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Restructuring | 3 Months Ended
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Mar. 31, 2024
Restructuring and Related Activities [Abstract] |
Restructuring | Restructuring To better align its resources with its strategy and operating model and to reduce the cost structure of its global operations, the Company commits to restructuring plans as necessary and as follows: Organizational Realignment Plan In January 2024, the Company announced an organizational realignment, which is expected to strengthen the Company’s front-end commercial capabilities, such as consumer understanding and brand communication, in support of the “where to play” and “how to win” strategy choices the Company unveiled in June of 2023 (the “Realignment Plan”). In addition to improving accountability, the Realignment Plan is designed to unlock operational efficiencies and cost savings, reduce complexity and free up funds for reinvestment. As part of the Realignment Plan, the Company is making several operating model changes, which entail: standing up a cross-functional brand management organization, realigning business unit finance to fully support the new global brand management model, further simplifying and standardizing regional go-to-market organizations, and centralizing domestic retail sales teams, the digital technology team, business-aligned accounting personnel, the Manufacturing Quality team, and the Human Resources functions into the appropriate center-led teams to drive standardization, efficiency and scale with a One Newell approach. The Company will also further optimize the Company’s real estate footprint and pursue other cost reduction initiatives. These actions are expected to be substantially implemented by the end of 2024, subject to local law and consultation requirements. Restructuring and restructuring-related charges associated with these actions are estimated to be in the range of $75 million to $90 million and are expected to be substantially incurred by the end of 2024. This estimate of charges consists primarily of $60 million to $70 million related to cash severance payments and other termination benefits, $11 million to $16 million associated with office space reduction and consolidation and approximately $4 million of other charges. The Company expects the majority of the aggregate charges will be cash expenditures. The Company commenced organizational realignment activities during the first quarter of 2024. During the three months ended March 31, 2024, the Company recorded restructuring charges of $22 million and nominal restructuring-related charges in connection with the Realignment Plan. Network Optimization Project In May 2023, the Company announced a restructuring and cost savings initiative that is intended to simplify and streamline its North American distribution network (the “Network Optimization Project”) in order to improve the Company’s cost structure and operating margins while maintaining focus on customer and consumer fulfillment. The Company initiated implementation of the Network Optimization Project during the second quarter of 2023 and expects it to be substantially implemented by the end of fiscal year 2024. The Network Optimization Project incorporates a variety of initiatives, including a reduction in the overall number of distribution centers, an optimization of distribution by location, and completion of select automation investments intended to further streamline the Company’s cost structure and to maximize operating performance. The Company currently estimates that it will incur approximately $37 million to $49 million in restructuring and restructuring-related charges associated with execution of the Network Optimization Project and expects that the costs incurred will be substantially complete by the end of 2024. This estimate of charges consists primarily of $8 million to $11 million related to cash severance payments and other termination benefits and approximately $29 million to $38 million associated with industrial site reductions. The Company expects approximately $35 million to $44 million of the aggregate charges will be cash expenditures. In connection with the Network Optimization Project, the Company recorded restructuring charges of $3 million during the three months ended March 31, 2024, and has incurred $10 million since inception. In addition, the Company incurred $2 million of restructuring-related charges during the three months ended March 31, 2024, and has incurred $18 million since inception. Project Phoenix In January 2023, the Company announced a restructuring and savings initiative (“Project Phoenix”) that was intended to strengthen the Company by leveraging its scale to further reduce complexity, streamline its operating model and drive operational efficiencies. Project Phoenix was substantially implemented by the end of 2023 and incorporated a variety of initiatives designed to simplify the organizational structure, streamline the Company’s real estate portfolio, centralize the Company’s supply chain functions, which included manufacturing, distribution, transportation and customer service, transition to a unified One Newell go-to-market model in key international geographies, and reduce overhead costs. The Company estimates that it will incur approximately $100 million to $130 million in restructuring and restructuring-related charges in connection with Project Phoenix. These charges consist primarily of $80 million to $105 million in charges related to severance payments and other termination benefits; $15 million to $20 million in charges associated with office space reductions; and approximately $5 million of other charges, including those associated with employee transition and legal costs. The Company expects approximately $95 million to $120 million of the aggregate charges will be cash expenditures. The Company commenced reducing headcount in the first quarter of 2023, and while the program was mostly complete by the end of 2023, charges will continue to be recognized as the Company completes remaining actions in accordance with local regulations and consultation requirements. All cash payments are expected to be paid within one year of charges incurred. During the three months ended March 31, 2024 and 2023, the Company recorded restructuring charges of $1 million and $36 million, respectively, in connection with Project Phoenix, and has incurred $79 million since inception. Also, during the three months ended March 31, 2024 and 2023, the Company recorded restructuring-related charges of $3 million and $6 million, respectively, in connection with Project Phoenix, and has incurred $22 million since inception. Restructuring costs, net and restructuring-related costs incurred from inception for the Realignment Plan, Network Optimization Project and Project Phoenix (collectively, the “Plans”) were as follows (in millions):
| Severance and termination costs | Contract termination and other costs | Total restructuring charges |  | Restructuring-related charges |  | Total charges
Realignment Plan | $ | 22 |  | $ | — |  | $ | 22 |  |  | $ | — |  |  | $ | 22 |
Network Optimization Project | 7 |  | 3 |  | 10 |  |  | 18 |  |  | 28 |
Project Phoenix | 77 |  | 2 |  | 79 |  |  | 22 |  |  | 101 |
| $ | 106 |  | $ | 5 |  | $ | 111 |  |  | $ | 40 |  |  | $ | 151 |
Other Restructuring and Restructuring-Related Charges The Company also incurs other restructuring and restructuring-related costs in connection with various discrete initiatives. During the three months ended March 31, 2024 and 2023, the Company recorded nominal and $2 million of other restructuring charges, respectively. Restructuring-related costs are recorded in cost of products sold and selling, general and administrative expenses (“SG&A”) in the Condensed Consolidated Statements of Operations based on the nature of the underlying costs incurred. During the three months ended March 31, 2024 and 2023, the Company recorded other restructuring-related charges of $8 million and $7 million, respectively. Restructuring costs, net incurred by reportable business segments for all restructuring activities for the periods indicated and the total charges since inception for the Plans are as follows (in millions):
|  |  | Three Months Ended March 31, |  | Total charges from inception of Plans
|  |  |  |  | 2024 |  | 2023 |
Home and Commercial Solutions |  |  |  |  | $ | 7 |  |  | $ | 16 |  |  | $ | 50 |
Learning and Development |  |  |  |  | 5 |  |  | 5 |  |  | 20 |
Outdoor and Recreation |  |  |  |  | 1 |  |  | 6 |  |  | 12 |
Corporate |  |  |  |  | 13 |  |  | 11 |  |  | 29 |
|  |  |  |  | $ | 26 |  |  | $ | 38 |  |  | $ | 111 |
Accrued restructuring costs activity for the three months ended March 31, 2024 was as follows (in millions):
| Balance at December 31, 2023 |  | Restructuring Costs, Net |  | Payments |  |  |  |  |  | Balance at March 31, 2024
Severance and termination costs | $ | 30 |  |  | $ | 24 |  |  | $ | (34) |  |  |  |  |  |  | $ | 20 |
Contract termination and other costs | — |  |  | 2 |  |  | (2) |  |  |  |  |  |  | — |
| $ | 30 |  |  | $ | 26 |  |  | $ | (36) |  |  |  |  |  |  | $ | 20 |
Accrued restructuring costs activity for the three months ended March 31, 2023 was as follows (in millions):
| Balance at December 31, 2022 |  | Restructuring Costs, Net |  | Payments |  |  |  | Foreign Currency and Other |  | Balance at March 31, 2023
Severance and termination costs | $ | 7 |  |  | $ | 36 |  |  | $ | (33) |  |  |  |  | $ | — |  |  | $ | 10 |
Contract termination and other costs | — |  |  | 2 |  |  | (1) |  |  |  |  | (1) |  |  | — |
| $ | 7 |  |  | $ | 38 |  |  | $ | (34) |  |  |  |  | $ | (1) |  |  | $ | 10 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//420/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4(e)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479823/420-10-S99-2 + Details
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