PowerPoint Presentation - starboardvalue.com · 8 We Believe that Asset Sales Executed at the Right Multiples Can Create Value, but the Process Has to Be Properly Executed… A combination

Transforming Newell Brands

May 2018

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This Presentation is not an advertisement. The purpose of this Presentation is to communicate Starboard’s views regarding the companies discussed herein, including Newell Brands Inc. (“Newell,” “Newell Brands” or the “Company”). In making this Presentation available for distribution, Starboard is not acting as an investment adviser with respect to any recipient of this Presentation. Any mention within this Presentation of Starboard’s research process is incidental to the presentation of Starboard’s views regarding the companies described herein.

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I. Executive Summary 4

II. Brief History of Newell Brands 14

III. Underperformance Creates Opportunity 20

A. Financial Performance 23

B. Issues Have Been Self-Inflicted 46

C. Culture 76

IV. The Opportunity to Improve Newell 83

A. SG&A Improvements 86

B. Procurement Improvements 115

C. Logistics Improvements 142

D. Working Capital Improvements 155

E. Empowering the Workforce to Improve Revenue Growth 163

V. Conclusion 170

TABLE OF CONTENTS

4

I. Executive Summary

5

We Are Excited About the Opportunity at Newell

We have been successful investing in companies with good core assets and helping these companies improve

culture, governance, and performance.

In the following pages, we detail our analysis of Newell Brands’ (“Newell” or the “Company”) business, its

operations, and the significant opportunity we see to create value at the Company.

It starts with people and culture.

– After our settlement with the Company last week, 75% of the Board will be reconstituted, bringing in new

people with fresh, objective, and experienced views on how best to create value at the Company.

– We believe this new Board will work to empower the people responsible for running Newell’s day-to-day

businesses while holding management accountable for reaching its revenue growth and profitability goals.

– We believe this new Board will be able to effectively oversee the Company’s potential divestitures by

comparing the after-tax value Newell can generate today vs. the risk-adjusted standalone operating potential

of the businesses.

With a renewed focus on operations and improving EBITDA, we believe Newell can increase annual profitability by

almost $1 billion, and in turn, substantially increase the stock price.

We are releasing this presentation so that management, the Board, and the shareholders can understand why

we believe there is such a great opportunity at Newell Brands

6

We have done extensive research on Newell Brands, including:

- Working with one of the leading operationally-focused consulting firms, and

- Conducting dozens of interviews with former employees, customers, and suppliers.

We believe there is substantial opportunity for improvement at Newell Brands.

We are sharing this research to provide management, employees, and the Board with

a directional roadmap for operational improvement.

In addition, we believe shareholders should understand the opportunity for

improvement at Newell.

We Are Excited About the Opportunity at Newell (cont’d)

7

We Believe that There Is a Significant Opportunity to

Create Value at Newell

We believe that a new, truly independent Board has a tremendous opportunity to oversee multiple

avenues to create significant shareholder value at Newell

A combination of operational improvements and asset sales could create significant value at Newell.

We believe there are several key tenets to create significant value at Newell:

1. Implement a comprehensive operational improvement plan, that includes:

A company-wide margin improvement plan that we believe will increase EBITDA by $585 to $966 million.

Substantial improvement in Working Capital of ~$800 million to ~$1.1 billion to generate excess cash.

2. Oversee the asset divestiture program.

We believe that a number of Newell’s assets could realize substantial after-tax multiples.

While we are in favor of asset sales, we believe that selling assets on their own is not a panacea for operational

issues and that those must simultaneously be addressed by the new Board.

3. Empower employees to make decisions by removing bureaucratic silos and granting them more P&L responsibility.

4. Enable a truly independent Board to oversee and hold management accountable for executing on its strategy.

1

2

3

4

Source: Company filings and Starboard estimates.

8

We Believe that Asset Sales Executed at the Right Multiples Can

Create Value, but the Process Has to Be Properly Executed…

A combination of asset sales and operational improvements can create significant value at Newell

We believe that Newell owns many valuable assets – and should evaluate strategic alternatives for them – but

the strategic review must be comprehensive and weigh ALL options to determine what is best for long-term

shareholder value creation.

Newell has fantastic brands and businesses. We believe that some of Newell’s assets have the potential to generate high

after-tax multiples and create shareholder value.

However, the process should follow certain parameters:

– The analysis and process should be robust, comprehensive, and focused on exploring strategic alternatives for

ALL of Newell’s assets;

– Newell should look to sell brands and businesses only if they can receive a high after-tax multiple such that the

sale is value accretive;

– All asset sale offer prices should be compared to the risk-adjusted operating plan for each asset and need to

account for potential side effects to other businesses (e.g., raw materials purchasing power, volume discounts,

customer pricing strategies, etc.).

1

2

3

9

…But Asset Sales Are Not a Panacea for Operational

ImprovementWhile asset sales can unlock value, we believe that the focus needs to be on operational improvement, which is

essential to driving long-term value creation at Newell.

Based on our operational improvement plan, 2019 EBITDA would increase to ~$3.1 billion (with Working Capital

ultimately decreasing by ~$800 million to ~$1.1 billion), resulting in a significantly higher value for Newell.

– Our plan is based on improvements that should be well within the control of management and the Board, and, we

believe, that there is an opportunity to immediately begin implementing the plan.

– Management targeted $1 billion in synergies after the acquisition of Jarden which never came to fruition. We believe

many of these opportunities are still available and have been incorporated into our plan.

– Given the resulting significant improvement in free cash flow, asset divestitures are not required to substantially

lower the Company’s current leverage profile.

However, we do believe that some of Newell’s assets have the potential to generate high multiples.

– Given that Newell now intends to explore asset sales for approximately half of the Company, we believe the most

prudent course of action is to evaluate a comprehensive set of strategic alternatives for ALL of the businesses.

– At the very least, we believe that Newell’s industrial and commercial product assets, including Waddington, Process

Solutions, Rubbermaid Commercial Products, and Mapa, are candidates for divestitures given the potential for

strategic acquirers to pay accretive after-tax multiples.

– In addition, we believe that the Company’s portfolio of smaller consumer businesses and brands should be fully

examined to determine which assets are non-core and could potentially generate attractive after-tax sale multiples.

We believe that the Company needs to focus on operational improvements to ensure that the strategic

alternatives process maximizes the value of its assets


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$546

$776

$169

$61

$0

$200

$400

$600

$800

SG&A Procurement Logistics Total

EBITDA Impact

Midpoint of Potential EBITDA Improvement

from Enhanced Operational Execution

We believe that there is a substantial cost improvement and Working Capital opportunity at Newell

Source: Starboard’s proprietary report by a leading consulting firm.

We Have Identified Specific Opportunities to Increase

Annual EBITDA by $585 – $966 Million

Working Capital Opportunity

($ in millions)

We believe there is also the

potential to improve

Working Capital by $800

million to $1.1 billion,

which would significantly

increase cash available for

capital deployment

We have retained one of the leading operationally-

focused consulting firms to assist us with this analysis

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Annual EBITDA by $585 – $966 Million (cont’d)

– Selling, General & Administrative expenses are bloated, causing inefficiencies.

– Transformation and integration spend appears excessive and is not fully accounted for in the adjusted numbers.

– Layers of redundant executives and vice presidents add complexity.

– Newell is inefficient in business support categories, such as HR and Finance & Accounting.

– The Company appears to have a large Information Technology & support staff for a company of its size.

– Newell’s lax Travel & Entertainment expense policies have resulted in unnecessary costs.

Selling, General &

Administrative

Working Capital

Logistics

Procurement

– Newell’s Working Capital usage is currently much higher than comparable company benchmarks.

– Days Sales Outstanding and Days Inventory Outstanding are significantly higher than industry averages.

– Inventory levels are materially higher than peers.

– The Company has failed to meaningfully improve its cash conversion cycle over time.

– The Company has failed to integrate legacy Newell Rubbermaid and Jarden warehousing networks.

– Multiple Transportation Management Systems (TMSs) present organizational challenges and increase costs.

– Newell concentrated its product discharge to Southern California, giving the appearance of consolidation, but

costs may have actually increased on the back-end because a mile transported on land is much more expensive.

– Lack of collaboration with major retailers has led to unnecessary steps in the distribution process.

– The Company lacks a well structured low-cost-country (LCC) sourcing strategy and make-vs-buy strategy.

– Products in several segments are “over-spec’d” or “over-engineered” versus the competition.

– A decentralized sourcing strategy for materials hinders the Company’s ability to leverage best-in-class processes.

We believe there are a number of opportunities that can substantially improve operating performance.


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Fwd

Comparable Companies EV/EBITDA

Church & Dwight Co., Inc. 13.8x

The Clorox Company 12.4x

Colgate-Palmolive Company 14.0x

Fortune Brands Home & Security, Inc. 10.3x

Henkel AG & Co. KGaA 11.5x

Prestige Brands Holdings, Inc. 10.4x

The Procter & Gamble Company 11.8x

Reckitt Benckiser Group plc 14.1x

Spectrum Brands Holdings, Inc. 13.7x

Stanley Black & Decker, Inc. 11.4x

Tupperware Brands Corporation 6.3x

Unilever PLC 13.1x

Mean 11.9x

Median 12.1x

High 14.1x

Low 6.3x

Low Mid High

Net Sales 14,655$ 14,655$ 14,655$

Adj. EBITDA 2,557$ 2,557$ 2,557$

Margin (%) 17.4% 17.4% 17.4%

(-) Transformation Office Expenditure (247) (247)$ (247)$

Pro Forma Adj. EBITDA 2,310$ 2,310$ 2,310$

Cost Opportunities:

(+) Selling, General & Administrative 399$ 546$ 693$

(+) Procurement 137$ 169$ 200$

(+) Logistics 49$ 61$ 73$

Total Cost Opportunity 585$ 776$ 966$

Adjusted EBITDA 2,895$ 3,086$ 3,276$

Margin 19.8% 21.1% 22.4%

EBITDA Multiple 10.0x 10.5x 11.0x

Enterprise Value 28,953$ 32,402$ 36,041$

(-) Net Debt (10,103) (10,103) (10,103)

(+) Working Capital Opportunities 800$ 950$ 1,100$

Equity Value 19,650$ 23,249$ 27,038$

Newell Brands Value per Share 40.50$ 47.92$ 55.73$

Upon executing our operational turnaround plan, we believe we can create Newell at approximately 6.7x – 7.6x

pro forma EV / EBITDA, compared with an average multiple since the Jarden acquisition of ~11.4x. By

executing this plan, we believe there is significant upside.

We Believe An Operational Turnaround Could Create

Significant Shareholder Value

We believe Newell Brands represents an extremely compelling investment opportunity

Source: Bloomberg, CapitalIQ, Company filings, and Starboard estimates.

(1) Consensus FY 2019E Revenue and FY 2019E EBITDA (excluding estimates which account for divestiture plan).

(2) Includes Starboard estimate for Transformation Office expense of $247 million.

Value Creation Opportunity

($ in millions, except per share data)

Identifiable

EBITDA

improvement

opportunities

explained in

detail in

Section IV

Peer Multiples

We believe we are being

conservative in our

EBITDA multiple

estimate, which we place

at a discount to peers

(1)

(1)

(2)

13

We Believe That Newell Is Undervalued with Substantial

Opportunities to Create Value

We believe Newell could be worth $47.92 per share, or 81% upside from where it currently trades

Source: CapitalIQ, Bloomberg, Company filings, and Starboard estimates.

Note: Stock price as of April 20, 2018.


$26.44

$47.92

$16.78

$2.74

$1.96

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

Current

Stock Price

EBITDA Improvement

(10.5x Multiple)

Current EBITDA

(10.5x Multiple)

Working Capital

Improvements

Pro Forma

Stock Price

Pro forma for an operational turnaround, which we believe is well within control of management and the

Board, we believe that Newell is extremely undervalued.

14

II. Brief History of Newell Brands

15

The merger of Newell Rubbermaid and Jarden combined portfolios of extremely well-recognized

brands, which should have generated strong growth and value for shareholders

Source: Company filings.

Note: Acquisition price includes debt assumed and net of cash acquired.

A Transformational Acquisition Created One of the Most

Prominent Consumer Products CompaniesIn April 2016, Newell Rubbermaid acquired Jarden for $18 billion in cash and stock, creating one of the most

powerful forces in the consumer products space.

16

The Combined Business Generated ~$16 Billion in

Revenue…This was a transformational transaction, as Newell more than doubled its revenue, tripled its employee base,

and significantly increased its financial leverage.

The combined company formed one of the largest global providers of consumer and commercial products


(1) Revenue based on each management team’s FY2016 projections on a stand-alone basis from the merger proxy (excluding the results of Venezuelan operations).

$5.9 Billion $10.1 Billion $16.1 Billion

2016 Net Sales(1)

Jarden

Newell

Rubbermaid

($ in billions)

17

…And ~$2.7 Billion in EBITDA with Significant Synergy

Opportunities

By acquiring Jarden, Newell more than doubled its EBITDA

$1.1 Billion $1.6 Billion $2.7 Billion

2016 Adjusted EBITDA(1)

Jarden

Newell

Rubbermaid

Following the Jarden acquisition, management promised $500 million in synergies (later increasing that target

to $1 billion in synergies) and EBITDA margins over 20% with greater than $3 billion in EBITDA.

($ in billions)


(1) Adjusted EBITDA based on each management team’s FY2016 projections on a stand-alone basis from the merger proxy (excluding the results of Venezuelan operations).

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(35%)

+4%

+29%

64

% U

nd

erperfo

rma

nce

Share Price Performance(1)

+7%

+24%

(2)

(3)

Since the Deal Closed, Newell Has Significantly

Underperformed…A series of operational missteps has caused Newell’s stock to underperform the S&P 500 by 64% since the

Jarden acquisition.

Newell has massively underperformed its sector and the overall market

Source: CapitalIQ.

(1) Total returns include dividends from April 18, 2016 (first day of trading as a combined company following Jarden acquisition) to February 8, 2018 (closing price before Newell confirmed receipt of Starboard’s director nominations).

(2) NWL’s 2017 Proxy Peer Group includes: MMM, AVY, TSE:6448, CLX, CL, DHR, TSX:DII.B, ECL, OM:ELUX B, EMR, EL, ITW, KMB, MAS, MAT, TSE:6503, SHW, ENXTPA:BB, SWK, VFC, and WHR.

(3) Includes CHD, CL, CLX, FBHS, XTRA:HEN3, PBH, PG, LSE:RB., SWK, SPB, TUP, and LSE:ULVR.

19

…But Continues to Own Fantastic Brands

Newell owns more than 50 leading brands that operate in large, growing, and unconsolidated global categories.

Newell’s diverse product portfolio contains many well-recognized and market-leading brands


Note: Excludes Newell Brands “Other” segment.

FY2017 Net Sales $5.6B

Core Growth Rate 0.1%

Adj. Operating Margin 12.4%

Key Brands:

LIVE




Key Brands:

LEARN




Key Brands:

WORK




Key Brands:

PLAY

20

III. Underperformance Creates Opportunity

21

Newell’s Share Price Has Dramatically Underperformed Both

the Market and Its Peers…

Source: CapitalIQ.

(1) Total returns for all periods include dividends. Performance is measured as of February 8, 2018 (last closing price before Newell confirmed receipt of Starboard’s director nominations).



(4) Newell Rubbermaid’s acquisition of Jarden Corporation closed on April 15, 2016.

One-Year Stock Price Chart

Newell’s stock price has materially underperformed the broader equity markets, its Proxy Peer Group and its

closest direct competitors over the last 1-, 3-, and 5-year periods.

Stock Price Chart since April 15, 2016(4)

Five-Year Stock Price Chart

Summary ReturnsTotal Shareholder Return

(1)

1 Year 3 Year 5 Year

Acquisition of

Jarden Corp.

S&P 500 Index 14.7% 33.7% 88.7% 28.7%

DJ U.S. Consumer Goods Index 4.1% 14.4% 48.8% 6.6%

2017 Proxy Peer Group (2)

15.0% 33.3% 100.8% 24.1%

Closest Direct Peers(3)

(1.9%) 20.6% 67.0% 3.8%

Newell Brands Inc. (38.3%) (22.3%) 27.7% (35.0%)

Underperformance vs. S&P 500 (53.0%) (56.0%) (61.1%) (63.7%)

Over/(Underperformance) vs. Consumer Goods Index (42.4%) (36.7%) (21.1%) (41.6%)

Over/(Underperformance) vs. 2017 Proxy Peer Group (53.3%) (55.7%) (73.1%) (59.1%)

Over/(Underperformance) vs. Closest Direct Peers (36.4%) (42.9%) (39.4%) (38.8%)

22

Newell Has Also Underperformed on a Number of

Important Metrics

Current quantitative and qualitative metrics show substantial room for improvement

Source: CapitalIQ, Bloomberg, Company filings, and Glassdoor.


While many of these metrics are disappointing, they also point to substantial opportunity.

COGS (% of Revenue)

Revenue per Employee Board TurnoverOrganic Revenue Growth

EBITDA Margin Employee Morale

($ in million)

5 board

members

resigned in the

span of two

months

Newell ranks

dead last among

its peers in

several Glassdoor

categories

(1)

(1)

Significant

deceleration in

organic

revenue growth

over the past 8

quarters

23


A. Financial Performance

24

We believe that significant opportunity exists to dramatically improve Newell’s financial performance,

closing the gap versus peers on both margins and valuation

Financial Performance Has Been Suboptimal,

Substantial Opportunity Exists for ImprovementNewell has struggled to improve its margins and execute on its financial targets following the Jarden

acquisition. In addition, its poor communication and inability to achieve expectations has frustrated investors.

Newell’s margins are among the worst in its peer group and well below the peer average.

EBITDA margins are significantly below management’s targets and best-in-class peers, despite supposed synergy

realization from the Jarden transaction.

Compared to peers, Newell trades at some of the lowest multiples on several valuation metrics (e.g., EV/EBITDA,

P/E), reflecting investors’ lack of confidence.

Newell management was very optimistic about the combination with Jarden, but execution and communication since the

acquisition has been poor.

Management believed that the strategic rationale was compelling and that the combination created substantial scale

in key geographies, customers, and channels.

Newell’s management expected to achieve significant synergies from the Jarden acquisition, stating that they had

“clear line of sight to $500 million”, and even doubled the synergy target to $1 billion.

Newell management has been unable to achieve its guidance targets, which has severely frustrated investors.

Following the Jarden synergy capture, Newell management expected the Company to generate >$3 billion of

EBITDA with >20% EBITDA margins. However, EBITDA has declined since the Jarden acquisition.

Revenue growth has been consistently decelerating for the past 8 quarters and Newell lowered its financial

guidance several times throughout 2017.


25

Newell’s Margins Are Substantially Below Peers

33.0%

28.8% 28.4%

25.9%

23.6%

21.4% 21.1% 20.9% 20.6% 20.0% 19.8%

16.9% 16.7% 16.6%

PBH LSE

RB

CL PG CHD CLX SPB LSE

ULVR

XTRA

HEN3

NWL

Mgmt Target

TUP NWL SWK FBHS

Source: CapitalIQ, Bloomberg, Company filings, and Starboard estimates.

Newell’s EBITDA margins are significantly below management’s targets and best-in-class peers, despite its

product portfolio consisting of valuable brands in large, growing, and unconsolidated global categories.

Newell’s peer group consists of a diverse set of companies operating in the Consumer Durables, Consumer Discretionary,

and Household Products industries.

Newell’s low EBITDA margins reflect a bloated cost structure and poor operating performance.

2018E EBITDA Margins

Peer Average: 23.1%

Newell’s EBITDA margins are among the worst in its peer group and substantially below the peer average

26

21.9x 21.3x 20.2x

19.3x 19.0x 17.2x 17.1x 17.1x 17.0x

15.8x

10.5x 9.9x 9.0x

SPB CL CHD LSE

ULVR

CLX PG LSE

RB

SWK XTRA

HEN3

FBHS PBH NWL TUP

And the Company Now Trades at a Significant Discount to

Peers

14.1x 14.0x 13.8x 13.7x 13.1x

12.4x 11.8x 11.5x 11.4x

10.4x 10.3x 9.4x

6.3x

LSE

RB

CL CHD SPB LSE

ULVR

CLX PG XTRA

HEN3

SWK PBH FBHS NWL TUP

Poor operating performance and missed expectations have led to Newell trading at a substantial discount to peers on several key valuation metrics.

Enterprise Value / CY2018E EBITDA

Price / CY2018E EPS

Peer Average: 17.1x

Peer Average: 11.9x

Source: CapitalIQ and Bloomberg.

Note: Market data as of April 20, 2018.

Newell is deeply undervalued relative to peer valuations

27

87.5% 86.3% 85.2% 85.1%83.5% 82.7% 82.5% 80.3% 79.5% 78.0%

74.6% 72.9%69.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

NWL FBHS SWK SPB TUP XTRA

HEN3

LSE

UVLR

CLX CHD PG CL LSE

RB

PBH

Newell Brands Maintains the Highest Expense Ratio Even

After “Synergies” from the Jarden Acquisition

Cost Profile (% of Revenue)

Compared to peers, Newell’s total expense ratio is the highest, indicating a substantial opportunity to reduce

costs.

An opportunity exists to significantly reduce costs and improve margins at Newell

$14.7B $5.3B $12.7B $5.0B $2.3B €20.0B €53.7B $6.0B $3.8B $65.7B $15.5B £11.5B $1.0B

2017

Revenue:

Source: CapitalIQ, Bloomberg, and Company filings.

Note: Based on LTM cost of goods sold and total operating expenses.

(1) Includes Starboard estimate for Transformation Office expense of $247 million.

(1)

28

Newell CEO Michael Polk was extremely bullish on the acquisition of Jarden

“The combination creates substantial scale in key

geographies, customers and channels, enabling us to leverage

an advantaged set of brand development and commercial

capabilities to accelerate the deployment and impact of our

portfolio in international markets, in key customers and in fast-

growing channels like e-commerce.”

- CEO Michael Polk,

Jarden Corp. and Newell Rubbermaid Merger Call (December 2015)

Newell was Optimistic About the Operational Prospects of

the Jarden Acquisition The Newell and Jarden combination was intended to establish a best-in-class brand portfolio with unmatched

growth potential and the opportunity to realize sizeable revenue and cost synergies.

“The strategic rationale for combining the two companies is clear and compelling. Both Newell Rubbermaid and Jarden

have strong portfolios of leading brands that are number one or number two in their categories. The combined brand portfolio

is quite concentrated, with the top 30 brands delivering about 80% of the revenue, which will enable us to focus investment

quite easily.”- CEO Michael Polk, Jarden Corp. and Newell Rubbermaid Merger Call (December 2015)


Merger Presentation - “A Winning Combination” (December 14, 2015)

29

Newell Expected to Achieve Significant Synergies from the

Jarden Acquisition…

Newell promised significant synergy realization from the Jarden acquisition

Newell predicted substantial upside from the anticipated cost synergies.

Shareholders put their faith in Michael Polk and the management team, realizing there was tremendous strategic

value between the two assets and various ways to win, including:

– Revenue synergies with the complementary business models;

– Substantial cost synergies in purchasing, manufacturing and corporate expenses;

– Greater leverage with retailers and suppliers, with opportunities for supply chain optimization; and

– A lower tax rate on Jarden businesses, among many others.

Many sell-side analysts believed that the synergy estimate, representing less than 4% of the combined cost structure,

was conservative, and there was the potential for much more.

“We have a clear line of sight to $500 million in anticipated cost synergies…And we wouldn’t have taken [on the merger

with Jarden had we] not seen tremendous upside beyond what we’re committing to today.”

- CEO Michael Polk, Jarden Corp. and Newell Rubbermaid Merger Call (December 2015)

1

2

3

4


30

…And Claimed a Significant Portion Would Flow Through

to Margins…

Achieving the stated synergies was expected to significantly increase EBITDA margin

Newell made promises to shareholders at the time of the Jarden acquisition, including “strong growth” and

improved profitability for the combined business.

“The first $500 million of synergies is expected to create a company with EBITDA margins of over 20% and annual EBITDA of

over $3 billion, giving us the firepower to reduce the leverage ratio to 3 times to 3.5 times within two years to three years and then,

subsequently, to deploy capital to create further value beyond our organic agenda.”- CEO Michael Polk, Q4 2015 Earnings Call (January 2016)

“…we expect to unlock the financial capacity for growth, margin development and cash flow yield through the delivery of at least $500

million in cost synergies and $300 million in Project Renewal savings. Over 80% of the combined $800 million in cost synergies and

savings will flow to margin, with the balance being reinvested in capabilities and brand support.”

- CEO Michael Polk, Q1 2016 Earnings Call (April 2016)

Adjusted EBITDA($ in billions)

Mgmt Projections(as Combined Stand-alone Companies)

Mgmt EBITDA

Target

Mgmt EBITDA

Margin Target


(1) Adjusted EBITDA based on each management team’s FY2016 projections on a stand-alone basis from the merger proxy (excluding the results of Venezuelan operations).

(2) Assumes $15 billion in revenue.

Mgmt Projections(as Combined Stand-alone Companies)

(1) (1)Synergy Potential

$800*80%=$640M in

EBITDA Improvements

Adjusted EBITDA Margin

Synergy Potential

$800*80%=$640M in

EBITDA Improvements

(2)

31

…Then Even Doubled the Synergy Target

Less than one year after closing the Jarden acquisition, Newell management doubled its synergy target

“We've been conservative in our

assumptions, but we'll pursue every

opportunity we uncover. We have no

revenue synergies, no working capital

benefits, and no tax synergies in our deal

economics and have a very clear line of

sight to at a minimum $500 million of

cost synergies.”

- CEO Michael Polk, Q4 2015 Earnings Call

January 2016

“But we believe we can now deliver $1 billion of synergies, on top of that $300 million in project renewal savings. That gets us to $1.3 billion in cumulative savings over the timeframe from 2016 through 2021. And so, that's going to be an important part of the algorithm. It drives margin development.”

- CEO Michael Polk, 2017 CAGNY Investor Conference

February 2017

Following the announcement of

the merger with Jarden,

management provided a synergy

target of $500 million, claiming

the target was conservative…

…leading them to double the

synergy target to $1 billion just

one year later


32

Sell-side Analysts Were Also Excited by the Combination

Wall Street echoed Newell management’s bullishness towards the Jarden acquisition

Source: Wall Street equity research.

Research analysts also saw strategic value in the acquisition, highlighting the combination’s potential and their

excitement within their research reports.

“We Are Positive on JAH Deal”

“JAH Acquisition Adds Significant Scale

and Cost Synergies”

“…JAH and NWL have complementary

portfolios, unmasking significant revenue growth

opportunities in cross-selling, geographic expansion

and retail relationships.”

- Gabelli, February 2016

“The Perfect Recipe”

“The deal makes a lot of sense from a

financial perspective, particularly once

synergies kick in.”

“We see tremendous merit in the potential merger

and note the following:

(1) Business models are complementary; not competitive; we see

minimal anti-trust risk; there is limited direct product or

category overlap;

(2) Both companies are specialists in durable goods businesses,

with margin rich consumables (non-staples) businesses;

(3) Mix based product margins are quite different, with NWL

exceeding JAH by nearly 700bps; we expect merger synergies

to be concentrated in COGS at the onset, based on baseline

savings in procurement, sourcing, logistics, warehousing, and

distribution;

(4) The combined entity would have near $16 billion in revenue in

2016; $10 billion domestic and $6 billion in international

markets;

(5) Combined EBITDA (pre-synergy) nears $2.5 billion; $500M in

identified synergies appears conservative in our view;

(6) Both companies have 10%+ exposure to mass retail but we note

that NWL is more exposed to big box specialty including home

improvement, office, and baby while JAH has exposure to club,

sporting goods, and department stores.”

- Piper Jaffray, December 2015

- Raymond James, December 2015

- Gabelli, February 2016

- Piper Jaffray, December 2015

- JP Morgan, December 2015

33

What Exactly Comprised the Synergy Opportunity?

Newell believed that the combination with Jarden would generate significant scale benefits


The Company promised to deliver $500 million (and later $1 billion) in cost synergies from the Jarden

acquisition.

Excerpts from Newell’s Presentation upon Deal Announcement

The Jarden acquisition made Newell one of the largest consumer products companies in the world.

This combination was expected to generate meaningful economies of scale in purchasing, SG&A leverage,

distribution, and transportation, among other expense categories.

Newell stated that the Jarden acquisition created ~2x – 4x the scale at major retailers.

34

Management identified several areas of opportunity to achieve the $500 million of cost savings.

Newell’s management team outlined numerous initiatives to achieve the $500 million synergy target


What Exactly Comprised the Synergy Opportunity? (cont’d)

- Deutsche Bank Global Consumer Conference (June 2016)

35

Newell management expected to deliver the $500 million of synergies earlier than its previous forecast

Management also articulated a specific timeline to achieve the stated synergies.


What Exactly Comprised the Synergy Opportunity? (cont’d)

- Barclays Consumer Staples Conference (September 2016)

36

The Company has reported almost $600 million in synergies and savings over the past two years.

However, EBITDA has actually declined during that timeframe

Yet, EBITDA Has Declined Since the Acquisition…

Adjusted EBITDA Comparison

($ in billions)

Jarden

Newell

Rubbermaid

$2.6$2.4

Newell has reported significant synergies and savings since the combination with Jarden. Yet, EBITDA has

actually declined two years post the acquisition.


(1) Adjusted EBITDA based on each management team’s FY2016 projections on a stand-alone basis from the merger proxy (excluding the results of Venezuelan operations); adjusts for Tools segment sale.

(2) Adjusts for Tools segment sale and includes Starboard estimate for Transformation Office expense of $247 million.

(1) (2)

Transformation Office

Expenditure

37

…And Estimates are Heading in the Wrong Direction

Following Newell’s recent financial results and 2018 outlook, we estimate that management’s implied

EBITDA guidance for 2018 has fallen 18% below its original EBITDA target

Management Commentary on Jarden Acquisition

“The first $500 million of synergies is expected

to create a company with EBITDA margins of

over 20% and annual EBITDA of over $3

billion…”

Goal #1:

Source: Company filings, CapitalIQ, and Bloomberg.

(1) Wall Street consensus FY2018 EBITDA estimate.

- CEO Michael Polk, Q4 2015 Earnings Call

($ in billions)

Adj. EBITDA & EBITDA Margin Since Merger

20%

17.7%

16.6%

16.9%

(Q4 2015)

(1)

18% below

original

targets

Despite the promise to shareholders of over $3 billion in EBITDA, the Company has thus far failed in reaching

its goal.

“But we believe we can now deliver $1 billion

of synergies, on top of that $300 million in

project renewal savings.”


38

The Company Also Failed to Hit Revenue Growth Targets

Source: Company filings, CapitalIQ, and Bloomberg.

(1) Wall Street consensus estimate of FY2018 “core growth” rate.

Management Commentary on Jarden Acquisition Actual Results – Core Growth Pre & Post-Merger

“Our ambition is to bring together and leverage

the best talent and capabilities from both

companies to drive strong growth…”

Goal #2:

- CEO Michael Polk, Q4 2015 Earnings Call (January 2016)

Revenue growth has massively decelerated and may turn negative in 2018

Despite the promise to shareholders of “strong growth,” core revenue growth has continued to meaningfully

decelerate.

NWL acquisition of JAH

closed on 4/15/2016

(1)

“The key tenet that underpins the strategy is

that this company is going to be growth-led…”

- CEO Michael Polk, Barclays Conference (September 2016)

39

Less than seven months after management doubled its synergy target, analysts were becoming more skeptical.

As a Result, Sell-side Analysts Started Becoming Skeptical

of the Company’s Targets and Guidance

Analysts expressed a lack of confidence in Newell’s execution and strategic vision

Analyst Commentary

Source: Wall Street equity research.

“We had expected Newell’s first $500M of cost synergies,

including ~$300M (or ~$0.50 in EPS) in FY18 to drop to the

bottom line, consistent with Newell’s initial guidance. This

had been a key driver of our positive thesis on Newell

Brands…However, the company’s “soft-guide” for ~$3.30 in

FY18 EPS, based on inferred low double-digit % growth off

of the lowered FY17 base, suggests materially higher

reinvestment levels than we (and Newell) had previously

expected.”- Jefferies, September 2017

“Headwinds Exist…but Bigger Issue Is Loss of

Confidence in Management and the Story — We think

the reason the stock has round-tripped to roughly where

it was when the JAH acquisition was first announced in

December 2015 is a lack of investor confidence that the

integration of these businesses is progressing to plan, and

doubt that the strategic vision of NWL’s CEO will

play out as he hopes.”

- Citi, September 2017

“Following the additional commentary today,

including on slower category growth and risk of

additional investment spending, we are less confident in

the bottom-line delivery at NWL.”

- Oppenheimer, September 2017

“While partially owing to cash restructuring/synergy-

related costs to unlock material savings, Newell’s

heretofore lack of progress in this area…and the

market’s concern regarding the company’s ability to

ultimately deliver on its long-term operating cash

flow targets should continue to weigh on the stock’s

multiple, in our view.”

- Jefferies, September 2017

40

Consensus Estimates Reflected this Skepticism

FY2017 Consensus Adjusted EBITDA Estimates

FY2017 EBITDA was 19% below initial estimates following the closing of the Jarden transaction

“The first $500 million of synergies is expected to create a company with EBITDA margins of over 20% and annual

EBITDA of over $3 billion, giving us the firepower to reduce the leverage ratio to 3 times to 3.5 times within two years to

three years and then, subsequently, to deploy capital to create further value beyond our organic agenda.”

- CEO Michael Polk, Q4 2015 Earnings Call (January 2016)

Management Long-Term EBITDA Target

Actual 2017

Adj. EBITDA

Source: Bloomberg and CapitalIQ.

Note: Estimates not normalized for acquisitions and divestitures.

41

Newell has repeatedly missed consensus expectations on numerous financial metrics over the past several quarters, frustrating shareholders, and failing to gain momentum despite its iconic portfolio of brands.

Source: Bloomberg and Company filings.

(1) Based on FY2017 EPS consensus estimate prior to Newell issuing its FY2017 guidance.

(2) Consensus estimates prior to announcement of preliminary results on January 25, 2018.(3) Stock price reaction on January 25, 2018 (day Newell announced preliminary 2017 results).

Newell Has Consistently Overpromised and Under-delivered…

Earnings Surprise History – Last 3 Quarters

Q2 2017

Earnings

Q3 2017

Earnings

Revised

Guidance

Q4 2017

Earnings(2)

(3)

Newell’s ability to achieve consensus expectations deteriorated significantly throughout 2017

42

(35%)

+4%

+29%

64

% U

nd

erperfo

rma

nce

+7%

+24%

A series of operational missteps has caused Newell’s stock price to underperform the S&P 500 by 64% in less

than 2 years.

…And Shareholders Have Suffered…

Newell has massively underperformed its sector and the overall market

Share Price Performance(1)

(2)

(3)

Source: CapitalIQ.

(1) Total returns include dividends from April 18, 2016 (first day of trading as a combined company following Jarden acquisition) to February 8, 2018 (closing price before Newell confirmed receipt of Starboard’s director nominations).



43

Since the acquisition of Jarden, approximately $10 billion in shareholder value has been destroyed.

Value at Time of Acquisition:

Value Today:$10 billion in shareholder value has

been destroyed in less than 2 years

Source: Company filings and CapitalIQ (adjusted for dividends).

Note: As of February 8, 2018 (closing price before Newell confirmed receipt of Starboard’s director nominations).

The operational issues at Newell have resulted in a significant destruction of shareholder value

…As Significant Shareholder Value Has Been Destroyed

44

The Communication to Shareholders Has Been Confusing

While management has tried to put a positive spin on the operating performance issues, shareholders

remain extremely concerned

Only exacerbating the poor execution and share price performance, management commentary regarding

Newell’s performance has been confusing for shareholders, leaving more questions than answers.

Quote Author


“So we’re right where we thought we would be,

although our business performance hasn’t been

up to our expectations.”

CEO Michael Polk

(CAGNY Conference – February 2018)

“And we delivered $358 million of synergies and

savings in 2017. Some of that did not flow through

the margin…for a variety of reasons, but quite clear

that that money is in the bank…”

CEO Michael Polk

(CAGNY Conference – February 2018)

“So on balance, I think we’ve had a phenomenal

year. Despite the fact that we're struggling on the

top line and the flow through to earnings

associated with revenue…”

CEO Michael Polk

(Town Hall Presentation– February 2018)

45

In contrast to management’s remarks, adjusted operating margins declined 138bps in FY2017 vs. FY2016

While management continually boasted about its success in achieving synergy targets, the Company’s

operating margins showed a completely different story.

“…the work we’re doing on cost synergies and Project Renewal savings is

having a meaningful positive impact on margins.”

Q1’17 Adj. Operating Margin

“We delivered over $80 million of savings and synergies in the second

quarter, which contributed to strong normalized operating margin growth…”


“We have delivered the cost synergies and Renewal savings we

committed to deliver…”


“When coupled with procurement benefits, this results in over $350

million [in FY2017] in savings and synergies that flowed to the P&L.”



In Our View, Newell Management Needs to Communicate

a Better Plan to Turn the Business Around and Execute

46


B. Issues Have Been Self-Inflicted

47

We believe that issues specific to Newell are responsible for the Company’s underperformance, and there is a

significant opportunity for improvement

While Newell Has Blamed Poor Performance on the Macro Environment,

We Believe it Is Self-Inflicted and Can Be Improved

Newell management has frequently blamed poor performance on the macro environment, yet peers have fared

far better.

While the retail macro environment has been stressed, Newell’s peers have performed far better.

Newell’s peers have shown consistent organic revenue growth and gross margin expansion.

As a result, Newell’s share price has significantly underperformed its peers over the past year.

We believe that Newell’s issues resulted from poor execution versus industry headwinds.

Many of Newell’s issues are self-inflicted due to communication problems within the Company.

Limited communication between corporate functions (e.g., e-commerce, R&D, brand marketing, etc.) and the

divisions / brands leads to inefficiencies and higher costs.

In the following pages, we discuss several examples of poor communication resulting in strained customer

relationships and negative financial consequences.

We believe that there are numerous opportunities to fix the internal communication issues.

By returning more responsibility and accountability to the divisions / brands, Newell can streamline

communication, accelerate time to market, and improve customer relationships.


48

The Company has been vehement that its operational issues are macro related

Newell claims poor results and guidance reductions are due to the weak retail environment.

Q2 2017 Earnings Call

(August 4, 2017)

“That said, like most others in our industry, we continue to face pressure from retailer inventory

reductions and retailer consolidation in the U.S.” – CEO Michael Polk

Barclays Conference

(September 7, 2017)

“We're making good progress despite a tougher landscape than we originally envisioned. The

landscape issue is really retail environment related and also market growth related. We are existing

now in sluggish markets, a little bit worse than where we were when this whole process started and

where we envisioned the deal…” – CEO Michael Polk


(November 2, 2017)

“We had a top customer bankruptcy, forcing a future re-plan on one of our best performing businesses.

We had unrelenting retailer inventory destocking, creating a headwind for revenue as our retail

partners adjust to slowing market growth and changes in shopping patterns. You name it, we experienced

it this quarter.”– CEO Michael Polk


(February 16, 2018)

“What's changed is the retail environment, and what's unique about our portfolio and that does not

change with the change in portfolio footprint is the exposure to the stressed segment of the U.S. retail

landscape. And that will continue to be bit of an overhang on the business with probably episodic events

like the ones we're dealing with right now.”– CEO Michael Polk

CAGNY Conference

(February 22, 2018)

“The external environment is tougher than what we anticipated when we did the deal and even at the

beginning of this year, and it's not that the markets are really having troubles or consumer purchasing

behaviors have slowed down in any way. In fact, it's the opposite, the consumer markets are quite robust.

But the retail landscape given our category footprint and our exposure to a group of stressed retailers

is more troubling than what we anticipated.”– CEO Michael Polk

Note: Emphasis added to quotations.

While Newell Has Blamed Poor Performance on the Macro Environment,

We Believe it Is Self-Inflicted and Can Be Improved (cont’d)

49

Facing the Same Retail Environment, Peers Have Fared

Much Better

Despite experiencing similar retail trends, Newell’s peers have outperformed

Stock price performance between Newell and the Company’s peers has differed significantly.

(45%)

(1%)

(5%)

(2%)

12%

8%

Source: CapitalIQ.

Note: Stock price return from May 9, 2017 (day of Newell Brands 2017 Annual Meeting) to February 8, 2018 (last closing price before Newell confirmed receipt of Starboard’s director nominations).


(1)

50

6%

5%

3%

3% 3% 3%

0%

(2%)

5%

4% 4%5%

7% 7%

8%

5%

4%

1%

2%

3%3%

5%5% 5%

2%

1%

0%

2%2%

8%

6%

2%

5%

5%

4% 4%

5%

-3%

-1%

1%

3%

5%

7%

9%

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17

NWL SWK CHD CL FBHS

While Newell’s Revenue Is Declining, Its Peers Are

Growing Consistently

Peers have been able to weather the “difficult environment” without reporting a quarter of negative

organic revenue growth. Unfortunately, Newell cannot say the same

Source: Company filings, peer filings, and Starboard estimates.

Organic Revenue Growth

While the macro environment may be more difficult, the Company’s peers are demonstrating substantially

better organic growth than Newell.

51

While Newell’s Gross Margins Are Deteriorating, Its Peers’

Are Continuing to Expand

While peers have been able to expand gross margins, Newell Brands’ contracted significantly in 2017

Source: Company filings and peer filings.

Change in Adjusted Gross Margin Year-over-Year

While the macro environment may be more difficult, Newell Brands’ peers are operating more effectively and

performing significantly better.

Q1’17 Q2’17 Q3’17 Q4’17 2017

(415bps) (24bps) (104bps) (412bps) (206bps)

163bps (15bps) 63bps (17bps)44bps

80bps 115bps 1bp (46bps)35bps

72bps 43bps (2bps) (36bps)19bps

103bps (80bps) (13bps) 52bps16bps

52

Many Specific Operational Missteps, Not the Macro

Environment, Have Led to this Underperformance

In the following pages, we detail clear examples of customer frustration, brand

destruction, and other actions that have contributed to the Company’s poor operational

execution.

Based on our research, we believe that the communication at Newell has resulted in a number of issues at the

Company and can be greatly improved.

The Company has drastically missed expectations, and has blamed the macro environment.

Our question: So why have competitors fared so much better than Newell in this environment?

We believe the culprit is not the macro environment.

We believe the Company’s issues are self-inflicted and there is substantial room for improvement.

These issues are fixable, and by implementing the appropriate changes, Newell can substantially

improve its margins

53

The Structure of the Organization Has Resulted in High

Costs, Massive Inefficiencies, and Declining Revenue

Source: Industry research and interviews.

While Newell continues to blame the macro environment, we believe that many of these issues are actually self-

inflicted.

We believe that Newell’s organization is inefficient, and its processes result in high costs, poor employee morale, and

frustrated customers.

Corporate appears to make decisions without fully informing the divisions / brands, which has resulted in

significant customer and brand issues, including gross margin erosion.

The R&D process lacks communication between corporate and the divisions / brands, which results in a low

number of new products reaching the market, high kill rates, duplicative functions, and far higher costs.

In many cases the division / brand leaders are so removed from new product design that the Company

could be working on new products for a year before the division / brand leader is involved. This results in

lengthy time to market and high product kill ratios.

The e-commerce group is too separated from the divisions and appears to determine online pricing without

communicating with the divisions, resulting in inconsistent pricing that, in some cases, violates the Company’s

own minimum pricing policy or results in different pricing to the same customers between online and brick-and-

mortar (i.e., Walmart vs Walmart.com).

These issues frustrate customers and lead to Newell giving large promotional concessions, which

drastically lowers margins.

Newell’s organizational structure appears to be a significant contributor to the issues facing the Company

54

Newell’s Siloed Organizational Structure Causes Massive

Communication Issues, Resulting in High Costs

CORPORATE

Division CEO / Head of Brand

CFO │ COO │ Supply Chain │ HR │

Regional Presidents

Reports to e-commerce head

Determines online pricing regardless of

whether retailer has brick-and-mortar

store

Division / Brand Level E-commerce

Research and

Development

Brand Marketing

Limited communication among the different functional groups not only results in duplicative costs, but also

frustrates customers and causes poor employee morale.

Reports to Richard Davies

New product design operated out of

Kalamazoo, MI

Works on new product development


National marketing and website design

New product development and pricing

Prices online products

without the knowledge of

division / brand, sometimes

violating Company’s own

minimum pricing policy for

some retailers, and in other

cases, results in presenting

different prices to the same

retailer (i.e., Walmart vs

Walmart.com)

Operates Design center in a

silo away from Division;

months or years of research

with high kill rate because

Division leaders have little

to no input

Limited communication

with Division Trade

Marketing and Sales (who

have customer relationships)

which results in bringing

forward products that

retailers don’t want

Given revenue and

operating plan from

corporate with

limited control over

actual P&L levers


Lack of communication

Field Sales

Trade Marketing

Engineering (Plant

and Supply Chain)

Can also reside in Corporate

depending on the division /

brand

If no Field Sales in Division,

would have to speak with

channel sales in corporate to

know product sales trends;

Very limited communication

with Brand Marketing


with R&D, resulting in new

products having to be

redesigned along with

sourcing issues

Responsible for

ultimately selling the

product

Responsible for in-store

promotions and in-store

support

Responsible for

manufacturing

engineering products

55

When Corporate Fails to Communicate with the Brands: Textbook

Way to Harm a Brand – The Yankee Candle Story

Source: Jarden filings.

Yankee Candle is one of the most recognized brands in the candle industry with ~600 retail store locations.

Yankee Candle has been a prominent, high quality candle brand for

many years.

In an effort to expand its reach, Yankee Candle (before Newell

acquired Jarden), created a value-priced candle line called

“American Home by Yankee Candle” so major retailers could carry

product without diluting the flagship Yankee Candle brand.

From Jarden’s 2015 CAGNY presentation – focused

strategy on breaking into mass retailing without

harming flagship Yankee Candle brand

56

When Corporate Fails to Communicate with the Brands: Textbook

Way to Harm a Brand – The Yankee Candle Story (cont’d)

The first way to kill the value of a brand is to put it right next to the Walmart knockoff that is a quarter of the price

As a result of this action, Walmart a) cut the price of the product, and b) placed it right next to the lowest-

end candles on the market.

Why would you put a high quality

brand next to a cheap knockoff?

In 2017, in an effort to generate additional near-term sales, Newell did away with the American Home brand

and began rolling out its higher-end, flagship Yankee Candle brand into large retailers.

Yankee Candle

$19.87

Low Quality Candles

priced at ~$3 - $5

Now the high-end Yankee Candle brand is lost in a sea of low-end knockoff candles in Walmart. How does the

opinion of its core customer base stay the same when Yankee Candle is now next to the $4 candles at Walmart?


57

In an Effort to Grow Sales, Newell Allowed Walmart to

Discount Yankee Candle by Almost $10 per Candle

Source: Industry research and interviews, www.yankeecandle.com, and www.walmart.com.

Why would Newell push the Yankee Candle brand into Walmart at a 30% discount to the price at its own stores?

Walmart - $19.87Yankee Candle Store - $27.99

Not considering the long-term effects of a decision like this can be dangerous

58

So What Do You Think Happened Next?

We believe that this had a negative impact on gross margins

Source: www.bedbathandbeyond.com, industry research and interviews.

Clearly, other large retailers would get upset if they realized Walmart was selling the same candle at a large

price discount. So, Bed Bath & Beyond demanded a lower wholesale price from Newell, so it could offer a

competitive retail price.

Bed Bath & Beyond today - $21.99

A more than 20% reduction at a major retailer

not only severely impacts profitability, but also

draws customers away from Company owned

stores to capitalize on better prices!

59

Newell’s actions resulted in a number of large retailers significantly reducing their prices of Yankee Candle

products. However, the same product is still sold in its own Yankee Candle stores for $27.99!

Many Major Retailers Ended Up Cutting Prices

This decision resulted in retail partners cutting their prices by 20% - 30%; clearly a bad outcome for the business

Source: www.yankeecandle.com, www.walmart.com, www.bedbathandbeyond.com, www.target.com, www.amazon.com, industry research and interviews.

Walmart - $19.87 Bed Bath & Beyond - $21.99

Amazon - $21.99

Target - $19.99

YankeeCandle.com - $27.99

60

Especially When Yankee Candle Has Close to 600 Stores

Selling at Full Price!

Why was this a good idea?

Source: www.yankeecandle.com, Mapline, industry research and interviews.

Newell is undercutting its own stores…and it operates a lot of stores.

Map of Yankee Candle Locations

61

The Appliance Business Opportunity

We believe that an issue like this is clearly self-inflicted, not macro related

Newell has pointed to “structural issues” and “destocking” to account for the struggling appliance business, but

we believe that the real issue was poor decision making.

We don’t believe this is a “destocking” or a “structural” issue. We believe the issue stems from the Company’s decision to fire

almost the entire sales force right before the selling season.

During the integration of legacy Newell and Jarden, the management team “integrated” sales offices in an attempt to shift

towards a more centralized strategy – resulting in the termination of more than 150 former Jarden sales executives.

However, two problems ensued in this relationship driven industry – (1) the recently terminated sales executives had the

relationships with the buyers, and (2) it was just prior to selling season!

“…Appliances in particular, that has some structural issues within its portfolio that need to be addressed through the work

we're doing on design, the work we're doing on innovation, the work we're doing in the brand arena.”


NWL fires legacy

Jarden appliance

salesforce –

integrates

appliances with

legacy NWL

salespeople

Sell-in for

upcoming 3rd and

4th quarter

appliance season

Newell reverses

course and tries to

re-hire legacy

salesforce

NWL misses

appliance

expectations in key

sales season

Q1 2017 Q3 2017 Q4 2017Q2 2017

Source: Company filings, industry research and interviews.

62

The R&D Process Appears to Be a Key Reason for Inflated

Costs and Slowing Revenue Growth


The process is led by corporate, not by the division / brands.

Corporate relies on test scores in determining new product design rather than conversations with retailers, pricing,

competition, or manufacturability.

Division leaders are not brought into the new product design process for sometimes up to a year after corporate

determines new concept, despite the fact that they are the ones who speak with the retailers and are responsible for

manufacturing.

This results in high kill rates when corporate finally realizes that competition exists, pricing is too high, or a product

cannot actually be manufactured.

In some cases, the Company seems to wait until the product is already manufactured to bring it in front of retailers

and then realizes that they don’t want it, thereby killing the product after multiple years of development.

The process is too lengthy and Newell misses opportunities to market.

Speed to market is one of the most important factors in new product success and revenue growth, yet Newell’s

complex structure, which cuts off division leaders, can lead to multiple years from concept to new product

production.

Newell appears to measure success based on quantity of concepts (approximately 1,300 last year alone!) rather than actual

new products to market or the revenue and return they generate.

The brand leaders live and breathe their brands and their respective categories. These are the people

that need to be empowered to drive innovation and revenue growth

1

2

3

63Source: Company filings, industry research and interviews.

In our research, we have focused extensively on Newell’s innovation and R&D process because we believe

there are massive inefficiencies.

Step 1: New Product Design (Led by Corporate R&D and Corporate Brand Marketing)

Over the next few pages, we detail what we believe to be the current R&D process at Newell. There are many issues with

the process that result in wasted time, higher than expected costs, frustrated retailers, and new product delays.

The corporate R&D design team in Kalamazoo, MI, along with corporate brand marketing, will generate new ideas for

products that theoretically solve a problem in the marketplace.

They are not experts in individual brands.

The division / brand leaders, who have the relationships with the retailers and are the experts in each brand, are generally

not involved and are unaware of what this corporate team is working on.

The design team, which operates in a silo in Kalamazoo, will draw up these new concepts.

Richard Davies, who operates out of the UK, oversees this process.

Rather than relying on the divisions / brands who are close to the retail customer and

know the competitive landscape, new product development is instead done in a

completely different location and generally without the knowledge of those who know

the business the best


Costs and Slowing Revenue Growth (cont’d)

64

Corporate makes decisions based on theoretical scores without the division / brand leaders having

input, whether the retailer wants the product, or whether it is even possible to manufacture

Step 2: Consumer Research

Once decided on a sketch and concept at

Kalamazoo, the idea will go through Newell’s

corporate consumer research team.

Again, the consumer research team is not brand

specific, so the division / brand still generally

has no idea about these new products.

The consumer research group will score each

product with a consumer panel, but they will

not typically discuss price, specification or any

details, just high level thoughts.

Corporate will then make its decisions based on

these theoretical index scores without the

proper input from division / brand leaders.

Steps 1 and 2 can take up to 6 months and

the divisions / brands are not involved.

Products moving forward are based on consumer index scores, but do

not properly take into account price, competition, retail customer

desires or even whether it is possible to manufacture the product!

They “trust the index number” and “don’t

take into account what matters like

competition, price, or even the retailer”

-Former Senior Executive




65

A year into the process, the division / brand specific executives still have minimal involvement

Step 3: Decision to Move Forward with R&D

After the consumer research stage, the division / brand leader finally gets notified – but not in a meaningful way.

The division / brand leader is invited to listen to a call, which typically lasts 30-45 minutes, where up to 70 new

concepts will be discussed by corporate.

Richard Davies and Bill Burke (COO) listen to each idea from corporate in rapid-fire and make approvals.

Since they are not experts in each industry, they rely primarily on index scores.

Division / brand leaders do not have the right to eliminate an idea, even if it already exists or they know the

retailer would not want it.

New product concepts are then approved (assuming they have a high index score) to go back to corporate engineering.

At this point, which can easily be 6-12 months, there is generally still no real view on price, cost, and feasibility

(since division operations are not on the call), and they typically have not shared the products or ideas with the

retailer.

The “quality of thinking was quite low”


“There was no debate, not enough time”


When discussing the rapid fire process to make approvals, one former senior executive stated:




66

Typically a year or more into the product development, there is still no answer on actual cost, limited

interaction with the divisions, limited/no conversations with the retailer, and corporate R&D

engineering is still trying to determine whether the product can actually be manufactured!

Step 4: Corporate R&D Engineering

Now the concept goes back to the R&D engineering team at corporate, led again by Richard Davies.

Once again, there is no knowledge or input from the division / brand leaders.

This group at corporate develops a theoretical cost and materials model, and tries to determine whether the product can

actually be manufactured.

Importantly, since the division supply chain and operations is typically not involved, actual pricing may differ

materially from theoretical pricing.

If R&D Engineering determines

the product cannot be

manufactured, the idea is killed

(yet a year may have been wasted)

Division / brand supply chain and

operations is not engaged, so

“theoretical” cost may differ

materially from actual cost

Sometimes the R&D team will

learn that someone else has

already patented the device and

cannot design around it, therefore

being forced to kill the idea




67

Step 5: Decision to move forward with commercial engineering

Once again, the division / brand leader is invited to listen to a call between corporate R&D, Richard Davies, and Bill

Burke to determine whether to pursue commercial engineering.

Corporate R&D explains whether the product can be theoretically manufactured and provides theoretical cost estimates.

Importantly, the supply chain and operations within the division has typically still not adequately engaged on the

product to determine whether it is even possible to manufacture and the actual cost estimate of manufacturing.

Richard Davies and Bill Burke then vote on proceeding to commercial engineering and trade marketing.

The division / brand leader can provide thoughts and input, but still has no ability to kill the product.

The division / brand leader still has no ability to kill the product

We may now be well over a year into the process and the division / brand leader, division operations,

and division trade marketing have had little involvement, resulting in retailers most likely not having

been told about the product




68

Over a year into the process, and the retailer could have absolutely no interest!

Step 6: Engage with Division – Proceed with Commercial Engineering and Trade Marketing

Commercial Engineering:

Corporate R&D works with division supply chain and

operations to get quotes from suppliers to determine

actual vs. theoretical manufacturing costs and whether

the product can realistically be manufactured in volume.

Trade Marketing:

Trade marketing (within the division) is finally

involved in a meaningful way and discusses the product

with the retailers.

If supply chain and operations determines that

it will cost more to manufacture the product

than the theoretical estimates, it will either be

redesigned or killed

If the retailer does not like the product,

believes its pricing is too high or there are

already too many competitors for its shelves,

the product may be killed or will become an

“online only offer”

Typically when the retailer decided it didn’t want the product they

[the retailer] would say, “We should have discussed this a year ago”





69

Step 7: Pursue tooling and investments

Step 8: Product Launch

Typically well over a year later, investments are made to pursue tooling and product launch.

Newell tested over 1,300 concepts in

2017? How many products were killed

and how much time was wasted?

If everything goes well and the new concept

gets through this backwards process that

could take years, then the product is finally

launched.

In 2017 Newell tested over 1,300 new

concepts, but how many were killed?




Newell appears to measure success based on concepts tested, rather than actual new products and

revenue growth

70

Oster’s Air Fryer Mishap Represents an Example of

Miscommunication

This could have been avoided if Newell’s teams worked in coordination

Oster’s “new” concept driven by Kalamazoo and the corporate marketing team resulted in a missed

opportunity for the business.

While Cuisinart was developing its Air Fryer Toaster Oven, the R&D team in Kalamazoo and brand marketing team in corporate

thought of a similar idea for Newell’s Oster brand.

The R&D team designed a product that received fantastic index scores from the consumer research group.

Importantly, price and competitive products were never discussed as part of these scores, and corporate decided to go

through with the product.

The R&D team then developed a theoretical cost estimate for the product.

However, since the division operations and supply chain was not involved, this cost was nothing more than theoretical.

When it finally came time for division operations and supply chain, along with division marketing, to become involved, they found:

1) The cost to manufacture would be far higher than the theoretical cost based on corporate R&D’s product design.

2) The retailer was already speaking with a competitor about a similar product, which was going to have a retail price that was

actually lower than the division operations’ cost estimate.

Conclusion – The product never came to market and Cuisinart launched its own Air Fryer Toaster Oven and now dominates the

market. If the division / brand could have been involved earlier, they would have been able to speak to retailers, understand the

competitive landscape, and recommend product changes that could have increased the chances of getting the product launched.

No Oster

product

exists; the

Cuisinart

product leads

the market

Consumer

report scores

Newell Regularly Touts its Consumer Scores


71

The E-commerce Group Needs to Better Communicate

with the Brands

Newell’s lack of a comprehensive e-commerce strategy has led to numerous missteps

Source: Company filings, Crain’s New York Business, industry research and interviews.

In November 2017, Newell announced the opening of a Brooklyn office to support its growing e-commerce

business.

With this new facility, we would have thought that Newell had a fully-integrated e-commerce team firing on all cylinders.

In reality, as we show in the following pages, Newell’s e-commerce strategy appears to lack sufficient communication with

the brands, causing customer issues.

“This lease signing is evidence of our

company's commitment to expanding our e-

commerce division, Brooklyn is an ideal

location to grow our footprint, accommodate

our growing team and move forward with

the transformation and build-out of our

industry-leading e-commerce capability.”

- Mark Tarchetti, Newell’s President

72

Division / Brand

E-commerce Group

Walmart

(brick-and-mortar)

Walmart.com

(online)

Responsible for

in-store pricing

Responsible for

online pricing

“Often times we would be sitting at a meeting with a customer where they [the customer] would say that the

online business is giving us a different price.”

- Former Newell executive

The lack of communication between the division / brands and the e-commerce group results in pricing issues

with large customers.

While the division / brand is responsible for in-store pricing, Newell’s e-commerce group is responsible for online pricing,

even when it is the same customer (i.e. Walmart vs Walmart.com).

Can go to the same

customer with

completely different

plans and

promotions for the

same product



with the Brands (cont’d)

73

Why aren’t e-commerce and the brands talking to each other?

The lack of communication resulted in Newell violating its own Minimum Advertised Price (MAP) policy,

forcing the Company to provide concessions to retailers.

On a number of different occasions, we understand that Newell’s e-commerce group offered pricing to online

customers that actually violated the Company’s own Minimum Advertised Price (MAP) that the division / brand would

provide to the brick-and-mortar retailer.

This would result in frustrated retail customers that would then demand price adjustments or significant promotional

funding, resulting in negative impacts to margins.

Apparently, this is not only happening with sales to online customers, but also on Newell’s own website.

“In one such instance, after finding out that Newell’s own website was selling a product online for

substantially cheaper than the retailer, the retailer slid across a piece of paper and said ‘your own website

is violating your Minimum Advertised Price policy.’”

- Former Newell executive




74

The lack of communication between division / brands and e-commerce has resulted in frustrated

customers and significant margin issues for the Company

The lack of communication resulted in Newell violating its own Minimum Advertised Price (MAP) policy,

forcing the Company to provide concessions to retailers.

Example – Fishing Reels

Most likely in an effort to grow near-term sales, the e-

commerce team began to aggressively discount prices on

fishing reels.

Shortly thereafter, a major sporting goods retailer (and

prominent Newell customer) realized they were able to

purchase this product online at a lower price than they

were currently purchasing it wholesale from the brands.

Example – Calphalon

A major brick-and-mortar retailer was selling a set of

Calphalon pots.

Amazon was selling the same set at a materially lower

price that was apparently below the brick-and-mortar

retailers’ minimum advertised price.

Result:

Newell lowered the price

for the sporting goods

retailer, hurting margins

Result:

In an effort to appease

the frustrated retailer,

Newell offered

substantial promotional

funding, hurting margins




75

We Believe Newell Needs to Improve Its Communication

Issues Rather than Distract Itself

Newell needs to focus on improving the communication with its brands before being distracted with

other e-commerce opportunities


What is “The Heart of Life”?

From Newell’s proxy statement:

“There's a really powerful idea that the e-commerce team is working

on in partnership with the design team, which is a brand store, an

integrated brand store platform, called ‘The Heart of Life,’ that will

give consumers and employees, but largely consumers, access to our

portfolio through a direct interface, and there's a lot more to come on

this, but at the tail end of this year, we expect to be in market with

this platform live, and we will not only have our brand stores, like

Marmot.com or Coleman.com, or YankeeCandle.com, but also this

Newell interface and marketplace up and running.”

We question whether creating an Amazon-like, Newell-products-only, e-commerce

website (which will presumably have less than 30 brands available vs. over half a

billion products available on Amazon) is a good business strategy for Newell.

2018 CAGNY Presentation

While we can understand Newell’s desire to further increase e-commerce penetration, we question whether the

Company should distract itself in creating an Amazon-like competitor.

76


C. Culture

77

We believe that empowering Newell’s employees is paramount to a successful turnaround of the Company

We Believe that Transforming Newell Brands Begins with

the Employees and the CultureThe Company’s greatest assets are its employees. We believe that the culture can be repaired through

improved management and communication.

Glassdoor rankings indicate that the employee base believes there is significant room for improvement.

Newell ranks dead last among its peers in several key categories – “Overall”, Culture & Values”, “CEO

Approval”, and “Senior Management”.

Furthermore, all of these categories have deteriorated over the past two years.

Improving communication is the first step towards fixing the culture.

Communication issues between corporate and the divisions / brands have resulted in negative financial

consequences for the Company. They have also resulted in employees feeling marginalized and caused

poor morale within the organization.

We believe that tenets of our plan will improve employee morale through an enhanced sense of

ownership in the Company’s future.


78

The Culture at Newell Needs to Be Improved

Glassdoor.com provides current and former employees the opportunity to anonymously review companies and their management.

Peer Average: 3.7

Glassdoor Ratings Category – “Overall”

“Newell has struggled to find its identity and with it, its priorities. There is constant changes in leadership, direction and not a

lot of clarity. It can be a tough environment to navigate.”- Anonymous Employee Review

Representative Glassdoor Review:

Source: Glassdoor ratings as of April 3, 2018.

Newell Brands ranks last among peers in Glassdoor’s “Overall” employee ratings

79

Employees of Newell Brands have made it clear that they are not happy with the culture of the organization.

Glassdoor Ratings Category – “Culture & Values”

Peer Average: 3.7

“Culture is incredibly harsh. It doesn’t feel like a team environment. And then the exec team puts on an act during employee

facing meets where they pretend to be smiley and nice. We all know it’s fake. We don’t trust any of them. It’s obvious.”- Anonymous Employee Review


The Culture at Newell Needs to Be Improved (cont’d)


Newell Brands ranks last among peers in Glassdoor’s “Culture & Values” employee ratings

80

Glassdoor Ratings Category – “CEO Approval”

Peer Average: 89%

While peer CEOs are revered by their employees and given high approval ratings on Glassdoor, Newell’s employees have voiced their skepticism of management.



“Executive leadership is incompetent, arrogant and out of touch and does not make time to meet with management…”

- Anonymous Employee Review

Michael Polk ranks last among peer CEOs in Glassdoor’s “CEO Approval” employee ratings


81

Employees are questioning the leadership and strategic direction of Newell Brands’ senior management.

Glassdoor Ratings Category – “Senior Management”

Peer Average: 3.3


“There is no planning, process, strategy, ownership or accountability here at all, and as such, everyone is always operating in

crisis mode. Executive leadership is incompetent, arrogant and out of touch and does not make time to meet with

management or even the Board when needed.”- Anonymous Employee Review


Newell Brands ranks last among peers in Glassdoor’s “Senior Management” employee ratings


82

Employees are voicing significant frustration inside the Company.

“Overall” Rating - Historical Trend “Culture & Values” - Historical Trend

“Senior Management” - Historical Trend“CEO Approval” - Historical Trend

Improving the culture is key to a successful turnaround


And Trends Are Continuing in the Wrong Direction

83

IV. The Opportunity to Improve Newell

84

Unacceptable Performance Provides an Opportunity for

Substantial ImprovementBased on our research, we are confident that there is an opportunity to improve EBITDA by $585 to $966

million based on actions that should be within management’s control.

Margins significantly below management’s targets and best-in-class peers

Bloated corporate structure and unnecessary / redundant layers of management

Excessive Selling, General & Administrative (SG&A) costs throughout the Company

Inefficiency in logistics / distribution and procurement

Suboptimal Working Capital management practices draining cash

85



– Selling, General & Administrative expenses are bloated, causing inefficiencies.

– Transformation and integration spend appears excessive and is not fully accounted for in the adjusted numbers.

– Layers of redundant executives and vice presidents add complexity.

– Newell is inefficient in business support categories, such as HR and Finance & Accounting.

– The Company appears to have a large Information Technology & support staff for a company of its size.

– Newell’s lax Travel & Entertainment expense policies have resulted in unnecessary costs.

Selling, General &

Administrative

Working Capital

Logistics

Procurement

– Newell’s Working Capital usage is currently much higher than comparable company benchmarks.

– Days Sales Outstanding and Days Inventory Outstanding are significantly higher than industry averages.

– Inventory levels are materially higher than peers.

– The Company has failed to meaningfully improve its cash conversion cycle over time.

– The Company has failed to integrate legacy Newell Rubbermaid and Jarden warehousing networks.

– Multiple Transportation Management Systems (TMSs) present organizational challenges and increase costs.

– Newell concentrated its product discharge to Southern California, giving the appearance of consolidation, but

costs may have actually increased on the back-end because a mile transported on land is much more expensive.

– Lack of collaboration with major retailers has led to unnecessary steps in the distribution process.

– The Company lacks a well structured low-cost-country (LCC) sourcing strategy and make-vs-buy strategy.

– Products in several segments are “over-spec’d” or “over-engineered” versus the competition.

– A decentralized sourcing strategy for materials hinders the Company’s ability to leverage best-in-class processes.

We believe that significant cost savings opportunities exist across various functional areas of Newell to

substantially increase EBITDA.


86


A. SG&A Improvements

87

We believe that there are numerous initiatives to improve SG&A that are well within management’s control.

We Believe There Is an Opportunity to Improve SG&A by

$399 million to $693 million

If properly executed, we believe Newell’s SG&A expenses can be significantly reduced

Savings Estimate

Lever Initiatives Estimated Timing Low High

Organizational Design - Eliminate excessive corporate costs and unnecessary layers of management 6 – 12 months $70 $120

Transformation Office - Significantly reduce or fully eliminate Transformation Office spending 3 – 9 months $95 $196

Corporate R&D & Marketing - Redesign product development process; eliminate centralized design; etc. 6 – 12 months $60 $124

Project Management Resources - Improve program management and eliminate unnecessary costs 6 – 12 months $6 $12

Finance & Accounting - Reduce redundant finance teams and improve organization design 6 – 12 months $27 $47

Human Resources - Reduce redundant HR resources and eliminate non-core functions 6 – 12 months $5 $11

Operations Support - Reorganize operations support; outsource non-core functions 12 – 18 months $18 $28

IT Organizational Efficiency - Eliminate redundant IT systems; improve service delivery 12 – 18 months $39 $55

T&E Expense Policies - Review travel policies; tighten approval for 3rd party spend 3 – 6 months $64 $64

Corporate Jet Maintenance - Eliminate 2 to 3 corporate jets 3 – 6 months $6 $8

Leverage Global Scale - Utilize global shared services to leverage lower-cost regions 12 – 18 months $9 $28

Total SG&A Opportunity: $399M $693M


88

Mergers typically result in office consolidation, but, after acquiring Jarden, Newell actually increased its main

corporate office locations.

Newell’s Corporate Offices Should Be Consolidated…

Corporate office consolidation is typically among the first synergies realized; yet Newell absorbed dis-

synergies by expanding its corporate office footprint!

Jarden Corporation Newell Rubbermaid

Corporate Office –

Executive Management

Miami, FL

Boca Raton, FL

Corporate Office -

Legal

Norwalk, CT

Corporate Office - IT

Corporate

Headquarters

Atlanta, GA

Newell Brands

Atlanta, GA

Corporate Office

Norwalk, CT

Corporate Office

Corporate

Headquarters

Hoboken, NJ

Corporate Office -

E-Commerce

Brooklyn, NY

Corporate Office -

Legal

Boca Raton, FL

3 1 5??


89

We believe that Newell’s private jet usage is excessive and needs to be immediately reviewed

Dassault Falcon 2000EX Dassault Aviation Falcon 2000EX

Fixed wing; multi-engine

(19 seats / 2 engines)

N-Number: 716CQEstimated Value:

$12 - $15 million

Dassault Falcon 900EX



N-Number: 904NBEstimated Value:

$10 - $12 million

Cessna 750



N-Number: N72FDEstimated Value:

$3 - $4 million


Cessna 750

…And Usage of Corporate Jets Should Be Rationed…

We believe that Newell has 3-5 corporate jets in addition to numerous NetJets contracts.


90

…Despite the Senior Management Team Being Spread Out

Newell’s senior executive leadership team is scattered across the US and UK, making communication with teams difficult and resulting in, what we believe to be, an extremely elevated T&E budget.

London

How can senior management focus on running the business when they are so scattered?

Chicago

Kalamazoo

Hoboken

Boston

Atlanta

Huntersville

A number of senior

executives commute

from other cities on

private planes


91

Corporate Costs Are Increasing…

CEO

COO CFO CLO CMO R&D

Corporate: R&D – Kalamazoo, MI

(100s of People)

Corporate: Marketing – Hoboken, NJ & UK

(100s of People)

Corporate: Online – Brooklyn, NY

(~500 people) Significant

Direct

Staff(HR, Finance,

etc.)

Newell continues to add numerous additional layers within

its senior management ranks, resulting in significant and

unnecessary duplicative costs and responsibilities.

Newell has created additional global layers in R&D,

Marketing, Online / E-commerce, etc. that not only burden

the P&L, but also create unnecessary complexity and

bottlenecks.

Illustrative Organizational Structure Additional Corporate Layers / Silos

Observations

Over the past several years, and especially since the Jarden acquisition, Newell has continued to add layers of management and additional executives, resulting in, what we believe to be, a large corporate cost reduction opportunity.

The combination of Newell’s “corporate cloud” and additional layers / silos has resulted in Newell

operating a bloated corporate structure

Division Presidents with Staff

Brand Managers with Staff

Brand Employees

The “Corporate Cloud”


92

…And Corporate Bureaucracy Appears Excessive…

CORPORATE

Division CEO / Head of Brand

CFO │ COO │ Supply Chain │ HR │

Regional Presidents

Field Sales

Trade Marketing

Engineering (Plant

and Supply Chain)

Reports to e-commerce head

Determines online pricing regardless of

whether retailer has brick-and-mortar

store

Can also reside in Corporate

depending on the division /

brand

If no Field Sales in Division,

would have to speak with

channel sales in corporate to

know product sales trends;


with Brand Marketing


with R&D, resulting in new

products having to be

redesigned along with

sourcing issues

Division / Brand Level E-commerce

Research and

Development

Brand Marketing

Limited communication among the different functional groups not only results in duplicative costs, but also

frustrates customers and causes poor employee morale.

Responsible for

ultimately selling the

product

Responsible for in-store

promotions and in-store

support

Responsible for

manufacturing

engineering products


New product design operated out of

Kalamazoo, MI

Works on new product development


National marketing and website design

New product development and pricing

Prices online products

without the knowledge of

division / brand, sometimes

violating Company’s own

minimum pricing policy for

some retailers, and in other

cases, results in presenting

different prices to the same

retailer (i.e. Walmart vs

Walmart.com)

Operates Design center in a

silo away from Division;

months or years of research

with high kill rate because

Division leaders have little

to no input

Limited communication

with Division Trade

Marketing and Sales (who

have customer relationships)

which results in bringing

forward products that

retailers don’t want

Given revenue and

operating plan from

corporate with

limited control over

actual P&L levers


Lack of communication

93

With ~500 VP and Executive level titles,

Newell appears to be overweight in

management layers.

Newell has multiple management layers

and we believe this additional

hierarchical infrastructure creates

added complexity in the organization.

Developing an organizational structure

that increases executive responsibility

and reduces top level positions, while

maintaining shared services, would

minimize disruption while reducing costs.

Based on best-in-class peers, we believe Newell’s corporate and executive leadership should be

consolidated, resulting in ~$70 to $120 million in savings

Observations

…Resulting in Unnecessary Layers of Management…

Layers of Management (Total: ~49,000; Total Spend: ~$4 billion)

PositionEstimated

Headcount

Number of

Employees

Reporting to

Position (Span)

Est. Cost Per

Employee

Est.

Personnel

Spend

Target

“Span”

Est.

Savings

Range

VP/

Executive500 1.8X $360K $180M

3.0X –

6.0X

$70M -

$120M

Director 900 6.8X $225K $200M

Manager 6,100 6.8X $155K $950M

Staff 41,500 $67K $2.8B

VP / Executives have fewer direct reports,

indicating a top heavy corporate structure

Newell has additional, unnecessary layers of management, which drives up the number of VPs and C-level

executive titles within the organization.

We believe that the current structure has resulted

in Newell obstructing entrepreneurial decision

making and creating bottlenecks, causing the

Company to miss opportunities in the marketplace


Note: Cost per employee assumes a 25% benefits rate and variable annual incentive bonuses; adjusts for regional pay variance; A portion of the high-end of cost savings target has been captured in the Transformation Office.

94

Several years after its formation, the Transformation Office continues to operate and will continue to be

a drag on both operating income and cash flow

The Transformation Office was supposed to be a temporary business unit, but it continues to weigh on the P&L

with no end in sight.

The understood purpose of the Transformation Office (“TO”),

which operates as a separate team within corporate, is to execute

on Newell’s cost savings plans.

We believe that the Transformation Office was supposed to be a

temporary cost. However, in reality, it has become an ongoing

cash expense for over 3 years with seemingly no end in sight.

We estimate that the TO – which, we believe, employs a

combination of consultants and Newell business unit

employees – had collective costs of ~$247 million in 2017, but

those costs are excluded from adjusted operating metrics.

…And an Overstaffed “Transformation Office”


“We've formed a transformation office that is diving on a

number of different work streams to see whether there's

paths to pull forward 2016 savings into 2015. It's too

early to know whether we'll be able to do that. But

clearly, that's something that's top of mind for John

[Stipancich], for myself, for the whole executive

leadership team.”- CEO Michael Polk, January 2015


“So, we've organized our synergy and savings delivery

through what we call the Transformation Office. Those

costs get normalized out of the P&L…They don't stop

this year. The program was never designed that way.”

- CEO Michael Polk, February 2018


- Consumer Analyst Group of New York, February 2016

95

$120

$247

$80

$16

$30

Transformation

Office

Personnel Costs

3rd Party

Expense

Travel

& Entertainment

Other

Expenses

Total

We believe that the Transformation Office (TO) is made up of a large number of full-time employees (FTEs), significant 3rd party expenses (e.g. consultants), an enormous T&E budget, and other non-value added expenses.

– Many of the employees allocated to the Transformation Office will eventually have to return to the business segments, creating a future drag on the P&L.

We believe that the Transformation Office is unwarranted as the Company is unnecessarily relying on excessive consultants, which is a recurring cash cost, and operating with bloated T&E budgets (e.g., private air travel, company cars, etc.).

Newell should immediately review the P&L and policies (especially T&E) of the Transformation Office and determine what amount, if any, is absolutely necessary and justified.

Estimated Transformation Office Cost Structure

($ in millions)

Observations

Transformation and integration costs continue to significantly burden the P&L and cash flow.

A significant portion of Newell’s Transformation Office expenditures are unnecessary and should be eliminated

Transformation and Integration Spend Appears Excessive

Opp: $120M $48M $16M $12M $196M

Est. %

Savings100% 60% 100% 40%


96

1) Headcount Reduction:

a) Conduct bottom-up review of TO org structure and identify non-value add activities and resources

Implement cultural shifts required to execute on streamlined transformation group

Review existing internal projects and ensure they are ROI- and time-based, allowing for

headcount reduction

Identify key performance indicators (KPIs), metrics and benchmarks to establish clear goals and

objectives for the Transformation Office

2) Significantly Reduce 3rd Party Spend:

a) Review all 3rd party activities and overlap with business unit capabilities

b) Reassign overlapping initiatives to business units

c) Reduce remaining unnecessary 3rd party spend

Review and renegotiate existing 3rd party contracts to establish “more skin in the game”

Define and build / hire key capabilities internally to reduce reliance on 3rd party resources

3) Improve Management of T&E Policies:

a) Immediately review all T&E policies (e.g., transportation, private planes, cars, etc.) and determine

how much is absolutely necessary

Define revised travel parameters that are aligned with the revised corporate culture and budgetary

goals, but flexible enough to account for travel in response to business dynamics

Implement expense reporting and travel reservation / monitoring software (e.g., Concur) that

provides “travel guardrails” (e.g., air, meal, hotel, and ground transportation policies)

Establish random expense report auditing, including spend benchmarks to ensure compliance

Cost Savings Opportunity

We have identified several initiatives, and outlined an implementation plan, by which Newell can

eliminate a significant portion of the Transformation Office

Unnecessary Transformation Office costs continue to burden Newell’s actual profitability and cash flow, and

should be eliminated.

Implementation Plan

We believe Newell could reduce or fully

eliminate a majority of the

Transformation Office (TO) and save

between $95 and $196 million by

streamlining its organization and executing

several initiatives:

1) Headcount reduction

2) Significantly reduce reliance on 3rd

parties (e.g., consultants) and/or

renegotiate existing agreements (e.g.,

gain share agreements vs. fixed fee)

3) Implement improved Travel &

Entertainment policies (e.g., coach

vs. business, per diem limits,

preferred airline carriers and hotels,

etc.)

Significantly Reducing or Fully Eliminating a Majority of the

Transformation Office Could Potentially Save ~$95 to $196 million


97

Newell has a plethora of product management, development, design, and engineering personnel in its corporate R&D and corporate brand marketing organization.

Many of the design personnel are located in Kalamazoo, MI, while others are scattered throughout several corporate locations.

In fact, we believe Newell’s product management, development, design, and engineering staff is >3x that of top quartile peers (without leading to more innovation).

Corporate R&D and corporate brand marketing operate in silos, developing new products without the proper oversight and input from the business units.

This leads to excessive new product concepts without an appreciation for cost and return on investment.

In fact, in 2017 alone, Newell tested >1,300 concepts. However, such a large volume of concepts often leads to high product concept kill rates, lengthy time to market, and unnecessary cost increases.

Due to a complex and inefficient corporate product development process, we believe Newell’s R&D and

marketing organization has >3x as many personnel as top quartile peers

When benchmarking the size of Newell’s R&D and marketing organization versus peers, Newell’s organization

appears bloated and inefficient.

Observations

Newell’s Corporate R&D and Corporate Marketing

Organization Is Burdened by Inefficiencies

R&D & Marketing FTEs per $1B in Revenue

Est. Savings $60 million $124 million

(71%)


Note: A portion of the Benchmark Top Quartile cost savings target has been captured in the Transformation Office.

98

1) Increase Focus & Accountability on ROI:

a) Establish stricter metrics for ROI and move more

quickly with go/no-go decisions

b) Fully engage business units early and throughout the

product development process

2) Eliminate Centralized Design & Innovation Hubs:

a) Consolidate corporate R&D and corporate brand

management locations and personnel where prudent

b) Optimize layers and personnel within the

restructured organization

3) Product Development Model:

a) Identify core and non-core areas of product

development

b) For non-core areas, develop an outsourced operating

model


There is a substantial opportunity to improve the corporate R&D and corporate marketing

organization and significantly reduce costs

We have identified several initiatives, and outlined an implementation plan, by which Newell can significantly

improve its corporate R&D and corporate brand marketing organization.

Implementation Plan

Streamlining the Inefficient Corporate R&D and Corporate

Marketing Organization Could Save ~$60 to $124 million

We believe Newell could save between $60 and

$124 million by streamlining its corporate R&D

and corporate brand marketing organization

through several initiatives:

1) Redesign the product development process

with an increased focus and accountability

on ROI

2) Eliminate centralized design and

innovation hubs

3) Shift to an outsourced product

development model


99

IT

Other

0

5

10

15

20

25

30

35

Newell Brands Median

Benchmark

Top

Quartile

Newell Utilizes Almost Twice the Project Management (PM)

Personnel Compared to Top Quartile Peers

Newell appears to have excessive personnel associated with program and project management across its business.

We believe that this is due to executive leadership across the organization (e.g., operations, R&D, etc.) over-utilizing PM resources for unknown return-on-investment (ROI) projects.

– In addition, spending on these resources is inadequately tracked, resulting in certain areas of Newell receiving outsized resources relative to the value generated.

For example, for the >1,000 product concepts annually generated by R&D, each concept is tasked with PM personnel to manage the development process from concept to production.

– Because the hit rate is so low, this results in excess project managers relative to potential successful products and ultimate revenue opportunities.

Project Management Resources per $1B Revenue


Program and PM personnel utilization should be improved to save ~$6 to $12 million

Observations

Due to Newell’s complex product development process, the Company utilizes superfluous project management resources.

31

27

18

(41%)


Note: A portion of the Top Quartile cost savings target has been captured in the Transformation Office.

100

We believe that Newell can more efficiently utilize project management personnel

Project Management resources appear excessive and do not appear to be tied to any return-on-investment

(ROI) metrics.

More Efficient Utilization of Program and Project

Management Personnel Can Save ~$6 to $12 million

1) Improve Focus on New Concept Design:

a) Improve efficiency, accountability, and expense

management of concept design process

b) Shift more responsibility to the business units,

thereby reducing reliance on PM resources

2) Demand Manage Project Selection:

a) Establish a standardized program management

playbook and methodology including: guidelines

required to activate PM personnel, job scope

details, and expense policies

b) Set criteria / threshold (e.g., capital investment,

complexity, etc.) for PM usage

c) Allocate resources based on ROI framework and

likelihood of project success

Cost Savings Opportunity Implementation


$12 million by executing the following

initiatives:

Improve focus on new concept design,

thereby reducing excessive program

management personnel


101

F&A FTEs Per $1 Billion in Revenue

By consolidating its finance groups, Newell can significantly reduce F&A costs

106

92

72

50

75

100

125

Newell Brands Benchmark

Median

Benchmark

Top Quartile


We believe that Newell is operating multiple redundant finance teams, which leads to internal confusion,

unclear reporting structures, and excess costs.

Finance & Accounting (F&A) Costs Are Well Above Top Quartile

Peers, Which Is the Result of Newell’s Numerous Finance Groups

We believe that there may be separate finance teams for almost every functional group at Newell.

– For example, in addition to each business having its own CFO or finance team, we believe that each of the following executives have their own finance team – CEO (partial), President, COO, Chief Development Officer, CEO of E-commerce, R&D) – in addition to the finance organization reporting to the CFO.

Observations

One former senior executive put it bluntly when

talking about reporting his division’s financial

results to corporate:

“It was not really clear who I was supposed to

report to.”

(33%)



102

Based on benchmarks, Newell has the opportunity to reduce headcount in business support categories and

achieve cost savings of approximately $27 to $47 million.

Reducing Finance & Accounting Costs Can Save ~$27 to $47 million

1) Centralize Finance / Organization Design:

a) Centralize finance and remove redundant finance

teams

b) Clearly indicate finance reporting lines to the

business units

c) Identify critical needs for financial analysis and

planning in the organization

d) Identify required personnel for the new operating

model

2) Automation / Technology Systems:

a) Reduce / eliminate redundant technology systems

b) Automate highly manual or critical processes

c) Improve and simplify complex Finance &

Accounting approvals and workflows


To reduce costs in Finance & Accounting (F&A),

Newell should:

1) Centralize finance and remove redundant

finance teams

2) Improve organizational design and

financial analysis coverage model

3) Reduce overall workload through

automation and improved workflows

Reducing F&A costs can save ~$27 to $47

million

Reducing redundant finance teams and improving organization design are crucial to reducing internal

complexity and optimizing Finance and Accounting expenditures


103

HR FTE Per $1 Billion in Revenue

44

41

35

20

30

40

50


Median

Benchmark

Top Quartile


By eliminating redundant Human Resource groups, Newell can significantly reduce HR costs

We believe that Newell is operating redundant HR teams – at the corporate and business unit level – which

creates internal confusion, excess resources, and elevated costs.

Human Resource (HR) Costs Are Well Above Top Quartile

Peers Due to Duplicative Internal HR Groups

Human Resource spending is incredibly bloated because there are multiple layers – i.e., a divisional HR layer and a large corporate HR layer that is responsible for all of the various corporate business functions.

– This creates significant duplicative functionsand excess costs.

HR infrastructure is also likely burdened by an increase of dedicated resources to non-core HR areas such as training, professional development, and organizational development.

– By focusing the roles of key HR employees and reducing or eliminating expendable, non-core functions, Newell can reduce the Company’s bloated HR costs.

Observations

(21%)



104

Based on benchmarks, Newell Brands has the opportunity to reduce HR headcount and achieve cost savings of

approximately $5 to $11 million.

Reducing HR Costs Can Save ~$5 to $11 million

1) Consolidate HR Groups:

a) Review workflows for corporate and division

HR personnel

b) Reduce and consolidate corporate and division

HR groups

c) Clearly outline reporting structure, roles, and

responsibilities

2) Non-Core HR Functions:

a) Reduce expectations by management for use of

HR for typical managerial functions such as

personnel management, interviewing, and

recruiting

b) Identify non-core HR functions

c) Reduce or eliminate personnel in these areas,

shifting responsibility of these functions to

management


Newell can effectively reduce costs in Human

Resources by:

1) Reducing and consolidating redundant

HR groups

2) Reducing or eliminating non-core HR

functions

Reducing HR costs can save ~$5 to $11

million

By focusing the roles of key HR employees and reducing or eliminating expendable, non-core functions,

Newell can reduce the Company’s bloated HR costs


105

Newell Has Greater Than Twice the Operations Support Compared to

Top Quartile Peers Likely Due to Inefficient Organizational Planning

Opportunity exists to reduce overall operations

support, as we believe that this group exacerbates

the “analysis paralysis” (e.g., superfluous market

share studies, sales reports, etc.) problem at Newell.

Newell Brands currently has 1 support person for

every ~4 to 5 sales personnel.

The top tier in the industry is closer to 1

support person for every ~7 to 10 sales

personnel.

Potential levers for reduction include:

• Workflow process improvement

• Enhanced system automation

• Streamlined order management

• Use of outsourced providers for routine or

low-value addition requests

Operations support to customer-facing sales professionals is suboptimal due to substandard support workflows,

technology complexity, and inefficient operating models.

Sales Personnel per Operations Support Personnel


Sufficient support for the salesforce is essential, but we believe Newell is not maximizing resources

1

2

3

4

Observations

(54%)10.0x


106

1) Workflows and Technology:

a) Reduce complexity and systems to be

managed and monitored by operations

support personnel

b) Identify high touch and manual steps in

workflows and processes

c) Reduce workload through automation

d) Examine usefulness and necessity of the

various functions

2) Outsourced Support Model:

a) Identify core and non-core processes and

functions

b) Shift non-core functions to an outsourced or

lower cost model


By reducing complexity and shifting to a more outsourced support model, we believe that Newell can

improve the profitability of its sales organization

Implementation

Rightsizing the Operations Support Group Could Save

~$18 to $28 million


$28 million by rightsizing the operations support

to customer-facing sales professionals by

executing the following initiatives:

1) Improve workflows and technology

2) Shift lower value additional support

functions to an outsourced model

There is an opportunity to streamline operations support to improve efficiency and reduce costs.


107

Newell Operates Redundant IT Systems that Can Be

Consolidated to Generate Significant Savings

Newell appears to have a high level of IT

staffing (employees that maintain the IT

infrastructure – e.g., computers, applications,

office suite, etc.) for a company of its size.

Legacy infrastructure and limited system

consolidation may be a factor in maintaining this

high level of staffing.

Management’s delay in integrating to a

consolidated ERP system has limited the

Company’s ability to effectively reduce this

staffing need.

Newell can achieve savings of $39 to $55 million in IT, with the higher-end savings potentially driven by system

consolidation.

IT FTEs Per $1 Billion Revenue


Newell appears to have a high level of IT staffing, likely driven by historical reluctance to integrate

legacy infrastructure

Observations

77

51

24


Median

Benchmark

Top Quartile


Note: a portion of the Benchmark Top Quartile cost savings target has been captured in the Transformation Office.

(69%)

108

Newell can significantly reduce IT staffing expenditures with the elimination of redundant systems and

operating delivery model improvement

High levels of IT personnel are driven by the sheer number of IT applications, redundant ERP systems, and

inefficient operating models.

Consolidating IT Systems and Eliminating Redundant IT

Staffing Needs Can Save ~$39 to $55 million

1) System Consolidation:

a) Identify future state architecture and future state

systems for consolidation

b) Develop a roadmap for system consolidation

and data migration

c) Execute on the roadmap with an aim to

consolidate to one ERP system and eliminate

redundant applications across the entire

organization

2) Service Delivery Model:

a) Identify inefficiencies in IT relationships and

coverage model

b) Implement a consistent and standard procedural

model

c) Improve the service delivery model to improve

agility and leverage outsourcing and offshore

opportunities when possible


Cost reduction levers within IT staffing

include:

1) Eliminate large number of IT applications

or redundant ERP systems

2) Improve operating and service delivery

model

Consolidating IT systems can save ~$39 to

$55 million


109

We Believe T&E Policies Need to Be Reconsidered

Newell’s management has built a lavish corporate bureaucracy with little focus on best practices

Newell Brands Industry Best Practice

Executive Perks

(corporate jets &

NetJets accounts)

Senior employees frequently commute by private

aircraft and private car services.

Corporate jets for executive travel have been eliminated

or reduced.

Fly commercial airlines whenever practical.

Use private aircraft as needed for multi-office day visits

and special meetings.

Charter planes for exceptional circumstances, rather

than purchasing planes and keeping crews on standby.

Corporate Retreats

Newell schedules numerous retreats on an

annual basis, frequently in lavish locations and

drawing employees from all over the world.

Corporate executives should fly commercial whenever

possible.

Locations should prioritize functionality and

convenience over luxury.

Company should use best efforts to limit excessive

T&E.

Headquarters

Building

Newell operates 5 corporate offices including

one waterfront property in Hoboken, NJ, and

another waterfront property in the chic Brooklyn

village, Dumbo.

Headquarters are designed for efficiencies and to

minimize total cost.

Other

Bureaucratic senior management with numerous

duplicative executive staff for corporate officers.

VP titles of seemingly endless permutations

(e.g., VP, Brand Activation and Trade

Marketing, Consumer and Commercial Solutions

at Newell Brands).

Promote lean and productive teams / managers.

Outsource non-critical functions to drive profitability

and maintain focus on core objectives.

Enforce tight and standard policies, audit, and strictly

enforce.

Conduct annual employee reviews to judge

performance.


110

Newell’s Lax T&E Expense Policies Have Resulted in an

Expense Ratio Well Above Top Quartile Peers

Newell can potentially save ~$64 million through

increased oversight of, and accountability for, its

T&E practices.

Potential levers in this category include:

Improved and tightened travel policies (e.g.,

private air travel, company cars, company

retreats / off-sites, etc.)

Ensure Concur policies are instituted, up to

date, and being adhered to

Tighten approval process for, and governance

of, 3rd party spend

We believe that the expense policies at Newell are excessive and appear unregulated, presenting an opportunity

to save ~$64 million through increased oversight and adopting industry best practices.

ObservationsT&E Expense (% of Total Costs)

Newell shareholders would benefit from the Company instituting the mantra “spend the Company's

money like it's your own”

1

2

3

We believe that spending policies may differ greatly

between corporate and the divisions, creating

misalignment of incentives and employee morale issues

(50%)

1.50%

1.00%

0.75%

0.0%

0.5%

1.0%

1.5%

2.0%


Median

Benchmark

Top Quartile


111

Newell’s Corporate Retreat to Nantucket…T&E Policies

Clearly Need to Be Reviewed

We believe that this retreat cost shareholders millions and millions of dollars

We believe Newell hosted a company offsite / retreat in Nantucket, MA during the summer of 2017 (Nantucket’s

peak season) with approximately 100 to 150 employees arriving in private planes from all over the world.

Private planes on the tarmac at Nantucket

airport (ACK)

Many employees

stayed at the

White Elephant,

the most

expensive hotel

on Nantucket

Source: Company filings, Industry expert interviews, and Capital IQ.

112

We Believe There Is an Opportunity to Significantly Reduce or Completely

Eliminate Newell’s Fleet of Private Planes and Reduce Operating Costs

Eliminating 2 to 3 corporate jets could save approximately ~$6 to $8 million in annual operating costs

Dassault Falcon 2000EX Dassault Aviation Falcon 2000EX



N-Number: 716CQEstimated Value:

$12 - $15 million




N-Number: 904NBEstimated Value:

$10 - $12 million

Cessna 750



N-Number: N72FDEstimated Value:

$3 - $4 million


Cessna 750

Newell possesses several private planes, which are expensive to operate and maintain.

Newell absorbs significant costs associated with maintaining a fleet of private planes, including:

Pilots and crew members

Normal maintenance

Hangar fees

Insurance


113

Increased Utilization of a Global Shared Services Model to

Leverage Low-Cost Locations Can Save $9 to $28 million

Function

Estimated Savings ($M)

Low High

Accounting $5 $16

Finance $2 $6

Human Resources $2 $6

Estimated

Opportunity:$9 million $28 million

Strategically centralizing services into a global

shared service center may allow for demand

aggregation.

Centralizing accounting may allow for the

largest opportunity with centralized ERP.

Certain Finance and Human Resources savings

are available through leveraging low-cost

locations for specific functions.

Opportunities to Leverage Low-Cost Locations

We believe that there are numerous opportunities to generate savings from increased utilization of global

shared services

Observations


Given Newell’s global footprint, the Company should be reaping more savings from global shared services.

114

Develop an organizational structure that eliminates excessive corporate

costs and unnecessary layers of management

Significantly reduce or eliminate the Transformation Office spending

through headcount reductions, decreased reliance on 3rd party spend, and

improved T&E spend policies

Streamline the corporate R&D and corporate marketing organization, and

redesign the product development process

Reduce reliance on and eliminate unnecessary costs from project

management resources

Centralize finance functions and reduce redundancies

Reduce redundant HR resources and eliminate non-core functions

Reorganize operations support and outsource non-core functions

Eliminate redundant IT systems and improve IT's service delivery model

Review and tighten T&E policies (e.g., private planes, company cars, etc.)

Increase utilization of global shared services

We estimate the opportunity to reduce SG&A costs to be $399 to $693 million by achieving spend levels in line with those of peers and the elimination of unnecessary / redundant positions.

We estimate the opportunity to reduce SG&A costs to be $399 to $693 million

Implementing the SG&A Opportunity

Key Initiatives

1

2

3

4

5

6

7

Low High

Organizational Design $70 $120

(+) Transformation Office $95 $196

(+) Corporate R&D & Marketing $60 $124

(+) Project Management Resources $6 $12

(+) Finance & Accounting $27 $47

(+) Human Resources $5 $11

(+) Operations Support $18 $28

(+) IT Organizational Efficiency $39 $55

(+) T&E Expense Policies $64 $64

(+) Corporate Jet Maintenance $6 $8

(+) Leverage Global Scale $9 $28

Total SG&A Opportunity: $399M $693M

Cost Opportunity

8

9

10


115


B. Procurement Improvements

116

Finished Goods

Resin

Chemicals

Packaging

Metal - Steel

Glass

Textiles

Wax

Other

Newell’s Cost of Goods Sold Is Greater Than $9 Billion;

Therefore, Procurement Optimization Is Essential

Newell Brands Estimated Breakdown of Materials in Cost of Goods Sold

We estimate the breakdown of Newell’s Cost of Goods Sold (COGS) based on a thorough, bottom-up analysis,

industry interviews, competitive benchmarks, and sector experience.

COGS is Newell’s largest expense item and presents significant opportunity for rationalization

Polyethylene,

Polypropylene, Polystyrene,

Colorants, etc.

Inks, Fragrances, etc.

(Other metals, wood, rubber, etc.)

Items purchased from

contract manufacturers


117

Opportunity

CategoryLow-Cost-Country

(LCC) Sourcing

Manufacturing

Process Materials Sourcing

Finished Goods

Resin

Chemicals

Packaging

Metal – Steel

Glass

Textiles

Wax

Paper

Electrical Components

All Other

While cost improvements may vary by expense category depending on the key drivers, we are confident that

in combination there are significant savings opportunities within procurement spend.

We believe a lack of focus and the inability to integrate acquisitions has caused bloated procurement

spending at Newell

A Large Procurement Opportunity Exists Across Multiple

Expense Categories


118

We Believe There Are Several Key Levers to Generate

Procurement Savings of ~$137 to $200 million

We believe there is an opportunity to improve procurement operations by $137 to $200 million

We believe a Company-wide, collective focus can help generate significant procurement savings, driven by

increased effectiveness in core categories while taking other categories to the next level of cost management.

Savings Estimate


Low-Cost-Country Sourcing &

Production

- Move procurement / production to low-cost countries

when viable

- Consolidate underutilized manufacturing facilities

9 – 18 months $45 $64

Optimize Manufacturing

Processes / Eliminate

Inefficiencies

- Comprehensive review of product & packaging design to

drive cost reductions (i.e. convert packaging similar to

peers, focus on uniform parts, reduce complexity, etc.)

9 – 18 months $62 $93

Improve Material Sourcing

Practices

- Improve total cost management approach to materials

- Leveraging scale to reduce pricing6 – 9 months $30 $43

Total Procurement Opportunity: $137M $200M


119

33.0%

38.9% 39.5% 44.2%

49.6% 52.9% 54.2% 55.6% 57.1%

62.2% 62.9% 63.3% 65.1%

TUP LSE

RB

CL PBH PG XTRA

HEN3

CHD CLX LSE

ULVR

SWK SPB FBHS NWL

Newell’s Sourcing & Production Strategies Are

Inconsistent and Rely on Too Many High-Cost Locations

We believe Newell’s sourcing inefficiencies are due to its poor integration of Jarden and its ongoing

lack of focus on core cost containment initiatives

We believe high-cost sourcing and production are major contributors as to why Newell has the highest Cost of

Goods Sold as a percentage of revenue among its closest peers.

Cost of Goods Sold (% of Sales)

Peer Average: 51%

Newell does not appear to have a well structured low-cost-country sourcing strategy or make-vs-buy strategy,

resulting in:

– Products being manufactured in high-cost countries;

– Similar products being manufactured / sourced from multiple regions, both of which result in higher costs.

We have found these inconsistencies throughout the organization, within certain business segments and even within

specific brands.

Source: Company filings, Starboard’s proprietary report by a leading consulting firm, and CapitalIQ.

Note: Reflects LTM Cost of Goods Sold.

120

Example: Inconsistent Sourcing of Commercial Products

Newell’s sourcing strategy has resulted in higher costs compared to the competition

Newell appears to be sourcing commercial products in both higher-cost, as well as geographically different,

locations, driving up costs compared to competitors.

Competition

Made in USA Made in Mexico Made in Pakistan

Low-Cost Countries

High-Cost Countries

Same Product / Different LocationsCompetitors are taking advantage of

lower-cost manufacturing


121

Specifically within Quickie, there appears to be an inconsistent sourcing and production strategy, presenting

an opportunity to source from lower-cost countries, which could generate significant savings.

Quickie products appear to be manufactured in multiple countries – both higher-cost and lower-cost –

rather than being consolidated into lower-cost locations

Low-Cost Countries

High-Cost Countries

Made in ItalyMade in Mexico Made in China

Example: Inconsistent Strategy within Quickie Products


122

We believe that there is a significant opportunity to move volume to low-cost countries

Observations

A number of Newell’s brands operate in one or more facilities in the United States, presenting a significant

opportunity to lower costs by sourcing products from low-cost countries.

Several brands have one or more

manufacturing facilities in the US.

In total, Newell Brands has 48

manufacturing facilities in North

America.

There is a significant opportunity to

move volume to low-cost countries to

reduce costs.

Specifically, moving products that have

less automated manufacturing processes,

more labor / assembly, and are not too

bulky to ship (example: Quickie) are

clear opportunities.

Switching to Low-Cost-Country Sourcing Is a Significant

Opportunity

Brand

US Manufacturing

Facilities Count

Manufacturing

Locations in US

Sunbeam 2 MO, TX

Calphalon 1 OH

Rubbermaid 2 KS, OH

Ball 1 IN

NUK 1 WI

Yankee US wholesale 2 MD, MA

Sharpie 3 TN, TN, TN

EXPO 3 TN, TN, TN

Elmer's 1 NC

Jostens 3 CA, TN, TX

Rubbermaid Commercial 2 TN, VA

Quickie/Spontex/MAPA 6 KS, NC, NJ, TX, TX, VA

Waddington 7 CA, GA, MA, NY, TX, TX, TX

Coleman 2 KS, MN

Shakespeare/Berkeley/ABU Garcia 1 IA

Rawlings 1 MN

Process Solutions 7 ME, MO, NA, PA, SC, TN, TN

Rainbow 1 MI

Bicycle +others 1 KY


Includes shared locations; does not include all manufacturing facilities in North America

123

More Efficient Sourcing & Production Could Also Result

in Manufacturing Plant Consolidation Opportunities

Example:

Potential offshore opportunity

for Quickie manufacturing sites

Consolidating into low-cost countries would result in substantial manufacturing consolidation opportunities.

Existing Newell Brands Footprint (Estimated)

Newell operates multiple higher-cost manufacturing sites than can be consolidated


124

For Reference, a More Efficient Sourcing Strategy Could Result

in a 10 – 15% Reduction in Manufacturing & Distribution Costs

Operating a more efficient manufacturing & distribution footprint can yield significant cost savings.

Typical Cost Breakdown for a Manufacturing Company

(% of Net Sales)

Opportunity

Newell’s inefficient and underutilized

manufacturing network lends itself to potential

plant consolidation opportunities.

For individual site closures, typical savings

are 25-50% of the site’s operating costs.

For the network as a whole, savings are

typically 10-15% of the ‘Total Delivered Costs’

for the same total production volume.

We believe these changes would yield a 10-15% reduction in the Company’s total manufacturing and

distribution costs

10-15% cost reduction in

Manufacturing & Distribution

Expenses is reasonable


125

We believe that there are numerous areas at Newell to improve LCC sourcing, which can result in significant

cost savings.

We estimate the opportunity to improve profitability through low-cost-country sourcing & production

is $45 to $64 million

Cost Opportunity for Low-Cost-Country (LCC) Sourcing

& Production

Category Lever

Savings Estimate

Low High

Finished Goods $34 $46

Resin $4 $6

Chemicals $3 $4

Packaging - - -

Metal – Steel <$1 $2

Glass - - -

Textiles $2 $3

Wax <$1 <$1

Paper <$1 <$1

Electrical Components <$1 $1

All Other <$1 $1

Total LCC Sourcing & Production $45 $64

Midpoint of estimated

savings represents less

than 1% of total Cost of

Goods Sold

Best-in-class peers continuously review their portfolio to

increase low-cost-country sourcing & manufacturing

consolidation.

Through a comprehensive review of its portfolio, Newell

can:

– First, consolidate manufacturing of similar

products in near-shore locations, like Mexico.

– Next, aggressively source more products from

China.

1

2


126

We believe it is essential to perform a comprehensive review of product and packaging design to drive

technical cost reductions.

We believe these inefficiencies speak to the overall lack of focus towards cost saving initiatives

Newell’s Packaging Strategy Is Inconsistent and Results in

Higher Costs

We have found a number of circumstances where Newell’s production and packaging processes differ from peers,

leaving Newell at a distinct cost disadvantage:

– Newell appears to be using more expensive packaging for products than peers;

– Box labels are excessive and designs are not optimized, resulting in a cost disadvantage versus peers as well

as shipping inefficiencies;

– Plastic products weigh substantially more than the equivalent products marketed by peers, resulting in higher

costs. However, these products also fail to demand higher prices, which hurts margins;

– Newell appears to be “over-engineering” its Writing segment products, which use more complex product

designs and more components than peers, resulting in higher costs.

1

2

3

4


127

Newell Appears to Use More Expensive Packaging Than Peers

Newell appears to use more expensive packaging material than peers. However, kitchen appliances (as shown

below) are already on display, reducing the need for the more expensive packaging to attract attention.

Converting to packaging similar to peers can save 5-7% on packaging costs without sacrificing visual appeal

Appliance In-Store Display – Coffee Makers Appliance In-Store Display – Blenders


128

Competition uses brown corrugate box instead of mottled which is 5% - 8% cheaper.

Graco also has 4+ color labels pasted on box, increasing costs even further.

2

1

1

2

Car Seat Packaging Evaluation

For car seats, significant packaging optimization opportunities exist

Excessive Use of Color Labels Also Increases Packaging Costs…

1


129

…Which Appears Unnecessary for Products that Are

Reviewed by Consumers Outside of the Box As depicted below, car seats are typically viewed in stores outside of their boxes.

It appears that Newell is needlessly spending on packaging details that play little role in customer

purchasing decisions

Target Car Seat Aisle Babies “R” Us Car Seat Aisle

buybuy BABY Car Seat Aisle


130

In Addition, Box Design Inefficiencies Needlessly Increase

Material and Shipping Costs…

Current corrugate box for car seat results in a lot of empty

space, which in turn results in higher material costs and

shipping inefficiencies.

Competition

1

1

2

Corrugate design improvements can lead to improved shipping efficiencies, particularly for products being

shipped from China.

Britax optimized space usage with an

“L” shaped design that provides

better nesting and yields improved

shipping efficiencies.

Graco’s box design is less optimized than the competition which results in a cost disadvantage

2


131

Paper Mate uses 47% more packaging when

compared to its competitor

Uni-Ball uses 10% more packaging when

compared to its competitor

Mechanical Pencil Packaging Gel Roller Pen Packaging

Competitive analysis of packaging indicates Newell uses substantially more material than its competitors

…And the Use of Excess Packaging Material Spans Multiple

Areas of Newell’s Product Portfolio…

Packaging:

3.5” x 7.75”

Total Area:

27 Sq”

Packaging:

5.0” x 8.0”

Total Area:

40 Sq”

Packaging:

3.5” x 7”

Total Area:

25 Sq”

Packaging:

3.6” x 7.5”

Total Area:

27 Sq”


132

…Which Appears Even More Unnecessary in Markets with

More Significant and Rising E-Commerce Penetration

As e-commerce penetration increases, product packaging design becomes less of a competitive differentiator.

Despite Newell’s alleged focus on e-commerce, the Company is not designing its products appropriately

to maximize profitability in this channel

Newell Brands 2018 CAGNY Conference Presentation

As e-commerce further

penetrates Newell’s

core markets, box

design becomes less and

less a function of

marketing and more of

a commodity. In these

instances (i.e. Graco

packaging within the

“Baby” category), box

design efficiency is even

more important.


133

2 Quart Pitcher

Rubbermaid is using substantially more plastic than its competitors to manufacture the same product.

248g 204g

Rubbermaid: 22% Heavier

346g 282g

Rubbermaid: 23% Heavier

230g 222gRubbermaid: 4% Heavier

(2 oz less of storage)

Does having more material result in increased consumer preference?

1 Gallon Pitcher Rubbermaid 23oz vs. Glad 25oz Storage

Product Weight

Product Comparisons

2 Quart Pitcher 1 Gallon Pitcher Rubbermaid 23oz vs. Glad 25oz Storage

Rubbermaid Appears to Use More Plastic in Its Design Than

Competitors, Resulting in Significantly Higher Material Costs


134

Storage - Rubbermaid vs. GladPitchers – Rubbermaid vs. Sterilite

Customer reviews often rank peer equivalent products above Rubbermaid. Studies should be conducted to

justify the value Newell receives from the added weight to the products.

Based on customer reviews, Rubbermaid is not receiving many benefits from its heavier, more costly

materials, as its products generally appear to be ranked below peers

Competitors:

Product Rating (Company Websites)

Rating: 3.4 / 5

Rating: 4.9 / 5 Rating: 4.7 / 5

Rubbermaid Appears to Use More Plastic in Its Design Than

Competitors, Resulting in Significantly Higher Material Costs (cont’d)

Rating: 3.8 / 5

Storage - Rubbermaid vs. Glad

Product Rating (Walmart)

Rating: 3.3 / 5

Rating: 4.1 / 5 Rating: 4.8 / 5

Rating: 3.9 / 5

Pitchers – Rubbermaid vs. Sterilite

Source: www.rubbermaid.com, www.sterilite.com, www.glad.com, and www.walmart.com.

135

Product Complexity Results in Significantly Higher Costs

We have found numerous examples of

Newell’s products that seem to have

unnecessary levels of product complexity.

An evaluation of the Elmer’s products indicates

various base colors and glue tips. What is the

purpose or benefit of this?

While we understand some aspects of complexity

can create value (e.g. product assortment,

flexibility, responsiveness to customer demands,

etc.), complexity can also drive up costs due to

higher inventory levels, multiple lower-volume

components, etc.

Despite being similar products, Newell uses a number of different cap designs, which seems unnecessary and

drives up costs.

Elmer’s Glue Product Evaluation

By focusing on more uniform parts, Newell can decrease product complexity and reduce sourcing and

manufacturing costs

Observations


136

1

2

34

5

6

7

8

9

10

1

2

3

4

5

6

Despite being similar options for consumers, Paper Mate uses almost twice as many parts as BIC due to

unnecessary over-engineering.

Paper Mate – Mechanical Pencil Teardown BIC – Mechanical Pencil Teardown

Does the added complexity result in higher consumer preference?

Competitive Teardowns Illustrate Newell’s Product Complexity Issues


137

While Newell’s More Complex Design Adds Costs, It Does Not Appear

to Add a Price Premium and Receives Worse Customer Reviews

What benefit is Paper Mate receiving from adding extra complexity to its mechanical pencils?

Mechanical Pencil Comparison

Paper Mate BIC

Am

azo

n.c

om

PAPER MATE WRITE BROS MECHANICAL PENCILS (24 COUNT) BIC XTRA-PRECISION MECHANICAL PENCILS (24 COUNT)

Price: $5.99 Price: $6.02

Wa

lma

rt.c

om

10 COUNT 10 COUNT

Price: $2.64Price: $2.58

The mechanical

pencils are priced very

similarly on various

different retail sites

Yet, BIC’s mechanical

pencil has actually

received better

reviews


138

We estimate the opportunity to improve profitability through optimizing manufacturing processes and

eliminating inefficiencies is $62 to $93 million

Category Lever

Savings Estimate

Low High


Resin $10 $15

Chemicals $6 $8

Packaging $8 $14

Metal – Steel $3 $6

Glass <$1 $2

Textiles $3 $4

Wax <$1 $1

Paper $1 $2

Electrical Components $1 $2

All Other $1 $2

Total Manufacturing Process &

Inefficiency Elimination Opportunity$62 $93



than 1% of total Cost

of Goods Sold

Cost Opportunity for Optimizing Manufacturing Processes

& Eliminating InefficienciesWe believe that there are numerous areas at Newell to optimize manufacturing processes and eliminate

inefficiencies, which can result in significant cost savings.

Newell’s products in several segments are “over-

spec’d” vs. the competition. These over-engineered

products and packaging are not necessarily valued by

customers, which is evident from customer reviews of

the product, but does result in higher material and

shipping costs.

Implementing best-in-class practices includes:

– Rigorous programs that bring together

competitor product teardowns

– Market research to understand customer

perception and demand

1

2


139

Leveraging its scale, Newell can generate significant savings in categories like packaging & chemicals

Cost Opportunity for Improvements in Material Sourcing

PracticesWe believe that there are numerous areas at Newell to improve material sourcing practices which can result in

significant cost savings.

Purchasing appears to be decentralized across a

number of different categories.

While resin is consolidated, other categories

like packaging and chemicals are not and

present consolidation opportunities.

Leveraging scale will result in reduced pricing

and better terms for Newell overall. This will

result in more centralized procurement

resources and less business unit specific

resources.

Category Spend

Business Units

Procuring

Consolidation

Opportunity

Resin

Metal – Steel

Metal – Aluminum

Metal – Other

Precious Metals

Glass

Wax

Textiles

Chemicals

Electrical Components

Wood

Paper

Rubber

Packaging

Other Materials


140

We estimate the opportunity to improve profitability through improvements in material sourcing

practices is $30 to $43 million

Category Lever

Savings Estimate

Low High


Resin $4 $6

Chemicals $6 $8

Packaging $9 $12

Metal – Steel $4 $8

Glass $1 $2

Textiles <$1 <$1

Wax <$1 $1

Paper $1 $2

Electrical Components - - -

All Other <$1 <$1

Total Material Sourcing

Practice Opportunity$30 $43



than 1% of total Cost

of Goods Sold

Cost Opportunity for Improvements in Material Sourcing

Practices (cont’d)While Newell has consolidated purchases across businesses for some categories like resin, purchasing for

several other categories appears decentralized and located within the business units.

The decentralized nature of Newell’s material

sourcing strategy results in an inability to

leverage best-in-class procurement processes and

the Company’s scale to negotiate reduced pricing

from suppliers.

Leveraging scale will result in reduced pricing

and better terms for Newell overall. This will

result in more centralized procurement resources

and less business unit specific resources.


141

We estimate the opportunity to improve procurement efficiencies to be $137 to $200 million by driving

increased procurement effectiveness in key categories while taking other categories to a more efficient level of

cost management.

Implementing the Procurement Opportunity

– Comprehensive review of Newell’s portfolio to, first, consolidate manufacturing of similar products in near-

shore locations like Mexico and, next, aggressively source more products from China

– Move procurement and production of certain products to low-cost countries (Quickie example)

– Review of product & packaging design to drive cost reductions

Design improvements to reduce costs and improve shipping efficiencies, particularly for products being

shipped from China

– Design complexity reduction in packaging using best-in-class competitor product teardowns and market

research to understand customer demand

– Complexity reduction in products to help rationalize product specifications

– Leverage best-in-class procurement processes and Newell's scale to get reduced pricing from suppliers,

increase centralized purchasing, and leverage scale across businesses

1

2

3

4

5

6

We estimate the opportunity to improve procurement efficiencies to be $137 to $200 million

Low High

Low-Cost-Country Sourcing & Production $45 $64

(+) Optimize Manufacturing Process $62 $93

(+) Material Sourcing Practices $30 $43

Total Procurement Opportunity: $137M $200M

Key Initiatives

($ in millions)


142


C. Logistics Improvements

143

$0

$400

$800

$1,200

Logistics Total Personnel Trucking Ocean Warehousing &

3PL

Rail Other (Equip, IT,

Airfreight, etc.)

Non-Personnel Spend = ~$800M

5-6% of Revenue

Logistics spend represents a large expense category; therefore, optimization is essential

Newell Brands Estimated Logistics Spend Breakdown

($ in millions)

We Believe Newell Currently Spends Over $1 Billion on

Logistics with Numerous Opportunities for Improvement


144

A meaningful opportunity exists to drive savings through improved freight and logistics practices

We Believe There Is an Opportunity to Improve Logistics

Operations by $49 to $73 millionWe believe there are a number of initiatives within management’s control to materially improve logistics.

Savings Estimate


Warehouse Consolidation- Consolidating warehouses into nearby facilities with capacity

- Leveraging existing network to optimize distribution points9 – 18 months $17 $20

Freight Sourcing & Mode

Optimization

- RFPs for Truckload (TL) and Less-Than-Truckload (LTL)

shipments

- Shifting LTL to TL and TL to Intermodal (IM) where possible

3 – 9 months $16 $27

Transportation Management

System (TMS) Consolidation

- Implement a single TMS solution to capture network freight

synergies3 – 9 months $1 $2

Ocean Network Optimization- Potentially shift volumes to Gulf and East Coast ports to minimize

more expensive over-the-road transportation costs6 – 9 months $5 $6

Transfer Importing to Retailers- Collaborate with retailers to own a portion of the imports for

direct shipping to their distribution centers6 – 9 months $4 $5

Inventory Reduction - Operational impacts of reducing inventory: less storage fees,

improved purchasing, etc.3 – 9 months $7 $13

Total Logistics Opportunity: $49M $73M


145

Newell’s Distribution Footprint Should be Consolidated

Scenario #4

Imports only 5 containers per week

- not enough to substantiate a DC

Scenario #1

Small Calphalon WH potentially

consolidated into Jarden’s Pataskala DC

Scenario #2

Jarden brands operating 4 separate

Facilities combining for over 2MM SF

Scenario #3

Potential to distribute Elmer’s and Quickie

through Newell DC in Atlanta

It appears Newell Brands has failed to integrate legacy Newell Rubbermaid and Jarden warehousing networks.

Distribution Footprint

After the Newell / Jarden combination, we believe there is a meaningful opportunity to consolidate DCs

Following the combination of Jarden and

Newell, numerous opportunities exist to

consolidate the distribution footprint.

We believe these opportunities have yet to be

executed upon, and therefore, can drive

meaningful additional savings.

For example, the South Florida distribution

center (DC) only imports a limited number of

containers per week, which, in our opinion,

does not validate the operation of a full

standalone DC.

Additionally, in Missouri, there are 4 separate

facilities, with over 2 million combined square

feet, that should be consolidated.


Observations

146

There Is Also an Opportunity to Improve Utilization for

Truckload and LTL Shipments

By consolidating its DC footprint and improving freight utilization, we believe Newell can substantially lower its costs

Segment Freight Warehousing Total Footprint

Writing $3 -- $3

Outdoor Solutions $2 $3 $4

Rubbermaid $2 $3 $5

Baby & Parenting -- -- --

Branded Consumables $2 $1 $3

Consumer Solutions $2 $1 $4

Process Solutions -- -- --

Total Savings $10 $9 $19

Improving load utilization for Truckload and Less-Than-Truckload (LTL) shipments

Reducing final miles shipped via LTL and parcel

Capitalizing on freight rates from more competitive markets

Key opportunities to drive freight savings:

Footprint Consolidation and Improvement in Truckload Utilization Savings ($ in millions)


Savings Estimate

Segment Low High

Writing $2 $4

Outdoor Solutions $4 $6

Rubbermaid $3 $5

Baby & Parenting $1 $2

Branded Consumables $3 $5

Consumer Solutions $2 $4

Process Solutions <$1 <$1

Total Savings $16 $27

Freight Sourcing & Mode Optimization Savings ($ in millions)

1

2

3

147

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

BU 1 BU 2 BU 3 BU 4 Nat'l Avg-Contract

National Average -Contract

Recent changes in freight costs

Contract Carrier Index – Actual Cost per Load Trend

Newell is not unified; however, the Company should be leveraging its entire network to extract more

attractive rates from transporters

Using a Decentralized Approach to Manage Freight Results

in Heightened Costs

Observations

Freight costs have dramatically increased over the last year and need to be closely watched and managed.

Recent rate trends reflect a tightening

market over the past 6 – 8 months.

We believe this is more carrier “margin

up” than true cost inflation.

There was some marginal relief in

1Q18, but carriers still maintain

pricing power over shippers.

Costs can escalate quickly when

each business unit or brand

operates independently.

Routing guide erosion can force

reliance on expensive brokers.

No true owner of carrier relationships to

keep pricing and service in-line.

BU = Business Unit

Managing different business units

separately results in higher costs than

if the Newell were to negotiate with

carriers as a whole company


148

Challenges Benefits of Consolidation

Duplication of licensing fees and other support costs

Duplication of expertise and skill sets

Fragmentation of transportation spend

Multiple sets of KPIs

Multiple carrier portals

Loss of network efficiency

Round trip / triangle opportunities

Minimize deadhead miles

Leveraging the best technologies across entire spend

Cross train more people to reduce staff and

potentially enable shared services in one location

Reduce software fees from the other systems

Enable global visibility to carrier usage to support

cost control

Single instance of reporting for ease of management

Further, Newell Makes it Tougher on Itself by Operating

Multiple Systems Which Results in Higher Costs

By using a rigorous and strategic mindset to Truckload and LTL RFPs, as well as using a single TMS

platform, we believe Newell can improve freight costs by 3% to 5%

Newell appears to be utilizing multiple Transportation Management Systems (TMS) driving freight costs

higher; therefore, an opportunity exists for the Company to consolidate to a single TMS platform.

Without a unified and focused approach to freight management, freight costs can quickly and dramatically increase.

A single, unified TMS can generate 0.5 – 1.0% freight cost reduction through automated mode optimization and identifying round trips.


149

Reconfiguring Newell’s Discharge Port Strategy May

Present Another Savings Opportunity

25,130

19,592

4,732 3,991

2,901

1,742 1,092 874 750 538 531

-

5,000

10,000

15,000

20,000

25,000

30,000

Having concentrated freight discharge in LA / Long Beach may increase onward distribution costs. Shipping

more volume directly to the Gulf and East Coast should be considered to potentially decrease on-carriage mileage

Discharge Ports (>500 containers/Yr)

Newell has concentrated much of its product discharge in Southern California, giving the appearance of

discharge consolidation; however, we believe that diversifying discharge ports may reduce costs because a mile

transported on land is much more expensive than on the ocean.


150

EXISTING NETWORK

• Vast majority of imports discharged in Los Angeles &

Long Beach

• High volume lanes inland to Springfield, Kansas City,

St. Louis, and San Antonio

• Potentially high freight costs to distribution centers,

plus potentially high freight costs / customer pick-up

allowance for inventory destined for SE and NE

POTENTIAL SAVINGS

• Increased direct shipment to Houston, Savannah,

and NY / NJ

• Lower freight cost to San Antonio from Houston

for 2% of imports

• Retain inventory closer to final consumption in NE

and SE for 19% of imports

Increasing direct shipments to Gulf ports could potentially save $600/shipment to San

Antonio, and relocating inventory closer to customers could save $300-550/shipment.

Shipping more volume directly to the Gulf and East Coast ports may decrease on-carriage mileage. Newell is

currently discharging ~70% to LA / Long Beach, and we believe there may be an opportunity to shift ~20% of

this to more productive ports and potentially reduce costs.

Changing port of discharge and shifting warehousing for ~20% of imports could potentially save $6 million


Reconfiguring Newell’s Discharge Port Strategy May

Present Another Savings Opportunity (cont’d)

151

0

150

300

450

600

750

900

TE

Us

('000s)

Retail Food & Bev Conglomerate Electronics Apparel Consumer Goods Appliances

Newell Brands imported 108,900

TEU to the US in 2016

Many CPG Companies Let Retailers Assume the

Importing Responsibility, But Newell Imports on Its OwnIn fact, Newell Brands is the only CPG company in the Top 50 U.S. importers by volume.

Top 20 US Importers by Volume

Only Spectrum Brands (15,600 TEU,

99th) ranks in top 100 importers

among comparable companies

Letting retailers assume the importing responsibility has many benefits:

Likely have scale and better

pricing than Newell

1 Reduces Newell inventory on

the water

2 Less warehouse space

required in the US

3

Why wouldn’t Newell allow its largest customers (i.e. Walmart and Target) to assume the importing responsibility if it is cost efficient and reduces the Company’s already high inventory levels?

Today’s strategy leads to unnecessary “double handling.”


152

Newell appears to send inventory directly to its DC, even

when the retailer may be only a few miles away, resulting

in extra touch points.

Large scale retailers such as Walmart and Target commonly

own the importing process on behalf of their vendors.

Newell’s warehousing network often overlaps with retailer

distribution centers (e.g. LA Inland Empire), causing

unnecessary steps in the distribution process.

Observations

By eliminating these extra steps, the Company could

save $4 – 5 million.

Frees up warehousing capacity to allow for network

consolidations.

Reduces Newell’s inventory on the water as well as on-

hand at the warehouses.

Increases collaboration with core customers.

Newell’s facility is

within 2.5 miles of

Walmart’s!

Current Strategy: Newell to Walmart (Riverside)

Capitalizing on Newell’s Opportunity to Shift Ownership

Volume to Retailers Can Drive Substantial SavingsBest-in-class companies collaborate with their retail partners to optimize total cost of ownership; transferring importing

responsibilities to the customer streamlines the supply chain by eliminating the extra touch at Newell's warehouses.

Allowing Walmart to control

the process allows for Newell

to capitalize on network

consolidation

New Strategy: Go Direct to Walmart

Shifting ownership of import volumes to retailers eliminates the extra touch, reduces miles traveled, shortens lead

times, and could save Newell $4 to $5 million annually

Opportunity

2 touch points

1 touch point


153

836,692

699,500

600,000

650,000

700,000

750,000

800,000

850,000

Newell Top

Quartile

Cost Driver

Potential Benefit

($ millions)

Procurement

• Improved EOQ purchasing $2 – 5

Storage Costs

• External WH storage fees $2 – 3

Manufacturing

• Reduced changeovers & setups

$2 – 5Obsolescence

• Reduced discounting, write-offs

Inter-DC Transfers

• External WH storage fees $0.4 – 1

Total Benefit $7 – 13

Improving Inventory Management Practices Can Have a

Ripple Effect Throughout the Supply Chain

Operational Benefits of Improved Inventory Practices

Notable benefits come from reducing the overall need for warehousing storage, more efficient purchasing, and

streamlining manufacturing operations, which, in total, can reduce costs by ~$7 to $13 million

Domestic Pallets on Hand

In addition to Working Capital benefits, improved inventory management practices can positively impact

EBITDA throughout several nodes of the supply chain.

137,000 pallets in storage

=

1.8 million square feet


154

Implementing the Logistics Opportunity

– Consolidate warehouses into nearby facilities with capacity and leverage the existing network to optimize

distribution

– Implement a single, unifying Transportation Management System (TMS) to generate freight cost reduction

through automated mode optimization and identifying round trips

– Explore shifting ocean volumes to Gulf and East Coast ports to minimize more expensive over-the-road

transportation costs

– Collaborate with retailers to transfer a portion of the imports to direct shipping to their DCs to help optimize total

cost of ownership; transferring the importing responsibilities to the customer streamlines the supply chain by

eliminating the extra steps for the product to reach the customer

1

2

3

4

We estimate there is an opportunity to improve logistics operations at Newell which would increase

profitability by $49 to $73 million

Low High

Warehouse Consolidation $17 $20

(+) Freight Sourcing & Mode Optimization $16 $27

(+) TMS Consolidation $1 $2

(+) Ocean Network Optimization $5 $6

(+) Transfer Importing to Retailers $4 $5

(+) Inventory Practices $7 $13

Total Logistics Opportunity: $49M $73M

Key Initiatives

($ in millions)


155


D. Working Capital Improvements

156

We Believe There Is an Opportunity to Improve Working

Capital by $800 million to $1.1 billionThere are several key initiatives which we believe need to be enacted to improve Working Capital.

We believe that there is a substantial opportunity to improve Working Capital

Savings Estimate


Days Sales Outstanding

(DSOs)

- Evaluate and negotiate existing terms with customers;

Enforce utilization of agreed upon terms9 – 12 months $600 $650

Days Payable Outstanding

(DPOs)

- Evaluate and negotiate existing terms with customers;

Minimize early payment; take all applicable discounts9 – 12 months $200 $450

Total 1x Cash Opportunity: $800M $1,100M


157

$57 $91 $131$351 $363

$556

$1,938

Church &

Dwight

The Clorox

Company

Prestige

Brands

Fortune

Brands

Spectrum

Brands

Stanley Black

& Decker

Newell

Brands

Newell Maintains Significantly Higher Net Working

Capital Compared to Its Peers

There appears to be a significant opportunity to improve Newell’s Working Capital management practices

FY 2017 Net Working Capital

Opportunity

($ in millions)

Improve purchasing by negotiating standard payment terms, e-payables / corporate card program, etc.

Rationalize SKUs by decreasing scope of SKUs to reduce operations complexity, improve demand planning,

inventory management, etc.

Improve collections by focusing on finance integration and AR systems implementation.

1

2

3


Note: Peers with over 50% of revenue coming from non-US market have been excluded in Working Capital slides.

158

7.7%8.8%

11.0%

13.1%

15.5% 15.8%16.9%

The Clorox

Company

Church &

Dwight Co.

Fortune

Brands

Prestige

Brands

Spectrum

Brands

Stanley Black

& Decker

Newell

Brands

Newell’s Inventory Levels Are ~42% Higher Than

Industry Averages

Inventory as % of Revenue

Newell maintains significantly higher inventory levels compared to peers

Newell’s inventory levels – expressed as a percentage of revenue – are significantly higher than peers.

Peer Average: 12.0%



159

Newell Has An Opportunity to Meaningfully Improve Its

Cash Conversion Cycle Over Time

Days Sales Outstanding (# of Days)

Days Inventory Outstanding (# of Days)

Days Payable Outstanding (# of Days)



160

2630

34

5460

77

87

2230

4250

58

95 98

Church

& Dwight

The Clorox

Company

Stanley Black

& Decker

Spectrum

Brands

Fortune

Brands

Newell

Brands

Prestige

Brands

FY 2016 FY 2017

Cash Conversion Cycle has

increased ~18 days in one year

In Fact, Newell Has Allowed Its Cash Conversion Cycle to

Increase ~23% Year-over-Year in FY 2017

Cash Conversion Cycle (# of Days)

(3.3) 0.2 8.2 (3.7) (1.9) 18.2 11.1Day

Change:

Newell has a significantly higher cash conversion cycle compared to peers

Newell experienced a significant increase in its cash conversion cycle in FY 2017.

BEST-IN-

CLASS

WORST-

IN-CLASS



161

Days Sales Outstanding (DSO)

Days Inventory Outstanding (DIO)

Lower is more

efficient

Peer Median: 38

Lower is more

efficient

Peer Median: 71

Days Payable Outstanding (DPO)

Higher is more

efficient

Peer Median: 58

Several Components of Newell’s Cash Conversion Cycle

Are Well Below Best-in-Class Peers

BEST WORST

BEST WORST

BEST WORST



162

95

46

33

Newell Brands Peer Median Best in Class

In Total, a Significant Cash Benefit Exists by Improving

Working Capital

DSOs are nearly twice the median of the peer group

By improving collections through finance integration and AR

systems implementation, we estimate $1.2 – $1.3 billion in

Working Capital improvements.

DIOs are ~24% higher than the industry average

By focusing on reducing operations’ complexity, improving

demand planning, and inventory management, driving lower

DIOs could lead to $400 – $900 million in Working Capital

improvements.

Newell

Brands

Peer

Median

Best in

Class

Potential

Savings

DSO 67 days 38 days 35 days $1.2 – 1.3B

DPO 60 days 58 days 72 days $0B

DIO 88 days 71 days 55 days $0.4 – $0.9B

Est. One-Time Cash Benefit $1.6 – 2.2B

Cash Conversion Cycle Summary

Est. One-time Cash

Benefit$1.6 billion $2.2 billion

Reduction in Days 49 days 62 days

Newell Working Capital Metrics vs. Peer Group

Newell’s Working Capital ratios, specifically DSO and DIO, are significantly higher than the industry average and

best-in-class peers due to the significant – but unnecessary – complexity of its business, as previously discussed.

We believe there is the potential to improve Working Capital by $800 million to $1.1 billion

Due to the complexity of Newell’s supply chain, we believe that

approximately half of the available Working Capital savings, or

$800 million to $1.1 billion, are achievable by the Company.



- -

163


E. Empowering the Workforce to Improve Revenue Growth

164

Core Revenue Growth Is Declining and Management

Consistently Blames the Macro Environment


Core Revenue Growth

Core revenue growth has massively decelerated and turned negative in 4Q’17

Core revenue growth has significantly declined over the last 8 quarters!

Management Commentary

“That said, like most others in our industry, we continue to face

pressure from retailer inventory reductions and retailer

consolidation in the U.S.” – CEO Michael Polk

Q2 2017 Earnings Call (August 4, 2017)

“The landscape issue is really retail environment related and also

market growth related.” – CEO Michael Polk

Barclays Conference (September 7, 2017)

“We had unrelenting retailer inventory destocking, creating a

headwind for revenue as our retail partners adjust to slowing market

growth and changes in shopping patterns.” – CEO Michael Polk

Q3 2017 Earnings Call (November 2, 2017)

“…exposure to the stressed segment of the U.S. retail landscape.

And that will continue to be bit of an overhang…” – CEO Michael Polk

Q4 2017 Earnings Call (February 16, 2018)

“The external environment is tougher than what we anticipated when we

did the deal and even at the beginning of this year…” – CEO Michael Polk

CAGNY Conference (February 22, 2018)Significant deceleration in revenue

growth over the past 8 quarters!

165

6%

5%

3%

3% 3% 3%

0%

(2%)

5%

4% 4%5%

7% 7%

8%

5%

4%

1%

2%

3%3%

5%5% 5%

2%

1%

0%

2%2%

8%

6%

2%

5%

5%

4% 4%

5%

-3%

-1%

1%

3%

5%

7%

9%

Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17

NWL SWK CHD CL FBHS

But Peers Are Growing Consistently, Indicating that

Newell’s Decelerating Growth Is Not an Industry Issue

Peers have been able to weather the difficult environment without reporting a quarter of negative

organic revenue growth; unfortunately, Newell cannot say the same

Organic Revenue Growth

While the macro environment may be more difficult, Newell Brands’ peers are demonstrating substantially

better organic revenue growth than Newell.

Source: Company filings, peer filings, and Starboard estimates.

166

We Believe in Empowering the Workforce and Reducing

Bureaucracy…

We believe that empowering managers with a sense of ownership of their brands is essential for future success

We believe that many of the issues affecting revenue growth have been primarily self-inflicted due to issues such

as poor communication, unending bureaucracy, and avoidable customer disputes, among others.

Communication between corporate and the business units has been poor.

– We believe that many brand-level decisions (e.g., pricing decisions, product development, etc.) must be run through

corporate, but the corporate officers are frequently out of touch with the real-time dynamics (e.g., customer

relationships, competitive dynamics, etc.) of the businesses, resulting in uninformed decision-making.

– As we have outlined in this presentation, there are numerous examples of miscommunication leading to poor

execution and negative financial impacts on the business units.

Newell’s bureaucratic corporate structure disenfranchises business unit leaders rather than empowering them.

– We believe Newell has lost the culture of entrepreneurial decision-making by creating corporate bottlenecks causing

the businesses to miss opportunities in the marketplace.

– Business unit leaders frequently do not understand the employee reporting structure, resulting in confusion and

inefficiency.

– Furthermore, business units are frequently allocated costs from projects that they neither have input in nor decision

making authority over. However, the business leaders are then held accountable for the future success of these

projects.


We believe Newell should empower and motivate brand managers and employees by instilling a sense of ownership in

their businesses and having fewer edicts coming down from senior management (e.g., major decisions regarding

product roadmaps, pricing decisions, etc.).

167

…And Not Needlessly Fighting with Large Customers

We believe that issues with specific customers have hampered revenue growth, and further, these issues

were avoidable

Issues with large customers have affected revenue growth.

Source: Wall Street Journal and Bloomberg.

Why would Newell

knowingly and willingly

fight with one of its

largest customers??

Why would Newell defiantly stop shipping

product and risk damaging a major

customer relationship rather than trying to

come to a mutually beneficial resolution?

168

An Effective Multi-Channel Strategy and Knowing the

Customer Are Paramount

A comprehensive multi-channel strategy and deep customer relationships are essential in the current

retail environment

We believe that an effective multi-channel strategy and strong relationships with key customers are essential in

today’s retail environment.

Multi-Channel Retail

Easy access to brands and products across multiple channels is the customer’s new norm.

With integrated technology (e.g., mobile, social, cloud) and the availability of constructive data, brands are able to

have a laser focus into a customer’s journey, within and across channels.

This supports always having the right mix of product along with optimized pricing and personalized engagement for

all points of distribution.

Direct-to-Consumer (DTC)

DTC is a critical component of a multi-channel strategy.

A distinctive, compelling, and seamless online retail experience allows brands to have influence over the customer’s

impression while cultivating relationships that transcend retail channels.

Consumers are demanding more authentic and engaging interactions.

Brand sites provide the opportunity for relevant content and personalized experiences and communications.

Smart multi-channel brands understand how to leverage DTC channels to test products and campaigns and gather

customer insights that benefit the overall brands and their retail partners.


169

The E-commerce Strategy and the Brands Need to Work

Hand-in-Hand

We believe that Newell’s product development group has excessive, unilateral authority for channel

strategy; however, cooperation between teams is key to success

There needs to be a clear strategy and accountability for each brand and business.

Brand leaders must have the authority to drive:

Brand identity and positioning

Product architecture

Design and innovation

Assortment and pricing

Marketing / Social

Customer insights

Launches, promotions, and events

Visual display and merchandising

Demand planning and inventory management

Brand leaders are fully responsible for sales, market

share, margin, inventory management, and operating

expenses, and incentivized on DTC performance.

Brand Leaders Direct Team

Direct team responsibilities include:

E-commerce and mobile store performance

Site merchandising and optimization

Product and calendar coordination

Technical operations and web development

Site reporting and analytics

Customer experience

Omni-channel services

Direct teams are held accountable to the e-commerce

P&L as well as speed and agility for driving a digital

culture.


170

V. Conclusion

171

$546

$776

$169

$61

$0

$200

$400

$600

$800

SG&A Procurement Logistics Total

EBITDA Impact

Midpoint of Potential EBITDA Improvement

from Enhanced Operational Execution

We believe that there is a substantial cost improvement and Working Capital opportunity at Newell




Working Capital Opportunity

($ in millions)

We believe there is also the

potential to improve

Working Capital by $800

million to $1.1 billion,

which would significantly

increase cash available for

capital deployment

We have retained one of the leading operationally-

focused consulting firms to assist us with this analysis

172

We Believe That Newell Is Undervalued with Substantial

Opportunities to Create Value

We believe Newell could be worth $47.92 per share, or 81% upside from where Newell currently trades

Source: Bloomberg, Company filings, and Starboard estimates.

Note: Stock price as of April 20, 2018.


$26.44

$47.92

$16.78

$2.74$1.96

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

Current

Stock Price

EBITDA Improvement

(10.5x Multiple)

Current EBITDA

(10.5x Multiple)

Working Capital

Improvements

Pro Forma

Stock Price

Pro forma for an operational turnaround, we believe Newell trades at an extremely attractive valuation.

Documents

PowerPoint Presentation - starboardvalue.com · 8 We Believe that Asset Sales Executed at the Right Multiples Can Create Value, but the Process Has to Be Properly Executed… A combination