Newell Brands Inc. recently announced its first quarter 2017 financial results.
First Quarter 2017 executive summary
- Net sales growth of 148.4 per cent to $3.3 billion; core sales growth of 2.5 per cent.
- Reported diluted earnings per share of $1.31 compared with $0.15 in the prior year, benefiting from a $784 million gain on the sale of the Tools business, core sales growth, cost synergies related to the Jarden acquisition, Project Renewal savings and contributions from acquisitions. These benefits more than offset increased investment in brand development, insights and e-commerce, negative foreign currency impacts, an increase in amortization of intangibles, higher interest expense and higher share count associated with the Jarden transaction.
- Normalized diluted earnings per share of $0.34 compared with $0.40 in the prior year, as the benefits of increased sales and operating profitability were more than offset by higher interest expense and higher share count associated with the Jarden transaction. Normalized earnings per share exclude certain items described later in this release.
- Reported operating margin of 4.8 per cent, compared with 9.5 per cent in the prior year, driven by the mix impact of the acquired Jarden business, including an increase in amortization of intangibles, and costs associated with the delivery of savings, partially offset by Project Renewal savings and cost synergies associated with the Jarden transaction. Normalized operating margin of 10.6 per cent, a 250 basis point decline versus the prior year due to the mix impact of the acquired Jarden business and investment in brand development, insights and e-commerce, partially offset by cost synergies and Project Renewal savings.
- Operating cash use of $289 million compared with a use of $261 million in the prior year; gross debt of $11.2 billion reflecting repayment of $726 million during the quarter and $2.8 billion since the creation of Newell Brands on April 15, 2016.
- Completed acquisition of WoodWick fragranced candle business and divestitures of the Tools and Rubbermaid consumer totes businesses; subsequent to quarter end, completed acquisition of New Zealand based Sistema Plastics food storage and the divestitures of the fire starter and fire log and the Lehigh cordage businesses.
- Announced new reporting framework aligned to Growth Game Plan with five segments (live; learn; work; play; other) and four regions (North America; Latin America; Europe, Middle East, Africa; Asia Pacific).
- Raised guidance for full year 2017 normalized diluted earnings per share to $3.00 to $3.20 compared with previous guidance of $2.95 to $3.15. Reaffirmed full year 2017 net sales guidance of $14.52 to $14.72 billion, representing 9.5 to 11 per cent growth, and core sales growth guidance of 2.5 to four per cent.
- Announced a $0.04 per share increase in the quarterly dividend to $0.23 per share, an increase of 21 per cent.
“We have had a good start to 2017 and are on our way to unlock the transformative value creation associated with our long-term guidance. We are confident that simultaneous growth and margin development fueled by savings and synergies will generate strong cash flow, leading to rapid deleveraging and then more aggressive value-creating uses of capital,” says Newell Brands CEO Michael Polk.
“We believe this transformative value creation story is unique to Newell Brands, given our leading brand positions in large global categories, the inherent opportunities presented through the new scale of the company, the investments we are making in new capabilities and the strong cash generative nature of our businesses. This confidence is shared by our Board of Directors which has approved a 21 per cent increase of the quarterly dividend to $0.23 per share.”