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

Next up, I'm excited to welcome the management team from Newell Brands back to the CAGNY stage. Here with us today, we have CEO, Ravi Saligram; President, Chris Peterson; and CFO, Mark Erceg. Over the last several years, Newell has made substantial progress transforming the business and readying it for the future, proving adept at navigating challenging market cycles, while also working to simplify the organization, embrace new technologies to improve the supply chain and invest behind driving profitable growth. As was announced earlier this month, this will be Ravi's final CAGNY presentation as CEO of Newell with Chris Peterson taking the big seat in May. Please join me in thanking Ravi for all of his help and support for the organization, and in congratulating Chris on his upcoming promotion. So with that, I'll turn it over to Ravi.

Thank you, Andrew. I invite you to peruse the forward-looking statements. And without much ado, a very warm welcome to Newell Brands CAGNY presentation. As Andrew mentioned, this is my last one, but Newell, I think it's in far better shape today than it was. So the message is you will expect to hear in the themes over the last 4 years, as we've turned around the company. We've significantly strengthened the company's foundation in all aspects and dimensions. We're here taking decisive action to improve financial performance with a laser focus on cash, cash, cash, making him back to billion-dollar man and profits. We're continuing to simplify the company, reduce complexity and leverage scale. We're operationalizing the new organizational structure as a result of Project Phoenix and our new operating model that came out of Phoenix. In an environment right now where consumer demand for discretionary products is constrained due to some forward acceleration that went on pre-pandemic and during the pandemic. We are very focused on enhancing consumer value and we really believe that with the strength that we have built up, we will come out stronger once macros improve. Newell at a glance, we're a $9.5 billion company. You may recall that we sold Connected Home last year. We have 25 brands that make up 85% of our sales. Our top 10 countries account for 90% of our sales. And you know our iconic brands be it Sharpie or Graco, Coleman, Yankee Candle, et cetera, and our top 10 international markets, which are highly developed from a per capita and then some emerging ones. So it's not surprising U.K., Canada, France, Japan, but also Mexico and Brazil, where we have big franchises. We charted out a vision for ourselves to become a consumer-led innovation powerhouse and growth engine and a force for good. Our brands are beloved friendly brands, which is our purpose is about brightening consumers' lives and creating moments of joy, providing peace of mind and confidence to consumers. So let's take a look at our profile. The $9.5 billion with our new segments. The biggest one is Home and Commercial solutions with over half of our sales there. But the most profitable business is Learning and Development, even though it's less than 1/3. From a geographic standpoint, about 1/3 of our business is international with EMEA being the largest at about $1.5 billion and LatAm getting close to $1 billion. So I'm going to spend some time on this slide because this really encapsulates the progress we've made over in the recent years. First, we made our brands more relevant and more modern and launched innovations that leverage COVID trends, and I'll talk about that a little bit more. Look, in 2021, we grew core sales by 12.5%. But in '22, we were down 3.5%. Interestingly, we are still above pre-pandemic compared to '19, we're still up 7.5%. But we're going through a difficult environment right now. But as I mentioned before, we're positioning ourselves that once the macros improve, we should come out well. E-commerce is really a competitive advantage for Newell. 22% of our global sales is through e-commerce and we've built omnichannel capabilities. So no matter where the consumers shop, how they shop, when they shop, we, through our understanding of consumer journeys, are there with consistent experiences. And in this regard, we've really created a lot of focus and capability in content creation and content creation that is omnichannel. So with that, what's happened is we've taken our e-design group and our packaging design created as communication design and starting from an omni view rather than a brick-and-mortar translate it to digital. What that has done is that we are really visually telling brand stories and making them come to life, which has allowed our content scores with our retailer.coms to improve dramatically. At the same time, our ratings and reviews for all our key brands are up significantly. We have strengthened and -- we have started creating the first-ever annual consumer and customer marketing campaigns, more on this later, enhanced our partnership with key customers and increased distribution in new channels, including grocery and dollar stores. Simplification, complexity reduction that numbers tell the story. 102,000 SKUs down to 28,000 in 2018, a 73% reduction 42 ERP systems down to 2 on 95% of our sales. Most companies have challenges just doing 1 big ERP, the fact that we've reduced it is testimony to our IT leadership. 7,000 applications down to 700. We've consolidated our real estate site count by over 35% since 2019. We've reduced our websites from hundreds down to 40 in the U.S. and now are pruning our international websites. We have delivered $1 billion in productivity through our FUEL program since 2018 and is reaching 3.5% to 4% of COGS at benchmark levels. We have significantly reduced overheads from 21% in '18, down now to 16%, 17%. And Ovid which has been a landmark program that has turned Newell into an inflection point, taking 23 supply chains, consolidating them into 1 with the vision of 1 order, 1 truck, 1 invoice is now alive -- has gone live and has been successful. At the same time, we have really modernized our factories and driven automation. We have 650 cobots and robots all over the place and that's helped us with the productivity. Culture, we were a fractured and fragmented company with employee churn when I started and the teams, we have worked very hard to improve employee engagement. We talked about our 4 values, which are about true transparency, teamwork and trust. And with that, engagement was around 45 and 37 when Chris joined. When I joined it was 45, it's gone up to now 75, and that was 2 years ago. And last year, we were again at 75 at benchmarks of world-class companies. And all of this has been driven with creating a One Newell mindset, focusing on diversity, inclusion, belonging, making our frontline champions. And I'm truly proud of a best-in-class leadership team. We really have great people who are team players but also experts in what they do. And we have tapped into the secret sauce of our employee camaraderie at our company. All of this has galvanized the employees into being a competitive advantage for Newell. So let me talk a little bit more about enhancing our brands and modernizing them. Let's start with Rubbermaid, and Rubbermaid has really -- we've got distribution into the grocery sector more, more distribution, launched new products like Rubbermaid DuraLite, and scale and innovation. We already had launched which is Brilliance and Brilliance today in POS is more than $100 million, and e-commerce penetration has increased. And so -- and it's weathered the storm, and it's not just COVID, but last year in '22, we grew share in each of the subcategories of Rubbermaid and pantry organization, you name it. This has become a very strong brand. Coleman had lost its way from being a really iconic brand to becoming more commoditized. Our teams have really revamped it with a lot of innovation, but great marketing and delivering on the messages of the outside is calling and restored it to its former glory on its 120th anniversary. Sharpie, one of my favorite brands at Newell and I -- this is an example of taking equity and launching into a category that is not that choppy, was not in pens and Sharpie S-Gel has become a leader in the writing market. Mr. Coffee always known for automatic drip, took advantage of COVID trends and we launched Mr. Coffee Iced and then we've created a platform by going Iced and Hot Frappe and now the latest latte in fall. So you can see that we have a number of innovations improving our brands and more than half of our top brands, top 25 brands, top 30 brands are #1 or #2 in their categories. Now let me come to a new idea that a number of you have always asked. What is the connection between the Newell brands? You have so many brands. How do you think about them? And how do you think about your portfolio? And really, when you talk to consumers and you say, Newell, you may get a blank stare. But as soon as you mention our brands, they all say, "Oh, yes, I have that in our house." And this led to this idea of consumer miles, life moments and life occasions. We think about it, there's 128 million households -- U.S. households. We believe Newell brands are in more than 100 million households. Together, this means $500 billion of opportunity. And so let's go through some life moments. You go to college, you rent your first apartment, you may get your first home. You get engaged or get married and then you upgrade your home, support your second home, et cetera. Then you start growing a family. You're expecting you have your first child, second child. And then like me 3 weeks ago, you become a grandparent for the first time. And then you transition your kids start going to school, nursery, kindergarten, high school, college, et cetera. Each one of these represents pockets of opportunities, which are billions of dollars. And Newell has the brands that cater to these life moments and occasions. Let me illustrate. Just look at on the left is the in the home and out of the home. So in the home, you think about the kitchen and cooking. So many of our brands come together, Oster, FoodSaver, Crock-Pot, Mr. Coffee, Calphalon; a home organization with Sistema, Rubbermaid, Ball; and home offices, Sharpie, Paper Mate; creative activity for kids with Elmer's, Mr. Sketch; child development with NUK and Graco; and health and wellness with Yankee Candle and WoodWick, Contigo; or sleeping with Sunbeam. And you go outside the home for camping, obviously, Coleman, Stearns; school and teaching, you have, again, Expo, Prismacolor, Elmer's; working Sharpie, Dymo, Paper Mate; and then on mobility, as you move from 1 place to another, Graco car seats, strollers, and Yankee Candle auto air fresheners; or exercise Baby Jogger where you can run with your kids or take Contigo on the go. This gives you a sense that we are really about life moments and life locations. And if we can capitalize on this idea and build on it. So for the first time, we're actually doing promotions, connecting our brands, whether it's on Amazon Prime Day or targets deal days, or Walmart promotions. We're bringing our brands together. We're trying to display them together. And then we just launched something called the Newell Creative Kitchen in Hoboken, which is a live theater where we use each of our brands to tell stories and it's a great social media platform that is really taking off showing our brand connections. So now let me turn to our operating model, which we came out with Phoenix. The life moments is what triggered this as we were thinking about our food and appliance business and saying, "Hey, they really reside in the kitchen." And then we were thinking about our customers, the merchants are the same for many of these categories. So we said, look, we're taking an internal focus of these businesses, the external focus from a consumer and customer point, how do you bundle them and at the same time, reduce duplication and create the synergies, which allows us to distort resources to our top brands with the highest margins. That's what led us to coming out with 3 segments: Learning & Development, Home & Commercial Solutions and Outdoor & Recreation. I will go into that in a second. We also came out of the second tenant, which was all about One Newell international go-to-market. On many earnings calls, I've spoken about this. International has outpaced the U.S. How do you capitalize on this? And the third is the One Newell sales model and fourth is the unified supply chain. All of this is about leveraging scale and efficiency of our portfolios. We've now promoted 3 of our people who came in 2, 3 years ago and have done a terrific job for us. Mike McDermott is the Segment CEO for Home & Commercial Solutions, Kris Malkoski for Learning & Development and Jim Pasani for Outdoor & Recreation; three great leaders who will work with Chris to take Newell to the next level. Let me spend a minute now on Home & Commercial Solutions. You can see that each of our brands here that are represented Rubbermaid, #1 consumer brand in food storage in the U.S. Rubbermaid Commercial Products, #1 brand awareness in commercial refuse and material handling. You may have seen brute, or gray trash can, which is almost indestructible, all the way in parks and our yellow pails in airports. FoodSaver, America's #1 vacuum sealing brand. Ball, over 86% in the category in the U.S. use the strongest brand, high shares, and we've been increasing penetration into users beyond food preserving. And believe it or not, heavy users of all have more than 80 ball jars in their home. So a lot of opportunity as we drive penetration. And Spontex, our European brand of sponges. You go to France and go to LeClaire or to Carrefour. And it is just incredible to see 8 feet sections of Spontex. Obviously, the Frenchmen love their sponges, but this is the strength of the brand that we've really driven there. So next, let me talk about Learning & Development and the natural progression from babies on to school. And in this, we've got Graco #1 baby gear brand in the U.S., #1 car seat brand in the U.S. Sharpie #1 brand in writing in U.S., Canada and Australia, #1 permanent marker and #1 highlighter in the U.S. and Canada. Expo #1 brand in presentation markers again in North America. In Outdoor & Recreation, our most international segment, 44% of the sales are outside of North America, with brands like Coleman #2 Tent Share in the U.S., #3 Hard Cooler , #1 stoves; and Contigo, #1 Thermal Share in the U.S. and #3 Kids Shares. And Campingaz, very popular brand in Europe with [ clutches ] and stoves and so on. So now let me talk a bit about our international go-to-market. As I said, international has been outpacing the U.S. But there's been a lot of fragmentation. How do we consolidate, how do we look at countries, One Newell create sales forces that can leverage our total sales when they go to customers. And that's what we started doing. We just appointed a General Manager for Newell for all of Canada, same for Mexico, same for other countries and in Australia and New Zealand, in Japan. And now we're looking at working with workers councils in Europe to see when we can do that in Europe. We think that this is really going to leverage our scale as we go forward. And then on Newell sales model. When I started and went and did a tour with customers, they were really not very happy with Newell because they felt there are so many people from business is going to them. They didn't have a view of One Newell, and they didn't feel our service was that great. There are a lot of issues. Today, we've gone from a 4 letter word hopefully to the 4-letter word of love. Maybe that's an exaggeration. But really, our partnerships with our customers is really very strong where we've become a strategic partner, whether it's JVPs or ASPs, I think we've created a lot of traction with them. And we created this by creating a Chief Customer Officer role, having heads for each of the customers. And now with the new model, we're actually putting that all on a P&L basis under our Chief Customer Officer where the segments can now focus on their specialty customers. So writing -- for instance, the writing sales force can focus on Staples and Office Depot, where it's on a consolidated basis, we'll go after the top 4 customers under a centralized umbrella. So we're harnessing the scale of the portfolio and domain expertise to win as One Newell. This new sales force of Newell. We're really all about thinking about, hey, category captains, category leadership, all about helping our retailers grow their categories. We're looking into driving more and more omni selling and activation. Building operational financial acumen amongst our sales teams so that both customers and ourselves are winning on margins and simplifying the One Newell go-to-market and creating that One Newell culture. So you can see with what I've shown, where we were and where we are going. We have a great team. I really think that the best days of Newell are ahead of us. And with that, let me just show you 3 commercials, which personify some of the innovations and brands you'll start with Sharpie, then you will see a commercial. And a lot of this is used in social media and YouTube and so on. And it's on squishies, hopefully, you'll start singing that song, and then we'll end with Graco, turn to me, which really addresses a pain point for our consumers and is a great innovation, and it's now become the fastest-growing turn to me car seat in that category. So let's hit the commercials. [Presentation]

Now Chris Peterson, my friend and partner, to talk about supply chain and all the other improvements. Chris?

Thanks, Ravi. Good morning, everybody. It's great to be back here in person at CAGNY. It's been a few years. One of the key strategies that we've been pursuing as a company has been around building operational excellence. And I thought I would start there today. This slide shows in the supply chain in particular, there are 4 planks to our strategy that we've been pursuing. We're focused on building a scaled One Newell supply chain. We are focused on driving scale and strategic relationships across the enterprise with our key suppliers through our procurement organization. We are reimagining our operations, which is really about automating and digitizing our manufacturing plants and our distribution centers and turning them into a compelling best place to work for our frontline workers and then we want to become the reliable retailer partner of choice across general merchandise categories, all of this based on the foundation of having the right people, process and technology. To help enable this, we've been focused as we've been talking for the last few years on simplification and complexity reduction. Ravi talked a number of the statistics on what we've done to simplify the IT systems, but we've done more than that. We've also simplified our legal entity structure. We've rationalized manufacturing plants and distribution centers. We've got Ariba now in place, which is a procurement system that gives us full spend visibility across the entire enterprise so that we can leverage the scale of the company with our suppliers and more. Perhaps the biggest project that we've done in this regard has been Ovid. Two years ago, we had 23 independent unique supply chains in the U.S. that was very complex did not leverage scale. And frankly, when we went and talked to retailers, they would tell us we were the most complicated company to do business with. We had a vision of saying we want to integrate that into a single Newell distribution company. We want to standardize and simplify our processes. We wanted to move product closer to our customers and consumers, and we wanted to drive scale through transportation to both improve service and lower our cost with a vision of having -- being able to accept a single order, ship on a full truck and invoice on a single invoice. Happy to report that we started this project about 1.5 years ago in concept stage in the middle of a supply chain disruption. And we've delivered pretty much on the original time line throughout the project. We had our first go-live, as you'll recall, in July of last year, where we've converted about 40% of the business into the new network. On February 1, just a few weeks ago, we moved the balance of the business into the new network. That conversion has gone exceptionally well ahead of plan and we are now fully operating in the new model. And I want to just give you a little bit more about why we're excited about being in the new model. So as part of the new model, we had to stand up 2 new distribution centers. One is in Newville, Pennsylvania. The other is in Gastonia, North Carolina. These are big facilities, 1.3 million square feet in Pennsylvania, 1.5 million square feet in North Carolina. The company did not have distribution capacity on the East Coast of the United States, North to South. Most of the company's distribution centers were either West Coast or Midwest. And so we needed these 2 facilities to expand and create a nationwide network. If you look at where we are today, we now have a multi-node network with mixed delivery capability that's fully operational, and our distribution centers are located in places that allow us to have full coverage across the country. So let me try to give you an example of what does this look like. So if I start with the map on the left, this is the baby gear business, which is the Graco business. Graco prior to the Ovid network shipped out of Southern California. If you look at the dark green, we could get there within about a day, anywhere in the red or the purple, it would take us a week or more to get there. It would ship on a less than truckload shipment and it would transfer trucks multiple times on the journey and probably arrive damaged a good part of the time. If you look at where we are today, which is the map on the right, that Graco car seat is now in 3 mixed distribution centers. We can get to the vast majority of the population centers on same-day delivery or 1-day delivery and cover 85% of the country in 2 days. Not only that, but we're moving from less than truckload shipments to full truckload shipments so that the truck goes directly from our distribution center to our retail partner, which gives us an advantage in terms of reducing damage, improving our on-time performance, et cetera. Effectively, we're moving from what I would classify as a poor service, high-cost network to a low-cost, high-service network. It took a lot to get this done. We had to stand up a unified face to the customer. We created a consolidated new legal entity, which is the U.S. Newell Distribution Company. We had to go and renegotiate our payment terms and our receivable terms and transportation terms with every retailer in the United States to harmonize them, so that we could basically invoice them and ship them on a single truck. We simplified our customer count. When we looked at the customer base, we were servicing directly over 7,000 retail customers. We moved the tail to a distributor wholesaler type model to simplify our operation. We have now centralized our transportation network, and we expect to drive significant cost savings by doing that. This model also has the benefit of diversifying our ports. We had 85% of our port exposure to L.A. and Long Beach. We're now 50-50 between the East Coast and West Coast. We've improved fulfillment times, as I showed with the baby gear example. And we're starting to see already enhanced results from a service standpoint. The products that are shipping as part of the new network, we're seeing our fill rates improve by almost 10 points, and our on-time performance is up by more than 10 points in terms of delivery. So our retailers are very excited about this. And then finally, from a sustainability standpoint, and I would say this is both sustainability and cost related. We expect to take a significant amount of miles driven out of the network as we move from parcel and LTL shipments across the country to full truckload shipments much closer to where the delivery points are. Ovid has been instrumental because it's involved a lot of people in the company. If you think about 23 unique supply chains going to one, we've had over 1,000 people in the company involved in this transformation. And what's important about that is people have been involved in the project. The project has gone well, and we have now a proof point that we can leverage scale across the company, and it can actually deliver a better outcome. And so we think that this gives us permission with the employee group, and we're gaining momentum on this One Newell mindset. So we are driving simplicity standardization. We think we have the ability to leverage resources and scale. We think this is going to create enhanced opportunities for our people. And importantly, it sets the foundation for us to then take the next step, which is to begin to leverage scale in our go-to-market strategies, centralizing manufacturing, which I'll talk a little bit about, unifying customer fulfillment and our enterprise customer teams, which is the next step in the scale journey. And so Ravi showed this chart, which are the 4 key tenets of the Project Phoenix we announced last month. I want to spend a little bit of time on where we're headed from a unified supply chain standpoint. This is the journey we've been on. In 2017, we had business unit independent operated supply chains, where -- many of the people who are operating in the supply chains in the business unit had never met the people in the other business units. There was no scale leverage. We started over the last several years by creating a hybrid capability where we staffed a center of expertise with best-in-class capability and began to implement things like automation across the enterprise. We began to simplify all of the things on IT systems. We began to -- we've executed now the Ovid project to effectively operate as 1 company across distribution, transportation, customer service in the U.S. We're now taking the next step to move to the green going forward, which is a fully integrated Newell supply chain, and we think there's big opportunities in this. As we look to take the next step, our focus is on driving operational excellence through common standards, technologies, process skills and a highly engaged workforce. We think there's an opportunity for us to leverage scale that is a competitive advantage opportunity for us going forward versus the companies we directly compete with who don't have the scale that we do across general merchandise categories. We're already seeing opportunities to significantly remove duplications and redundancies as we're moving to this new model. One example is if you look at our manufacturing footprint today, which is the next leg of the journey, over 90% of our manufacturing plants are still single node or single business. And so if you look in the U.S., for example, we have 20 manufacturing plants in the U.S. Now we have somebody who is the Head of North American manufacturing, we're going to start looking at those manufacturing plants to say, how do we better utilize them, increase the asset utilization, drive the next wave of rationalization and leverage scale even further. We think there's a big opportunity. It's not going to happen overnight, but we think there's a big opportunity to further reduce our cost, improve speed and improve service for our consumers and our customers. The journey we're on is to create a world-class supply chain. We have 3 objectives as a company. We want to drive top line growth, we want to drive margin improvement and we want to drive cash flow. And if you look at the supply chain priorities, they are very much tied to those 3 Newell objectives. In terms of top line growth, we want to be the preferred partner of choice across general merchandise, and we're starting to take the journey to get there. We want to support growth in the business, whether it's innovation, regions, different channels to support the top line growth. On margin improvement, we're focused on accelerating productivity. This is both through our fuel productivity program, automation, the network design that I mentioned and continuing the journey on simplifying the operation, whether it be SKU count, systems, data, et cetera. And then on cash flow, we're focused on platinum planning and inventory management to reduce our working capital, reduce our days on hand and begin to turn the company back to a very strong cash generator. So let me shift gears a little bit and talk a little bit about the financials that we reported 2 weeks ago and the outlook we gave for 2023 and then what our priorities are specifically for 2023. So when we reported results 2 weeks ago, we were coming off a period in 2021 where the company had 12.5% core sales growth. That 12.5% core sales growth benefited from stimulus money that gave -- that brought consumers into the category and COVID demand for some of our categories that led to peak demand levels, particularly in the home and outdoor categories. That strong core sales growth in 2021 continued into the first half of '22, but you can see in the second half of '22, things changed. And effectively, we wound up in the second half of '22, down 10.1% on core sales growth. And there were a couple of drivers of that. The first is consumers became more under pressure as inflation in food, housing and energy put pressure on consumers in discretionary categories. The second is some of the categories that had experienced COVID peak demand, particularly in home and outdoor began to normalize back more to pre-COVID levels. And then given those trends, retailers -- and an improving supply chain situation, retailers began to reduce inventories that I think you're all aware of. Those 3 trends effectively resulted in this trend shift that we saw in the second half of last year. We gave guidance 2 weeks ago for 2023, and we called 2023 core sales to be a range of minus 6% to 8% as we expect those trends to continue into '23. I will say we expect those trends to be more pronounced in the first half of '23 and significantly less pronounced in the second half of '23. If you look at operating margin, we drove operating margin improvement in '21. We continued in the first half of '22. In the second half of '22, we took a pretty big step backwards and the reason for that is because we pulled back on our supply plan significantly to rightsize our inventories to get our working capital back and that leads to the cash flow piece here, where you see we had strong operating cash flow in '21. In '22, we took a step back because of the working capital, but we very much expect to be a strong cash contributor in '23. So if I go to how this shapes our priorities for '23, we basically have 5 priorities we're focused on for '23. First and foremost is strengthening cash flow and the balance sheet. We expect to rightsize inventory carefully manage the forecasting process and return the company to being a strong cash generator. The exciting part about this is if you look at what happened to our inventory when we made the intervention sort of late summer on the supply plan, we've already started to see progress. So in the fourth quarter, our inventories were down by over $400 million from the end of the third quarter, and that's a leading indicator of cash flow progress to come. It doesn't show up right away because when you first see the inventory reduction, it's offset by payable reduction. But as you go forward, those normalize and you start to get the cash back. We're also focused on driving gross margin improvement this year, accelerating FUEL productivity savings, continuing our automation initiatives. We took out almost 1,000 jobs out of our supply chain last year through automation and we're on track to do about the same number again in 2023. We think we've got a big opportunity to operationalize Project Ovid now that we're fully in the model, as I mentioned, we are pricing internationally for currency, and we're driving greater financial discipline on our innovation. We're also focused on driving overhead savings through Project Phoenix, continuing the work on SKU count reduction and complexity reduction and operationalizing the new organization and operating model. So on cash flow, you can see in 2019, 2020, 2021, we had very strong operating cash flow as a company. I think when I stood here in 2019, shortly after I joined the company, I said our cash conversion cycle was the worst in the industry. We have made very steady progress in improving that in significant progress to '21. I mentioned we took a step back in '22 because of the sudden change in top line trend but we are very committed to getting back on track to be a strong cash generator and we've got good line of sight to do that in '23. We're also continuing to focus on complexity reduction. Also in 2019, when I was here with Newell for the first time, I reported that we had 100,000 SKUs, and I thought at the time we could get to 50,000 not because I knew anything, but because it seemed like a good number. We got there, and then we set the bar even more aggressively to 30,000. We beat that bar as well and ended last year at 28,000 but we now still think we've got another round to go. So I suspect that we will continue to drive improvement there. And what's important about that is not that we're reducing SKUs. It's that -- it's the right hand of this chart, that we're increasing revenue per SKU. And if you look at our revenue per SKU, our revenue per SKU has more than tripled since we started this program in 2018. And that's important because that revenue per SKU is what allows us to create significant consumer value. It enables us to drive productivity across the supply chain. It enables better automation, it enables a better cash conversion cycle. We're continuing to drive productivity as we head into this year. And in fact, this year, in '23, we expect to be an all-time record high productivity year for Newell. And so we've started the productivity program. Prior to 2019, the company was delivering productivity that was less than 1% a year since we started the FUEL productivity program, the automation initiatives, we've been between 3% and 4% each year. We expect this year to be above 4%, and that's because of the fuel productivity programs, automation in addition to the Ovid program coming to life this year. And so we're expecting a very strong year. Let me just show you a little bit of the automation that's happened in the company over the last couple of years. [Presentation]

So let me end where Ravi started, which is we believe that we have significantly strengthened the company's foundation over the last few years. We are taking decisive action to improve our financial performance starting in '23, with a focus on cash and profits given the external environment. We're continuing to reduce complexity and leverage scale. We are focused on operationalizing the new organization structure and operating model and we're also focused on enhancing consumer value so that we position the company to come out stronger once macros improve. So with that, Ravi?

Thank you. So as Andrew stated, I announced that I'll be retiring May 16. It's been a great journey. And one of the highlights of that journey for me has been building an amazing leadership team and an incredible partnership with my friend here, Chris Peterson. He's truly ready. He's the right person with the right temperament and the right skill sets to take Newell forward to the next level. And that's why I feel it's not just the strengthening of the company, but we'll have the right leader going forward and the right leadership team, and that's why I feel Newell's best days are truly ahead of us. The transition has gone very smoothly. Our employees have accepted Chris, this is not a surprise. We've been a very deliberate working this. So there was no surprises. He's well liked, well accepted. And with that, Chris?

Yes. I'll just mention that it's been a real pleasure, Ravi, working with you, and we've had a great partnership. I also want to welcome Mark to the team. Mark and I worked together at P&G for many years. And Mark has been with us about 2 months, and I echo Ravi's comments, I think the company is much stronger today, and we're very much looking forward to the future. So with that, we will open for questions.

Thanks and congratulations on the transition. On that note, Chris, you and Mark come with a P&G background. The Chairman of the Board comes with a P&G background. And P&G obviously has been a great company over the past few years, great stocks. So that would seem like a fantastic combination except for where 10 years ago, there was a big company, CEO who came from Unilever to run Newell and it didn't work out so well. Before him, somebody from P&G came to Newell to change things around and that didn't work out so well. So help us understand how the P&G experience helps how that -- it might be different and how you look at kind of the changing as we've come out of the Ravi's really led a great transition out of some pretty dark times. As you get to a more normalized environment, how does that look?

It's a great question, and it's something that I have thought a lot about. It's interesting. If we try to turn Newell into P&G, we will fail. That is not our strategy. But I think that the P&G experience is very helpful and very instructive because a lot of what you learn at P&G is designed to get the fundamentals across all of the different things that are required to win in consumer products. You understand what best-in-class capabilities look like. But then both Mark and I have spent a lot of years outside of P&G at other companies that are smaller that are not P&G. I went to Ralph Lauren, I went to Revlon, I came to Newell. Mark has been at Masonite and Railroad and Tiffany and Cerner. And I think through those experiences, I think we've got sort of the best of both, which is we know how to operate in a scrappier small company maybe less developed set of capabilities company like Newell, but we also have the background of what best-in-class looks like. And so in my mind, it's about being choiceful about where do we want to dramatically improve our capabilities that's going to directly connect to the shareholder value equation, and that's what we're working on. I think I mentioned on the earnings call that we're going to take a fresh look with the leadership team, given the change in the external environment at the company's strategy. And I don't expect a revolution, but I do expect it to evolve, and I expect to complete that work over the next several months. Lauren?

Great. Thanks. Chris, there was a lot of the information on Ovid and the mechanical pieces of it, which are desperately important. I was curious as you're starting to talk to retailers in this notion of leveraging scale and not being differentiated. Because I remember having that conversation with Mark [indiscernible] this should be really cool. So what is it the changes sort of in the store in your conversations with retailers besides it being easier to do business with Newell, where do we get to the building the business part and maybe any sort of early look into conversations you're having or how you expect [indiscernible].

So we were -- I'll just mention, as an example, Walmart, who is our largest retail customer. There are about 14% or 15% of our business, we report in the 10-K. Ravi and I and a few others went to Walmart 3 weeks ago and met with their Chief Merchant and their key sort of leadership team and as part of that process, they asked us to be what's called an advanced strategic planning partner with them. And they don't do that for very many companies. I think we're the only company in the space we compete in that they've asked to do that. And that's a good example of leveraging our scale. And so we almost had to get through Ovid and get the customer service improvements to get the conversation off of why are you guys coming to us with 23 different supply chains and not good customer service. We've now crossed that bridge. And now we're focused on how do we take our leading brand positions and our leading capabilities and begin to drive category growth and in our case, share growth across the enterprise and show up at retail, whether it's in-store or online with competitively advantaged value products to consumers. And so that's the next phase. And we're starting to see the retailers ask us to play that role more and more. So the promise is still there. and we are focused on running through that and beginning to deliver against that.

One thing I'd add, Lauren, is Ovid just didn't happen overnight with customers. We co-opted them. I remember my first trip to Walmart with the previous Chief Merchant, walking through. And one of his big complaints was Newell's supply chain, and he couldn't understand why each business had to be invoiced separately and all of that. And so as we did Ovid, we co-opted, we asked them to put their supply chain people as part of our teams to give us advice. So they've been part of this. And the fact that we've unified all the terms -- the payment terms for Newell, that's pretty historic. So whether it's customer service, whether it's terms, this is the backbone of the company is stronger now so that we can really focus on category growth, consumer preference, et cetera.

Kevin?

Kevin Grundy, Jefferies. Maybe got a couple of minutes. I'll try to be brief with this. Chris, just maybe the scope of the portfolio review for historical context. I think a lot of folks remember, at the time of the merger was a $16 billion business. By the time the portfolio shuffling, it is down to $8 billion to $9 billion, and we're somewhere in that 9-ish sort of range today. I think there was some level of concern, Ravi, from yourself included or an Outdoor & Recreation appliances. It had a bounce during COVID. And then as you guys spoke to, it's kind of having a little bit of a hangover now. So maybe just comment on the scope of the review and potentially for investors, what is considered and what's on the table here with the review.

Sure. Helpful clarification. So when Newell bought Jarden in 2016, the company, as you mentioned, was a $16-or-so billion company. And since that time, the company has done 15 divestitures. And those 15 divestitures have really resulted in a portfolio that is much more cohesive relative to how we can leverage scale across the portfolio. Portfolio today can be characterized generally as leading brands that are sold through common distribution channels, where the capabilities required to win are relatively consistent. And so the scope of the review that we're going to take from a strategy standpoint on M&A, I suspect you'll see us continue to evaluate tuck-in and tuck-out divestitures, but I do not expect us to look at significant major acquisitions or significant major divestitures because we think we've got so much opportunity organically to drive this portfolio forward.

I think, Kevin, one thing, the whole operating model with the new segments, which are operational segments, not just accounting. It really helps address the issue of appliances or outdoor because we got the synergies and now we can drive the brands.

I think we'll wrap it up there. Just join me one more time and thanking Ravi and congratulating Chris and Mark on their new roles. And obviously, we'll take it over to the breakout.