뉴웰 브랜즈(NWL) 2026년 3분기 실적발표 콘퍼런스 콜: 매출 성장 및 실적 전망 상향

핵심 요약

• 뉴웰 브랜즈(Newell Brands)는 2026년 3분기 매출액이 전년 동기 대비 3.7% 증가한 약 19억 달러를 기록했으며, 코어 매출(core sales)은 3.3% 증가했다고 발표했습니다. 두 실적 모두 회사가 제시했던 가이던스 범위 상단인 2%~3%를 상회했습니다.
• 성장은 주로 판매량 증가에 기여했으며, 전사적 가격 수준은 사실상 변동이 없었습니다. 경영진은 소매 재고 수준에 실질적인 변화가 없었다고 밝혀, 이번 분기의 매출 성장이 소비자 및 소매업체의 실질 수요를 반영하고 있음을 나타냈습니다.
• 일반화(Normalized) 매출총이익률은 35.2%로 70bp 확대되었고, 일반화 영업이익률은 9.8%로 90bp 상승했습니다. 일반화 희석 주당순이익(EPS)은 0.17달러에서 0.20달러로 증가했습니다.
• 회사는 2026년 매출 전망을 매출액 성장률 2%~3%, 코어 매출 성장률 1%~2%로 상향 조정했습니다. 일반화 영업이익률 가이던스는 10.0%~10.4%로 유지했으며, 일반화 EPS 가이던스는 0.74달러~0.76달러로 범위를 축소했습니다.
• 경영진은 2026년 투입 원가 인플레이션 역풍 추정치를 기존 대비 2,000만 달러 늘어난 2억 2,000만 달러로 상향 조정했으며, 이는 매출원가의 약 4.6%에 해당합니다. 생산성 향상, 매출 증가 및 비용 통제가 이러한 압박을 상쇄하는 데 기여했습니다.
• 최근 12개월(TTM) 일반화 EBITDA는 약 1억 7,300만 달러 증가한 10억 3,000만 달러를 기록했습니다. 순차입금 비율(Net leverage)은 2분기의 4.8배 및 전년 동기의 5.3배에서 약 4.5배로 낮아졌습니다.

주요 재무 데이터

사업 및 운영 실적

성장은 광범위하게 나타났습니다. 이번 분기 동안 뉴웰 브랜즈의 3개 부문 중 2개, 6개 사업 부문 중 4개, 상위 10개 브랜드 중 7개, 상위 10개 국가 중 7개가 성장했습니다. 미국 및 해외 사업 모두 2022년 2분기 이후 처음으로 플러스 성장을 기록했으며, 라틴 아메리카, EMEA(유럽·중동·아프리카) 및 아시아 태평양 지역이 모두 플러스 코어 매출 성장을 달성했습니다.

러닝 앤 디벨롭먼트(Learning and Development) 부문은 3분기 연속 코어 매출 성장을 달성했습니다. 문구(Writing) 사업은 지난 3년 중 가장 높은 미국 신학기 소매 매출 성장에 힘입어 한 자릿수 중반대의 성장률을 기록했습니다. 샤피(Sharpie), 엑스포(Expo), 엘머스(Elmer's), 프리즈마컬러(Prismacolor) 등은 혁신, 유통망 확대 및 재주문 증가의 수혜를 입었습니다.

유아용품(Baby) 코어 매출은 미국의 성장이 캐나다의 매출 감소로 상쇄되면서 거의 변동이 없었습니다. 경영진은 성장 둔화의 주요 원인을 출하 시기 문제로 돌렸습니다. 연초 대비 누적 유아용품 코어 매출은 그라코(Graco) 카시트와 누크(NUK) 브랜드 재출시 효과에 힘입어 한 자릿수 후반의 성장률을 유지했습니다.

홈 앤 커머셜(Home & Commercial)은 코어 매출이 6% 증가하며 이번 분기 가장 우수한 실적을 낸 부문이었습니다. 3개 사업 부문이 모두 성장한 것은 5년 만에 처음입니다. 양키캔들(Yankee Candle)이 미국 시장 점유율을 확대하면서 홈 프래그런스(Home Fragrance) 부문은 두 자릿수 성장을 기록했고, 주방용품(Kitchen)은 2분기 연속 성장을 달성했습니다. 상업용품(Commercial)도 플러스 코어 매출 성장으로 돌아섰습니다.

아웃도어 앤 리크리에이션(Outdoor & Recreation)은 2분기 성장 이후 다시 감소세로 돌아섰습니다. 경영진은 이러한 약세를 소매 현장의 문제보다는 주로 출하 시기 문제로 설명했으며, 뉴웰이 사업부별 공식 가이던스를 제공하지는 않지만 4분기에는 플러스 코어 매출 성장으로 복귀할 것으로 전망하고 있습니다.

뉴웰은 2023년 1개에 불과했던 Tier 1 및 Tier 2 혁신 제품을 2026년에는 약 25개 출시할 계획대로 진행 중입니다. 경영진은 연간 약 25회의 출시를 지속 가능한 수준으로 보고 있으며, 3년의 라이프사이클 동안 제품 지원을 지속할 계획입니다.

경영진 가이던스

2026년 전망에는 2026년 2분기에 반영된 2025년 IEEPA 관세 비용의 일회성 환급금 약 1억 달러(주당 0.17달러)가 포함되어 있습니다.

경영진이 일회성 및 비영업적 항목으로 규정한 두 가지 요인으로 인해 연간 영업활동 현금흐름 가이던스는 기존 약 4억 달러에서 약 1억 5,000만 달러로 하향 조정되었습니다. 연금 제도 종료 회계처리는 6,000만 달러의 순현금 이익을 창출함에도 불구하고 보고된 영업활동 현금흐름을 약 8,500만 달러 감소시킬 것으로 예상됩니다. 매출채권 팩토링은 2025년에 비해 영업활동 현금흐름 기여도가 약 1억 6,500만 달러 적을 것으로 예상됩니다.

2027년에 대해 경영진의 기본 계획은 글로벌 카테고리 성장이 2026년과 거의 유사한 수준을 유지하고 혁신, 유통 확대 및 마케팅에 힘입어 플러스 코어 매출 성장을 이룰 것으로 가정하고 있습니다. 회사는 약 1억 5,000만 달러 규모의 인플레이션을 예상하고 있으며 연초에 완만한 가격 인상을 계획하고 있습니다.

경영진은 2026년에 1억 달러의 관세 환급 혜택이 포함되어 있기 때문에 2027년 보고된 일반화 영업이익률이 감소할 것으로 예상합니다. 해당 혜택을 제외할 경우 연간 목표치인 50bp를 상회하는 이익률 확대를 기대하고 있습니다. 또한 강력한 영업활동 현금흐름과 잉여현금흐름, 그리고 지속적인 부채 축소(디레버리징)를 예상하고 있습니다.

리스크 및 주시 사항

• 뉴웰은 2026년 인플레이션 추정치를 초기 예상치인 약 1억 달러에서 2억 2,000만 달러로 상향 조정했습니다. 디젤 연료, 운송, 수지(레진), 조달 완성품 및 인건비가 주요 압박 요인이었습니다.
• 경영진은 2027년에 추가로 1억 5,000만 달러의 인플레이션이 발생할 것으로 예상합니다. 이 추정치는 디젤 비용이 현재 수준 부근을 유지하고 상승한 수지 및 운송 비용이 지속될 것임을 전제로 합니다.
• 회사는 2년간 누적 인플레이션이 약 3억 7,000만 달러(8%)에 달함에 따라 2027년에 선별적인 가격 인상을 계획하고 있습니다. 경영진은 앞서 경쟁사보다 먼저 진행했던 10%~15%의 가격 인상이 상당한 판매량 감소 반발을 초래했음을 인정했습니다.
• EMEA 및 아시아 태평양 지역은 거시경제적 압박과 중동 정세의 직·간접적 영향으로 인해 여전히 어려움이 지속되었습니다.
• 미·중 '30 for 30' 이니셔티브에 따른 유아용품(Baby Gear)에 대한 잠재적 관세 경감 조치는 세부 시행 방안, 시기, 범위가 확정되지 않아 여전히 불확실한 상태입니다.
• 경영진은 뉴웰이 경쟁하는 카테고리 시장이 2026년 연간 기준으로 변동 없거나 1% 감소할 것으로 예상하고 있습니다.

애널리스트 Q&A 하이라이트

경영진은 3분기 코어 매출 성장의 거의 전부가 판매량과 제품 믹스에서 비롯되었으며, 가격 효과는 사실상 제로에 가까웠다고 말했습니다. 또한 소매업체의 재고 수준이 실적에 실질적인 영향을 미치지 않았음을 강조했습니다.

2027년 가격 책정과 관련해, 뉴웰은 정가 변경, 제품 구색 믹스, 프로모션의 할인율 또는 빈도 축소, 고객 프로그램 조정, 혁신의 조합을 활용할 계획입니다. 조치는 사업부 및 지역별로 상이할 것입니다. 경영진은 평균 가격 인상률이 한 자릿수 초반대가 될 것으로 예상하며, 일부 카테고리는 한 자릿수 중반대 인상을, 다른 카테고리는 인상이 없을 수 있다고 보고 있습니다.

회사는 생산성 향상과 비용 통제를 통해 2027년 예상되는 1억 5,000만 달러의 인플레이션 역풍 중 상당 부분(전부는 아님)을 상쇄할 것으로 기대하고 있습니다. 경영진은 뉴웰이 자체 조치를 실행하기 전에 일부 카테고리에서 경쟁사 및 자체 브랜드(PB) 제품의 가격이 이미 상승하기 시작하여 가격 격차가 줄어들었다고 밝혔습니다.

경영진은 연금 회계 및 팩토링 효과를 제외한 2026년 기초 영업활동 현금흐름이 기존 예상치인 약 4억 달러 수준을 유지하고 있다고 밝혔습니다. 또한 주요 ERP 통합 작업 완료에 따라 자본지출이 2억 달러 미만을 유지하면서 2027년 영업활동 현금흐름이 4억 달러를 상회할 가능성이 있다고 보고 있습니다.

소비자 수요에 대해 경영진은 3분기 미국 카테고리 성장이 플러스였다고 말했습니다. 저소득 가구의 지출 추세는 여전히 음수(감소세)였으나 전년 동기 대비 개선되었고, 고소득 소비자는 지출을 지속적으로 늘렸으며 중소득 소비자는 대체로 안정적인 모습을 보였습니다.

실적발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good morning, and welcome to Newell Brands' Third Quarter 2016 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. A live webcast of this call is available at ir.newellbrands.com.

I will now turn the call over to Joanne Freiberger, Senior Vice President of Investor Relations and Chief Communications Officer. Ms. Freiberger, you may begin.

Joanne Freiberger

Thank you. Good morning, everyone, and welcome to Newell Brands' Third Quarter 2026 Earnings Call. Joining me today are Chris Peterson, our President and CEO; and Mark Erceg, our CFO.

During today's call, we will be making forward-looking statements, which involve risks and uncertainties. Actual results and outcomes may differ materially, and we undertake no obligation to update forward-looking statements. Please refer to the cautionary language and risk factors available in our earnings release, our Form 10-K, Form 10-Q and other SEC filings available on our Investor Relations website for a further discussion of factors affecting forward-looking statements.

Today's remarks will also refer to non-GAAP financial measures, including those referred to as normalized measures. We believe these non-GAAP measures are useful to investors, although they should not be considered superior to the measures presented in accordance with GAAP. Explanations of the non-GAAP measures and reconciliations between GAAP and non-GAAP measures can be found in today's earnings release and tables that were furnished to the SEC.

And with that, I'll turn it over to Chris.

Christopher Peterson

Thank you, Joanne. Good morning, everyone, and welcome to our third quarter earnings call. Top line growth accelerated sequentially, as Newell Brands delivered its second consecutive quarter of year-over-year sales growth, driven by broad-based market share gains. Net sales increased 3.7% and core sales grew 3.3%, with both results exceeding the high end of our 2% to 3% guidance range.

Growth was broad-based with 2 of 3 segments, 4 of 6 businesses, 7 top 10 brands and 7 top 10 countries growing during the third quarter. The U.S. continued to grow and international returned to growth, with positive core sales growth across Latin America, EMEA and Asia Pacific. This breadth provides further evidence that the capabilities we have built over the past several years are translating into better business performance.

Stronger sales and productivity drove expansion in Newell's normalized gross and operating margin. And in another positive sign, normalized operating margins expanded on 5 of 6 businesses. Normalized earnings per share came in at the high end of our guidance range, despite inflation that exceeded going in expectations. Trailing 12-month normalized EBITDA was up meaningfully, having grown 20% versus a year ago. With 2 consecutive quarters of top line growth, it is becoming increasingly clear that investments in consumer understanding, innovation, brand building, marketing and go-to-market capabilities are expanding distribution and driving growth.

Let's share a few examples, beginning with Learning and Development, which delivered its third consecutive quarter of core sales growth. Writing delivered mid-single-digit core sales growth, supported by our strongest U.S. back-to-school POS growth in 3 years. Sharpie, Expo, Elmer's and Prismacolor all performed particularly well as consumer-relevant innovation, distribution expansion and better back-to-school execution on both sell-in and on replenishment orders drove category expansion and market share gains.

Baby core sales was roughly flat in the third quarter, with growth in the U.S. offset by lower sales in Canada. Within the business, Graco delivered core sales growth during the third quarter, building on strong year-to-date consumer takeaway and car seat share gains. Our rotating car seat platforms, including Turn2Me and Easy Turn 360, continue to resonate with consumers. Recent results included low double-digit growth in POS and share gains at key mass retailers. In Baby Care, NUK also delivered positive U.S. POS and gained market share during the quarter as we continued to invest behind this year's full brand relaunch.

Turning to Home & Commercial. Core sales increased 6%, with all 3 businesses growing for the first time in 5 years. Commercial posted solid core sales growth as both U.S. B2B and DIY channels recorded gains. Innovation contributed to the improvement, including the new 34-gallon BRUTE container and an expanded BRUTE cleaning lineup featuring push brooms designed to tackle different surfaces and types of debris. The 34-gallon BRUTE container also earned a 2026 Pro Tool Innovation Award.

Kitchen delivered its second consecutive quarter of core sales growth, with positive momentum in the U.S. and Latin America. Rubbermaid Brilliance glass food storage continued to see strong demand, consistent with consumers' increasing preference for glass storage options. Crock-Pot also delivered growth supported by our design series, slow cookers, which combine everyday functionality with colors inspired by current design trends. Our collaboration with Valspar builds on that innovation by pairing 6 new Crock-Pot colors, with complementary paint palettes to help consumers personalize their kitchens. And while we don't usually comment on current quarter sales trends, October was, we believe, Crock-Pots' largest sales month ever.

Oster is another great illustration of how sustained investment can build a stronger innovation platform over time. We previously discussed our extreme mix performance blender, which laid the foundation for a broader lineup designed to address different consumer needs and price points. More recently, our new Vortex blender uses proprietary reversible motor technology and customized built-in preprogram settings, which made consistent results easier to achieve. Oster's QuietPro blender addresses consumers' noise concerns associated with blending, and our new Titan blender combines high-performance blending with a glass jar. Oster blenders delivered positive U.S. POS and sales growth in Latin America during the third quarter.

Home Fragrance delivered very strong core sales growth against a favorable prior year comparison. Yankee Candle returned to double-digit growth in the U.S. and gained market share, driven by growth in Yankee Candle retail stores, strong D2C performance and distribution gains in the grocery channel.

Following a return to growth in the second quarter, Outdoor & Recreation core sales declined in the third quarter, even as consumers continued to respond well to our 2026 relaunches of bubba and Contigo. bubba contributed positively, Contigo delivered core sales growth in the third quarter, and we grew share in the important hydration segment. In addition, Coleman Snap 'N Go was recently recognized among Times' Best Innovations of 2026. Demand continues to significantly exceed our initial expectations, and we are expanding availability ahead of the holiday gifting seasons since Snap 'N Go makes large capacity coolers easier to store, transport and use.

Starting with only one Tier 1 and Tier 2 innovation in 2023, we are on pace to launch about 25 this year, which we believe is a big part of our positive sales inflection in these past 2 quarters. Now that we have rebuilt our innovation funnel, it is important to point out that we do not expect the number of new Tier 1 and Tier 2 innovations we launch each year to increase further, because with 25 brands accounting for over 90% of the company's sales and profits, we believe we have achieved a steady state or going rate of innovation. That said, we will continue to focus on bringing differentiated, new consumer-preferred products to market while simultaneously building on the innovations we have already launched.

Consistent with that, we opened a new Atlanta design center in September at our corporate headquarters. This facility brings design, consumer insights, brand marketing, innovation and research and development together to co-collaborate in a new state-of-the-art dedicated consumer research environment with advanced prototyping capabilities, which we believe has the potential to translate into higher rates of future growth.

Before turning the call over to Mark, I want to provide some perspective on the consumer environment and the actions we are taking to protect profitability while continuing to invest in growth despite persistent inflationary pressures. The categories in which we compete were roughly flat globally in the third quarter, which was consistent with what we experienced during the second quarter, but slightly better than contemplated in our July outlook. Consumer conditions were stronger in the U.S. and Latin America, while EMEA and APAC remain more challenged amid ongoing macroeconomic pressures and the direct and indirect effects of the Middle East situation. Based on that result and what we are seeing so far in the fourth quarter, we now expect the categories in which we compete to be flat to down 1% for the full year, which is 1 to 2 points better than when we first started the year.

Inflation, excluding tariffs, has continued to run above expectations, particularly diesel fuel and transportation costs, with broader pressures across commodities like resins, purchase products and labor. At the start of the year, we expected an input cost inflation headwind of about $100 million. We increased that estimate by an additional $50 million during our first and second quarter earnings calls, respectively. And today, we are raising it by another $20 million. That means we are being forced to contend with the total in-year inflationary headwind of $220 million, which equates to approximately 4.6% of our total cost of goods sold.

Our primary response to the significant inflation challenge has been to increase productivity. Our fuel productivity program is now on track to deliver savings well above its original budget and ahead of our stretch target this year. These savings reflect improvements across procurement, product design and value engineering, manufacturing and distribution. We have also leveraged higher sales growth, maintained disciplined overhead cost management, used the 2026 in-year portion of IEEPA tariff refunds recorded during the second quarter and very selectively and reluctantly used limited pricing actions, covering less than 10% of our portfolio, to help offset these inflationary impacts. The net result is we are raising our sales outlook for 2026, while maintaining the midpoint of our operating margin and EPS guidance for the year despite the higher inflation outlook.

Turning to 2027. The macro environment remains volatile and difficult to predict. As such, we are planning the business in an agile manner so that we can adjust quickly to different scenarios. Our base plan assumes global category growth remains roughly in line with this year. We expect to maintain positive core sales growth by growing faster than the category, driven by a strong portfolio of innovation, distribution gains and marketing activation. We expect inflation of about $150 million, which is above normal levels, but below the $220 million in 2026.

Given the cumulative 2-year impact of inflation of $370 million or about 8%, we plan to take modest pricing early in 2027 as we cannot offset this level of impact from productivity alone. One notable area that might be excluded from these pricing actions is Baby Gear, where we are cautiously optimistic that the U.S.-China 30 for 30 initiative could bring relief to this product category. However, the scope, timing and extent of any relief remain unconfirmed since we need the formal implementation details from the administration before we can quantify the impact on Newell.

Relative to margins, we expect normalized operating margin to be down versus 2026 reported level, given the $100 million of tariff refund benefit in 2026 results related to 2025. Excluding this impact, we expect normalized operating margins to be up by more than our 50 basis point evergreen target. Finally, we expect a strong operating and free cash flow year with continued deleveraging.

Navigating this environment while sustaining profitable growth requires strong execution across our commercial and operational teams. With that in mind, I want to welcome Guillermo Beade, who joined Newell this week as Chief Operating Officer. Guillermo brings more than 30 years of global leadership experience at SC Johnson, PepsiCo and Unilever. Guillermo will lead our sales, central marketing and supply chain functions globally, building on the capabilities we have established, and bringing greater connectivity across these teams. I look forward to working with Guillermo as we build on our momentum to drive sustainable, profitable growth in the years ahead.

Finally, before I close, I want to thank our employees around the world. Their focus on our consumers and customers and their determination to deliver in a challenging environment is helping us build positive sales momentum across Newell.

I'll now turn the call over to Mark to walk through our financial results and updated outlook.

Mark Erceg

Thanks, Chris. Good morning, everyone. During our time together this morning, I will comment on third quarter results and a few notable business accomplishments achieved during the quarter before sharing our outlook for the fourth quarter and the full year.

Third quarter 2026 net sales increased 3.7% to approximately $1.9 billion, while core sales increased 3.3%. Both exceeded the top end of our guidance ranges, and year-to-date core sales growth was nearly 1%, following more than 4 years of declines. Favorable foreign exchange generally accounted for the difference between net and core sales growth. Normalized gross margin was 35.2%, up 70 basis points versus prior year as higher sales and productivity more than offset inflation and tariffs in the quarter. Normalized operating margin was 9.8%, up 90 basis points from 8.9% last year.

Higher sales and improved gross margin drove this improvement despite inflation running above our going-in expectations. A&P remained at approximately 6.9% of sales, and normalized overheads decreased 20 basis points. Net interest expense was $86 million compared with $83 million in the prior year period and the normalized effective tax rate was 9.5% versus 7.9% last year. Taken together, these results yielded $0.20 of normalized diluted earnings per share versus $0.17 a year ago.

Turning to cash flow. Year-to-date operating cash flow was $93 million compared with $103 million in the prior year period. The modest decline versus a year ago primarily reflects higher inventory levels to support anticipated sales growth, largely offset by higher accounts payable and tariff refund collections.

Newell's third quarter cash conversion cycle improved by 4 days year-over-year, primarily reflecting higher accounts payable as purchasing patterns normalized following last year's tariff-related pauses, partially offset by higher inventory to support higher sales growth. Capital expenditures totaled $131 million through the first 9 months of 2026 compared with $177 million last year. We now expect full year capital expenditures to be below our prior estimate of approximately $200 million. Trailing 12-month normalized EBITDA increased approximately $173 million year-over-year to $1.03 billion, and net leverage declined to approximately 4.5x. This compares favorably with 4.8x at the end of the second quarter and 5.3x a year ago.

During the third quarter, we entered into a new $800 million asset-based revolving credit facility, replacing our secured revolver and extending its maturity to 2031. In addition, our senior notes offering, with a 2031 maturity, attracted strong demand, with an order book approximately 5x oversubscribed. This allowed us to upsize the offering to $600 million at a coupon of 6.25%, which was [ 1/8 ] better than the notes they were placed. The proceeds were then used to fully redeem the June 2027 notes and repay a portion of our revolving borrowings under the new ABL facility.

During the third quarter, Moody's also revised their outlook on Newell from negative to stable while affirming our overall credit rating. Importantly, we ended the quarter with no short-term debt outstanding.

We also continue to advance our One Newell operating model during the third quarter by simplifying how we operate across businesses within each country. All 10 of our largest non-U.S. countries now operate with a single ERP system and a common organizational structure compared with only 4 countries in 2024. This multiyear effort reduces complexity, supports more coordinated execution across Newell. And after many long years of painstaking work, effectively represents the end of Newell's ERP consolidation journey.

Now let's turn to the outlook for the remainder of the year. For the fourth quarter, we now expect positive year-over-year growth in both net and core sales of 1% to 3%, which would have achieved marked our third consecutive quarter of positive sales growth. Normalized operating margin is expected to be between 8.4% and 9%, and normalized diluted earnings per share are expected to range from $0.17 to $0.19, with a low single-digit effective tax rate.

Based on our year-to-date performance and updated expectations for the balance of the year, we are raising our full year outlook for both net and core sales. Specifically, we now expect full year net sales growth of 2% to 3% and core sales growth of 1% to 2%.

Despite significantly higher inflation, we are maintaining our normalized operating margin outlook of 10% to 10.4%. And after tightening the range to $0.74 to $0.76 from $0.73 to $0.77, now that only one quarter remains in the year, we are keeping the midpoint of our normalized diluted earnings per share outlook unchanged at $0.75, using an effective tax rate of about 20%. Just as a reminder, please note that this updated full year outlook continues to include approximately $100 million or $0.17 per share from the onetime out-of-period recovery of IEEPA tariff costs expense in 2025, which was recorded during the second quarter of 2026. At that time, we raised our full year normalized EPS guidance on both the top and bottom end of our ranges by that full amount.

Moving to cash. We expected full year operating cash flow of approximately $400 million, which would have been up about 50% versus a year ago. However, after accounting for 2 onetime nonoperational items, we now expect full year operating cash flow of approximately $150 million. Since there's an understandable focus on operating cash flow as we continue to deleverage the company, let me explain these 2 changes in greater detail.

First, as previously discussed, the termination of our nonqualified defined benefit plans is expected to generate approximately $60 million of net cash renewal, which is clearly a positive development. However, the underlying cash flows associated with this transaction are reported in different parts of the cash flow statement. The proceeds from the liquidation of the insurance assets are classified as investing inflows, while the benefit payments to participants are treated as operating outflows. Reporting the payments and related cash taxes and operating activities reduces our operating cash flow outlook by approximately $85 million, even though this presentation does not change the transaction's total $60 million net cash benefit to the company.

Second, we now expect receivable factoring programs to contribute approximately $165 million less operating cash flow than in the prior year. This primarily reflects reduced capacity under the amended agreements and the benefit of having upsized the recent debt refinancing from $500 million to $600 million. As stated earlier, excluding these 2 onetime nonoperational items, we were tracking well against our previous operating cash flow guidance because we remain laser-focused on disciplined working capital management, cash generation and debt reduction, since deleveraging the company remains a top priority. Consistent with that, we expect total debt and outstanding factored receivables combined to decline by a couple of hundred million dollars versus year-end 2025, and we continue to expect net leverage to finish 2026 comfortably below 4.5x.

In closing, we delivered 2 quarters of consecutive sales growth, expanded normalized gross and operating margins and have a clear line of sight to what we expect to be a third consecutive quarter of positive sales growth. None of this would have been possible absent the resourcefulness and professionalism of our team. Their tireless dedication gives us confidence in our ability to build on this progress and sustain profitable growth in the years ahead.

Operator, please open the call for questions.

Operator

[Operator Instructions] And our first question will come from Olivia Tong with Raymond James.

질의응답

Olivia Tong Cheang

A couple of questions here. First, I was wondering if you could talk about the moderation in the Q4 core sales relative to Q3? And how much of that Q3 growth came from volume versus pricing mix and how you think about sell-in versus sell-through?

And then on -- and then you mentioned that pricing in Baby. Is that primarily due to the potential legislation relief that you see? Would you have raised Baby pricing, if not for that? Or is it a function of perhaps some price sensitivity amongst consumers, particularly Baby?

Christopher Peterson

Sure. So let me start with the vast majority of the core sales growth in Q3 is being driven by volume. Pricing was effectively close to 0 for the company in the third quarter. Recall that we had a couple of categories at the beginning of this year that we took price down. We had a couple of categories that were highly resin dependent that we took price up. The net of those was effectively 0.

The other thing I would say about core sales in Q3 is that this was really driven by consumer demand and retailer demand for the products. There was not a significant change or any change of note in retail inventories. So the -- so we feel very good about the core sales delivery in the third quarter. Relative to the fourth quarter guide of 1% to 3%. We're excited about having our second quarter of core sales growth, and we're excited that we were able to guide Q4 to positive core sales growth, which I think last quarter, we set our implied guide was sort of flat to modest growth.

Given the strength that we're seeing from consumers and responding to the innovation that we've put in the market and the marketing that we're putting in the market, that's what gives us the confidence to effectively raise the outlook for Q4 to the 1% to 3% range. And what we've been telling the team internally is that, "Hey, the first quarter, we get the core sales growth. It's a data point. The second quarter, it's a straight line. And when we get to the third quarter, then we'll have a trend." And so we're very focused on delivering positive core sales in the fourth quarter and then sustaining that, as I mentioned, in the next calendar year.

On the Baby piece, the government created a body called the Board of Trade, which is a sort of an organized approach for the current administration to negotiate trade policy with China specifically. And in the latest visit with President Xi and President Trump, there was an announcement from the administration that there was $30 billion of goods where the U.S. was going to reduce tariff rates in exchange for China reducing tariff rates on $30 billion of goods. We were very excited to see and have been actively lobbying for baby gear products to be part of that list. And in fact, they were included in that list, which means that if the list gets -- or when the list gets finalized and actually implemented, we would expect baby gear tariffs to reduce. And in that environment, we would not take pricing. So we've been sort of in a wait-and-see mode on the baby products. That's one of the ones that we're waiting for further details on the specific implementation, timing, amounts and details, but we believe it's an encouraging sign because that would significantly reduce our tariff exposure headed into 2027 once the details become known.

Olivia Tong Cheang

Great. And then just following up, you mentioned -- you had about 25 Tier 1, Tier 2 innovations this year. You mentioned probably about the same next year. So as you think about that, can you talk about the opportunity for the next tranche of launches, whether the margins are similar, the productivity of those relative to [ 25, 26 ] launches?

And then you added Guillermo to -- in the COO role. How does he help sort of ensure the success of that next tranche of launches in addition to building on the first tier? And what decisions will we move to him in terms of sales, marketing and supply chain?

Christopher Peterson

Yes, sure. So on the innovation side, we -- as I mentioned in the prepared remarks, we think 25 launches, Tier 1, Tier 2 launches, is about the right number to sustain strong momentum because there's a limit with 25 brands to how -- to focusing your investment dollars and your communication dollars from a consumer standpoint.

Also, the other important thing to remember here is, generally, when we launch an innovation, we think about the innovation is having sort of a 3-year life cycle. And so as we go into next year and we have 25 launches next year, we're not only supporting the 25 launches next year, but we're supporting year 2 of the 25 from this year, and I think the 18 or 19 that we have from the year before. And so it's a very robust set of innovation for us to talk about what consumers we believe that we're on the right cadence from a product life cycle management. Now obviously, what we're trying to do is drive the innovations to be bigger -- to have a bigger impact, individually and in total. And that's a continuous process that we're focused on. But I think the pacing that we're on, I now feel like, is good. And so that's the piece on the innovation.

Relative to Guillermo, one of the things that we saw, so Mark alluded that we implemented our last major SAP conversion across Europe, primarily October 1, and it has gone very well. And so we're now complete effectively with those ERP changes, and we're operating with sort of one global ERP system around the world, which is very exciting because that's going to allow us not only to reduce CapEx going forward, but it's also going to really allow us to leverage scale more effectively.

So as we think about the next journey over the next several years, we saw an opportunity to bring together our front-end marketing capability, center marketing capability, our go-to-market teams in each of the regions around the world and our supply chain and procurement organization to drive faster and more effective operations relative to how we bring products to market, supply products through retailers and connect to both consumers and retail customers. And so that's really the focus of the role. And I think he's going to be a great addition to the team that allows us to sustain strong top line growth, and in addition to continuing the fuel productivity program that we've had, the margin improvements and strong cash generation.

Operator

And our next question is going to come from Peter Grom with UBS.

Peter Grom

Great, guys. So there -- you guys gave some pretty helpful color on '27, expectations around category growth, core sales, inflation. Mark, I was curious how we should be thinking about your ability to kind of offset the incremental $150 million of inflation through those pricing actions and productivity just based on what you know today. And then obviously, the cost environment remains very volatile. So if you can maybe just unpack what underpins that $150 million assumption, that would be helpful.

Mark Erceg

Yes, I think we feel pretty good about that. Look, in 2025, inflation was about $90 million. As Chris indicated this year in '26, it's been about $220 million. Next year, we're thinking about $150 million. We've been using our fuel productivity efforts and other means to control overhead to allow us to expand our margins.

If we go back to 2023, you'll recall, our normalized operating margin was 6, all right? In 2024, we took that up to 8.2. 2025, we took it up to 8.4, despite all those challenges, including tariffs. And then for 2026, right now, we have a normalized operating margin guidance range of 10 to 10.4. Now that does include the $100 million about a period tariff recovery. But if you strip that out, you'd be at 8.6 to 9, which center lines at 8.8. Well, 8.8 compares pretty good to 8.4 in the prior year. So we're going to be up about 50 bps this year despite massive challenges, and we think things will start to roll over next year, and we'll have another year, as Chris said, of levels of A&P support, better and stronger innovation, better go-to-market capabilities, et cetera, et cetera. So we feel really good about our algorithm and are very confident that we'll be able to deliver against our financial evergreen targets into next year.

Christopher Peterson

The last thing maybe I would say to your question is, on pricing, we feel pretty good about where we're headed. We've held off on pricing this year. So if you look at pricing as a contribution to our core sales this year, it's effectively 0, and all of our growth has been driven by volume and mix. And we've used this very strong productivity to offset the $220 million of inflation.

As I mentioned in the prepared remarks, when you look at the $150 million next year, which is really being driven by transportation and sort of the annualization of the commodity move up, which is driving the above normal element of it, that 2-year cumulative inflation, which represents about 8%, we can offset a big part of that with productivity and cost containment actions, but not all of it. And so what we're looking at is modest pricing that we would put in next year. We believe that the cost justification is there. And we believe we'll have a plan that's not a sticker shock plan that we'll be able to implement relatively smoothly.

Peter Grom

That's super helpful, guys. And then, Chris, you touched -- where you mentioned to Olivia that you were pleased with organic sales growth in the third quarter. I was wondering if we could maybe get a report card, if you will, just on how the quarter played out across your various segments versus your expectations. At least from an outsider's perspective, commercial looks to be strong. Learning and Development was positive [indiscernible] flow, albeit on a bit of a tougher comp. So just characterize how the quarter played out relative to your expectations? And then are there any puts and takes and notable call outs that we should be aware of as we think about 4Q and into '27?

Christopher Peterson

Yes. So I think relative to the quarter, if I just go through sort of the reporting units, as I mentioned, Writing had a very strong core sales growth, up mid-single digits. We had a great back-to-school season. And it's always important in the third quarter, Writing is one of our most important businesses because we have the replenishment orders, which are a little bit hard to predict. But the POS was stronger, if anything, than we expected going in to the back-to-school season and coming out of it, and that resulted in stronger replenishment orders. So we grew Writing significantly faster than what we had thought coming into the quarter.

Baby was interesting because Baby, the core sales were roughly flat. And Baby, if you recall, was coming off the first half of the year where we were up almost double digits through the first 6 months. And so the Baby core sales is not really reflective of the underlying performance from a consumer standpoint, it's more a shipment timing pattern piece that's driving that. Year-to-date, Baby is still up high mid-single digits on core sales growth and continuing to -- the innovation we've got on that business is continuing to resonate.

I think that the Home & Commercial segment was probably the standout in the third quarter at 6%. We had double-digit core sales growth in Home Fragrance. We had Kitchen up nicely, and we had Commercial returning to core sales growth for the first time. And so that was exciting to see.

And then Outdoor & Rec, which had turned positive in the second quarter, which is important because the second quarter is the biggest Outdoor & Rec season, did flip back to a decline in Q3. That was probably the one that we were the most negatively surprised at. But the combination, when you put all of that together, was that we came in above our forecast, above plan and above the high end of our guidance range, really driven by, I think, the Home & Commercial and the Writing business primarily.

Mark Erceg

And if I could, it's really encouraging that we've had such a broad-based build-out. But it's also notable that this is the first time since the second quarter of '22 that both the U.S. and international were positive. So it's not just a segment build-out. It's also happening geographically. And Chris mentioned the fact that 7 of our top 10 brands grew, but also 15 of our top 25 grew. So we feel like we're pushing out broadly now.

Operator

And the next question will come from Lauren Lieberman with Barclays.

Lauren Lieberman

A couple of questions. I don't know if I missed it if you had updated leverage target for the end of the year change in the operating cash flow. And I was just hoping we could get a little bit more color on the reduction in factoring, which is definitely a positive to see. But how should we think about that into '27? Is there further headwind from reducing clients on that to improving quality, I think, from a Wall Street standpoint, it's a good thing to see, but just a good thing to have our arms around in terms of magnitude as we look into next year.

Mark Erceg

Yes. Great question, Lauren. So we're still comfortably targeting to be below 4.5x levered at the end of this year, which as you know, will represent a meaningful reduction as we continue on our deleveraging journey. When we first began, we were 6.5x. And so we feel really good about what we've been able to do with respect to that.

As far as a specific question on cash, look, I think we feel really good about the underlying cash delivery of the business. If you go back to 2025, our operating cash flow was, call it, $265 million or something to that effect. If you build up from there, we're going to have about another $150 million of cash EBITDA this year. We're going to have between lower bonuses paid and less cash taxes, like another $150 million, which is operational in effect. And then there's about $150 million that comes off the top for working capital, principally inventory, because at the end of the day, our sales base is growing, and we also want to get ahead of the next shoe that might drop on the 301 tariffs. And so we think that's a prudent thing to do. If you put all that together, we were on pace to deliver against that $400 million of operating cash flow. Then we have these 2 onetime nonoperating elements, I think people understand what happened with respect to the COLI liquidation, that's pretty straightforward. That $60 million of net cash in the door, everything there works out really well.

On the factoring side of the house, we did redeem -- I'm sorry, we did renegotiate our factoring facilities. When we did that, we did end up with a little less capacity because of interest rates going up. We also ended up with just a little bit less capacity just based on the way that those negotiations went and given where our current credit ratings sit. But that said, we said we ended the quarter with no short-term debt. We expect to finish the year with effectively no short-term debt. And we took an extra $100 million in when we refinanced the [ 27s ]. So what we have now is the opportunity to use that money at 6.25 instead of factoring. And basically, if you look at the economics of it, it's effectively a push. When you factor, you also have a little bit more in the way of restrictions where the money we took in through the upsizing has no restriction. So economically, we're a little bit indifferent to all of that.

Now as we think about next year, next year, while it's still early days, we don't see any reason why we wouldn't be projecting out somewhere in the 400 plus range for the operating cash flow based on all the pieces of the puzzle that we see because we'll have strong underlying EBITDA growth again. We're going to have less restructuring charges. As we continue to move forward, we think our CapEx is running much better now that we completed the ERP integrations. All the supply chain elements used to be 250. We're going to be below 200 this year. We would expect that to continue into next year. So we're confident we'll be able to continue our deleveraging into '27 and actually feel really very good about our cash position overall. I think we took 4 days out of the cash conversion cycle this year, continue to show real operational discipline as it relates to all of that. So again, these are 2 nonoperating onetime events that I don't think too much have you read through on.

Lauren Lieberman

Okay. Great. And then just wanted to follow up again on Outdoor & Rec. So just curious about POS versus -- I know broadly, there were no big inventory dynamics in the quarter. But just curious on POS trends for Outdoor in the third quarter, I know seasonally, it's not the most important here, but you did mention still positive trends on hydration and then clearly with Coleman and Snap 'N Go. So just another thought into 4Q and kind of anything more specific on what fell short this quarter?

Christopher Peterson

Yes. I think it's more of a shipment timing issue than a POS issue. So our forecast for Q4 has O&R bouncing back in Q4 and turning back to positive core sales growth. We obviously don't guide at that level, but when you see that -- when you see a business that goes positive and then goes negative and then comes back to positive, you've got to sort of look at a little bit of longer term trend to really get a sense of what's going on. So I -- as I said, we were -- that was the one business that sort of from a shipment standpoint did come in a little below what we thought. But we believe we're on track to get that business back to growth sustainably. It's just a little choppy as we move into that.

Operator

And our next question will come from Steve Powers with Deutsche Bank.

Stephen Robert Powers

Chris, I wanted to talk a little bit more about the pricing into next year, really the kind of more of philosophy that you're using to guide that pricing in terms of -- I don't know if it's focused on any particular segments or if it's more in areas where the costs are hitting you hardest or it's more focused behind some of your innovation, I'm curious in the context of 2 things. One, just through the elasticity assumptions around some of that pricing. And then also the durability of that pricing, if we've got some cost relief, are you pricing in such a way that you think you could hold that pricing through any cost relief? Or is it really tied to the inflation itself, if that makes sense?

Christopher Peterson

Yes. So first of all, I would say that when we talk about pricing, we're trying to be much more strategic as we head into the pricing plan for next year. And so there's different ways you can take pricing. We can take pricing by taking a straight list price increase. We can drive sort of assortment mix to take pricing. We can pull back on promotional depth or frequency and/or we can reduce sort of customer programming are all options to do that or we can drive pricing up through new product innovation. And I think the answer is what we're trying to do is look at each business and each geography somewhat independently to understand what are the underlying cost trends given this elevated inflation that we're seeing. And then what is the right execution of moving the pricing up to effectively deal with that underlying cost pressure.

And the answer is going to be different by business and by geography. The U.S. is subject to much more inflation than many of the other regions around the world because of the impact on transportation cost here is higher than in some other countries where the transportation is subsidized. The exposure of different businesses because of where they're manufactured and because of the competitive environment is also different. And so we're trying to take all of that into account as we go forward.

As I mentioned, I also don't want to overstate this pricing impact because if you think about it, we're generating fuel productivity savings that are 4% of cost of goods sold or something like that. Now we're doing a lot of work to do that. We have a 2-year cumulative impact of inflation of 8%. So it's not like we need to take significant pricing here. But on average, if we got that sort of a low single-digit number by maybe in some categories, we take mid-single-digit pricing that are significantly impacted, and in other categories we may not take any pricing, that's sort of what we're talking about here, which I think we can do in a way that I think can actually grow the categories be fully cost supportive and be durable and not put us really at a competitive disadvantage.

By the way, one of the things we're also seeing is we're seeing some of our competitors are already taking pricing. So this is not a situation where, in many cases, we need to lead pricing. In particular, we're seeing private label pricing in the categories where we compete against private label move up right now. So our price gaps are narrowing because we're seeing some of the retailers move on their own private label before we move on our branded products.

Stephen Robert Powers

Perfect. You actually preempted my follow-up on competitive pricing. Holistic answer, and I'll leave it there.

Operator

And our next question is going to come from Andrea Teixeira with JPMorgan.

Andrea Teixeira

Yes. The question was exactly that same question regarding sensitivity prices in competitors. I was just hoping, if Chris, you can talk about like when you took pricing ahead of your competitors, which is not the case now, but thinking about the price gaps, but more importantly, how the consumer can absorb, like what are the learnings you've had in terms of that affordability? And what are the things you're doing now? And if you can kind of explain the price increase that you're seeing, like I'm assuming when you say very selectively, the magnitude or if you're doing any RGM to the price points that are less sensitive and taking pricing on those vis-a-vis like the more price competitive ones.

Christopher Peterson

Yes. So I think this is a very different situation. And it's exactly the way -- the way your question is phrased is the way we've been thinking about it. So if you go back to when we did -- when we put the new strategy into effect in 2023, if you recall, at that point in time, we took a pretty significant price increase on parts of our business where we were not making any money, where we were gross margin 0 or negative, and that was like a 15% price increase.

We also -- when tariffs first came into effect in 1.5 years or 2 years ago, we took significant pricing there and we led the pricing up. And those price increases might have been 10% or 12% or something. And where we led the pricing and we got ahead of people, we did see a significant negative volume reaction until competitors caught up. And so when we were talking about 2025, we were talking about being scraped effectively by the competitive set. And so this year, we haven't done that. And as I said, when you think about 2026, our pricing on average has been about 0, and we've really driven the core sales growth driven by the innovation, volume growth, mix improvement, et cetera.

As we go into next year, I don't think there's any business or any category where we're talking about price increases to anywhere where we expect the magnitude to be close to what happened in 2023 or '24. These are much more modest price increases. And importantly, I think they're going to be timed such that they're likely to happen and when the competitive set moves, including in the categories where we compete with private label where the retailers move. And so I think that positions us in a very different way. And I also think it allows us to do it sort of strategically where we get to logical price points and price pack architectures that -- it may wind up not really even being consumer noticeable in many cases. And so that's why we're sort of excited about it, but that's the way we're approaching it.

And we're also excited that we're able to, with our fuel productivity program and our overhead cost containment program, not be forced into a situation where we have to price fully for inflation. So we're pricing less than inflation is what we're talking about here over the 2-year period.

Andrea Teixeira

Yes, that's super helpful. And then a question to Mark. The operating cash flow, the $400 million, then you take out, I believe you mentioned the factoring of receivables was a decline of about 150, correct me if I'm wrong, that would -- and then the other impact of the pension would be definitely nonrecurring. But thinking about like how you now don't need as much as from what I understand, like you don't need the factoring of receivables as much as you do now, what is the normalized -- you did in the past, what is the normalized free cash? I mean, should we think about like into 2027, something in the order of like 250? Or is that a good kind of guardrail?

Mark Erceg

Well, I think what I would say is if you think about having an operating cash flow number of approximately $400 million, as we talked about our CapEx programs, having historically been in the 250 range, this year will be below 200. I think it's reasonable to assume that next year will be below 200 as well. And we don't see a need for that to creep up over the next several years.

So I think at the end of the day, we will have the ability to pay down some measure of debt each year going forward. Obviously, we're going to be driving our EBITDA growth. As Chris indicated, our trailing 12 months adjusted EBITDA is up 20% for the quarter we just printed. We've taken 2 turns off our leverage ratio over the last couple of years, whilst we've had to deal with basically a top line compression situation and bleeding out excess inventory. And now that we start having the positive flywheel on the sales line, we can monetize that through the P&L and increase our rate of EBITDA delivery and hopefully take our leverage ratio was down even faster.

We talked about this $2 billion investment we've made in our manufacturing network and we talked about the marginal economics that come off each of those automated lines. And on a gross margin basis, it's effectively $0.50 on the dollar. And on an op margin basis, it's about $0.45 on the dollar. So we think the flywheel is now starting to move and we're very comfortable that we're going to be able to continue to deleverage the company in the years ahead, like we've done in the past.

Christopher Peterson

Yes. If you look at the -- this year, to Mark's point, if you were to say, exclude the pension item, which we actually believe is a positive, as Mark mentioned, and you were to exclude the impact of the factoring reduction, our guidance says we're still on track with the $400 million. So we're not changing our operational underlying guidance of $400 million for this year. These are the 2 items explain 100% of the difference in the guide. And so neither one of those do we believe is recurring into next year.

We also, as Mark mentioned, expect this year to not only reduce factoring but to pay down debt, because we expect factoring and debt in total to be down $200 million. And there's no change on our end-of-year leverage being comfortably below 4.5x. So this is a little bit of -- I know it can be a little bit confusing, but we're going to get $145 million of inflow in investing from the pension settlement and we're going to have $85 million of outflow in operating. That results in $60 million that we're going to use to pay debt down. We think that's a positive because it delevers the company. Even though the way the accounting works, it looks a little funny because it reduces operating and it doesn't give you credit for the $145 million that's coming in next week on the investing side.

Mark Erceg

And we took an extra $100 million with the refinancing we did recently, and so that money is now being effectively used versus having to then factor where there's a fee associated with it.

Andrea Teixeira

Absolutely. And then the cost of factoring obviously is higher than when you raise, right, the money. So it's kind of improving your overall capital structure by -- or your overall cost.

Mark Erceg

It's close to a push, yes. It's close to a push, given where we are, but that 6.25 money was, I think, prudent for us to take in to just improve the company's overall liquidity position. But we're very comfortable with what we've been able to achieve on the deleveraging side of the house. And again, now that the positive flywheel is coming through the sales line and pushing through the P&L, we feel even better about our prospects going forward.

Operator

And the next question is going to come from Filippo Falorni with Citi.

Filippo Falorni

I wanted to get your perspective on the holiday season which is upcoming. And especially just general health of the consumer in your categories as we hear from a lot of your peers about some income -- some lower income consumers feeling more the pressure of higher gas prices. How do you think that will play out in the coming holiday season? And any initial expectation from your retail partners as you head into the important season of the year?

Christopher Peterson

Yes. Good question. So from a consumer standpoint, it's actually interesting. I mentioned on the prepared remarks that our category growth in the third quarter was about flat globally, which was a little better than we had thought coming into the quarter. We had sort of thought it might be minus 1. And part of what's driving that is the U.S. was actually positive on category growth. Europe was negative, and that -- those were the 2 biggest things that were different from the flat.

In the U.S., what's happening is the low-income consumer last year, recall, had been pulling back on consumer purchases of durable and discretionary general merchandise items. What's happening now is they've sort of bottomed out. So the trend among the low-income consumer is actually getting better because they're not declining their spend as much. So if last year, their spend of the bottom 1/3 of U.S. households was down 10% to 15%, this year, it might be only down 5%. So it's a material improvement in the year-over-year trend from that low-income consumer.

At the same time, the high income consumer continues to spend more because they continue to benefit from higher equity prices, higher home values. And the middle income consumer has been sort of hanging in there around flat line. And so when we look at that consumer picture, the biggest difference year-over-year in terms of why the category growth is improving is the low-income consumer is declining less than they were a year ago. So that's sort of broadly what's happening from our view of the consumer environment.

Relative to the holiday season, we think it's going to be a decent holiday season. We certainly are not expecting with higher gas prices and higher cost of living a blowout holiday season. But we do think holiday spending will be up versus a year ago. We believe that we're well positioned for the holiday season. We continue to expect in the fourth quarter, significant distribution gains this year versus last year for the Newell portfolio. And we think that importantly, as we've launched new product innovation, we're not seeing really any barrier to consumers responding to that new product innovation when we come with a product that has great features and benefits under a leading brand name at a good value proposition. And so that's what we're focused on. And I think we're well positioned. But obviously, there's -- the next 2 months are going to be critical as we head into the Turkey 12 and the holiday season coming up.

Filippo Falorni

Right, Chris, very helpful. And then maybe one quick follow-up for Mark. In the $150 million that you mentioned in terms of cost inflation for next year for '27, can you give us a breakdown of how much is resins versus transportation and maybe what's your underlying assumption for oil prices?

Mark Erceg

Yes. Right now, as far as diesel is concerned, which is the principal variant, we're going to assume that where we are today is where we are tomorrow, generally speaking. I think that's the most conservative approach that we can take as it relates to that.

As far as breaking down the specifics within the $150 million, I think what I'd prefer to do is rather give you a general sense of how we're looking at the current year, [ 220 ], because that's a lot more definitive. And if you look at that, what I would tell you is resin and source-finished goods accounts for about 45% of that. And then labor and overhead, because again, this is basically COGS inflation, runs around $50 million as does transportation, both of those collectively put together, labor and overhead and transportation is equal to about another 45. And then about 10% comes from metals and packaging and glass and other commodities. So I would expect it to be somewhat similar based on the fact that we're going to be assuming that oil being elevated, so therefore, resin remains elevated, diesel remains elevated, transportation remains elevated. And of course, there's always typically someone wage inflation across your supply chain. So I would think those percentages would stay somewhat comparable as it relates to the 150.

Operator

Thank you. And this concludes today's conference call. A replay of today's call will be available later today on the company's website at ir.newellbrands.com. Thank you for your participation. You may now disconnect, and have a great day.