insight and I think we're able to react very, very quickly. I feel very good about our innovation pipelines. And we're also partnering with some external firms now to really drive that innovation DNA. Historically, this company has had that. And lastly, with sourced finished goods, we're now building partnerships with our suppliers so that they give us their best innovations first. So that would be the damage, I'd say. And then being disciplined, one of the [ groups ] we're saying is, "Hey, if you put a new SKU, take out an old SKU."

Yes. And actually, I do want to come back to some of the points you just made there. But as I think about the investment required to make good on the demand that you see ahead of you, Chris, I want to loop that in with what you've been able to accomplish on free cash flow conversion, free cash flow productivity, which has been -- which is positively surprised now, I think, for essentially every quarter for 2 years. So there's been remarkable progress there. And I guess what I want to gauge from you is your confidence that there's enough underlying -- the flywheel of underlying kind of free cash flow productivity that can keep you at that 100% level plus or minus or plus, as you invest through a best against these opportunities or if investors should expect the normalized rate to continue robustly as you've telegraphed, but -- that there may be more volatility as you invest ahead of demand that's built.

Yes. So let me start off by saying that I think when I joined the company at CAGNY in February of 2019, I stood up and said that our cash conversion cycle was 115 days. And when we did the benchmarking, it positioned us as the worst company in consumer products. And we had set a target at the time of 70 days, which was sort of an average target looking at much of our peer group. We didn't know at the time how to get there, but we put an aggressive plan against all elements of the cash conversion cycle. And that included going after accounts payable by renegotiating payment terms with suppliers. It turned out we were paying faster than most of our competitors. And what we wanted to do was pay in line with our competitors. We also wanted to take aggressive action at reducing the number of suppliers that we were dealing with because -- had a supplier community that was way larger than anybody else and we just hadn't consolidated it. So we've done those things. We've also gone after inventory, and I think there's still a lot of opportunity ahead of us on inventory, reducing excess and obsolete inventory, going after the SKU count reduction program where we've already taken our SKU count from over 100,000 when we started to 47,000 last year, and we believe we've got the opportunity to go down to 30,000 by the end of next year. That has a direct bearing on inventory levels. We're now focused on improving our forecast accuracy. Our forecast accuracy was amongst the worst of any consumer products company I've ever been involved in. And we've set a goal of getting to best-in-class over the next several years. As you do that, it allows you to improve customer service and reduce inventory at the same time. And then finally, we got focused on receivables. And on receivables, we were going to market in a very complicated fashion with millions of transactions, millions of deductions, a very complicated way of resolving it. And we've tried to work on simplifying, but we still got room ahead of us. So as we've gotten into it, we ended this past year at 72 days. So we frankly got to the goal of or close to the goal of 70 faster than I thought at the beginning was possible. And so we've now reset the goal and said we think we can get down to 50 days over the next few years. Doing that, I think, is going to continue to allow working capital to be a source of cash for the company. And when you look at that together, I think in 2019, our free cash flow productivity was 108%. Last year was a banner year of 154%. We certainly don't expect that to continue at that level, but we were very pleased with it. This year, we're guiding for 100%. I think we've got enough gas in the tank to continue sort of at the 100% type of level. And that includes investment of CapEx into the business behind strong return opportunity projects, which we are fully funding and continuing to go after.

Great, great. Ravi, when you were talking about innovation and agility, a lot of what you were saying reminded me -- I think it spoke to your 5 Cs. I don't know the strategy or how you think about it, but maybe you can just talk about those 5 Cs more specifically for those who are less familiar. But how integrated do you think those 5 Cs are across your businesses? Are there businesses where you feel like -- okay, we've got all 5 of them. We're hitting our culture is in the right spot. We're matching to what we need to do from a channel diversification standpoint. We're very in tune with customer insights and innovating accordingly. Is that homogenous across the organization? Or are there businesses where that is more ingrained and that serves kind of as the role model for businesses that are still on the evolutionary curve?

Yes. I think, and as a reminder, the 5 Cs, I'm glad you brought it up, it's sort of our go-to-market approach. And it's just a telegraphic way to really get that message across different levels of the organization so that it's not overly conceptual. And really, it stands for -- the first C for cultural winning. And the second is about consumer focus and [indiscernible] consumer focus. Third is about customer collaboration. The fourth is about channels and the fifth is about continuous improvement. So these are -- I'd say, each business and each function in the company is very dedicated to this. They all get it. And so -- but they may be at different stages of the journey. And so clearly -- and it may have a slightly different application or viewpoint in one business versus another. So an example would be, even though it's a Rubbermaid brand in Food and in Commercial, as a big brand -- but in Commercial, our channels are really -- our customers, from our distributors in the home centers -- whereas for the Food business, it's really grocery, mass merchants, et cetera. So they're optimizing it in different ways. But clearly, some of our businesses are further along on the journey of consumer insights. And so the food business is really rapidly getting after that and a strong brand. Our Home Fragrance business is now really making an effort in that area. And so -- but one thing I can say is every business is now driving innovation. And every business is very committed. And you can't drive innovation if you don't have a strong baseline of consuming insight and foresight. The other thing about it is there's an innovation discipline where we've created 10 operating innovation principles where we're saying, look, it has to be -- innovations have to be gross margin accretive because our journey -- to me, I'm [ obsessive ] by gross margins because they really tell the value of the brand. And they have to be relevant, both for your consumer and for your customer and meaningfully. And we are classifying them in different ways. There are some big needle movers where you say, "Hey, we've got to get to $50 million, $100 million over a couple of years and really strong gross margins." And then there are some major renovations. Either way, it has to be a very focused effort rather than just activity, if you will. On the customer side, I think uniformly, now that I brought in a Chief Customer Officer with Mike Hayes, we are doing a tremendous job of top-to-top relationships. We've reignited that the relationships with our top customers, the Walmart or Target or Amazon, Costco, et cetera, and I personally am involved in those. And we're also getting -- one of the biggest issues for us is how do we improve on our customer service to them and particularly given some of the pandemic issues. But I think there is a real spirit of collaboration. There was a time when we all had really -- they also saw us as 8 different companies going to them, whereas today, we have one voice. We've put in an omnichannel general manager in Walmart. She's doing an amazing job bringing one voice of Newell to Walmart, for instance, and we've got the same at Amazon. So I think across these different sides -- and the culture of winning, we just did a leadership survey, and we were just astonished to say that our top 150 leaders, there was sort of an 85% top boss agreement that there was great clarity of vision in the company. So feel that on different aspects where we're making real progress on the 5 Cs.

And if there's a sixth C, which I would think it would be around capital deployment and capital structure, so Chris, how are you thinking about the current capital structure where I think you've made some great progress and the prioritization of cash going forward to further the growth strategy? And is there -- I guess, the question underneath that, is there an appetite for further portfolio optimization now that you've kind of got the first year, 2 years of the restructuring under your belt and momentum building?

Yes. So I'd say a couple of things. First of all, as I mentioned on the previous -- one of the previous questions, when we think about capital allocation, the first thing we're focused on is continuing to generate strong free cash flow. And we are on track and I believe have a good path to get strong operating cash flow and free cash flow going forward. With that cash flow, we've made tremendous progress over the last couple of years of strengthening the balance sheet. So I think when -- in 2018, the company might have been at 5x net debt to EBITDA. We ended last quarter at 3.3% on a trailing basis. We had set a target as part of the turnaround plan a couple of years ago of getting down to 3x, and we're very much on track to do that by the end of this year. When we think about how we deploy capital, the first thing that we think about is investing back in the business with CapEx. And generally, what we're seeing is opportunities to invest capital back into the business where we're seeing 30%, 40%, 50% rates of return and we're going to fully fund that. That probably accounts for some number of 3% or slightly under as a percent of sales on a going basis, which is about what we've been investing, so we're fully funding that. The second thing we think about is paying the dividend. When the company went through the COVID crisis, one of the decisions we made was to maintain the dividend because we did not want to cut the dividend. And we thought that the better strategy was to grow the company's financial profile back into the dividend, and I think we're very much on the way to do that. So I think you'll see us continue to pay the dividend at the current level. I don't think you'll see us change it up or down anytime in the near future. Beyond that, we're going to generate cash beyond -- I think for this year, it's about getting to that leverage target, which, as I said, we expect to get to by the end of this year. When we go into next year, I think that frees us up to think more about excess cash. And I think we're going to be focused on how to deploy the excess cash in a way that is shareholder value accretive, and that's going to be our primary focus there. On the portfolio side, I don't think Ravi and I, and we've been very clear on this, are interested in large-scale acquisitions or large-scale divestitures. We have said that we are open to tuck-in acquisitions or tuck-out divestitures, but our bar for those is very high. They have to be something that is very -- not only strategic, but something that is clearly shareholder value accretive in the first year. And so that's the way we're thinking about it. And I think we're headed in a good direction here.

Great. We're coming towards the end of our time, but I did want to loop back, Ravi. Something you mentioned a couple of times and we talked about, I think, the first time you and I sat down around e-commerce. And what I thought has been notable, I don't know if it's intentional or if it's just an evolution, the Newell in the past was always very focused and early to e-commerce. But it always seemed to me it's something that was a discreet -- you had an e-commerce strategy independent of anything else. And what I've noticed, at least I perceive, is that, that has transformed into -- from an e-commerce strategy to more of an omnichannel strategy, where e-commerce is one component of a larger channel diversification strategy. So is that -- I guess, first question, is that an intentional shift from your perspective or just something that has happened to the extent you agree with it? And then as you think about the opportunity from here, which businesses do you see as having the most opportunity for continued e-commerce penetration or just omnichannel optimization above and beyond the company average?

Great. Steve, that's [indiscernible] [ diversifications ] and it is highly intentional. And look, I give credit to the previous team in terms of creating the e-commerce foundation in the company, and that's a good thing. But in today's world, which is digital first, you've got to have the entire company be digital first. It can be just sort of an island unto itself. So we've taken a lot of time to integrate digital into our business units. In fact, we moved all the digital marketers over to our business units so that they will be integrated with the brick-and-mortars so that you can take an overall omni. Our customers are doing this. They demand it. In fact, [indiscernible] they've moved all our salespeople to have an omni view. And we think our competitive advantage longer term will come. As we take our e-commerce backbone and convert it to really omnichannel [ prowess ] and the ability to really drive consumer relationships that are very sticky, enduring and which creates great lifetime value for them. So I think we are poised to do this better than most. And given that our e-commerce penetration has doubled over the last 2 years since 2018, if you will, and we're now at about 21% of global sales and much higher on a consumption basis. And we want to see if we can double that again over a period of time. And now we've brought in a real e-commerce group with Mike Geller to head that whole business so that we create real centers of excellence. And the next part of the journey is how do you take data analytics, artificial intelligence and integrate all this. We already have a strong e-commerce analytics group. How do you take all of that because it's all about following the consumers' end-to-end journey and integrate that with shopper insights and make sure that we really are creating amazing brand experiences. So if you don't bring the [ beginnings ] into the picture, then there'll be a lot of tension because they need to be committed to e-commerce. They need to spend and not say -- otherwise, they'll just say, let's keep spending on TV and traditional ways because today, most of our spend is on e-commerce. So I think that's question one. Number two, is that we are -- Baby is already at 50, and I think it still has room to go. But I think our businesses like Food, we're actually underpenetrated there. And I think that's tremendously [indiscernible] on our Food business. Commercial, and you may say Commercial will always be low, but there's also a Consumer business [indiscernible] Commercial, like our [ sheds ] business, et cetera. But I think overall, and they're already making traction with Amazon, it's at 7% penetration, a lot of penetration opportunity there. So [indiscernible] Home Appliances where now home appliances are sold a lot online. We've been steadily improving Home Appliances and Writing, tremendous opportunity there. Overall, I just think for Newell, this is just going to be a towering advantage.

Great. We are down to our last few minutes. We've covered a lot of ground. I appreciate both of your time and your insights. I guess is there -- in closing, is there are a key message each of you would like to leave with investors as to why they should feel confident that Newell will continue to improve and deliver over the next, not just 3 to 5 quarters, but 3 to 5 years?

So I'll just say there is -- we just have a lot of opportunity, and our job right now is prioritizing those opportunities. But if I were an investor, the things that I would be cognizant a bit more, one is the whole -- we've got great brands. We're now becoming an innovation engine again. That's, I think, a real important thing. Second, our whole omnichannel capabilities, converting e-commerce into omnichannel expertise. Third, I think operational excellence and reducing complexity, that's a great opportunity. And fourth, I would not minimize this even though it's little intangible, but our leadership team and our people are very passionate, want to leave a legacy and get back to the days where we -- in our heyday. So there's a lot of shareholder value improvement that we can envision.

And then the only thing I would add, I would echo all of Ravi's comments, is we've got a track record as a team of delivering what we say. So since I've been here, since Ravi has been here, we haven't missed a quarter. Everything that we've said we were going to deliver, we've delivered. And I think that speaks to the focus, the integrated nature of the strategies and the strength of the team of employees that we have, both at the leadership team level and across the organization, to deliver on the shareholder value commitments that we're making.

Well, great. Chris and Ravi, thank you both for your time today and a big thanks to Newell Brands participating in the conference, and have a great event.

Thank you very much. Enjoyed it. Thank you.