Good morning, and welcome to Newell Brands' third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time schedule for the call, please limit yourself to one question during the Q&A session. Today's conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com. I will now turn the call over to Sofya Tsinis, Vice President of Investor Relations. Ms. Tsinis, you may begin. Thank you. Good morning, everyone. Welcome to Newell Brands' third quarter earnings call. On the call with me today are Chris Peterson, our President and CEO, and Mark Erceg, our CFO. Before we begin, I'd like to inform you that during the course of today's call, we will be making forward-looking statements which involve risks and uncertainties. Actual results and outcomes may differ materially, and we undertake no obligation to update forward-looking statements. I refer you to the cautionary language and risk factors available in our earnings release, our Form 10-K, Form 10-Q, and other SEC filings available on our Investor Relations website for a further discussion of the factors affecting forward-looking statements. Please also recognize that today's remarks will refer to certain non-GAAP financial measures, including those we refer to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP. Explanations of these non-GAAP measures and available reconciliations between GAAP and non-GAAP measures can be found in today's earnings release and tables that were furnished to the SEC. Thank you, and now I'll turn the call over to Chris. Thank you, Sofya. Good morning, everyone, and welcome to our third quarter call. We had mixed results in the third quarter. We made significant progress delivering against the five major priorities we established at the start of the year, as well as deploying and actioning the new integrated corporate strategy. At the same time, we were disappointed core sales declined 9.2% during the quarter. Let me take these each in turn, starting with the five priorities we laid out at the start of the year. First, year to date, we delivered excellent results on operating cash flow, which improved more than $1.2 billion versus last year, largely due to significant progress on inventory reduction. The stronger than anticipated performance thus far has given us confidence to raise our outlook on cash flow for the full year. Second, during the third quarter, gross margin reached an inflection point, expanding 170 basis points year-over-year, with the Fuel Productivity Program, along with pricing, serving as the driving force. We continue to expect record productivity savings in 2023, with year-over-year gross margin improvement continuing into the fourth quarter. Third, we've completed the Project Phoenix organization design changes, with all markets moving to the One Newell approach. We are on track to realize $140 million-$160 million of pre-tax savings this year and $220 million-$250 million on an annualized basis. Fourth, we are moving at pace with the simplification and SKU count reduction work across the organization and are on track to end the year with less than 25,000 SKUs, down from about 28,000 last year and over 100,000 at the end of 2018. Finally, the new operating model with three segments, a centralized manufacturing and supply chain, and a One Newell approach with our top four customers and across the geographies, is now fully in place and starting to pay dividends. The most concrete example of how we are already creating and leveraging scale under a One Newell approach is the difficult but necessary actions taken during the third quarter to rightsize the manufacturing labor force across selected sites. Those actions, which would have not been possible previously due to the way Newell was organized, are expected to yield about $50 million in annualized cost savings. The challenging macroeconomic background continued to weigh on Newell's top line during the third quarter, reflecting soft demand for discretionary and durable products amidst persistent inflation on everyday goods, normalization in category trends post-COVID, tight inventory management by retailers, as well as the unfavorable impact from the bankruptcy of Bed Bath & Beyond. We estimate that about 80% of the sales decline was driven by category declines and retailer inventory actions. However, there was a meaningful portion of our sales compression that traces back to gaps in our front-end consumer-facing capabilities, or was the direct result of the July 1 pricing actions we took to proactively address situations where our structural economics were untenable. That is why, since my appointment in May, we have placed so much emphasis on developing a robust set of corporate, business unit, functional, and brand-specific strategies, all of which were fully informed by our brutally honest capability assessment to guide our approach in the years ahead. At its core, our new strategy focuses on improving the company's consumer-facing capabilities while distorting investment to our top 25 brands and top 10 markets, and building on the strengthened operational and organizational foundation we have built over the past several years. Following the deployment of our new strategy in June, we've taken decisive actions to bring the new strategy to life in several ways. First, to put consumer understanding and insights at the center of everything we do, we've reinvented the consumer insight function and overhauled Newell's innovation process around a biannual review process. This new process has been established to identify strong, consumer-driven propositions on our top 25 brands with a focus on creating fewer, bigger, and longer-lasting innovations that are gross margin accretive, as part of a comprehensive, tiered product launch system designed to get consumer-relevant innovation into market faster. Consistent with this, and to ensure we are being choiceful in driving the strategy into execution, we are taking swift action relative to the exit of smaller, non-core brands. We are moving at pace and expect to finish the year with a tighter, more focused brand portfolio, comprised of about 60 master brands versus 80 at the start of this year. Second, to dramatically improve brand building and brand communication, and as we strive to build brand management into a foundational capability, we replaced close to half of Newell's brand managers over the past several months and put exceptional performance standards in place, which set clear KPI-driven expectations for all brand managers going forward. In addition, we recently implemented important changes to the process and structure of our marketing and digital organizations to unlock quicker decision-making, drive accountability, and improve our ability to drive stronger purchase intent across our top 25 brands. Third, key members of Newell's sales team have been tasked with leading new business development, where they will leverage Newell's scale and extensive portfolio of leading brands to identify and pursue incremental distribution opportunities within new accounts, while the bulk of our selling resources will continue to maintain their focus on strengthening our partnerships and increasing distribution with existing customers. Finally, to properly cascade Newell's integrated set of corporate where to play and how to win choices, along with the new segment function and top 25 brand strategies, key members of the leadership team and I have now visited eight of Newell's top 10 countries across North America, Europe, and Latin America. Based in part on those interactions, we have decided to bring in new, strong talent to fill crucial roles across several of Newell's businesses and geographies. For example, we recently hired new leaders for the home fragrance and kitchen businesses, as well as new heads of Europe and France. Before turning the call over to Mark, I'd like to provide a little perspective on the back-to-school season, since that's always an area of interest. While predictions for the back-to-school season varied widely across the industry, in aggregate, the categories where Newell competes declined modestly, with stronger market performance from retailers that put their support behind leading brands versus those that focused on private label offerings. Against this backdrop, several of our major brands, such as Sharpie and EXPO, grew market share, which we were excited to see. That said, gaining share in a down market is not a prescription for long-term success. That's why we are already incorporating the learnings from this season, the most important of which is the role our leading brands can play in driving category growth into next year's back-to-school plans with leading retailers. While there are parts of Newell's portfolio where we are gaining share, that's not the case broadly. This highlights why we needed to make a major pivot in the company's front-end strategy. While we are dissatisfied with our current sales performance, we did say at the Deutsche Bank conference in June that we expected our top-line performance to be below our evergreen target of low single digits for the next four to six quarters. Beyond that, and as the bulk of our new capabilities ramp up, we remain fully committed to returning the company to top-line growth. Back in June, and during our last earnings call, we also reiterated that our top financial priorities for 2023 were strengthening cash flow and improving gross margin, and very good progress is being made on both of those fronts. So while there are certainly much more work to do ahead of us, the strategy is starting to take shape. That's why we are confident that this year, free cash flow productivity will exceed our evergreen target of about 90%, and the business will continue to improve sequentially next year, as measured by gross margin expansion and the number of top 25 brands growing market share. As we operationalize and execute our new strategy to significantly improve our financial performance, we have been laser-focused on implementing the organizational, operational, and cultural changes required to strengthen the company's front-end, consumer-facing capabilities while harnessing the scale and power of One Newell. While the path forward will not be a straight line, we remain confident Newell's financial performance will improve and significant value will be created over time for our stakeholders. I would like to thank our leaders and employees for their hard work, perseverance, and dedication amidst significant organizational changes and for their unwavering commitment to our purpose of delighting consumers by lighting up everyday moments. I'll now hand the call over to Mark. Thanks, Chris. Good morning, everyone. Third quarter net sales and core sales both declined approximately 9%, largely due to the same macroeconomic headwinds we've been wrestling with since the third quarter of last year. However, on a more positive note, we continued to make significant progress improving the structural economics of the business during Q3, with Newell's normalized gross margin improving 170 basis points versus last year, and 140 basis points sequentially to 31.3%. A 500 basis point contribution from fuel productivity savings and meaningful pricing actions taken across roughly 30% of our U.S. business, primarily in the home and commercial space, more than offset the significant headwinds from inflation and fixed cost absorption. Despite excellent productivity work by the team, as well as strong savings from Project Phoenix, which amounted to $49 million in the quarter, normalized operating margin contracted 220 basis points versus last year to 8.2%. Most of the contraction in third quarter normalized operating margin was driven by higher incentive compensation charges. As you may recall, incentive compensation was revised sharply lower during Q3 last year, making current period comparisons very difficult. During the third quarter, net interest expense increased $12 million versus last year to $69 million, due solely to higher interest rates, because net debt was down nearly $500 million year-over-year and down nearly $400 million year to date. The discrete tax benefit originally expected in the fourth quarter was captured in the third quarter, yielding a normalized tax benefit of $73 million, which, in combination with the other elements we just went over, brought normalized diluted earnings per share in at $0.39 and drove the significant upside in normalized earnings per share relative to the $0.20- $0.24 outlook previously provided. Turning to operating cash flow, strong progress on inventory management allowed us to generate $679 million of positive operating cash flow year to date through the third quarter. This represents considerable improvement versus a $567 million use of cash during the same period last year. Therefore, through the first nine months of 2023, operating cash flow increased more than $1.2 billion, which is a remarkable achievement that Chris and I want to thank Newell's extended planning, sourcing, and production teams for delivering. As anticipated, the company's leverage peaked at 6.3 x at the end of Q2, before improving sequentially and ending the third quarter at 6.1 x. We are exceeding our cash flow projections and paying down debt and expect additional improvement in the leverage ratio in Q4. Longer term, we remain committed to achieving investment grade status and continue to target a leverage ratio of about 2.5 x. Looking out over the remainder of the year, we've assumed the following for the fourth quarter. Net sales in the range of $1.96 billion-$2.03 billion, as net sales and core sales are both expected to decline 14%-11% versus last year. Gross margin is expected to be demonstrably higher than the fourth quarter of last year due to the targeted interventions we have made to improve the structural economics of the business. SG&A expense relative to last year is expected to be down in dollar terms, driven by Project Phoenix savings and discretionary spend control. But SG&A, as a percentage of sales, should increase due to lower and to a much lesser extent from the capabilities we've invested in, in consumer and customer understanding, revenue growth management, data analytics, and retail execution, among others. Putting all this together, fourth quarter normalized operating margin is forecasted to be in the range of 7.8%-8.8%, which represents a 290-390 basis point improvement versus last year. As such, Q4 is expected to mark an important turning point in the company's operating profit, which at the midpoint of the range, is forecasted to grow nearly 50% versus last year. Finally, for the fourth quarter, we forecast interest expense to be higher year-over-year, a tax rate in the high teens, and normalized earnings per share in the range of $0.15-$0.20. For the full year, we expect net sales in the range of $8.02 billion-$8.09 billion, largely driven by a core sales decline of about 13%. Normalized operating margin is expected to be 7%-7.3% as we reflect the negative top line flow-through and capability investments discussed earlier. Interest expense is forecasted to be up significantly versus last year, with a normalized tax benefit in the teens, reflecting the sizable tax benefit that was realized in the third quarter. Normalized diluted earnings per share are now forecasted in the $0.72-$0.77 range. At the start of the year, we said cash generation was our number one priority, so we're very pleased that based on our strong year-to-date performance, we can confidently raise our cash flow outlook for the year, even as top line expectations and earnings per share estimates have been tempered. We now expect to generate operating cash flow of $800 million-$900 million, inclusive of $95 million-$120 million of cash payments related to Project Phoenix, which, as Chris indicated, is on track for $140 million-$160 million of pre-tax savings this year. At the midpoint of our outlook, operating cash flow improves by more than $1.1 billion year-over-year, with free cash flow productivity expected to be well north of 100%. With the caveat that next year's planning process is still in its very early stages, we thought it might be helpful to provide some high-level conceptual thoughts. So with that understanding, meaningful improvement in the top line run rate is expected on a sequential basis. However, 2024 core sales are still expected to be down as macroeconomic challenges persist and front-end capabilities are still being rebuilt. Please note that this preliminary sales commentary is consistent with comments provided at the Deutsche Bank conference in June, where we stated core sales growth is expected to be below the evergreen target of low single-digit growth over the next 12-18 months. Currency based on current spot rates, in combination with planned brand exits, might collectively lower net sales by an additional 2-3 points. Importantly, we expect strong gross margin improvement next year, fueled by productivity savings, carryover pricing benefits, less excess and obsolete charges, and better product mix, which should allow operating margin to expand ahead of the 50 basis point evergreen target, even as we continue to invest behind front-end capabilities. Interest expense should be slightly higher in 2024, and at this point, we are planning for a normalized effective tax rate of about 17%, which would represent a significant year-over-year headwind to earnings per share. As for cash, we'll provide more context once we're further along in our planning process, but in the meantime, suffice it to say, cash will remain a major focus area for us. In closing, there are two key takeaways from today's call. First, we are making strong progress on the deployment of our new integrated set of corporate, business unit, functional, and brand strategies, all of which were heavily informed by a comprehensive company-wide capability assessment. We now have, for the first time in a long time, very clear where to play and how to win choices, that the major pivot in our front-end consumer-facing capabilities will allow us to successfully pursue. Second, Newell is delivering against the two key financial priorities, gross margin and cash flow, that were established for 2023, even though macro-driven pressures are greater than previously anticipated. Specifically, the underlying structural economics of the business are being strengthened, with gross margin expanding both sequentially and year-over-year, with additional gross margin improvement expected during Q4 and next year. As we've doubled down on actions that are within our control, operating cash flow has improved more than $1.2 billion year-to-date. While the macroeconomic environment remains challenging, we are undeterred and are moving forward with deliberate speed to unlock and monetize the full potential of Newell's portfolio of leading brands by building the front-end capabilities and creating and leveraging the scale required to consistently win with consumers and customers in our product categories. Operator, if you could, please open the call for questions. Certainly. To ask a question, please press star one one on your telephone and wait for your name to be announced. If you wish to remove yourself from the queue, press star one one again. Our first question comes from the line of Chris Carey with Wells Fargo Securities. Hi, good morning, everyone. Morning, Chris. So I just wanna talk maybe high level. Can you just talk about the evolution of how you would expect to manage the business? I think right now, there's very much a focus on free cash flow and the balance sheet, and over time, as sort of these macro headwinds and, you know, other kind of competitive dynamics ease, then the focus can perhaps turn a bit more back to the income statement, delivering earnings, right? Just maybe the tension in the organization between those two things. I guess, the question underlying that is, the performance that we're seeing right now, you know, how much of that is due to you making certain decisions in favor of the balance sheet and cash flow, as opposed to, again, the income statement, given the priorities right now? Thanks. Yeah, thanks for the question. So let me try to provide a little bit of commentary on that. And you're right, we did, at the beginning of this year, as we said in the prepared remarks, prioritize cash flow and gross margin improvement and structural economic improvement in the business, and we've made a series of choices to try to drive that. You've seen our inventory is down, I think around $850 million versus the same time last year, which is a massive improvement, which is driving the operating cash flow to be $1.2 billion better, year to date this year versus last year. You've also seen that we've turned the business to now driving gross margin improvement this quarter of 170 basis points, and we expect gross margin in Q4 to be up even more than that versus a year ago. Some of those choices are things like the July 1st price increase that we put in the market, where as Mark commented on, we priced structurally unattractive businesses. In some cases, what we've seen is retailers have accepted those price increases, consumers have accepted those price increases, and the structural profitability of those businesses improved. In some cases, we've lost distribution on those businesses, but it was effectively zero margin business that we've walked away from. And so we think that what we're doing is improving the long-term quality of our portfolio, consistent with the strategy that we've deployed, focused on the top 25 brands, top 10 countries. At the same time, we are very focused on the capability improvement actions that I mentioned around consumer understanding, brand building, innovation, which we believe can get the company back to market share growth more broadly than where we are today. We are growing market share today on a number of our leading brands, brands like Sharpie and Expo and Rubbermaid and Crock-Pot and Ball, but we're not growing market share across a broad enough set of our brands, and we aspire to do that, so that when the macro environment turns, we are positioned with leading brands that are growing market share and in a position with a more structurally attractive business. And that's, that's really the, how we're thinking about the trajectory going forward. One quick follow-up. Just as you think about, you know, this dynamic of over the next 12-18 months, that core sales, for example, would remain under pressure. How much of that is a function of category growth, market share performance versus things that you think you need to do in the organization to create a cleaner, maybe smaller, more profitable foundation for the longer term? Yeah, I think the majority, you know, as I mentioned in the prepared remarks, you know, this quarter, about 80% of the core sales decline was really driven by market contraction and retailer inventory actions. But there's 20% that is- that's related to us not having the front-end capabilities where we want them, and walking away from some of these structurally challenged businesses. I think as we go forward, you're gonna see that 20% bucket improve dramatically as the strategy and the capability investment starts to take shape, and we believe that's gonna turn into a positive rather than a headwind over the next 12-24 months. The category growth dynamic is hard to predict as we've said repeatedly. But I do think that the category growth dynamic, from a macro standpoint, some of the dynamics that are driving that are coming to an end. We believe that retailer inventory destocking is largely behind us at this point, for example. Underlying consumer pressure that's causing consumers to prioritize spending on food, essentials, and away from durable and discretionary categories is harder to predict. Thank you. One moment, please, for our next question. Our next question comes from the line of Andrea Teixeira with JP Morgan. Thank you, Chris. So I wanted to go back to this point about growing share. You mentioned that it's not enough to grow share in a declining category, which I appreciate the honesty. But could it make sense and to make, you know, to perhaps sell some of the businesses? I know you've been through a lot of rationalization over the years since the Jarden acquisition, but wondering if some of these other businesses, even though they may have cash flow there that you can sell, but perhaps, you know, be more, I think, choiceful from what you can keep or what you cannot. I understand that you just mentioned about 20% of what you saw in the declining core sales have been from not having capabilities or having made choiceful decisions for distribution on things that are not so profitable. So I wanted to just go back and see if you, number one, you can, there's space for divestitures, or it's gonna be like, it's not like a full business, and therefore, it's more you getting out of some of these categories or some of these SKUs. And how far along in this process do you believe you are? Because I understood that you've been doing this all along from reducing the very massive reduction in SKUs. I was wondering why it's taking so long, or is that something that you realize, like, you have to continue to do, you have to continue to do in order to improve profitability? Yeah. So let me try to provide some perspective. So when we announced the strategy in June, we had—at that point in time, we had 80 brands that we were selling across the company. The 80 brands that we were selling largely fit within the company's portfolio because they are branded products that are sold and based on the same capability set of consumer understanding, innovation, brand building, applies to all of the 80 brands, and they're largely distributed through the same retail channels across the world. And so we feel like we've got now a portfolio from the divestitures that have been completed over the last five years that fits together and where there is scale that can be leveraged. We've also made important progress on the supply chain and the back office to get things onto one IT system, to get things into one distribution network with the Ovid program, et cetera, so that we believe in most cases, we are the best owner of those brands. We continue to look at, is the portfolio the right thing, and is there value to be unlocked? To date, we have not seen that there's a big opportunity to break up the portfolio and drive value, because we believe the dis-synergies and the tax impact would overwhelm any value we would get from a major divestiture. That being said, we also very clearly said that we don't think 80 brands is the right answer. As part of the strategy, we said we're gonna prioritize the top 25 brands because they represent 90% of the sales and profit of the company. We are moving at pace since we announced that strategy in June, and as I mentioned in my prepared remarks, we expect to be down from 80 brands down to 60 by the end of this year. That's already a meaningful reduction in the number of brands in the portfolio, and we think we'll continue to reduce the number of brands over time. As we've looked to how are we reducing the number of brands in the portfolio, largely what we're doing is we're converting shelf space that we have on these smaller, less consumer-relevant brands into shelf space on our bigger, more profitable, more consumer-relevant brands. But it takes a little bit of time to do that because retailers reset their shelving typically on an annual basis. And we don't want to create holes across shelving. And so we've worked up a plan to sort of migrate this shelf space over time from these small brands that we will be exiting into a more streamlined portfolio focused on the top 25. Thank you. One moment, please, for our next question. Our next question comes from the line of Bill Chappell with Truist Securities. Good morning. Morning, Bill. Just kind of keeping it, as it seems to be on kind of a high level conversation this morning. Bill, this is now, I guess, kind of the third cut to top line this year, and I know things change with your new outlook mid-year. Trying to understand, you know, how forecastable your business is right now with—in the kind of merits of doing so many things to try to right size the ship, when the macro environment is so kind of volatile. When I say that, I mean, you talked about lowering the number of brands by 20, replacing, I think, a third of the brand managers in the past six months, SKU reduction, Project Ovid, project... You know, there are a couple other projects in there. At a time when, you know, it doesn't seem like anyone in the categories you play in can really forecast a kind of post-pandemic recovery or new normal. I'm just—maybe you could touch on, do you worry that you're doing too much or that with all these changes happening, that forecastability isn't really going to be that great for six months until we kind of see how things set? Or is this just something you had to do and, you know, it's kind of a rip-the-Band-Aid type moment? Yeah, it's a good, it's a good question, and it's one that we talk a lot about with the board and with the management team, inside the company. If you look at the core sales growth of minus 9% in Q3, and I think we had guided down 5%-7%. We were 3 points off at the midpoint of the range versus the actual. That 3-point miss was really entirely driven by market growth, which came in weaker than we expected. That gets to your point of it's a challenging environment to forecast, the market and consumer offtake right now. That being said, we believe from the capability assessment work that we've done and the strategy that we've put in place, that we need to improve these capabilities, because at some point this market will turn, and the macro environment will not be as negative as it is now. And we want to make sure when that happens, that we are fully positioned to take advantage of that with a portfolio of leading brands that have the ability to consistently grow market share and drive market growth in what eventually will be a better macro environment. But we recognize that the macro environment right now is very difficult to forecast. We're trying to run the business on a scenario planning basis with wider ranges of possible outcomes, given that dynamic. But it doesn't cause us to slow down on the capability improvement actions that we need to drive, because we believe that those need to happen irrespective of the macro environment. Got it. I mean, when I'm listening to the initiatives and stuff like that, I mean, the way you look at it is, they've all been announced and in our process, it's not you're continuing to look for new initiatives or new ways to change the business. It's, it's we just got to keep pushing forward with the original kind of reorg. That's exactly right. You know, from the capability assessment, which was comprehensive, that led to the strategy, there's been no change in the strategy or in the initiatives that we're driving to try to drive the capability and improvement, and many of them are now well underway. Some of them have actually already been completed. Not all, but they're it's not that we're adding new things onto the list. We're driving the plan that we put in place as part of the June strategy review. Got it. One just follow-up. On the writing instruments, I mean, that was a category that had at least low- to mid-single digit growth for many years prior to going into the pandemic. Obviously, the pandemic changed everything with back to school and what have you. As we're getting back to a more normalized environment, is this a, you know, long-term, mid-single digit growth or low- to mid-single digit growth category, or is it more mature now and it's maybe not as, as opportunistic as it used to be? Yeah, we've looked at that, at the writing category growth, over the last five years, over the last 10 years, over the last 20 years. If you normalize out sort of the COVID blip, it's been a category that's been growing kind of low single digits, on a global basis. So we think that that's the right place for it to be. I don't think it's a mid-single digit growing category. I think it's a low single digit growing category. And that's our view of what we think is likely in a normalized basis going forward. Great. Thanks so much. Thank you. One moment for our next question, please. Our next question comes from the line of Peter Grom with UBS. Thanks, operator. Good morning, everyone. Hope you're doing well. So I appreciate all the commentary on 2024, and I'm sure we'll get more concrete guidance in February. But is there any way to frame the degree of margin expansion that you're kind of expecting, you know, just because, you know, should we expect kind of the 4Q exit rate, which is pretty substantial, to continue? Should it be a bit more subdued than that? You know, just because, you know, given the top line commentary, you know, higher interest rates, if it's less robust, that would imply a pretty substantial step down in EPS. So not trying to pin down guidance or anything, but just, it would be helpful to just try to understand directionally how we should be thinking about it. Yeah, let me offer a few thoughts as it relates to that, and maybe I can even reinforce some of the commentary about the current year gross margin progression. You know, we're really excited by what's happening on the gross margin front, right? We said we have to improve the structural economics of the business, and we've been getting after that, in quick order here. And you're seeing that in the fact that we've improved sequentially from Q1 to Q2, Q2 to Q3, and we're calling for a very large, continued progression on, gross margin from Q3 to Q4 of this year. Which we do think will put us into a good launchpad, going into the following year. You know, it's notable that this is the first time gross margin expanded since the second quarter of 2021, and it's driven in part by the fact that our fuel productivity savings this year are running at almost 6.5% of COGS. And that's not a coincidence. I mean, that's nearly 2x what we've normally seen in most years. It traces back to Project Phoenix and the decisions to restructure the business so that the supply chain is a unified force, as is procurement. And that's lending itself to all kinds of additional opportunities that we're seeing. That strong progression is really what's allowing us to call in the fourth quarter for that gross margin to expand, and more importantly, the normalized operating margin, based on the commentary we provided, is expected to be up, as I said, 290-390 basis points. I mean, that's a huge move in the right direction. So I know it's difficult to see all that underneath the surface, when you're looking at the top line compression driven by, market contraction and trade destocking principally, but it's most certainly there. We haven't provided any specifics on gross margin, for next year, and we won't at this time. But we have said that if we look at our evergreen, you know, targets of growing op margin 50 basis points per year, we think we'll be certainly at or above that next year, and most of that will be driven by continued gross margin, progress that we're making. Got it. That's really helpful. And then, and then just following up on the category performance, which obviously has been called out several times as a big driver of the weaker 3Q. Can you maybe just give us some color on how that really progressed through the quarter? You know, did it get worse as we kind of were later in August and into September? And, and have category trends, you know, further slowed here into October? Yeah, I think, you know, as I mentioned before, really the driver of the core sales miss versus our guidance in Q3 was the market contraction rate, which came in about 3 points higher than what we expected. We did see that September was the weakest month of the third quarter. We did see the trend in terms of market contraction accelerate into the back part of the quarter. Obviously, we've got, you know, some view of the first part of October, and that, you know, is running very much in line with our guidance for the fourth quarter. So, you know, that's a bit on the sort of the inner quarter play. Yeah, if I could, I think it might be helpful, 'cause obviously in Q3, as Chris indicated, you know, we saw our core sales down by 9%. For the fourth quarter, we're effectively saying that we think that our core sales will be down somewhere between, you know, 14% and 11%. And I think it might be instructive to try and kind of decompose that for everybody here on the call today. So in both Q3 and Q4, we expect the market to continue to contract. Based on our analytics, we think that'll be somewhere, you know, mid-single digit to high single digit. For the sake of argument, let's call that somewhere down, you know, 6%-7%. That will be true both in the third quarter and we think in the fourth quarter. Trade destocking, we're getting towards the tail end of that. We think it was somewhere between -1 and -2 in Q3. We think that will carry over to Q4 as well. As Chris indicated, there was a certain element of share loss that we incurred. Let's call that a point. If you do that math on Q3, you'll see that that's roughly down to 9 that we obviously just printed in our release. The only two things that are then different in Q4 is, as Chris indicated, we did take pricing action on July 1. This is part of our enhanced capabilities to actually do more data analytics. You'll recall that we actually literally looked at the structural economics of 6,000 discrete SKUs and being able to make those pricing actions. So they were very targeted, and they were in the right places, but we will lose some distribution as a result of that. In Q4, we think that might be a point or two. But again, this is stuff where we're economically indifferent because the structural economics were so poor, that the pricing actions needed to be taken, and if the business falls away, it falls away, and then the supply chain will make up the differential. The other piece that is really playing into it, and gets back to a question that was asked earlier that Chris provided an answer to, is we have about two points in the fourth quarter where we think we're gonna have less deep discount promotions. Because what we're doing now is making the tough calls today to make sure we set the launch pad properly for 2024. We've had a lot of promotions in the fourth quarter historically, where frankly, we didn't make any money. What we're doing is we're walking away from these structurally untenable decisions that were made in the past to get ourselves on good footing, and from there we can grow our way back out based on the capability work that's being done. Got it. That's really helpful. I'll pass it on. Thank you. One moment, please, for our next question. Our next question comes from the line of Brian McNamara with Canaccord Genuity. Good morning, guys. Thanks for taking the questions, and congrats on the really strong improvement in cash flow. A question we often get asked is, if and when we'll see top line growth at Newell again? You've mentioned that sales will be down again next year. So I guess, what should give investors confidence that you'll reach those evergreen targets in 2025? Yeah, I think on that question, it's one that we ask ourselves, often as well. And I think when we laid out the strategy, we were very clear that this was going to be a multi-year strategy. And we said that we expected for the next four to six quarters that we would be below the evergreen target on Core Sales growth because of the capability investment that was required to get the company back to sustainable Core Sales growth. We are very much on track with the capability improvement actions that we've taken. I feel very good about the progress we've made over the last four months since we announced the strategy. We're only four months into the strategy, but I think we're making incredibly fast and strong progress against that. The piece that is sort of overwhelming at the moment is the market contraction and the retail inventory actions, but we believe that at some point, those are going to wane. As I mentioned, it's hard to predict when that's going to be. As Mark said in his prepared remarks, as we think about next year, you know, we think Core Sales is likely going to be down next year, but we expect it to be sequentially better next year than this year. And we're very bullish on the progress we're making on the strategy, on the capability improvements. We think we'll have green shoots to point to in 2024, from that work that will help improve the trend, and we think in 2025, we're gonna be in a much better place. Got it. And then secondly, with the 20 brands you'll lose by the end of the year as you reallocate shelf space with your retail partners, are those largely being discontinued or are any of them being sold or licensed or other? Thanks. Yeah, I would say that probably 80%-90% are just being discontinued. There are a handful that we are licensing, and there's one or two that we are actually gonna sell. They won't be material sales, but we are looking at all three alternatives as we go through this. In some cases, we have brands that might be $2 million of revenue, and the right answer is just to discontinue the brand because it's not worth it to go and try to sell them. In other cases, we have brands that are more meaningful that are either a country-specific brand that doesn't really add to the portfolio and we don't think is leverageable, and those are the ones that we're looking to sell. An example there is, we have a brand in Italy called Millefiori, which is a home fragrance brand. It's largely distributed only in Italy, and we've reached a sale agreement on that brand, where we expect it to close the sale of that brand this quarter, so. Great. Thanks for the color. Best of luck, guys. Thank you. One moment, please, for our next question. Our next question comes from the line of Olivia Tong with Raymond James. Great, thanks. First question, just, you know, given obviously the focus on cash flow, if you could talk about what that implies with respect to your commitment to the dividend at current levels? Yeah, look, I think we feel pretty good about where we are. We made an intervention earlier this year to right-size the dividend. We said that our strategy as it relates to that, is to be somewhere in a 30%-35% dividend payout ratio, and we're gonna continue to tack along with that, you know, going forward. So we feel really good about our cash position. I mean, it's important to note that we paid down a significant amount of debt. You know, so far, net debt is down $500 million year-over-year, $400 million year-to-date. So we feel really good about the work that we're doing. The other thing I would just take this opportunity to point to out and speak out to is, you'll recall that, you know, our inventory kind of peaked at $2.6 billion in the third quarter of last year. And as we go forward and kind of do our year-end projections, we think by the end of this year, we're gonna have literally drawn down inventory by $1 billion, on top of the market contraction that we're obviously contending with. So the fixed cost absorption from having that market contraction and the trade de-stocking and our self-selecting decision, to basically hold back production, in order to kind of clear the inventory, release the cash, and then set the right base point for the next years going forward, is really quite notable. The other thing that we haven't talked about as much is just the carryover inflation effects that we've had to incur. Because of the way we do our inventory costing, at the end of last year, when we saw inflation running, you know, high single digits, this year it's kind of low single digits, we suspended an awful lot of inflation charges into our inventory balance. And over the first, second, and third quarters of this year, we've been bleeding out that value, in effect. And it's honestly been over $200 million of inflation that was basically incurred in the prior year that's now basically being bled through the P&L this year, which at the end of the third quarter here, it now stops and it actually reverses and starts going the other way. So we feel really good about our cash position, feel really good about our gross margin position, and we're excited about the difficult decisions we've been taking to set the business up for success in the future, as we then make the capability investments to really start driving the front end of the operation. Got it. And then, it sounds like 2024 is obviously going, the challenges are expecting to continue. As you think about a lot of the moving pieces, eventually, would imagine that, you know, innovation and focusing on innovation in order to drive sales recovery will become part of the plan. Can you talk about that and other actions that you can take in the interim that can improve your ability to combat the tough environment? You know, maybe a little bit more, you know, you briefly talked about the back-to-school categories, but maybe some more specifics around some of the other moving parts within the division, you know, ones that you think can recover faster versus ones that will clearly still have structural challenges that'll take even more time to address. You know, just walking through, you know, sort of the different businesses and thinking about, you know, the recovery path. Thank you. Yeah. So let me try from a company standpoint first, which is, I think, where you started. We are doing a tremendous amount of change to get the front-end capability in a place where we think we can consistently drive market growth and market share gains in the categories in which we compete. And we talked about, in my prepared remarks, the innovation process that we've put in place. We're putting in place a brand management structure, and importantly, it's not just the brand manager, but we're also putting multifunctional teams against the top 25 brands, which did not exist before. We're putting in place a selling capability that is a new selling capability focused on going after incremental distribution opportunities, which we believe there are a significant amount of. We've started to put in place now a measurement system to look at our distribution, our selling, our merchandising, and our promotion, which many other CPG companies have, but we were not measuring. And what we're finding is that in many of our categories, our share of shelf is below our market share. So we think we've got big opportunity to change the retail environment to get our brands more appropriately distributed. We also are focused on something that we're calling internally pillars of competitive advantage, and we're starting to measure our brands and our products against superiority on product performance, on packaging and claims, on brand communication, on retail execution, both in store and online, and on value from a pricing standpoint. And when I say value, I'm not talking about low price. I'm talking about representing a good value for the feature benefit set that we're offering, really focused on the MPP, HPP part of the market. And that all is new capability, with KPIs that we are putting across the front end of the organization. It is a lot of change on the front end, but it is all the right things, and we're seeing significant opportunities for improvement. Some of them are gonna take time, because if you put a new innovation idea in the funnel, it might take 18-24 months before it comes out and is ready to launch. Some of them are faster, things like distribution, new distribution opportunities, where we're under-spaced with our existing brands and products, that can go faster. And so that's why, when we announced the strategy in June, we said this is a multiyear turnaround, and we said that it's, it's gonna take four and six quarters for this to really all come together. But it's across all of those vectors that we're driving improvement on the front end. I will say, the other thing I'll say on your question on categories is because the company was operating previously in seven business units, effectively, the capability of each of those business units was highly variable because they were all operating effectively, independently. And so we have some business units that are starting from a position of relatively strong capabilities, where there's plus-up opportunity, but they already were 60% of the way of where we needed to be. An example of that would be the writing business, which we're growing market share in. It's our most profitable business. We do have very strong products that are superior in the market that represent great value. There are other categories where we're starting from almost zero front-end capability, that we need massive improvement. An example there would be more like the outdoor and rec business, where in that business, there's more work to do on the capability improvement to get that business back, back to performing and getting back to growth. Thank you. One moment, please, for our next question. Our next question comes from the line of Lauren Lieberman with Barclays. Thanks. Good morning, guys. You've covered so much ground, but I just thought maybe it'd be interesting to ask about dialogue with retailers. So you talked about, you know, two points less than the fourth quarter, from, you know, eliminating some of these, you know, money-losing, these promotions. But, you know, retailers also lose on that. I mean, it's good for your P&L, obviously, and better for the health of the business long term, but that does detract a bit, you know, from retailer trends in some of these categories. So I guess, what can you tell us about the conversation with retailers, how they feel about the timeline of progression, some of the Band-Aid ripping off you're doing in the near term, and how they're factoring into their, you know, sort of planning for next year and thoughts about category growth? Thanks. Yeah. Thanks, Lauren, and it's been a big focus of ours, as we've talked a little bit about in the past, and it continues to be. You know, I've had top-to-top meetings with several of our top retailers, both in the U.S. and internationally. And as we've done those meetings, I would describe our relationships as very strong. And I would say our relationships with retailers today are significantly better than where we were two years ago. And the reason for that is really the implementation of OVID and the simplification work that we've done. You know, this may be a little bit in the weeds, but if I take an example of our largest retail customer, we used to operate with them with 23 different legal entities, 23 different vendor numbers. We would ship them. We would force them to provide 23 orders. We'd ship them 23 different LTL shipments. It was confusing, chaotic, and we didn't have one voice to that customer. And that's. I could have picked any number of customers where that was the case. If you look at where we are today, we interface with them with one legal entity, one vendor number. We've converted our shipments from what was probably in the twenties, on 20% full truckload, to now 80% full truckload shipments. So we are a dramatically better supplier to retailers, and they've recognized that and seen the improvement that we've made. And we are the largest in most of our retail customers, the largest general merchandise supplier to them. They want us to win. They recognize the journey that we're on, and they're leaning in to help support us. We're not making any of these choices in a vacuum. When we make these choices to improve the structural economics, we have very open dialogues with our retail customers so that we don't surprise them, we don't leave them in a bind. But, you know, we've got to make the right choices for Newell, and we're trying to do this in a way that's a win-win partnership with them. And I think largely, the retail. Our largest customers are very supportive of that. Thanks so much. Thank you. One moment, please. Our final question comes from the line of Filippo Falorni with Citi. Hey, good morning, guys. First question on the inventory side. You guys both mentioned that you feel like you're at the tail end of the inventory reductions. I guess, what gives you the confidence that that's the case, in case the categories from a consumption level were to continue to be soft? And is there any risk of a further reduction into next year? And then from second question, on a pricing standpoint, I know your price action were justified, but to what extent your worst market share performance was driven by competitors not following on pricing? If you can comment on that, it would be great. Thank you. Yeah, let me start with the inventory. So one of the things that we do is we measure weeks of coverage at our top retailers, and we get the data directly from the retailers of how much inventory they have on hand. And as we saw their weeks of cover accelerate last year, when the market shifted in Q3 of last year, we've now seen their weeks of cover come back down. And actually, as we've implemented OVID in the U.S. market, our delivery times are also much shorter, which has allowed them to reduce weeks of cover even more. From our view of weeks of cover, we believe that largely the weeks of cover are in a good place, and we think retailers would be taking significant out-of-stock risk if they go lower on weeks of cover. To your question on if the consumption continues to go down, couldn't that allow. Because you maintain the same weeks of cover, could that allow another amount of inventory reduction? The answer to that is yes, but it's not going to be anywhere near the magnitude of what we've seen over the last nine to 12 months. On the pricing question, I think that we have largely led pricing because we are the market-leading brands in most of the categories in which we compete. I would say, broadly, we've seen competition follow, for the most part, because everybody was dealing with the same input cost inflation, and there wasn't really an opportunity for them not to follow. However, there are selective cases and selective businesses where we priced, and competition has not fully followed, and we are monitoring those situations. And if we need to, we will react appropriately, to make sure that we're maintaining our market share. Thank you. This concludes today's conference call. Thank you for your participation. A replay of today's call will be available later today on the company's website at ir.newellbrands.com. You may now disconnect. Have a great day.