Newell Brands Revises 2017 Earnings Guidance

Sep 6, 2017

Expects Hurricane-Related Inflation to Impact U.S. Manufactured Resin-Based Businesses

Sustains Increased Investment Behind eCommerce and Brand Market Share Momentum

HOBOKEN, N.J.--(BUSINESS WIRE)-- Newell Brands (NYSE:NWL) announced today that it is updating its 2017 normalized earnings per share guidance for the anticipated effects of Hurricane Harvey on its U.S. manufactured resin businesses, including increasing inflationary pressure through the third quarter. Since Hurricane Harvey’s landfall on August 25, 2017, nearly all of Newell Brands’ resin suppliers with facilities in Texas and Louisiana have declared force majeure, with many facilities shut down for more than a week and some still not operating. The company is working closely with both U.S. and international suppliers to find alternative sources of resin with some early success, albeit at a significantly higher delivered cost than in its plans. As a result, the company has revised its normalized EPS guidance to $2.95 to $3.05 from $3.00 to $3.20. Its outlook for 2017 net sales and core sales remains unchanged.

Despite resin availability challenges and expected higher costs, the company will continue to invest in its strategic capabilities and brands, accepting temporary margin compression versus its 2017 plan, rather than pull back on investment connected to the company’s transformation and long term strategy. These investments are enabled by strong Project Renewal savings and cost synergies that remain on track with its previously communicated plans.

Chief Executive Officer Michael Polk commented, “The tragic events that have unfolded in Texas and Louisiana related to Hurricane Harvey have resulted in a significant disruption to a large part of the U.S. resin manufacturing supply chain. We anticipate resin supply availability issues to result in Newell Brands manufacturing disruptions on some U.S. manufactured resin-based products. We expect these conditions to persist through the fourth quarter of 2017 and resin inflation to now build, rather than contract as previously forecast, through the balance of 2017 and into 2018. Despite the incremental costs related to the hurricane and other unplanned inflationary pressure, we have taken the decision to sustain increased investment in our strategic priorities and brand plans in the second half of 2017 in order to build on our improving share momentum, with the rate of share growth in the U.S. increasing from the first quarter to the second quarter and now into the third.”

Polk continued, “While meaningful, the disruption related to Hurricane Harvey is temporary, and pales in comparison to the devastating impact the storm has had on peoples’ lives in Texas and Louisiana. In partnership with the American Red Cross, Newell Brands is working to provide support and resources to storm-related recovery efforts throughout the region.”

The company’s revised full year 2017 guidance is as follows:

   

 

2017 Full Year Outlook

Net sales

Net sales growth

Core sales growth

Normalized earnings per share

$14.8bn to $15.0bn

11.5% to 13.0%

2.5% to 4.0%

$2.95 to $3.05

 

Polk will present at the Barclays Global Consumer Staples Conference in Boston on September 7, 2017 at 12:45 p.m. ET. The presentation will be webcast live and may be accessed by selecting Events & Presentations from the Investor Relations tab of the Newell Brands website at www.newellbrands.com. The webcast will be archived and available for replay following the live presentation.

About Newell Brands

Newell Brands (NYSE: NWL) is a leading global consumer goods company with a strong portfolio of well-known brands, including Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Jostens®, Marmot®, Rawlings®, Oster®, Sunbeam®, FoodSaver®, Mr. Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Rubbermaid®, Contigo®, First Alert®, Waddington and Yankee Candle®. For hundreds of millions of consumers, Newell Brands makes life better every day, where they live, learn, work and play.

This press release and additional information about Newell Brands are available on the company’s website, www.newellbrands.com.

Non-GAAP Financial Measures

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission and includes a reconciliation of these 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 in explaining its results to stockholders and the investment community and in its 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 using the same tools that management uses to evaluate the company’s past performance, reportable business segments and prospects for future performance and (b) determine certain elements of management’s 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 (other than the Jarden acquisition), planned or completed divestitures, the deconsolidation of the company’s Venezuelan operations, retail store openings and closings, and changes in foreign currency from year-over-year comparisons. As reflected in the Core Sales Analysis, the effect of foreign currency on reported sales is determined by applying a fixed exchange rate, calculated as the 12-month average in the prior year, to the current and prior year local currency sales amounts (excluding acquisitions and divestitures), with the difference in these two amounts being the increase or decrease in core sales, and the difference between the change in as reported sales and the change in constant currency sales reported as the currency impact. The company’s management believes that “normalized” earnings per share, which excludes restructuring and other expenses and one-time and other events such as costs related to the extinguishment of debt, certain tax benefits and charges, impairment charges, the acquisition, integration and financing of acquired businesses and the divestiture of businesses, amortization of intangible assets associated with acquisitions (beginning in the second quarter of 2016), advisory costs for process transformation and optimization initiatives, costs of personnel dedicated to integration activities, transformation initiatives under Project Renewal 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.

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.

While the company believes that these non-GAAP financial measures are useful in evaluating the company’s performance, 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.

Reconciliation of Non-GAAP Financial Measures

Reconciliation of the 2017 core sales growth outlook is as follows:

   

Year Ending December 31, 2017

Estimated net sales growth (GAAP) 11.5% to 13.0%
Less: Pre-closing Jarden sales included in pro forma base [1] -18.1%
Add: Unfavorable foreign exchange 0.5% to 0.8%
Add: Divestitures, net of acquisitions [2] 8.6% to 8.3%
Core Sales Growth, Adjusted Pro Forma 2.5% to 4.0%
 

[1] Adjusted pro forma reflects Jarden sales from January 1, 2016 to April 15, 2016. As of April 15, 2016, Newell Brands core sales include pro forma core sales associated with the Jarden transaction as if the combination occurred April 15, 2015.

[2] Acquisitions (other than the Jarden acquisition) exclude net sales until the one year anniversary of their respective dates of acquisition, and are comprised of Sistema, Smith Mountain Industries, GUD, Bond, and Touch Industries. Divestitures include the completed divestitures of the Levolor and Kirsch window coverings brands, the Tools business (excluding Dymo® industrial labeling), the Fire building, Lehigh, and Teutonia businesses, two winter sports units, Völkl® and K2®, and the Rubbermaid® Consumer Storage business, as well as the planned exit of a distribution agreement with Sprue Aegis. Additionally, since the completion of the Jarden acquisition and consistent with standard retail practice, the Home Fragrance business in the Live segment and the Outdoor & Recreation business in the Play Segment exclude net sales from retail store openings until the one year anniversary of their opening dates and current and prior period net sales from retail store closures from the decision date to close.

The company has presented forward-looking statements regarding normalized earnings per share for 2017, which is a non-GAAP financial measure. This non–GAAP financial measure is derived by excluding certain amounts, expenses or income from the corresponding financial measure determined in accordance with GAAP. The determination of the amounts that are excluded from this non-GAAP financial measure is a matter of management judgment 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 the aforementioned forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measure because such information is not available and management cannot reliably predict all of the necessary components of such GAAP measure without unreasonable effort or expense. The unavailable information could have a significant impact on the company's full year 2017 GAAP financial results.

Caution Concerning Forward-Looking Statements

Statements in this press release that are not historical in nature constitute forward-looking statements. These forward-looking statements may relate to, but are not limited to, statements about sales (including pricing), income/(loss), earnings per share, operating margin or gross margin improvements or declines, future economic performance, costs and cost savings, inflation or deflation with respect to raw materials and sourced products, productivity and streamlining, changes in foreign exchange rates, expected benefits and synergies and management’s plans, goals and objectives for future operations, performance and growth or the assumptions relating to any of the forward-looking statements. These statements generally are accompanied by words such as “intend,” “anticipate,” “believe,” “estimate,” “plan,” “expect,” “will,” or similar statements. Actual results could differ materially from those expressed or implied in the forward-looking statements. 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 dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation of challenging economic conditions; competition with other manufacturers and distributors of consumer products; major retailers’ strong bargaining power and consolidation of our customers; our ability to improve productivity, reduce complexity and streamline operations; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands, including the ability to realize anticipated benefits of increased advertising and promotion spend; risks related to the substantial indebtedness that we have incurred in connection with the Jarden acquisition; risks related to a potential increase in interest rates; our ability to complete planned acquisitions and divestitures; difficulties integrating Jarden and other acquisitions; changes in the prices and availability of raw materials and sourced products; the risks inherent in our foreign operations, including currency fluctuations, exchange controls and pricing restrictions; a failure of one of our key information technology systems or related controls; the potential inability to attract, retain and motivate key employees; the imposition of tax liabilities greater than our provisions for such matters; product liability, product recalls or regulatory actions; changes to our credit ratings; and those factors listed in our filings with the Securities and Exchange Commission (including the information set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K). Changes in such assumptions or factors could produce significantly different results. The information contained in this news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.

Source: Newell Brands

Newell Brands

Investors:

Nancy O’Donnell, 1 770-418-7723

SVP, Investor and External Relations

nancy.odonnell@newellco.com

or

Media:

Michael Sinatra, 1 201-610-6717

Director, External Communications

michael.sinatra@newellco.com