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

Good morning, and welcome back to Deutsche Bank's Global Consumer Conference. My name is Christopher Barnes, and I'm part of Deutsche Bank's U.S. consumer packaged goods research team. It's my pleasure this morning to welcome back Newell Brands to our stage. President and Chief Executive Officer; Chris Peterson; and Chief Financial Officer, Mark Erceg, will lead us through a presentation, after which we'll dive into some quick Q&A as time allows. And without further delay, the floor yours, Chris.

All right. Thank you. It's exciting to be back at the Deutsche Bank conference, as always. Before we get started, we have put a forward-looking statement in our presentation deck. It's on our website for those that are interested. I thought I would start with just a little bit of background overview of Newell. Newell is about a $7.6 billion company. We generate about $900 million a year of trailing 12-month EBITDA. We have 25 that represent 90% of the company's sales, 10 countries that represent 90% of our sales. About 62% of our business is in the U.S., 38% is international. You may not have heard of Newell Brands, but you've heard of our brands. Our top 10 brands include brands like Rubbermaid, Graco, Coleman, Sharpie, Paper Mate, Yankee Candle and Oster, to name a few. We have a diverse portfolio that's organized into 3 segments: the Home & Commercial segment, the Learning & Development segment in the Outdoor & Rec segment. And our business is pretty globalized, as I mentioned, with the U.S. being the largest market at 62%, but 38% spread regionally relatively around the world. Key messages for the presentation today. In 2023, we conducted a capability assessment of capabilities that were required to win in consumer products. From that capability assessment, we deployed a new corporate strategy actually at this conference 2 years ago today with a clear set of where to play and how to win choices. That strategy was then fully implemented over the course of the last 2 years with a new operating model, critical talent upgrades and a culture redesign. We believe that we now are in the position where we have the right capability set to successfully compete and win with consumers and leading retailers, and we'll talk through why we believe that's the case. And we believe we have evidence now that the new strategy is working as our top line trends have improved since we put the new strategy in place. We have dramatically improved our gross margins. We've improved gross margins 7 quarters in a row. We've had strong operating cash flow. And we believe we've got significant runway for future value creation. So let's start with the capability assessment. The time we did the capability assessment, these were the 11 capabilities that we thought were required to win in consumer products. We subdivided these into, on average, about 5 sub-capabilities each. We did a database analysis comparison of where Newell stacked up versus best-in-class consumer product companies. And from that, we put in place the strategy and a capability improvement plan. That led to this strategy, which is a fairly simple strategy, but a complicated strategy to actually execute. We have 5 where-to-play choices focused on distorting investment to our largest and most profitable brands, expanding distribution in our fastest-growing channels and winning retailers. From a geographic standpoint, we want the U.S. as the top priority, given it's 62% of our revenue, but we wanted to grow internationally as One Newell. We'll talk more about that. We wanted to disproportionately invest in mid- and high price point segments within the categories in which we competed as opposed to opening price point segments. And target millennial and Gen Z consumers disproportionately because they represent the majority of the purchases in the categories in which we compete. From a how-to-win standpoint, it was very much around building capability in the core areas that are required to win, things like consumer understanding, superior innovation, brand building and brand communication, go-to-market retail expertise, supply chain, and importantly, becoming a high-performance organization. The new operating model we installed had some significant changes that we put in place in 2024. First and foremost, the company put in place a consumer-first global brand management organization, which did not exist prior to the new strategy. We standardized the international operating model to move from going to market by business, by country to a One Newell integrated operating model where we go to market as a company in each of the top 10 countries. We centralized U.S. selling and created a new business development team. We took the supply chain finance and HR functions and fully centralized those where we thought we could drive scale and cost efficiency. And we continued what had been a very aggressive simplification agenda. We installed a new team. On the leadership side, we reduced over 20% of the company's management roles that are at the VP and above level. Of the remaining roles, we brought in 25% new people into those roles to upgrade the talent in the leadership organization. The marketing side was probably the biggest change that we made. Not only did we institute brand management, but we then put in place an exceptional performance standard that we measured brand management against. And as a result of that, we wound up turning over and bringing in from the outside about 50% new marketing talent from academy-oriented companies. And then underpinning this, we put in place a high-performing, high accountability culture as the goal of what we were trying to establish. Relative to the new culture, we defined the culture that we were looking to transform the company to by 3 vectors: we wanted to be high performance, we wanted to be innovative and we wanted to be inclusive. And those are the 3 things that we're striving for. As a result of that, we also changed the company's values that we are ascribing to how we want to do this, focused on integrity, passion for winning, leadership, ownership and teamwork. Previously, the company's values had elements of integrity and teamwork, but was really missing passion for winning, leadership and ownership, which we felt are important values to get the company back on the right track. We also have simplified our brand portfolio. We started the journey, we had 80 brands across the company. Today, we have about 55 brands. So we have disgorged about 25 brands. So the quality of the portfolio that we're operating with today, we believe, is much stronger than what we were doing several years ago. If you look at how we disgorged the brands, there were several brands that we sold. There were a few that we licensed. And then there were a number where we just shut down the brand because they were small, insignificant, not making much money and we thought that we could capture that volume either in other brands in the portfolio. The way we determined which of these vectors to go after was really focused on net present value, what was the best net present value to do that. If you look today then at the top 25 brands, I mentioned we operate in 3 segments. These are the top 25 brands by segment that we go after. And so you can see in Learning & Development, the Writing and Baby brands; in Home & Commercial, you can see the Commercial, the Home Fragrance and the kitchen brands. And in Outdoor & Rec, you can see Coleman, Contigo and Campingaz, which is a big brand here in Europe. What's important about this is that we believe that these brands all fit together well under the Newell umbrella for a couple of reasons. First, the same core competencies are required to win across all of these brands. So if you think about the capability assessment that we went through and the capabilities that we're driving of consumer understanding, innovation, brand building, brand communication, all of those things are important for each of these brands. Second thing is the vast majority of these brands are sold in common retail channels around the world. So there's significant synergy in going to market with them as 1 portfolio. Part of what Newell was doing in the past was going to market without them in 1 bag or in 1 sales organization, but in a dispersed set of sales organizations. So as we've now put the sales organizations together, we are seeing significant synergy by going to market with all of these in a common sales force. We also have integrated the supply chain and back office, and this is leading to significant cost synergy. As an example, a few years ago, in the U.S., we were supplying the U.S. market with about 20% of our volume moving in full truckloads. Today, about 80% of our volume moves in full truckloads. So we have dramatically consolidated. We've moved to mixed distribution centers that can support all of the brands so we can deliver a single order with a single invoice to a single retailer and carry each of the brands in that. We believe we now have the right capability set to successfully compete and win with consumers and leading retailers, and I'll just spend a minute on each of them and give you a snapshot of where I think we are in this journey. So this was the capability set that we showed previously that we started with. If I just spend a second on each of these, I'll start with consumer and customer understanding. This is foundational work that all consumer product companies need. The company did not have a great consumer insights organization. We built and hired a new internal consumer insights organization. That organization has now mapped 37 different consumer segments across 17 countries with 76,000 respondents. The one I'm showing here is an example of a cooking segmentation. So if you think about how people cook, there are 7 segments within that. The reason why this is important is if you are trying to put a brand strategy together, it's important to know which of the consumer segments are you going after with your brand because each of these consumer segments are looking for something different. And so if you don't understand what the segmentation is, it's hard to come up with new product innovation and compelling brand building. This work is now complete and has been done across all of the top 25 brands across the company, which is foundational work required for good brand management. In terms of brand building, we've installed a Newell Brands Brand Academy with best-in-class training. We've made a significant investment in upskilling , as I mentioned, the marketing organization. We've now put a rigorous training course to really move the capability and improve the skill set of the marketing organization. That is enabling the global brand management operating model to operate in a much more effective way. We've also created a center of expertise and marketing that's focused on data-driven marketing and enhanced media capabilities that is driving higher ROI across the company's marketing investment. As an example, brand communication is an area that we've made meaningful progress focused on driving awareness, engagement and conversion across different elements like public relations, paid media, brand-owned marketing, shopper marketing and influencer marketing. This is an example of the Rubbermaid Easy store innovation that's set to launch later this summer in the Rubbermaid Food Storage business. And you'll see as we're going to market with the new innovation, we now have a holistic 360-degree marketing campaign across all of the relevant touch points to drive the brand communication in a more productive and effective and efficient manner. On innovation, we had major work to do to improve the company's innovation capability. And I'll just give you a few examples quickly of innovation that is launching this year that is dramatically better than what we've had previously. So many of you heard us talk about last year in Writing, we launched Sharpie Creative Markers. This year, we're launching around -- sort of the extension of that with new earth tone colors and a new fine tip size. Since we launched Creative Markers, we went from 0% market share in paint markers to 35% market share in paint markers. So it's been a strong innovation based on superior product, and we are extending it with additional innovation coming this year. This is a good example. This is one of my favorite. The Sharpie brand back in 2020 was a permanent marker brand. We decided to enter gel pens. On the left, what you can see -- when we first entered gel pens, we came with a terrific product that was MSRP of about $10 for a pack, $1.25 per pen. We then, in '21, extended with metal barrel pens, which allowed us to move the price point per pen from $1.25 to $2.50 or double the price per pen. And then last year, we launched the Sharpie S-Gel copper pen at $10 per pen. And so we are driving category growth through innovation that is delighting consumers, and this is a good example of how we're doing that. We are launching, as we speak, on EXPO. EXPO is our dry erase brand, which has about 80% market share. An upgrade to the ink on -- that's used on EXPO to make it much more vibrant colors, so that people can see across the room when you're writing on a whiteboard. In addition to this, we're also launching a wet erase segment, which is a new-to-the-world segment. that is permanent until you don't want it to be. So one of the challenges with dry erase is you rub up against the whiteboard and it rubs off. With wet erase, you can write it and it won't rub off unless you put water on it. And so we believe that's going to open up a whole new set of usage occasions and drive growth on the EXPO brand. On baby care, we've talked about the SmartSense, which we've launched toward the end of last year, and we will be activating aggressively this year, both a Soothing Swing and Bassinet that respond to baby's cries. This is off to a terrific start, and we believe we've got significant opportunity for growth behind these products. We also are launching -- or have just launched a 360-degree turning cars under the Graco brand. That's a 2-in-1 convertible car seat that we believe is going to be a game changer for the industry in the U.S., and we're off to a strong start on that product as well. On kitchen, we've just launched an extreme mixed blender. This is our first foray into -- in the U.S., at least, into performance blenders. The Oster blender business is a very strong business in Latin America, which is the primary market, but the U.S. has been more of a white space for us. We're off to a good start. This blender is competitive with the best performance blenders in the U.S. market. In fact, as we were traveling over here, Food & Wine magazine just came out in the U.S. and named the Extreme Mix blender the best blender available in the United States. So outperforming Vitamix, SharkNinja's product and others. So we're excited to get in the game in the U.S. I will also mention on the blender business, our blenders are self-manufactured in Mexico in a facility that's USMCA compliant. So we also are not subject to tariffs, which is a unique advantage that we have in this category versus the vast majority of our competitive set, which is made in Asia. On Rubbermaid Commercial, we've done work to launch a set of farm products under the BRUTE brand name that we're pretty excited about. So the team has gone and looked at farms, and we've determined that we've got a big opportunity to disrupt this category with BRUTE products that are indestructible by large animals. And so we're launching a whole lineup. The one pictured here is a water or a feed bowl that will replace what historically has been a metal product that will last about 30 days. This product will last 10 years. And so we think it's a game-changing product for the farmer community. Home Fragrance, this is our largest innovation of the year. This product is set to launch in about 30 days in the U.S. We're doing a complete restage of the Yankee Candle brand with significantly improved soy wax formulation for a cleaner burn, a significantly improved fragrance formulation and significantly improved graphics and packaging behind a new advertising campaign. In addition to that, we're going to be launching a new premium candle offering to get in the game at more premium levels. We're pretty excited about this. The response from the consumer testing we've done has been terrific, and more to come as we get into the back half of the year. On Coleman, we've launched a set of Coleman coolers called Coleman Pro that launched earlier this year, which are injection-molded coolers, which are much higher-end coolers. So these coolers compete with much higher performance-oriented coolers and they represent a superior value to those coolers. We're off to a strong start in this brand, but this is an example -- a good example of how we're trying to bring the Coleman brand out of the opening price point in the U.S. up into more of a lifestyle aspirational type of brand. Innovation has been a multiyear journey. When we were here 2 years ago at this conference, we said that we needed a complete reset of the innovation process, people, objectives, everything. And so we really did a sort of a full stop of what the company had previously been doing, which was launching a lot of SKUs that were not really driving any type of financial result that were not consumer oriented. We've been working over the last 2 years to build a healthy pipeline of products, and we believe we've made significant progress on that. And our innovation launches this year will be the strongest that the company has had from a financial standpoint in 8 years since the Jarden acquisition. And we've got a great pipeline coming for the following year. So we believe that we are now finally at the point where we have good innovation that's investable, which is required to get the company fully back to core sales growth. From a go-to-market and retail execution standpoint, this is an example of a major U.S. retailer that we're working with to do an aisle reinvention. And so on the left, you see what their shelf looked like previously. The right is what it looks like in the test. The test results came back. We grew the category with the aisle reinvention by 470 basis points for this retailer. Importantly, Newell grew by almost 1,200 basis points, so our market share went up because we have the leading brands and that retailer, which expanded the test in October '24 has now committed to roll across their entire line which will reset in October of '25. So this is an example of how we're trying to play the category leadership role where we have category leadership positions, which we had not been doing previously. On the international side, I mentioned Oster in Latin America. This is an example of a 100-year anniversary program across multiple touch points that we ran from a commercial innovation standpoint and a good example of what we're trying to do from a go-to-market standpoint. From a supply chain and procurement standpoint, we believe we have a competitively advantaged global trade expertise center. And I probably wouldn't have put this slide in if -- maybe 3 months ago. But with the political landscape that we're operating in now, I feel very good about having this. So we have a dedicated team of people that has over 500 years of experience. We operate 4 free trade zones in the U.S., which is unique. We don't believe many of our competitors operate any. We have real-time data on all of the goods movement. We've showed a picture here. I could pull it up on my computer and show you where any of our containers in the world are at any moment on any ship. And we can quickly maneuver based on trade and tariff policy to maximize profitability and flow of goods. From a supply chain standpoint, we've done a lot of work investing in the company's supply chain. We have 42 manufacturing plants around the world. We've invested over $2 billion in capital over the last 7 years to automate these factories. And so if you look at the factories today, we are operating with highly efficient, highly automated factories. We've improved the company's global fill rate to over 95%, which is the highest in the history of the company. And we've reduced our dependence on China from what was 35% several years ago to less than 10%. We have 19 tariff-advantaged categories that are produced either in the U.S. or the U.S. or in Mexico for the U.S. This gives you a sense of where they are. Eight of Newell's top 10 brands are manufactured in North America. So we believe we are advantaged from a tariff standpoint in more categories than we are disadvantaged. And then lastly, from an artificial intelligence standpoint, this is one of the areas we got started on as well from a capability assessment -- from a capability standpoint 2 years ago. We started by standing up a governance team and going aggressively after artificial intelligence use cases or applications. Today, we've got about 75 apps live across the company that we are using every day across marketing, across supply chain and across our consumer service, customer service and back-office functions. Where we're moving to is agentic AI, which we believe is the next frontier. We've got a few agents started, but we believe there's more to go there to drive capability improvement. In closing, we believe over the past 2 years, we've really fundamentally transformed the company. We started with the capability assessment and the new corporate strategy. We put in place the new team, the new culture, the new operating model, simplified the brand portfolio. Today, we believe we have the capabilities in place to really accelerate performance. Mark will talk a few minutes more about that.

Thanks, Chris. So Chris just discussed how the capabilities we have built and the interventions we have made in support of our new corporate strategy have put Newell Brands in a position for the first time in a long time to successfully compete and win with consumers and leading retailers. What we'd like to do now is highlight the significant progress we have made in operationalizing and monetizing our new corporate strategy as evidenced by improving top line trends, dramatic margin expansion and strong operating cash flow. Newell's new strategy and capability set provides us with significant runway for value creation, which is why over the past 2 years we've been maniacally focused on top line acceleration, margin expansion and driving strong cash flow. So let's go a bit deeper into each of these areas, starting with top line acceleration. As you can see on Slide 39, total company core sales trends have improved sequentially and meaningfully during each subsequent 6-month period since the adoption and implementation of our new corporate strategy. And while we have admittedly not yet seen total company core sales trends turn positive, it is important to point out that both the Learning & Development segment, which is our most profitable segment; and our international business, which represents nearly 40% of Newell's total sales, each posted positive core sales growth for 5 consecutive quarters. Looking forward, brand category exits are now largely in the past. Our front-end capabilities and our intervention program, in particular, are getting stronger every day and we have numerous tariff-advantaged categories where we are aggressively pursuing incremental sales opportunities. Turning to margin expansion on Slide 40, you can see we have dramatically improved the underlying structural economics of our business. In fact, trailing 12-month normalized gross margin has expanded meaningfully in each of the 7 full quarters since the implementation of Newell's new corporate strategy and now stands at 34.4%, which is 610 basis points higher than it was just 7 quarters ago. We have achieved this level of gross margin expansion without the benefit of any unit volume leverage or fixed cost absorption, which suggests at least to us that when the top line turns positive, there is potential for even larger gross margin expansion gains. Because Newell's gross margin expansion has been so dramatic, let's spend a little more time talking about what has made that possible. The first significant source of normalized gross margin improvement comes from a reimagined, unified and optimized global plant network, where meaningful investments in automation and shop floor digitization are transforming Newell supply chain into a sustainable source of competitive advantage. From a cultural standpoint, we have a strong frontline engagement program focused on continuous improvement, which we refer to as PEAK, which is a mountain climbing metaphor, which connotes a never-ending climb to the summit of continual improvement. Within PEAK, there are 6 levels of attainment and each level generally takes 12 to 24 months, depending on the phase, size and complexity of the site to complete. Phase 1 is referred to as foundations. Phase 2 is base camp. Phases 3 through 5 are designated as climb 1, 2 or 3. Finally, Phase 6 is the summit where continual improvement has become the cultural norm, and as such, is fully embedded in everything we do. Now with respect to our 42 plants. 15 of our smaller plants have not started their journey. Seven are in Phase 1 and 10 plants are in both Phases 2 and 3. This means we don't have any plants that have reached Phases 4 through 6 yet. So we have tremendous upside potential remaining. That is why, and consistent with last year, we continue to expect 1 to 1.5 points of COGS savings per year from plant network optimization going forward. We also expect procurement as depicted on Slide 42 to remain a major source of gross margin improvement and strategic advantage for Newell Brands. In 2024, Newell reduced its supplier base by approximately 14%, which brings the total cumulative reduction to about 45% since 2020. And this year, 2025, we expect another 10% reduction as part of our never-ending continuous improvement mindset. Reducing the number of suppliers is all about aggregating our global purchase pools in order to lower costs, improve supplier payment terms and reduce working capital requirements with a smaller but more capable set of strategic suppliers, which we can leverage to supplement internal R&D ideation with supplier-led innovation as we proactively share our portfolio towards MPP and HPP segments. We continue to expect procurement-related savings to amount to 2 to 3 percentage points of COGS per year. The third area we'd like to discuss in more detail on Slide 43 is distribution and transportation. Since implementing the second go-live wave of Project Ovid in 2023, we have further optimized the One Newell system in the U.S., and frankly, the results have exceeded our expectations. For example, our global fill rate in 2024 exceeded 95%, which was the highest level Newell has ever achieved since the Jarden acquisition. And during Q1 of this year, our global fill rate was 97%. Consistent with this, we have reduced customer penalties and shortages in the U.S. by 66% versus 2022. On the international front, we've reduced the number of distributors across Latin America, Europe and emerging Asian markets by more than 40% since 2022 with additional albeit smaller levels of reduction expected in the future. With a long list of additional continuous improvement efforts already identified, we remain confident that we can generate up to 0.5% of COGS savings each year from distribution and transportation systems. The 3 areas we just covered, Newell's plant network, procurement team and distribution and transportation systems are all governed by an ongoing company-wide productivity initiative called FUEL, which stands for finding untapped efficiencies and leverage. In the early days, following the Jarden acquisition, Newell Brands' overall level of FUEL productivity savings was relatively low. Then starting with 2019 and moving through 2022, we captured annual COGS savings in the 3% range as our capabilities improved, which based on our benchmarking work, put Newell Brands on par with what best-in-class companies typically achieve. More recently, we have dramatically outperformed what would be considered best-in-class productivity attainment, having saved on average approximately 6% of COGS during 2023 and 2024. In 2025, we expect our level of attainment to be about 4%. And looking forward, we see a very long margin expansion runway in front of us. Overheads are also an area where we have focused on reducing costs as much as possible. As you can see on Slide 45, we've reduced total head count by 14% and office expenses by 25% since 2022. We've also continued to make progress on simplifying our ERP systems. Our goal remains to have 97% of our total company sales on one unified system by the end of 2026. During 2024, we reduced our legal entities down to 227, which is a remarkable achievement considering that number was more than 500 just a few years ago. In addition, from 2018 through 2024, we've reduced office space by just over 1 million square feet and we are on pace to finish fiscal 2026 with less than 70 corporate office locations versus 122 in 2018. For 2025, we expect to deliver about $60 million in overhead savings while simultaneously building essential capabilities. Now when we combine all the individual top line and margin expansion building blocks Chris and I just shared, we believe there's additional upside because of the symbiotic relationship that exists between some of the elements. For example, innovation drives sales, but it's also gross margin accretive, particularly if the innovation is targeted towards MPP or HPP offerings. Pricing and revenue growth management, when done correctly, can grow the top line and have a dramatic positive impact on Newell's structural economics. New business development expands the top line, drives fixed cost leverage throughout the entire supply chain and helps defray corporate and segment overhead expenses. And our international business has gross margins that are higher than the company average, so international growth is also gross margin accretive. This cumulative effect can be seen on Slide 46, which shows the significant expansion in normalized gross margin for each of the 7 full quarters since our new strategy was put in place. It also shows that on a 2-year stacked basis, the normalized gross margin expansion has been even more impressive at 590, 800 and 540 basis points for Q3 '24, Q4 '24 and Q1 '25, respectively. A strict adherence to Newell's new strategy is also strengthening our balance sheet and improving cash flow. On Slide 47, you can see we've driven a $750 million improvement in operating cash flow and a 30-plus day improvement in our cash conversion cycle in 2024 versus 2022 and paid down approximately $500 million and $175 million of net debt in 2023 and 2024, respectively. From a debt maturity standpoint, we have conducted 2 highly oversubscribed debt offerings, one last fall and one just a few weeks ago, which gives us a clear runway out to September of 2027 when we have a $500 million of debt maturing, which based on our internal modeling, we currently plan to pay off with cash on hand and available credit facilities. We expect 2025 to be another strong cash flow year with operating cash flow expected in the range of $400 million to $500 million. Turning to Slide 48. In 2024, we reported normalized EBITDA growth of over 15%, bringing trailing 12-month normalized EBITDA up to $900 million. Strong growth in normalized EBITDA and an 8-day improvement in our cash conversion cycle drove a meaningful reduction in our leverage ratio, allowing us to end fiscal 2024 at 4.9x. We expect to finish this year, fiscal 2025, with a year-end leverage ratio of about 4.5x, which should move us closer to our longer-term ambition of being an invest-grade debt issuer at some point in the future. Two years ago, when we unveiled Newell's new strategy at this very conference, we shared Slide 49, which laid out our annual Evergreen financial targets: low single-digit core sales growth, 50 basis points of operating margin improvement and free cash flow productivity of about 90%. Over the past 2 years, we have dramatically improved our core sales trends and drove both operating margin and free cash flow productivity at rates well in excess of these targets. Nonetheless, we continue to believe that these financial targets are appropriate so we are not considering any changes at this time. Our capital allocation strategy has also served us well, so we will continue funding high-return internal growth opportunities, deleveraging the balance sheet to achieve investment-grade status and strive to maintain a dividend payout ratio in the 30% to 35% range. So with that, we'd like to stop where we started. In 2023, we initiated a capability-based multiyear turnaround strategy. And over the course of the past 2 years, we've been putting new operating models in place, strengthening the management team through a series of critical talent upgrades and redesigning Newell's culture to be high performance, inclusive and innovative. As we stand here today in 2025, we now believe we have the right set of capabilities to successfully compete and win with consumers and leading retailers. And most importantly, there's clear evidence in the form of multiple proof points that Newell's strategy is working. And we believe we still have a significant runway ahead of ourselves for future value creation. Thank you for your time and your interest in Newell Brands. And I believe we have time for just maybe a few questions.

Well, I guess I'll start where, I guess, we just left off. So over the past couple of years, Newell's undergone like many restructuring optimization initiatives and overhauled your commercial strategy, revamped the go-to-market model, simplified the organization and supply chain. I guess, just relative to your Evergreen Targets, how much -- like -- how much of like returning to that Evergreen growth is a function of just some level of normalized and stable underlying market conditions versus strategic and tactical decisions that are directly within your control?

Yes. There's a -- we are certainly subject to macro conditions and market growth conditions. But what we're trying to do is develop a plan and a set of capabilities that allow us to grow faster than market growth by 1 point or 2 consistently every year. And we think if we can grow faster than the market by 1 point or 2 every year, that's how we get back with a normalized market to the long-term algorithm from a top line standpoint. The other thing I would say is that some of market growth in some of our categories is in our control. So if you look, for example, at the EXPO dry erase marker that I mentioned where we have an 80% market share, what's important for us on that business is not do we go from 80% market share to 81%. What's important for us on that business is can we get the category growing faster. That's why we're launching the wet erase segment, which is a completely new segment that opens up new use cases that we believe will drive market growth.

This is an important point. So I want to just expand on it just a little bit. The other thing that we have found is while we may have categories that are down a couple of points, within those categories there's typically a bifurcation between what's happening with higher-income consumers and lower-income consumers. And so as we migrate our strategy to be more MPP and HPP, we believe that we can grow within categories that, generally speaking, may be in decline in total dollars, but there are certainly pockets within it where innovation will still drive net sales in a favorable manner.

Got it. That's very helpful. And then, I guess, maybe just thinking about the near term, I mean, we've heard a lot about a challenged consumer environment at this conference so far. Are you able to comment on how consumption trends have performed, I guess, since you last reported last month? Is there -- is it generally in line, behind, better than your down 2% to down 1% market assumption?

Yes. So on our last quarter earnings call, we updated our outlook for the year to say we were expecting market growth to be minus 1% to minus 2% this year. And nothing, as we sit here today, changes that outlook from the consumption patterns that we've seen. So we -- as we sit here today, I think we're still very much on track with what we said at the last quarterly call.

Got it. And then just related to the tariff environment, like today and even at your last earnings call, you mentioned a lot of opportunities for market share and distribution to shift to your brands and your portfolio just given your advantaged supply chain. As we've seen a moderation in the rate of tariffs on China, like have you seen any shifts in those expected plans, expected wins? And relatedly, with your own business, have you resumed purchases from China? Or just I'd love to hear any updated perspective.

Yes. So number one, we resumed purchases from China, particularly on the Baby business, which is our most tariff-exposed business. That whole baby gear industry is tariff exposed in China. On the flip side, on our advantaged categories, we are gaining strong traction on that. When we announced our earnings call, we said of the 19 categories where we were tariff-advantaged, there were 2 of them that we had already secured wins. Since that time, we've secured wins on 2 more. So we now have 4 of them, which includes Rubbermaid Food Storage, the FoodSaver, Fresh Preserving, the Writing markers business and Home Fragrance where we have U.S. manufacturing capability. And what we're hearing is that retailers are shifting from China and Asia-based sourcing and wanting to move -- derisk their supply chain to favor U.S. manufacturing, which we think is a good idea, and we're taking advantage of that aggressively with our sales pitch with retailers as we speak. And we think we've got more to come. We're in process on the other 15 categories that we're aggressively pitching.

Perfect. And we'll leave it there. Thank you, guys, very much.

Thank you.