Net Sales Growth 4.4%; Core Sales Growth 6.9%
Delivers Net Sales, Operating Profit and EPS Ahead of Outlook
Diluted EPS $0.55; Normalized Diluted EPS $0.36 Reaffirms Outlook
for Full Year 2022
Newell Brands (NASDAQ: NWL) today announced its first quarter
2022 financial results.
"We are pleased with a strong start to 2022, as we delivered a
seventh consecutive quarter of core sales growth and our team
executed with excellence in a challenging environment. Core sales
grew 6.9 percent, on top of a difficult 20.9 percent comparison
from the prior year, while normalized operating income increased
10.4 percent, despite significant ongoing inflation, demonstrating
the power of our diversified portfolio and the nimbleness of our
model,” said Ravi Saligram, Newell Brands President and CEO. “We
are committed to realizing the full potential of our business, as
we continue to drive sustainable and profitable growth, build
competitive advantage and serve as a force for good, while
overcoming external pressures."
Chris Peterson, Chief Financial Officer and President, Business
Operations, said, “During the first quarter we built on the
business momentum, as we drove a better than anticipated outcome on
top and bottom lines through focus on factors that are within our
control, as well as swift and decisive actions to mitigate the
impact of inflation and supply chain obstacles. Strong first
quarter results give us confidence to reaffirm the full year 2022
outlook, despite macro uncertainties and external headwinds."
First Quarter 2022 Executive
Summary
- Net sales were $2.4 billion, a 4.4 percent increase compared
with the prior year period, during which the company experienced
elevated demand across many of its categories.
- Core sales grew 6.9 percent compared with the prior year
period. Five of seven business units increased core sales compared
with the prior year period.
- Reported operating margin was 9.1 percent compared with 8.4
percent in the prior year period, as benefits from FUEL
productivity savings, pricing and lower overhead costs more than
offset a significant headwind from inflation and an unfavorable
impact from foreign exchange. Normalized operating margin was 10.6
percent compared with 10.1 percent in the prior year period.
- Reported diluted earnings per share were $0.55 compared with
$0.21 per share in the prior year period, with the year over year
change largely reflecting the improvement in reported operating
income, a gain on the divestiture of the Connected Home &
Security (CH&S) business and a reduction in the effective tax
rate.
- Normalized diluted earnings per share were $0.36 compared with
$0.30 per share in the prior year period.
- The company's leverage ratio was 3.1x at the end of the first
quarter versus 3.3x in the prior year period and 3.0x at the end of
2021.
- The company completed the divestiture of the CH&S business
to Resideo Technologies, Inc. for a purchase price of $593 million,
subject to customary working capital and transaction adjustments,
and repurchased $275 million of its common shares.
- The company reaffirmed its full year 2022 net sales and
normalized earnings per share outlook of $9.93 billion to $10.13
billion and $1.85 to $1.93, respectively.
First Quarter 2022 Operating
Results
Net sales were $2.4 billion, a 4.4 percent increase compared to
the prior year period, as core sales growth of 6.9 percent and
higher net sales in the CH&S business were partially offset by
the impact of unfavorable foreign exchange, as well as category and
retail store exits. Net sales were 16.9 percent above the first
quarter 2019 level, driven by growth across every segment.
Reported gross margin was 31.0 percent compared with 31.9
percent in the prior year period, as the significant headwind from
inflation, particularly related to resin, sourced finished goods,
transportation and labor, and unfavorable impact from foreign
exchange more than offset the benefits from FUEL productivity
savings and pricing. Normalized gross margin was 31.2 percent
compared with 32.2 percent in the prior year period.
Reported operating income was $217 million compared with $192
million in the prior year period. Reported operating margin was 9.1
percent compared with 8.4 percent in the prior year period, as
benefits from FUEL productivity savings, pricing and lower overhead
costs more than offset a significant headwind from inflation and an
unfavorable impact from foreign exchange. Normalized operating
income was $254 million, or 10.6 percent of sales, compared with
$230 million, or 10.1 percent of sales, in the prior year
period.
Net interest expense was $59 million compared with $67 million
in the prior year period, reflecting a reduction in the company's
debt balance.
The reported tax rate was 17.0 percent compared with 29.4
percent in the prior year period, reflecting an increase in
discrete tax benefits and a lower effective tax rate associated
with the divestiture of CH&S. The normalized tax rate was 18.4
percent compared with 22.4 percent in the prior year period.
The company reported net income of $234 million, or $0.55
diluted earnings per share, compared with $89 million, or $0.21
diluted earnings per share, in the prior year period. The year over
year change largely reflects the improvement in reported operating
income, a gain on the divestiture of the CH&S business and a
reduction in the effective tax rate.
Normalized net income was $155 million, or $0.36 normalized
diluted earnings per share, compared with $128 million, or $0.30
normalized diluted earnings per share, in the prior year
period.
An explanation of non-GAAP measures and a reconciliation of
these non-GAAP results to comparable GAAP measures are included in
the tables attached to this release.
Balance Sheet and Cash
Flow
Operating cash outflow was $272 million compared with outflow of
$25 million in the prior year period, reflecting a working capital
increase to support sales growth.
On March 31, 2022, the company completed the divestiture of the
CH&S business to Resideo Technologies, Inc. for a purchase
price of $593 million, subject to customary working capital and
transaction adjustments. During the quarter, the company also
repurchased $275 million of its common shares beneficially owned by
Carl C. Icahn and certain of his affiliates.
At the end of the first quarter, Newell Brands had cash and cash
equivalents of $344 million and net debt outstanding of $4.5
billion. Newell Brands exited the first quarter with a leverage
ratio of 3.1x compared to 3.3x in the prior year period and 3.0x at
the end of 2021.
Leverage ratio is defined as the ratio of net debt to normalized
EBITDA. An explanation of how the leverage ratio is calculated and
a related reconciliation, as well as a reconciliation of reported
results to normalized results, are included in the tables attached
to this release.
First Quarter 2022 Operating Segment
Results
The Commercial Solutions segment generated net sales of $510
million compared with $471 million in the prior year period,
reflecting core sales growth of 7.4 percent, a net sales increase
for the Connected Home & Security business unit, and the impact
of unfavorable foreign exchange. Reported operating income was $55
million, or 10.8 percent of sales, compared with $50 million, or
10.6 percent of sales, in the prior year period. Normalized
operating income was $59 million, or 11.6 percent of sales, versus
$53 million, or 11.3 percent of sales, in the prior year
period.
The Home Appliances segment generated net sales of $340 million
compared with $360 million in the prior year period, reflecting
core sales decline of 1.9 percent, as well as the impact of exits
from low margin categories and unfavorable foreign exchange.
Reported operating loss was $18 million, or negative 5.3 percent of
sales, compared with reported operating income of $3 million, or
0.8 percent of sales, in the prior year period. Normalized
operating loss was $14 million, or negative 4.1 percent of sales,
versus normalized operating income of $8 million, or 2.2 percent of
sales, in the prior year period.
The Home Solutions segment generated net sales of $500 million
compared with $504 million in the prior year period, reflecting
core sales growth of 1.4 percent, partially offset by the impact of
unfavorable foreign exchange and the exit of 38 underperforming
Yankee Candle retail locations during the first quarter. Core sales
growth in the Food business unit more than offset core sales
decline in the Home Fragrance business unit. Reported operating
income was $61 million, or 12.2 percent of sales, compared with $61
million, or 12.1 percent of sales, in the prior year period.
Normalized operating income was $72 million, or 14.4 percent of
sales, versus $76 million, or 15.1 percent of sales, in the prior
year period.
The Learning & Development segment generated net sales of
$650 million compared with $617 million in the prior year period,
reflecting core sales growth of 7.4 percent, partially offset by
the impact of unfavorable foreign exchange. Core sales increased in
both the Writing and Baby business units. Reported operating income
was $130 million, or 20.0 percent of sales, compared with $110
million, or 17.8 percent of sales, in the prior year period.
Normalized operating income was $137 million, or 21.1 percent of
sales, compared with $114 million, or 18.5 percent of sales, in the
prior year period.
The Outdoor & Recreation segment generated net sales of $388
million compared with $336 million in the prior year period,
reflecting core sales growth of 22.9 percent, partially offset by
the impact of exits from low margin categories and unfavorable
foreign exchange. Reported operating income was $45 million, or
11.6 percent of sales, compared with $15 million, or 4.5 percent of
sales, in the prior year period. Normalized operating income was
$49 million, or 12.6 percent of sales, compared with $20 million,
or 6.0 percent of sales, in the prior year period.
Outlook for Second Quarter and Full
Year 2022
The company initiated its outlook for second quarter 2022 and
reaffirmed its full year 2022 outlook as follows:
Q2 2022
Outlook
Full
Year 2022 Outlook
Net Sales
$2.52 to $2.57 billion
$9.93 to $10.13 billion
Core Sales
Low single digit growth
Flat to 2% growth
Normalized Operating Margin
11.7% to 12.1%
11.5% to 11.8%
Normalized EPS
$0.45 to $0.48
$1.85 to $1.93
The full year 2022 outlook for net sales, normalized operating
margin and normalized EPS includes the contribution from CH&S
during the first quarter. Core sales growth outlook for full year
2022 excludes the contribution from CH&S. Net sales outlooks
for both Q2 2022, as well as for the full year 2022, account for
the expected unfavorable foreign exchange movements, using current
rates, as well as closures of Yankee Candle retail locations and
market and category exits, primarily in the Outdoor &
Recreation and Home Appliances segments.
For full year 2022, the company expects to deliver operating
cash flow in the range of $800 million to $850 million, including
the impact of the loss of profits from the sale of the CH&S
business, as well as a one-time cash tax payment on this
transaction.
The company has presented forward-looking statements regarding
core sales, normalized operating margin and normalized earnings per
share. These non-GAAP financial measures are derived by excluding
certain amounts, expenses or income, from the corresponding
financial measures determined in accordance with GAAP. The
determination of the amounts that are excluded from these non-GAAP
financial measures is a matter of management judgement and depends
upon, among other factors, the nature of the underlying expense or
income amounts recognized in a given period. We are unable to
present a quantitative reconciliation of forward-looking normalized
operating margin or normalized earnings per share to their most
directly comparable forward-looking GAAP financial measures because
such information is not available, and management cannot reliably
predict all of the necessary components of such GAAP measures
without unreasonable effort or expense. In addition, we believe
such reconciliations would imply a degree of precision that would
be confusing or misleading to investors. The unavailable
information could have a significant impact on the company's future
financial results. These non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others, changes in connection with quarter-end and
year-end adjustments. Any variation between the company's actual
results and preliminary financial data set forth above may be
material.
Conference Call
Newell Brands’ first quarter 2022 earnings conference call will
be held today, April 29, at 9:30 a.m. ET. A link to the webcast is
provided under Events & Presentations in the Investors section
of the company’s website at www.newellbrands.com. A webcast replay will be
made available in the Quarterly Earnings section of the company’s
website.
Non-GAAP Financial
Measures
This release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the U.S. Securities and
Exchange Commission (the "SEC") and includes a reconciliation of
non-GAAP financial measures to the most directly comparable
financial measures calculated in accordance with GAAP.
The company uses certain non-GAAP financial measures that are
included in this press release and the additional financial
information both to explain its results to stockholders and the
investment community and in the internal evaluation and management
of its businesses. The company’s management believes that these
non-GAAP financial measures and the information they provide are
useful to investors since these measures (a) permit investors to
view the company’s performance and liquidity using the same tools
that management uses to evaluate the company’s past performance,
reportable segments, prospects for future performance and
liquidity, and (b) determine certain elements of management
incentive compensation.
The company’s management believes that core sales provides a
more complete understanding of underlying sales trends by providing
sales on a consistent basis as it excludes the impacts of
acquisitions, planned and completed divestitures, retail store
openings and closings, certain market and category exits, and
changes in foreign exchange from year-over-year comparisons. The
effect of changes in foreign exchange on reported sales is
calculated by applying the prior year average monthly exchange
rates to the current year local currency sales amounts (excluding
acquisitions and divestitures), with the difference between the
2022 reported sales and constant currency sales presented as the
foreign exchange impact increase or decrease in core sales. The
company’s management believes that “normalized” gross margin,
“normalized” operating income, “normalized” operating margin,
"normalized EBITDA," “normalized” net income, “normalized” diluted
earnings per share, “normalized” interest and “normalized” income
tax benefit or expense, which exclude restructuring and
restructuring-related expenses and one-time and other events such
as costs related to the extinguishment of debt, certain tax
benefits and charges, impairment charges, pension settlement
charges, divestiture costs, costs related to the acquisition,
integration and financing of acquired businesses, amortization of
acquisition-related intangible assets, inflationary adjustments,
expenses related to certain product recalls and certain other
items, are useful because they provide investors with a meaningful
perspective on the current underlying performance of the company’s
core ongoing operations and liquidity. “Normalized EBITDA” is an
ongoing liquidity measure (that excludes non-cash items) and is
calculated as normalized earnings before interest, tax
depreciation, amortization and stock-based compensation expense.
"Leverage ratio" is a liquidity measure calculated as the ratio of
net debt (defined as total debt less cash and cash equivalents) to
normalized EBITDA.
The company determines the tax effect of the items excluded from
normalized diluted earnings per share by applying the estimated
effective rate for the applicable jurisdiction in which the pre-tax
items were incurred, and for which realization of the resulting tax
benefit, if any, is expected. In certain situations in which an
item excluded from normalized results impacts income tax expense,
the company utilizes a “with” and “without” approach to determine
normalized income tax benefit or expense.
While the company believes these non-GAAP financial measures are
useful in evaluating the company’s performance and liquidity, this
information should be considered as supplemental in nature and not
as a substitute for or superior to the related financial
information prepared in accordance with GAAP. Additionally, these
non-GAAP financial measures may differ from similar measures
presented by other companies.
About Newell Brands
Newell Brands (NASDAQ: NWL) is a leading global consumer goods
company with a strong portfolio of well-known brands, including
Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate,
Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid
Commercial Products, Spontex, Coleman, Campingaz, Contigo, Oster,
Sunbeam and Mr. Coffee. Newell Brands' beloved, planet friendly
brands enhance and brighten consumers lives at home and outside by
creating moments of joy, building confidence and providing peace of
mind.
This press release and additional information about Newell
Brands are available on the company’s website, www.newellbrands.com.
Caution Concerning Forward-Looking
Statements
Some of the statements in this press release and its exhibits,
particularly those anticipating future financial performance,
business prospects, growth, operating strategies, the impact of the
COVID-19 pandemic and similar matters, are forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These statements generally can be
identified by the use of words or phrases, including, but not
limited to, "guidance," "outlook," “intend,” “anticipate,”
“believe,” “estimate,” “project,” “target,” “plan,” “expect,”
“setting up,” "beginning to,” “will,” “should,” “would,” "could,"
“resume,” “are confident that,” "remain optimistic that," "seek
to," or similar statements. We caution that forward-looking
statements are not guarantees because there are inherent
difficulties in predicting future results. Actual results may
differ materially from those expressed or implied in the
forward-looking statements, including impairment charges and
accounting for income taxes. Important factors that could cause
actual results to differ materially from those suggested by the
forward-looking statements include, but are not limited to:
- our ability to manage the demand, supply and operational
challenges with the actual or perceived effects of the COVID-19
pandemic, including as a result of any additional variants of the
virus or the efficacy and distribution of vaccines;
- our dependence on the strength of retail and consumer demand,
commercial and industrial sectors of the economy in various
countries around the world;
- competition with other manufacturers and distributors of
consumer products;
- major retailers’ strong bargaining power and consolidation of
our customers;
- changes in the prices and availability of labor,
transportation, raw materials and sourced products, including
significant inflation, and our ability to obtain them in a timely
manner and to offset cost increases through pricing and
productivity;
- our ability to improve productivity, reduce complexity and
streamline operations;
- the cost and outcomes of governmental investigations,
inspections, lawsuits, legislative requests or other actions by
third parties, the potential outcomes of which could exceed policy
limits, to the extent insured;
- our ability to develop innovative new products, to develop,
maintain and strengthen end-user brands and to realize the benefits
of increased advertising and promotion spend;
- our ability to consistently maintain effective internal control
over financial reporting;
- risks related to our substantial indebtedness, potential
increases in interest rates or changes in our credit ratings;
- future events that could adversely affect the value of our
assets and/or stock price and require additional impairment
charges;
- our ability to complete planned divestitures and other
unexpected costs or expenses associated with dispositions;
- our ability to effectively execute our turnaround plan;
- the risks inherent to our foreign operations, including
currency fluctuations, exchange controls and pricing
restrictions;
- a failure or breach of one of our key information technology
systems, networks, processes or related controls or those of our
service providers;
- the impact of U.S. and foreign regulations on our operations,
including the impact of tariffs, environmental remediation costs
and legislative and regulatory actions related to climate
change;
- the potential inability to attract, retain and motivate key
employees;
- changes in tax laws and the resolution of tax contingencies
resulting in additional tax liabilities;
- product liability, product recalls or related regulatory
actions;
- our ability to protect intellectual property rights;
- significant increases in funding obligations related to our
pension plans; and
- other factors listed from time to time in our filings with the
SEC, including, but not limited to, our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and our other SEC filings.
The consolidated condensed financial statements are prepared in
conformity with accounting principles generally accepted in the
United States (“U.S. GAAP”). Management’s application of U.S. GAAP
requires the pervasive use of estimates and assumptions in
preparing the unaudited condensed consolidated financial
statements. As discussed above, the world is currently experiencing
the global COVID-19 pandemic which has required greater use of
estimates and assumptions in the preparation of our condensed
consolidated financial statements. Although we have made our best
estimates based upon current information, the effects of the
COVID-19 pandemic on our business may result in future changes to
management’s estimates and assumptions, especially if the severity
worsens or duration lengthens. Actual results may differ materially
from the estimates and assumptions developed by management. If so,
the company may be subject to future incremental impairment charges
as well as changes to recorded reserves and valuations.
The information contained in this press release and the tables
is as of the date indicated. The company assumes no obligation to
update any forward-looking statements as a result of new
information, future events or developments.
NEWELL BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per
share data)
Three Months Ended March
31,
2022
2021
% Change
Net sales
$
2,388
$
2,288
4.4%
Cost of products sold
1,648
1,557
Gross profit
740
731
1.2%
Selling, general and administrative
expenses
518
534
(3.0)%
Restructuring costs, net
5
5
Operating income
217
192
13.0%
Non-operating expenses:
Interest expense, net
59
67
Other income, net
(124
)
(1
)
Income before income taxes
282
126
NM
Income tax provision
48
37
Net income
$
234
$
89
NM
Weighted average common shares
outstanding:
Basic
421.9
424.9
Diluted
424.7
427.6
Earnings per share:
Basic
$
0.55
$
0.21
Diluted
$
0.55
$
0.21
Dividends per share
$
0.23
$
0.23
NEWELL BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in millions)
March 31, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
344
$
440
Accounts receivable, net
1,421
1,500
Inventories
2,297
1,997
Prepaid expenses and other current
assets
349
325
Total current assets
4,411
4,262
Property, plant and equipment, net
1,144
1,204
Operating lease assets
595
558
Goodwill
3,486
3,504
Other intangible assets, net
3,046
3,370
Deferred income taxes
797
814
Other assets
725
467
TOTAL ASSETS
$
14,204
$
14,179
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
1,651
$
1,680
Accrued compensation
154
270
Other accrued liabilities
1,375
1,364
Short-term debt and current portion of
long-term debt
3
3
Total current liabilities
3,183
3,317
Long-term debt
4,880
4,883
Deferred income taxes
720
405
Operating lease liabilities
531
500
Other noncurrent liabilities
910
983
Total liabilities
10,224
10,088
Total stockholders' equity
3,980
4,091
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
14,204
$
14,179
NEWELL BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)
(Amounts in millions)
Three Months Ended March
31,
2022
2021
Cash flows from operating
activities:
Net income
$
234
$
89
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
76
86
Gain from sale of business
(130
)
—
Deferred income taxes
326
1
Stock based compensation expense
14
14
Other, net
(2
)
—
Changes in operating accounts excluding
the effects of divestiture:
Accounts receivable
14
122
Inventories
(403
)
(283
)
Accounts payable
25
(18
)
Accrued liabilities and other
(426
)
(36
)
Net cash used in operating
activities
(272
)
(25
)
Cash flows from investing
activities:
Proceeds from sale of divested
business
620
—
Capital expenditures
(70
)
(54
)
Other investing activities, net
9
—
Net cash provided by (used in)
investing activities
559
(54
)
Cash flows from financing
activities:
Payments on current portion of long-term
debt
(1
)
(94
)
Payments on long-term debt
—
(6
)
Repurchase of shares of common stock
(275
)
—
Cash dividends
(100
)
(100
)
Equity compensation activity and other,
net
(17
)
(39
)
Net cash used in financing
activities
(393
)
(239
)
Exchange rate effect on cash, cash
equivalents and restricted cash
8
(14
)
Decrease in cash, cash equivalents and
restricted cash
(98
)
(332
)
Cash, cash equivalents and restricted cash
at beginning of period
477
1,021
Cash, cash equivalents and restricted
cash at end of period
$
379
$
689
Supplemental disclosures:
Restricted cash at beginning of period
$
37
$
40
Restricted cash at end of period
35
7
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share data)
Three Months Ended March 31,
2022
GAAP
Restructuring
Transaction
Non-GAAP
Measure
and restructuring-
Acquisition
costs and
Measure
Reported
related costs [1]
amortization [2]
other [3]
Normalized*
Net sales
$
2,388
$
—
$
—
$
—
$
2,388
Cost of products sold
1,648
(5
)
—
(1
)
1,642
Gross profit
740
5
—
1
746
31.0
%
31.2
%
Selling, general and administrative
expenses
518
(1
)
(18
)
(7
)
492
21.7
%
20.6
%
Restructuring costs, net
5
(5
)
—
—
—
Operating income
217
11
18
8
254
9.1
%
10.6
%
Non-operating (income) expense
(65
)
—
—
129
64
Income (loss) before income taxes
282
11
18
(121
)
190
Income tax provision (benefit) [4]
48
3
3
(19
)
35
Net income (loss)
$
234
$
8
$
15
$
(102
)
$
155
Diluted earnings (loss) per share **
$
0.55
$
0.02
$
0.04
$
(0.24
)
$
0.36
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of each of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
424.7 million shares for the three months ended March 31, 2022.
Totals may not add due to rounding.
[1]
Restructuring and restructuring-related
costs of $11 million.
[2]
Acquisition amortization costs of $18
million.
[3]
Transaction costs and other includes $4
million primarily related to fees for certain legal proceedings; $3
million of costs related to completed divestitures; $2 million
related to Argentina hyperinflationary adjustment and $130 million
gain on disposition of businesses. Includes income tax benefit of
$7 million related to difference in effective tax rate.
[4]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CERTAIN LINE ITEMS
(Amounts in millions, except per
share data)
Three Months Ended March 31,
2021
GAAP
Restructuring
Transaction
Non-GAAP
Measure
and restructuring-
Acquisition
costs and
Measure
Reported
related costs [1]
amortization [2]
other [3]
Normalized*
Net sales
$
2,288
$
—
$
—
$
—
$
2,288
Cost of products sold
1,557
(5
)
—
(1
)
1,551
Gross profit
731
5
—
1
737
31.9
%
32.2
%
Selling, general and administrative
expenses
534
(3
)
(21
)
(3
)
507
23.3
%
22.2
%
Restructuring costs, net
5
(5
)
—
—
—
Operating income
192
13
21
4
230
8.4
%
10.1
%
Non-operating (income) expense
66
—
—
(1
)
65
Income before income taxes
126
13
21
5
165
Income tax provision (benefit) [4]
37
3
4
(7
)
37
Net income
$
89
$
10
$
17
$
12
$
128
Diluted earnings per share **
$
0.21
$
0.02
$
0.04
$
0.03
$
0.30
*
Normalized results are financial measures
that are not in accordance with GAAP and exclude the above
normalized adjustments. See below for a discussion of each of these
adjustments.
**
Adjustments and normalized earnings per
share are calculated based on diluted weighted average shares of
427.6 million shares for the three months ended March 31, 2021.
Totals may not add due to rounding.
[1]
Restructuring and restructuring-related
costs of $13 million.
[2]
Acquisition amortization costs of $21
million.
[3]
Transaction costs and other includes $3
million primarily related to fees for certain legal proceedings and
divestiture costs related to completed divestitures and $2 million
related to Argentina hyperinflationary adjustment. Includes income
tax benefit of $8 million related to difference in effective tax
rate.
[4]
The Company determined the tax effect of
the items excluded from normalized results by applying the
estimated effective rate for the applicable jurisdiction in which
the pre-tax items were incurred, and for which realization of the
resulting tax benefit, if any, is expected. In certain situations
in which an item excluded from normalized results impacts income
tax expense, the Company uses a "with" and "without" approach to
determine normalized income tax expense.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
FINANCIAL WORKSHEET - SEGMENT
REPORTING
(Amounts in millions)
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
Year over year changes
Reported
Reported
Normalized
Normalized
Reported
Reported
Normalized
Normalized
Normalized Operating
Operating
Operating
Normalized
Operating
Operating
Operating
Operating
Normalized
Operating
Operating
Net Sales
Income (Loss)
Net Sales
Income (Loss)
Margin
Items [1]
Income (Loss)
Margin
Net Sales
Income (Loss)
Margin
Items [2]
Income (Loss)
Margin
$
%
$
%
COMMERCIAL SOLUTIONS
$
510
$
55
10.8
%
$
4
$
59
11.6
%
$
471
$
50
10.6
%
$
3
$
53
11.3
%
$
39
8.3
%
$
6
11.3
%
HOME APPLIANCES
340
(18
)
(5.3
)%
4
(14
)
(4.1
)%
360
3
0.8
%
5
8
2.2
%
(20
)
(5.6
)%
(22
)
NM
HOME SOLUTIONS
500
61
12.2
%
11
72
14.4
%
504
61
12.1
%
15
76
15.1
%
(4
)
(0.8
)%
(4
)
(5.3
)%
LEARNING AND DEVELOPMENT
650
130
20.0
%
7
137
21.1
%
617
110
17.8
%
4
114
18.5
%
33
5.3
%
23
20.2
%
OUTDOOR AND RECREATION
388
45
11.6
%
4
49
12.6
%
336
15
4.5
%
5
20
6.0
%
52
15.5
%
29
NM
CORPORATE
—
(56
)
—
%
7
(49
)
—
%
—
(47
)
—
%
6
(41
)
—
%
—
—
%
(8
)
(19.5
)%
$
2,388
$
217
9.1
%
$
37
$
254
10.6
%
$
2,288
$
192
8.4
%
$
38
$
230
10.1
%
$
100
4.4
%
$
24
10.4
%
*NM - NOT MEANINGFUL
[1]
The three months ended March 31, 2022
normalized items consist of $18 million of acquisition amortization
costs; $11 million of restructuring and restructuring-related
charges; $4 million of fees for certain legal proceedings; $3
million of costs related to completed divestitures and $1 million
of Argentina hyperinflationary adjustment.
[2]
The three months ended March 31, 2021
normalized items consist of $21 million of acquisition amortization
costs; $13 million of restructuring and restructuring-related
charges; $3 million of fees for certain legal proceedings and
divestiture costs related to completed divestitures and $1 million
of Argentina hyperinflationary adjustment.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH BY
SEGMENT
Three Months Ended March 31,
2022
Net Sales (REPORTED)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
COMMERCIAL SOLUTIONS
8.3
%
(2.1
)%
1.2
%
7.4
%
HOME APPLIANCES
(5.6
)%
2.2
%
1.5
%
(1.9
)%
HOME SOLUTIONS
(0.8
)%
1.2
%
1.0
%
1.4
%
LEARNING AND DEVELOPMENT
5.3
%
0.1
%
2.0
%
7.4
%
OUTDOOR AND RECREATION
15.5
%
2.8
%
4.6
%
22.9
%
TOTAL COMPANY
4.4
%
0.5
%
2.0
%
6.9
%
CORE SALES GROWTH BY
GEOGRAPHY
Three Months Ended March 31,
2022
Net Sales (REPORTED)
Acquisitions, Divestitures and
Other, Net [2]
Currency Impact [3]
Core Sales [1] [4]
NORTH AMERICA
7.1
%
0.9
%
0.2
%
8.2
%
EUROPE, MIDDLE EAST, AFRICA
(10.5
)%
0.1
%
5.5
%
(4.9
)%
LATIN AMERICA
12.3
%
0.3
%
3.6
%
16.2
%
ASIA PACIFIC
5.6
%
—
%
7.6
%
13.2
%
TOTAL COMPANY
4.4
%
0.5
%
2.0
%
6.9
%
[1]
“Core Sales” provides a consistent basis
for year-over-year comparisons in sales as it excludes the impacts
of acquisitions, completed divestitures (including the sale of the
Connected Home & Security business unit), retail store openings
and closings, certain market and category exits, as well as changes
in foreign currency.
[2]
Divestitures include the sale of the
Connected Home & Security business unit, certain market and
category exits and current and prior period net sales from retail
store closures (consistent with standard retail practice).
[3]
“Currency Impact” represents the effect of
foreign currency on 2022 reported sales and is calculated by
applying the 2021 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2022 reported sales.
[4]
Totals may not add due to rounding.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
NET DEBT TO NORMALIZED EBITDA
FROM CONTINUING OPERATIONS RECONCILIATION
(Amounts in millions)
March 31, 2022
December 31, 2021 [1]
March 31, 2021
NET DEBT RECONCILIATION:
Short-term debt and current portion of
long-term debt
$
3
$
3
$
357
Long-term debt
4,880
4,883
5,135
Gross debt
4,883
4,886
5,492
Less: Cash and cash equivalents
344
440
682
NET DEBT
$
4,539
$
4,446
$
4,810
Net income [2]
$
717
$
572
$
598
Normalized items [2]
88
206
251
NET INCOME
805
778
849
Normalized income tax [2]
136
138
24
Interest expense, net [2]
248
256
278
Normalized depreciation and amortization
[2] [3]
235
236
244
Stock-based compensation [4]
52
52
47
NORMALIZED EBITDA
$
1,476
$
1,460
$
1,442
NET DEBT TO NORMALIZED EBITDA LEVERAGE
RATIO [5]
3.1
x
3.0
x
3.3
x
[1]
For the twelve months ended December 31,
2021, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the twelve months ended
December 31, 2021, on the Company’s Form 8-K furnished on February
11, 2022.
[2]
For the trailing-twelve months ended March
31, 2022, refer to “Reconciliation of GAAP and Non-GAAP Information
(Unaudited) - Certain Line Items” for the three months ended
December 31, 2021, September 30, 2021 and June 30, 2021 on the
Company’s Forms 8-K furnished on February 11, 2022, October 29,
2021 and July 30, 2021, respectively. For the trailing-twelve
months ended March 31, 2021, refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended December 31, 2020, September 30, 2020 and June
30, 2020 on the Company’s Forms 8-K furnished on February 11, 2022,
October 29, 2021 and July 30, 2021, respectively.
[3]
For the trailing-twelve months ended March
31, 2022, normalized depreciation and amortization excludes the
following items: (a) acquisition amortization expense of $75
million associated with intangible assets recognized in purchase
accounting; (b) $5 million of accelerated depreciation costs
associated with restructuring activities. Refer to “Reconciliation
of GAAP and Non-GAAP Information (Unaudited) - Certain Line Items”
for the three months ended December 31, 2021, September 30, 2021
and June 30, 2021 on the Company’s Forms 8-K furnished on February
11, 2022, October 29, 2021 and July 30, 2021, respectively. For the
trailing-twelve months ended March 31, 2021, normalized
depreciation and amortization excludes the following items: (a)
acquisition amortization expense of $89 million associated with
intangible assets recognized in purchase accounting; (b) $19
million of accelerated depreciation costs associated with
restructuring activities. Refer to “Reconciliation of GAAP and
Non-GAAP Information (Unaudited) - Certain Line Items” for the
three months ended December 31, 2020, September 30, 2020 and June
30, 2020 on the Company’s Forms 8-K furnished on February 11, 2022,
October 29, 2021 and July 30, 2021, respectively. Normalized
depreciation and amortization excludes from GAAP depreciation and
amortization for the twelve months ended December 31, 2021, the
following items: (a) acquisition amortization expense of $78
million associated with intangible assets recognized in purchase
accounting (b) accelerated depreciation and amortization costs of
$11 million associated with restructuring activities. Refer to
“Reconciliation of GAAP and Non-GAAP Information (Unaudited) -
Certain Line Items” for the twelve months ended December 31, 2021
on the Company’s Forms 8-K furnished on February 11, 2022 for
further information.
[4]
Represents non-cash expense associated
with stock-based compensation.
[5]
The Net Debt to Normalized EBITDA ratio is
defined as Net Debt divided by Normalized EBITDA. The Company's
debt has certain financial covenants such as debt to equity ratio
and interest coverage ratio; however the Net Debt to Normalized
EBITDA leverage ratio is used by management as a liquidity measure
and is not prescribed in the Company's debt covenants.
NEWELL BRANDS INC.
RECONCILIATION OF GAAP AND
NON-GAAP INFORMATION (UNAUDITED)
CORE SALES GROWTH
Three months ended March 31,
2021
Net sales change (GAAP)
21.3%
Acquisitions, divestitures and other, net
[1]
1.3%
Currency impact [2]
(1.7)%
Core sales change (NON-GAAP)
20.9%
[1]
Divestitures include the exit of the North
American distributorship of Uniball® products, current and prior
period net sales from retail store closures (consistent with
standard retail practice), disposition of the foamboards business
and exit from Home Fragrance fundraising business.
[2]
“Currency Impact” represents the effect of
foreign currency on 2021 reported sales and is calculated by
applying the 2020 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2021 reported sales.
CORE SALES OUTLOOK
Three Months Ending June 30,
2022
Twelve Months Ending December
31, 2022
Estimated net sales change (GAAP)
-7%
to
-5%
-6%
to
-4%
Estimated currency impact [1] and
divestitures [2], net
~ 8%
~ 6%
Core sales change (NON-GAAP)
1%
to
3%
0%
to
2%
[1]
“Currency Impact” represents the effect of
foreign currency on 2022 reported sales and is calculated by
applying the 2021 average monthly exchange rates to the current
year local currency sales amounts (excluding acquisitions and
divestitures) and comparing to 2022 reported sales.
[2]
Divestitures include the sale of the
Connected Home & Security business unit, certain market and
category exits and current and prior period net sales from retail
store closures (consistent with standard retail practice).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428006366/en/
Investor Contact: Sofya
Tsinis VP, Investor Relations +1 (201) 610-6901
sofya.tsinis@newellco.com
Media Contact: Beth Stellato
Chief Communications Officer +1 (470) 580-1086
beth.stellato@newellco.com
Newell Brands (NASDAQ:NWL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Newell Brands (NASDAQ:NWL)
Historical Stock Chart
From Sep 2023 to Sep 2024