Newell Brands Announces Fourth Quarter and Full Year 2018 Results
Delivered Sequential Core Sales Improvement in All Segments
Completed Divestitures of Jostens and Pure Fishing
Repaid
“Newell Brands’ fourth quarter results reflect solid progress as we continue to execute the Accelerated Transformation Plan (ATP) announced one year ago,” said
Fourth Quarter 2018 Executive Summary
- Net sales from continuing operations were
$2.3 billion , a decline of 6.0 percent compared with$2.5 billion in the prior year period, reflecting headwinds from the adoption of the new 2018 revenue recognition standard, unfavorable foreign exchange and a decline in core sales. - Core sales from continuing operations declined 1.2 percent from the prior year period. All segments posted improved core sales trends on a sequential basis, with the Learning & Development segment returning to growth. Three of four regions posted improved core sales growth trends on a sequential basis.
- Reported operating margin was 0.8 percent compared with 5.7 percent in the prior year period. Normalized operating margin was 11.4 percent compared to 10.7 percent in the prior year period.
- Reported diluted earnings per share for the total company were
$0.46 compared with$3.38 in the prior year period. Reported diluted earnings per share from continuing operations were$0.36 versus$3.07 in the prior year period. - Normalized diluted earnings per share for the total company were
$0.71 , compared with$0.68 in the prior year period. Normalized diluted earnings per share from continuing operations were$0.47 , compared with$0.28 in the prior year period. - Operating cash flow was
$498 million compared with$990 million in the prior year period, with the difference attributable to the absence of the operating cash flow contribution from divested businesses, increased cash taxes and transaction-related costs, and a change in the timing of vendor payments relative to the prior year. - Announced and completed divestitures of two businesses, Pure Fishing and Jostens, for combined after-tax proceeds of
$2.5 billion . - Deployed
$2.6 billion to debt repayment,$102 million to dividends and$996 million to share repurchases.
Fourth Quarter 2018 Operating Results
Net sales were
Reported gross margin was 34.7 percent compared with 32.7 percent in the prior year period, resulting from pricing, productivity, lower integration and restructuring costs and the impact of the new revenue recognition standard, which more than offset the headwinds from foreign exchange and inflation related to higher input costs, tariffs and transport costs. Normalized gross margin was 34.7 percent compared with 33.0 percent in the prior year period.
The company recorded a
Reported operating income was
The company reported a tax benefit of
The company reported net income of
Normalized net income for the total company was
Operating cash flow was
A reconciliation of reported results to normalized results is included in the tables attached to this release.
Fourth Quarter 2018 Operating Segment Results
The Learning & Development segment generated net sales of
The Food & Appliances segment generated net sales of
The Home & Outdoor Living segment generated net sales of
Full Year 2018 Results
Net sales for the full year ended
Reported gross margin was 34.9 percent, compared with 34.2 percent in the prior year. Normalized gross margin was 34.8 percent, in line with the prior year.
The company reported a full year 2018 operating loss of
Reported net loss was
Operating cash flow was
The company exited the year with a gross debt leverage ratio of 3.5x.
An explanation of how the gross debt leverage ratio is calculated and a related reconciliation as well as a reconciliation of reported results to normalized results is included in the tables attached to this release.
2019 Change to Normalization Practice
In 2019, the company will change its normalization practice. In addition to its GAAP results, the company has provided and will continue to provide certain non-GAAP financial measures, referred to as “normalized” measures, which provide investors supplementary information helpful in understanding the company’s underlying operating performance. To date, including the fourth quarter and full year results discussed in this earnings release, the company has excluded from these normalized results the cost of its Transformation Office, consisting of employees fully dedicated to executing the integration of the merger of
The company’s outlook for the twelve months ending
Outlook for Full Year and First Quarter 2019
Full Year 2019 Outlook | |
Net Sales | $8.2 to $8.4 billion |
Core Sales | Low single digit decline |
Normalized Operating Margin | 20 to 60 bps improvement |
Total Company Normalized EPS | $1.50 to $1.65 |
Total Company Operating Cash Flow | $300 to $500 million |
Q1 2019 Outlook | |
Net Sales | $1.66 to $1.70 billion |
Core Sales | 2% to 4% decline |
Normalized Operating Margin | 10 to 50 bps improvement |
Total Company Normalized EPS | $0.04 to $0.08 |
The company’s net sales, core sales and normalized operating margin outlook reflects continuing operations only. Normalized earnings per share and operating cash flow guidance reflects the total company outlook. Core sales are calculated on a constant currency basis in line with industry practice and exclude the impacts of foreign exchange, acquisitions until their first anniversary, planned and completed divestitures and certain other items. Full year operating cash flow guidance assumes approximately
The company has presented forward-looking statements regarding core sales, normalized earnings per share for the total company and normalized operating margin on continuing operations. 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 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 measures 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 full-year 2019 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
The company’s fourth quarter 2018 earnings conference call will be held today,
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the
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 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, planned and completed divestitures, retail store openings and closings, certain market exits, changes in foreign exchange and the impact of the adoption of revenue recognition standard ASC 606 as of
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 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.
While the company believes 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. Additionally, these non-GAAP financial measures may differ from similar measures presented by other companies.
About
This press release and additional information about
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 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 such as “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “will,” “should,” “would” or similar statements. We caution that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. In addition, there are no assurances that we will complete any or all of the potential transactions or other initiatives referenced above. Actual results may 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 various parts of the world;
- 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;
- future events that could adversely affect the value of our assets and/or stock price and require additional impairment charges;
- our ability to remediate the material weakness in our internal control over financial reporting and maintain effective internal control reporting
- 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;
- risks related to our substantial indebtedness, a potential increase in interest rates or changes in our credit ratings;
- our ability to effectively accelerate our transformation plan and to execute our divestitures of the remaining assets held for sale;
- our ability to complete planned acquisitions and divestitures, to integrate acquisitions and to offset unexpected costs or expenses associated with acquisitions or dispositions;
- changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner;
- the risks inherent to our foreign operations, including foreign exchange fluctuations, exchange controls and pricing restrictions;
- a failure of one of our key information technology systems, networks, processes or related controls or those of our service providers;
- the impact of
United States and foreign regulations on our operations, including the impacts of tariffs and environmental remediation costs; - the potential inability to attract, retain and motivate key employees;
- 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 the funding obligations related to our pension plans; and
- other factors listed from time to time in our filings with the
Securities and Exchange Commission , including, but not limited to, our Annual Report on Form 10-K.
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) | ||||||||||||||||||||||||||
For the three months ended December 31, | For the twelve months ended December 31, | |||||||||||||||||||||||||
2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||||||
Net sales | $ | 2,340.6 | $ | 2,489.2 | (6.0 | )% | $ | 8,630.9 | $ | 9,552.0 | (9.6 | )% | ||||||||||||||
Cost of products sold | 1,528.9 | 1,675.4 | 5,622.1 | 6,289.0 | ||||||||||||||||||||||
GROSS PROFIT | 811.7 | 813.8 | (0.3 | )% | 3,008.8 | 3,263.0 | (7.8 | )% | ||||||||||||||||||
% of sales | 34.7 | % | 32.7 | % | 34.9 | % | 34.2 | % | ||||||||||||||||||
Selling, general and administrative expenses | 619.2 | 652.9 | (5.2 | )% | 2,434.8 | 2,705.6 | (10.0 | )% | ||||||||||||||||||
26.5 | % | 26.2 | % | 28.2 | % | 28.3 | % | |||||||||||||||||||
Restructuring costs, net | 18.0 | 19.2 | 80.5 | 87.6 | ||||||||||||||||||||||
Impairment of goodwill, intangibles and other assets | 156.7 | ─ | 8,322.0 | 84.3 | ||||||||||||||||||||||
OPERATING INCOME (LOSS) | 17.8 | 141.7 | (87.4 | )% | (7,828.5 | ) | 385.5 | NM | ||||||||||||||||||
% of sales | 0.8 | % | 5.7 | % | (90.7 | )% | 4.0 | % | ||||||||||||||||||
Nonoperating expenses: | ||||||||||||||||||||||||||
Interest expense, net | 104.1 | 116.1 | 446.3 | 469.1 | ||||||||||||||||||||||
Loss on extinguishment of debt | 4.1 | ─ | 4.1 | 32.3 | ||||||||||||||||||||||
Other (income) expense, net | (0.5 | ) | 5.6 | (11.2 | ) | (708.3 | ) | |||||||||||||||||||
107.7 | 121.7 | 439.2 | (206.9 | ) | ||||||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | (89.9 | ) | 20.0 | (549.5 | )% | (8,267.7 | ) | 592.4 | NM | |||||||||||||||||
% of sales | (3.8 | )% | 0.8 | % | (95.8 | )% | 6.2 | % | ||||||||||||||||||
Income tax benefit | (253.7 | ) | (1,478.8 | ) | (1,505.1 | ) | (1,578.4 | ) | ||||||||||||||||||
Effective rate | 282.2 | % | (7,394.0 | )% | 18.2 | % | (266.4 | )% | ||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 163.8 | 1,498.8 | (89.1 | )% | (6,762.6 | ) | 2,170.8 | (411.5 | )% | |||||||||||||||||
% of sales | 7.0 | % | 60.2 | % | (78.4 | )% | 22.7 | % | ||||||||||||||||||
Income from discontinued operations, net of tax | 44.3 | 154.1 | (155.3 | ) | 578.0 | |||||||||||||||||||||
NET INCOME (LOSS) | $ | 208.1 | $ | 1,652.9 | (87.4 | )% | $ | (6,917.9 | ) | $ | 2,748.8 | (351.7 | )% | |||||||||||||
% of sales | 8.9 | % | 66.4 | % | (80.2 | )% | 28.8 | % | ||||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||
Basic | 451.5 | 488.1 | 473.7 | 486.7 | ||||||||||||||||||||||
Diluted | 451.8 | 488.8 | 473.7 | 488.0 | ||||||||||||||||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.36 | $ | 3.07 | $ | (14.27 | ) | $ | 4.46 | |||||||||||||||||
Income (loss) from discontinued operations | 0.10 | 0.32 | (0.33 | ) | 1.19 | |||||||||||||||||||||
NET INCOME | $ | 0.46 | $ | 3.39 | (86.4 | )% | $ | (14.60 | ) | $ | 5.65 | (358.4 | )% | |||||||||||||
Diluted: | ||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.36 | $ | 3.07 | $ | (14.27 | ) | $ | 4.45 | |||||||||||||||||
Income (loss) from discontinued operations | 0.10 |
0.31 |
(0.33 | ) | 1.18 | |||||||||||||||||||||
NET INCOME | $ | 0.46 | $ |
3.38 |
(86.4 | )% | $ | (14.60 | ) | $ | 5.63 | (359.3 | )% | |||||||||||||
Dividends per share | $ | 0.23 | $ | 0.23 | $ | 0.92 | $ | 0.88 | ||||||||||||||||||
* NM - NOT MEANINGFUL | ||||||||||||||||||||||||||
NEWELL BRANDS INC. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
in Millions | ||||||||||
At December 31, 2018 | At December 31, 2017 | |||||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 495.7 | $ | 485.7 | ||||||
Accounts receivable, net | 1,850.7 | 1,879.3 | ||||||||
Inventories, net | 1,583.1 | 1,662.4 | ||||||||
Prepaid expenses and other current assets | 278.0 | 327.9 | ||||||||
Current assets held for sale | 3,541.3 | 5,549.3 | ||||||||
Total current assets | 7,748.8 | 9,904.6 | ||||||||
Property, plant and equipment, net | 925.6 | 972.4 | ||||||||
Goodwill | 2,970.2 | 6,873.0 | ||||||||
Other intangible assets, net | 5,579.6 | 10,199.6 | ||||||||
Deferred income taxes | 165.2 | 144.8 | ||||||||
Noncurrent assets held for sale | - | 4,663.3 | ||||||||
Other assets | 327.0 | 377.8 | ||||||||
TOTAL ASSETS | $ | 17,716.4 | $ | 33,135.5 | ||||||
Liabilities and stockholders' equity | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 1,019.5 | $ | 1,226.8 | ||||||
Accrued compensation | 159.1 | 85.9 | ||||||||
Other accrued liabilities | 1,182.3 | 1,271.9 | ||||||||
Short-term debt and current portion of long-term debt | 318.7 | 661.8 | ||||||||
Current liabilities held for sale | 650.4 | 1,178.3 | ||||||||
Total current liabilities | 3,330.0 | 4,424.7 | ||||||||
Long-term debt | 6,696.3 | 9,889.2 | ||||||||
Deferred income taxes | 1,041.8 | 2,552.7 | ||||||||
Noncurrent liabilities held for sale | - | 725.5 | ||||||||
Other noncurrent liabilities | 1,370.5 | 1,362.1 | ||||||||
Total liabilities | $ | 12,438.6 | $ | 18,954.2 | ||||||
Stockholders' equity | ||||||||||
Total stockholders' equity attributable to parent | 5,243.0 | 14,144.7 | ||||||||
Total stockholders' equity attributable to non-controlling interests | 34.8 | 36.6 | ||||||||
Total stockholders' equity | $ | 5,277.8 | $ | 14,181.3 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 17,716.4 | $ | 33,135.5 | ||||||
NEWELL BRANDS INC. | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
in Millions | ||||||||||
For the twelve months ended December 31, | ||||||||||
2018 | 2017 | |||||||||
Operating Activities | ||||||||||
Net income (loss) | $ | (6,917.9 | ) | $ | 2,748.8 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 433.9 | 635.6 | ||||||||
Impairment of goodwill, intangibles and other assets | 9,789.5 | 85.0 | ||||||||
Gain from sale of businesses, net | (832.9 | ) | (713.0 | ) | ||||||
Gain on extinguishment of debt | (6.3 | ) | (1.9 | ) | ||||||
Deferred income taxes | (1,597.9 | ) | (1,781.8 | ) | ||||||
Stock based compensation expense | 75.7 | 70.9 | ||||||||
Other, net | 4.2 | 8.6 | ||||||||
Changes in operating accounts excluding the effects of acquisitions and divestitures: | ||||||||||
Accounts receivable | 161.7 | 288.7 | ||||||||
Inventories | 125.7 | (350.4 | ) | |||||||
Accounts payable | (309.3 | ) | 211.0 | |||||||
Accrued liabilities and other | (246.4 | ) | (235.3 | ) | ||||||
Net cash provided by operating activities | $ | 680.0 | $ | 966.2 | ||||||
Investing Activities | ||||||||||
Proceeds from sale of divested businesses | 5,133.3 | 2,106.9 | ||||||||
Acquisitions and acquisition-related activities | - | (634.3 | ) | |||||||
Capital expenditures | (384.4 | ) | (406.2 | ) | ||||||
Other investing activities | 58.5 | 12.1 | ||||||||
Net cash provided by investing activities | $ | 4,807.4 | $ | 1,078.5 | ||||||
Financing Activities | ||||||||||
Net short term borrowings | (903.5 | ) | 111.8 | |||||||
Payments on long-term debt | (2,579.9 | ) | (1,512.2 | ) | ||||||
Debt issuance and extinguishment costs | (10.4 | ) | (34.2 | ) | ||||||
Repurchase and retirement of shares of common stock | (1,507.3 | ) | (152.4 | ) | ||||||
Cash dividends | (434.6 | ) | (428.6 | ) | ||||||
Payments to dissenting shareholders | - | (161.6 | ) | |||||||
Option proceeds net of repurchase of restricted shares for vesting and other, net | (18.8 | ) | (18.6 | ) | ||||||
Net cash used in financing activities | $ | (5,454.5 | ) | $ | (2,195.8 | ) | ||||
Exchange rate effect on cash and cash equivalents | (22.9 | ) | 49.3 | |||||||
Increase (decrease) in cash and cash equivalents | 10.0 | (101.8 | ) | |||||||
Cash and cash equivalents at beginning of period | 485.7 | 587.5 | ||||||||
Cash and cash equivalents at end of period | $ | 495.7 | $ | 485.7 | ||||||
NEWELL BRANDS INC. | |||||||||||||||||||||||||||||||||||||||||||
Reconciliation of GAAP and Non-GAAP Information | |||||||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | |||||||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||||||||||||||||
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For the three months ended December 31, 2018 |
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GAAP Measure | Acquisition | Transaction | Other | Loss on | Net gain/(loss) |
|
Non-GAAP Measure |
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Integration | amortization | and | Divestiture | non-recurring | extinguishment | on sale | Percentage | ||||||||||||||||||||||||||||||||||||
Reported | costs [1] | costs [2] | related costs [3] | costs [4] | items [5] | of debt [6] | of business [7] | Tax items [8] | Normalized* | of Sales | |||||||||||||||||||||||||||||||||
Cost of products sold | $ | 1,528.9 | $ | (1.4 | ) | $ ─ | $ ─ | $ ─ | $ | 1.3 | $ ─ | $ ─ | $ ─ | $ | 1,528.8 | 65.3 | % | ||||||||||||||||||||||||||
Gross profit | 811.7 | 1.4 | ─ | ─ | ─ | (1.3 | ) | ─ | ─ | ─ | 811.8 | 34.7 | % | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 619.2 | (28.0 | ) | (32.5 | ) | (2.5 | ) | (11.0 | ) | (1.2 | ) | ─ | ─ | ─ | 544.0 | 23.2 | % | ||||||||||||||||||||||||||
Restructuring costs | 18.0 | (18.0 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||
Impairment charges | 156.7 | ─ | (156.7 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||
Operating income (loss) | 17.8 | 47.4 | 189.2 | 2.5 | 11.0 | (0.1 | ) | ─ | ─ | ─ | 267.8 | 11.4 | % | ||||||||||||||||||||||||||||||
Non-operating (income) expenses | 107.7 | ─ | ─ | ─ | ─ | (0.6 | ) | (4.1 | ) | ─ | ─ | 103.0 | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | (89.9 | ) | 47.4 | 189.2 | 2.5 | 11.0 | 0.5 | 4.1 | ─ | ─ | 164.8 | ||||||||||||||||||||||||||||||||
Income taxes [9] | (253.7 | ) | 61.3 | 85.8 | 5.0 | 5.2 | 2.0 | 1.0 | ─ | 43.9 | (49.5 | ) | |||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | 163.8 | (13.9 | ) | 103.4 | (2.5 | ) | 5.8 | (1.5 | ) | 3.1 | ─ | (43.9 | ) | 214.3 | |||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 44.3 | 1.1 | 326.6 | ─ | 15.2 | (0.1 | ) | ─ | (248.8 | ) | (31.5 | ) | 106.8 | ||||||||||||||||||||||||||||||
Net income (loss) | $ | 208.1 | $ | (12.8 | ) | $ | 430.0 | $ | (2.5 | ) | $ | 21.0 | $ | (1.6 | ) | $ | 3.1 | $ | (248.8 | ) | $ | (75.4 | ) | $ | 321.1 | ||||||||||||||||||
Diluted earnings per share** | $ | 0.46 | $ | (0.03 | ) | $ | 0.95 | $ ─ | $ | 0.05 | $ ─ | $ | 0.01 | $ | (0.55 | ) | $ | (0.17 | ) | $ | 0.71 |
* 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 451.8 million shares for the three months ended December 31, 2018. | |
Totals may not add due to rounding. | |
[1] During the three months ended December 31, 2018, the Company incurred costs primarily associated with the Accelerated Transformation Plan of $49.5 million ($2.1 million of which is reported in discontinued operations), including $19.7 million of restructuring costs ($1.7 million of which is reported in discontinued operations). | |
[2] During the three months ended December 31, 2018, the Company incurred acquisition amortization costs of $32.5 million. During the three months ended December 31, 2018, the Company recognized impairment charges of $541.4 million ($149.9 million related to goodwill, $389.5 million to other intangible assets, $2.0 million for other assets), $384.7 million was reported in discontinued operations, primarily related to businesses held for sale. | |
[3] During the three months ended December 31, 2018, the Company recognized transaction and related costs of $2.5 million. | |
[4] During the three months ended December 31, 2018, the Company recognized $32.1 million of costs ($21.1 million of which were reported in discontinued operations) primarily related to the divestitures of Jostens, Fishing and the planned divestitures of Gaming, Process Solutions and Commercial and Consumer Solutions businesses. |
[5] During the three months ended December 31, 2018, the Company recorded $1.3 million, net of recoveries, for fire-related losses in the Writing business; $1.2 million of consulting costs for accounting standard adoption, and $0.6 million of pension settlement costs. | |
[6] During the three months ended December 31, 2018, the Company incurred $4.1 million of debt extinguishment costs, net, consisting of non-cash write-offs of $46.6 million of deferred debt issue costs and $5.2 million of fees, partially offset by $47.7 million non-cash settlement gains for payoff of debt below its carrying value. | |
[7] During the three months ended December 31, 2018, the Company recognized a $343.6 million net gain primarily, related to the sale of the Jostens (loss of $32.1 million) and Fishing businesses (gain of $371.6 million). | |
[8] During the three months ended December 31, 2018, the Company recognized deferred taxes in continuing operations primarily related to statutory rate changes and adjustments to the Company’s 2017 transition tax estimate, while the amounts in discontinued operations relate to the difference between the book and tax basis in the Fishing, Jostens, Gaming and Process Solutions businesses divested and held for sale. | |
[9] 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 | |||||||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | |||||||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||||||||||||||||
For the twelve months ended December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||
GAAP Measure | Acquisition | Transaction | Other | Loss on | Net gain/(loss) | Non-GAAP Measure | |||||||||||||||||||||||||||||||||||||
Integration | amortization | and | Divestiture | non-recurring | extinguishment | on sale | Percentage | ||||||||||||||||||||||||||||||||||||
Reported | costs [1] | costs [2] | related costs [3] | costs [4] | items [5] | of debt [6] | of business [7] | Tax items [8] | Normalized* | of Sales | |||||||||||||||||||||||||||||||||
Cost of products sold | $ | 5,622.1 | $ | (4.4 | ) | $ ─ | $ ─ | $ ─ | $ | 10.5 | $ ─ | $ ─ | $ ─ | $ | 5,628.2 | 65.2 | % | ||||||||||||||||||||||||||
Gross profit | 3,008.8 | 4.4 | ─ | ─ | ─ | (10.5 | ) | ─ | ─ | ─ | 3,002.7 | 34.8 | % | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 2,434.8 | (99.5 | ) | (131.4 | ) | (15.4 | ) | (18.2 | ) | (45.2 | ) | ─ | ─ | ─ | 2,125.1 | 24.6 | % | ||||||||||||||||||||||||||
Restructuring costs | 80.5 | (80.5 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||
Impairment charges | 8,322.0 | ─ | (8,322.0 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||
Operating income (loss) | (7,828.5 | ) | 184.4 | 8,453.4 | 15.4 | 18.2 | 34.7 | ─ | ─ | ─ | 877.6 | 10.2 | % | ||||||||||||||||||||||||||||||
Non-operating (income) expenses | 439.2 | ─ | ─ | ─ | ─ | 10.0 | (4.1 | ) | 0.6 | ─ | 445.7 | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (8,267.7 | ) | 184.4 | 8,453.4 | 15.4 | 18.2 | 24.7 | 4.1 | (0.6 | ) | ─ | 431.9 | |||||||||||||||||||||||||||||||
Income taxes [9] | (1,505.1 | ) | 51.3 | 1,210.0 | 4.5 | 4.5 | 6.3 | 1.0 | 5.5 | 46.4 | (175.6 | ) | |||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | (6,762.6 | ) | 133.1 | 7,243.4 | 10.9 | 13.7 | 18.4 | 3.1 | (6.1 | ) | (46.4 | ) | 607.5 | ||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | (155.3 | ) | 16.8 | 1,432.0 | ─ | 43.3 | 0.3 | ─ | (674.6 | ) | ─ | 662.5 | |||||||||||||||||||||||||||||||
Net income (loss) | $ | (6,917.9 | ) | $ | 149.9 | $ | 8,675.4 | $ | 10.9 | $ | 57.0 | $ | 18.7 | $ | 3.1 | $ | (680.7 | ) | $ | (46.4 | ) | $ | 1,270.0 | ||||||||||||||||||||
Diluted earnings per share** | $ | (14.60 | ) | $ | 0.32 | $ | 18.29 | $ | 0.02 | $ | 0.12 | $ | 0.04 | $ | 0.01 | $ | (1.44 | ) | $ | (0.10 | ) | $ | 2.68 |
* 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 474.3 million shares for the twelve months ended December 31, 2018. | |
Totals may not add due to rounding. | |
[1] During the twelve months ended December 31, 2018, the Company incurred costs primarily associated with the Accelerated Transformation Plan of $205.9 million ($21.5 million of which is reported in discontinued operations), including $90.0 million of restructuring costs ($9.5 million of which is reported in discontinued operations). | |
[2] During the twelve months ended December 31, 2018, the Company incurred acquisition amortization costs of $172.3 million ($40.9 million of which is reported in discontinued operations). During the twelve months ended December 31, 2018, the Company recognized impairment charges of $9.8 billion ($5.1 billion related to goodwill, $4.7 billion related to other intangible assets and $41.1 million, primarily related to Home Fragrance fixed assets impairments), of which $1.5 billion was reported in discontinued operations primarily related to goodwill impairment attributable to businesses held for sale. | |
[3] During the twelve months ended December 31, 2018, the Company recognized transaction and related costs of $15.4 million. | |
[4] During the twelve months ended December 31, 2018, the Company recognized $69.0 million of costs ($50.8 million of which is reported in discontinued operations) primarily related to the divestitures of Waddington, Team Sports, Jostens, Fishing, and Goody along with the planned divestitures of Process Solutions and Commercial and Consumer Solutions businesses. | |
[5] During the twelve months ended December 31, 2018, the Company recorded $10.5 million, net of recoveries, for fire-related losses in the Writing business; $25.5 million of bad debt related to a customer in the Baby business; $16.7 million of costs related to the proxy contest, $3.0 million of consulting costs for accounting standard adoption, $11.3 million gain on legacy Jarden investment, and $1.6 million of pension settlement costs ($0.3 million of which is reported in discontinued operations). | |
[6] During the twelve months ended December 31, 2018, the Company incurred $4.1 million of debt extinguishment costs, net, consisting of non-cash write-offs of $46.6 million of deferred debt issue costs and $5.2 million of fees, partially offset by $47.7 million non-cash settlement gains for payoff of debt below its carrying value. | |
[7] During the twelve months ended December 31, 2018, the Company recognized a gain of $599.0 million related to the sale of the Waddington business, gain of $20.3 million related to the sale of Goody, gain of $371.6 million related to the sale of Pure Fishing business, gain of $1.2 million related to a sale of a small subsidiary, loss of $127.7 million related to the sale of the Rawlings business, loss of $32.1 million related to the sale of the Jostens business, and $0.6 million gain on working capital adjustment related to the sale of the Tools business. | |
[8] During the twelve months ended December 31, 2018, the Company recognized deferred taxes in continuing operations primarily related to statutory rate changes and adjustments to the Company’s 2017 transition tax estimate, while the amounts in discontinued operations relate to the difference between the book and tax basis in the Goody, Jostens, Fishing, Gaming and Process Solutions businesses divested and held for sale. | |
[9] 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 | |||||||||||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | |||||||||||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||||||||||||||||||||
For the three months ended December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||
GAAP Measure | Project | Acquisition and | Acquisition | Transaction | Other | Non-GAAP Measure | |||||||||||||||||||||||||||||||||||||||||
Renewal | Inventory | integration | amortization | and | Divestiture | non-recurring | Gain | Non-recurring | Percentage | ||||||||||||||||||||||||||||||||||||||
Reported | costs [1] | step up [2] | costs [3] | costs [4] | related costs [5] | costs [6] | items [7] | on sale [8] | tax items [10] | Normalized* | of Sales | ||||||||||||||||||||||||||||||||||||
Cost of products sold | $ | 1,675.4 | $ | (0.4 | ) | $ | (2.4 | ) | $ | (5.2 | ) | $ | (2.9 | ) | $ ─ | $ ─ | $ | 3.6 | $ ─ | $ ─ | $ | 1,668.1 | 67.0 | % | |||||||||||||||||||||||
Gross profit | 813.8 | 0.4 | 2.4 | 5.2 | 2.9 | ─ | ─ | (3.6 | ) | ─ | ─ | 821.1 | 33.0 | % | |||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 652.9 | (4.1 | ) | ─ | (55.4 | ) | (29.1 | ) | (7.1 | ) | (2.5 | ) | (0.2 | ) | ─ | ─ | 554.5 | 22.3 | % | ||||||||||||||||||||||||||||
Restructuring costs | 19.2 | (1.7 | ) | ─ | (17.5 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||||
Impairment charges | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||||||
Operating income | 141.7 | 6.2 | 2.4 | 78.1 | 32.0 | 7.1 | 2.5 | (3.4 | ) | ─ | ─ | 266.6 | 10.7 | % | |||||||||||||||||||||||||||||||||
Non-operating (income) expenses | 121.7 | ─ | ─ | 2.4 | ─ | ─ | ─ | ─ | (1.9 | ) | ─ | 122.2 | |||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 20.0 | 6.2 | 2.4 | 75.7 | 32.0 | 7.1 | 2.5 | (3.4 | ) | 1.9 | ─ | 144.4 | |||||||||||||||||||||||||||||||||||
Income taxes [9] | (1,478.8 | ) | 2.9 | 1.0 | 6.0 | 58.1 | 2.7 | 1.7 | 1.1 | (18.8 | ) | 1,429.5 | 5.4 | ||||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | 1,498.8 | 3.3 | 1.4 | 69.7 | (26.1 | ) | 4.4 | 0.8 | (4.5 | ) | 20.7 | (1,429.5 | ) | 139.0 | |||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 154.1 | ─ | ─ | 14.5 | 29.0 | ─ | ─ | ─ | (1.8 | ) | ─ | 195.8 | |||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 1,652.9 | $ | 3.3 | $ | 1.4 | $ | 84.2 | $ | 2.9 | $ | 4.4 | $ | 0.8 | $ | (4.5 | ) | $ | 18.9 | $ | (1,429.5 | ) | $ | 334.8 | |||||||||||||||||||||||
Diluted earnings per share** | $ | 3.38 | $ | 0.01 | $ ─ | $ | 0.17 | $ | 0.01 | $ | 0.01 | $ ─ | $ | (0.01 | ) | $ | 0.04 | $ | (2.92 | ) | $ | 0.68 |
* 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. | |
**Totals may not add due to rounding. | |
[1] Costs associated with Project Renewal during the three months ended December 31, 2017 include $4.5 million of project-related costs and $1.7 million of restructuring costs. Project-related costs include advisory and consultancy costs, compensation and related costs of personnel dedicated to transformation projects, and other project-related costs. | |
[2] During the three months ended December 31, 2017, the Company recognized $2.4 million of non-cash charges related to the fair value step up of inventory related to the Chesapeake® acquisition. | |
[3] During the three months ended December 31, 2017, the Company incurred costs primarily associated with the Jarden integration of $95.1 million of costs ($19.4 million of which is reported in discontinued operations), including $28.0 million of restructuring costs ($10.5 million of which is reported in discontinued operations). | |
[4] During the three months ended December 31, 2017, the Company incurred acquisition amortization costs of $68.6 million ($36.6 million of which are reported in discontinued operations). | |
[5] During the three months ended December 31, 2017, the Company recognized $7.1 million of transaction and related costs, primarily associated with the Sistema® and Chesapeake® acquisitions. | |
[6] During the three months ended December 31, 2017, the Company recognized $2.5 million of transaction and related costs primarily associated with the divestiture of the Winter Sports business. | |
[7] During the three months ended December 31, 2017, the Company reversed $(3.6) million for recoveries of fire-related net of losses and costs, in the Writing business; $(2.0) million of reversal of previously recognized bad debt related to a customer in the Baby business; and $2.2 million of consulting expenses for new accounting standards adoption. | |
[8] During the three months ended December 31, 2017, the Company recognized net gains of $0.7 million ($2.6 million of which is reported in discontinued operations) related to sale of businesses and $18.8M of tax expense related to the refinement of estimated taxes on sale of businesses and the impact of tax reform. | |
[9] During the three months ended December 31, 2017, the Company recognized a benefit of approximately $1.4 billion related to tax reform due to the revaluation of it's deferred tax liabilities for the change in the U.S. tax rate from 35% to 21%; $195.0 million of tax expense related to the mandatory repatriation tax; and $87.2 million of tax benefit to reverse the Company's APB 23 liability on historical Jarden earnings. | |
[10] 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 is 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | |||||||||||||||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the twelve months ended December 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP Measure | Project | Acquisition and | Acquisition | Transaction | Other | Loss on | Non-GAAP Measure | ||||||||||||||||||||||||||||||||||||||||||||
Renewal | Inventory | integration | amortization | and | Divestiture | non-recurring | extinguishment | Gain | Non-recurring | Percentage | |||||||||||||||||||||||||||||||||||||||||
Reported | costs [1] | step up [2] | costs [3] | costs [4] | related costs [5] | costs [6] | items [7] | of debt [8] | on sale [9] | tax items [10] | Normalized* | of Sales | |||||||||||||||||||||||||||||||||||||||
Cost of products sold | $ | 6,289.0 | $ | (2.6 | ) | $ | (10.7 | ) | $ | (17.8 | ) | $ | (11.5 | ) | $ ─ | $ ─ | $ | (14.6 | ) | $ ─ | $ ─ | $ ─ | $ | 6,231.8 | 65.2 | % | |||||||||||||||||||||||||
Gross profit | 3,263.0 | 2.6 | 10.7 | 17.8 | 11.5 | ─ | ─ | 14.6 | ─ | ─ | ─ | 3,320.2 | 34.8 | % | |||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 2,705.6 | (12.5 | ) | ─ | (222.8 | ) | (129.7 | ) | (27.4 | ) | (34.9 | ) | (15.2 | ) | ─ | ─ | ─ | 2,263.1 | 23.7 | % | |||||||||||||||||||||||||||||||
Restructuring costs | 87.6 | (19.4 | ) | ─ | (68.2 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | |||||||||||||||||||||||||||||||||||||
Impairment charges | 84.3 | ─ | ─ | ─ | (84.3 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||||||||||||
Operating income | 385.5 | 34.5 | 10.7 | 308.8 | 225.5 | 27.4 | 34.9 | 29.8 | ─ | ─ | ─ | 1,057.1 | 11.1 | % | |||||||||||||||||||||||||||||||||||||
Non-operating (income) expenses | (206.9 | ) | ─ | ─ | 2.4 | ─ | (2.0 | ) | ─ | ─ | (32.3 | ) | 710.4 | ─ | 471.6 | ||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 592.4 | 34.5 | 10.7 | 306.4 | 225.5 | 29.4 | 34.9 | 29.8 | 32.3 | (710.4 | ) | ─ | 585.5 | ||||||||||||||||||||||||||||||||||||||
Income taxes [10] | (1,578.4 | ) | 12.7 | 3.9 | 86.3 | 124.4 | 10.2 | 12.8 | 10.9 | 10.4 | (166.1 | ) | 1,429.5 | (43.4 | ) | ||||||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | 2,170.8 | 21.8 | 6.8 | 220.1 | 101.1 | 19.2 | 22.1 | 18.9 | 21.9 | (544.3 | ) | (1,429.5 | ) | 628.9 | |||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 578.0 | ─ | ─ | 36.3 | 99.8 | ─ | ─ | ─ | ─ | (1.8 | ) | ─ | 712.3 | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 2,748.8 | $ | 21.8 | $ | 6.8 | $ | 256.4 | $ | 200.9 | $ | 19.2 | $ | 22.1 | $ | 18.9 | $ | 21.9 | $ | (546.1 | ) | $ | (1,429.5 | ) | $ | 1,341.2 | |||||||||||||||||||||||||
Diluted earnings per share** | $ | 5.63 | $ | 0.03 | $ | 0.01 | $ | 0.53 | $ | 0.41 | $ | 0.04 | $ | 0.05 | $ | 0.04 | $ | 0.04 | $ | (1.12 | ) | $ | (2.93 | ) | $ | 2.75 |
* 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. | |
**Totals may not add due to rounding. | |
[1] Costs associated with Project Renewal during the twelve months ended December 31, 2017 include $15.1 million of project-related costs and $19.4 million of restructuring costs. Project-related costs include inventory rationalization, advisory and consultancy costs, compensation and related costs of personnel dedicated to transformation projects, and other related costs. | |
[2] During the twelve months ended December 31, 2017, the Company recognized $10.7 million of non-cash charges related to the fair value step up of inventory related to the Chesapeake®, Sistema® and WoodWick® (Smith Mountain Industries) acquisitions. | |
[3] During the twelve months ended December 31, 2017, the Company incurred costs primarily associated with the Jarden integration of $359.0 million ($52.6 million of which is reported in discontinued operations), including $92.5 million of restructuring costs ($24.3 million of which is reported in discontinued operations). | |
[4] During the twelve months ended December 31, 2017, the Company incurred acquisition amortization costs of $284.9 million ($143.7 million of which is reported in discontinued operations). During the twelve months ended December 31, 2017, the Company recognized $85.0 million of impairment charges ($0.7 million of which are reported in discontinued operations), primarily associated with assets of the Winter Sports and Fire building. | |
[5] During the twelve months ended December 31, 2017, the Company recognized $29.4 million of transaction and related costs, which includes $2.0 million of hedge loss associated with the Sistema® acquisition. | |
[6] During the twelve months ended December 31, 2017, the Company recognized $34.9 million of costs primarily associated with the divestiture of the Tools business (excluding Dymo® industrial labeling) and Winter Sports business. | |
[7] During the twelve months ended December 31, 2017, the Company incurred $14.6 million of fire-related losses and costs, net of recoveries, in the Writing business and $13.0 million of bad debt related to a customer in the Baby business; and $2.2 million of consulting expenses for new accounting standards adoption. | |
[8] During the twelve months ended December 31, 2017, the Company incurred a $32.3 million loss related to the extinguishment of debt, consisting of a make-whole payment of $34.2 million and fees, partially offset by $1.9 million of non-cash write-offs. | |
[9] During the twelve months ended December 31, 2017, the Company recognized $713.0 million of net gains ($2.6 million of which is reported in discontinued operations) related to the sale of businesses, primarily Tools and Winter Sports. During the twelve months ended December 31, 2017, the Company recognized $166.1 million of deferred tax expense related to the difference between the book and tax basis on the sale of the Winter Sports business. | |
[10] During the twelve months ended December 31, 2017, the Company recognized a benefit of approximately $1.4 billion related to tax reform due to the revaluation of it's deferred tax liabilities for the change in the U.S. tax rate from 35% to 21%; $195.0 million of tax expense related to the mandatory repatriation tax ; and $87.2 million of tax benefit to reverse the Company's APB 23 liability on historical Jarden earnings. | |
[11] 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. | |||||||||||||||||||||||||||||||||||||||||||
Financial Worksheet - Segment Reporting | |||||||||||||||||||||||||||||||||||||||||||
For the three and twelve months ended December 31, 2018 and 2017 | |||||||||||||||||||||||||||||||||||||||||||
in Millions | |||||||||||||||||||||||||||||||||||||||||||
For the three months ended December 31, 2018 | For the three months ended December 31, 2017 | Year over year changes | |||||||||||||||||||||||||||||||||||||||||
Reported | Reported | Normalized | Normalized | Reported | Reported | Normalized | Normalized | Normalized | |||||||||||||||||||||||||||||||||||
Operating | Operating | Excluded | Operating | Operating | Operating | Operating | Excluded | Operating | Operating | Net Sales | Operating Income | ||||||||||||||||||||||||||||||||
Net Sales | Income | Margin | Items [1] | Income | Margin | Net Sales | Income | Margin | Items [2] | Income | Margin | $ | % | $ | % | ||||||||||||||||||||||||||||
FOOD AND APPLIANCES | 823.6 | (19.3 | ) | (2.3 | )% | 115.8 | 96.5 | 11.7 | % | 887.9 | 105.2 | 11.8 | % | 10.5 | 115.7 | 13.0 | % | (64.3 | ) | (7.2 | )% | (19.2 | ) | (16.6 | )% | ||||||||||||||||||
HOME AND OUTDOOR LIVING | 808.8 | 45.5 | 5.6 | % | 64.0 | 109.5 | 13.5 | % | 871.6 | 108.4 | 12.4 | % | 22.1 | 130.5 | 15.0 | % | (62.8 | ) | (7.2 | )% | (21.0 | ) | (16.1 | )% | |||||||||||||||||||
LEARNING AND DEVELOPMENT | 706.7 | 135.4 | 19.2 | % | 3.7 | 139.1 | 19.7 | % | 729.7 | 97.8 | 13.4 | % | 4.7 | 102.5 | 14.0 | % | (23.0 | ) | (3.2 | )% | 36.6 | 35.7 | % | ||||||||||||||||||||
OTHER | 1.5 | 0.4 | 26.7 | % | (0.1 | ) | 0.3 | 20.0 | % | ─ | 0.9 | ─ % | (1.5 | ) | (0.6 | ) | ─ % | 1.5 | ─ % | 0.9 | 150.0 | % | |||||||||||||||||||||
RESTRUCTURING | ─ | (18.0 | ) | ─ % | 18.0 | ─ | ─ % | ─ | (19.2 | ) | ─ % | 19.2 | ─ | ─ % | ─ | ─ % | ─ | ─ % | |||||||||||||||||||||||||
CORPORATE | ─ | (126.2 | ) | ─ % | 48.6 | (77.6 | ) | ─ % | ─ | (151.4 | ) | ─ % | 69.9 | (81.5 | ) | ─ % | ─ | ─ % | 3.9 | 4.8 | % | ||||||||||||||||||||||
$ | 2,340.6 | $ | 17.8 | 0.8 | % | $ | 250.0 | $ | 267.8 | 11.4 | % | $ | 2,489.2 | $ | 141.7 | 5.7 | % | $ | 124.9 | $ | 266.6 | 10.7 | % | $ | (148.6 | ) | (6.0 | )% | $ | 1.2 | 0.5 | % |
For the twelve months ended December 31, 2018 | For the twelve months ended December 31, 2017 | Year over year changes | ||||||||||||||||||||||||||||||||||||||||
Reported | Reported | Normalized | Normalized | Reported | Reported | Normalized | Normalized | Normalized | ||||||||||||||||||||||||||||||||||
Operating | Operating | Excluded | Operating | Operating | Operating | Operating | Excluded | Operating | Operating | Net Sales | Operating Income | |||||||||||||||||||||||||||||||
Net Sales | Income | Margin | Items | Income | Margin | Net Sales | Income | Margin | Items | Income | Margin | $ | % | $ | % | |||||||||||||||||||||||||||
FOOD AND APPLIANCES | 2,699.1 | (3,290.0 | ) | (121.9 | )% | 3,555.5 | 265.5 | 9.8 | % | 2,921.1 | 311.1 | 10.7 | % | 47.6 | 358.7 | 12.3 | % | (222.0 | ) | (7.6 | )% | (93.2 | ) | (26.0 | )% | |||||||||||||||||
HOME AND OUTDOOR LIVING | 2,946.7 | (4,237.7 | ) | (143.8 | )% | 4,509.5 | 271.8 | 9.2 | % | 3,114.1 | 274.0 | 8.8 | % | 75.1 | 349.1 | 11.2 | % | (167.4 | ) | (5.4 | )% | (77.3 | ) | (22.1 | )% | |||||||||||||||||
LEARNING AND DEVELOPMENT | 2,981.6 | 237.9 | 8.0 | % | 397.0 | 634.9 | 21.3 | % | 3,269.1 | 540.4 | 16.5 | % | 63.4 | 603.8 | 18.5 | % | (287.5 | ) | (8.8 | )% | 31.1 | 5.2 | % | |||||||||||||||||||
OTHER | 3.5 | 3.8 | 108.6 | % | (0.7 | ) | 3.1 | 88.6 | % | 247.7 | (89.5 | ) | (36.1 | )% | 91.3 | 1.8 | 0.7 | % | (244.2 | ) | (98.6 | )% | 1.3 | 72.2 | % | |||||||||||||||||
RESTRUCTURING | ─ | (80.5 | ) | ─ % | 80.5 | ─ | ─ % | ─ | (87.6 | ) | ─ % | 87.6 | ─ | ─ % | ─ | ─ % | ─ | ─ % | ||||||||||||||||||||||||
CORPORATE | ─ | (462.0 | ) | ─ % | 164.3 | (297.7 | ) | ─ % | ─ | (562.9 | ) | ─ % | 306.6 | (256.3 | ) | ─ % | ─ | ─ % | (41.4 | ) | (16.2 | )% | ||||||||||||||||||||
$ | 8,630.9 | $ | (7,828.5 | ) | (90.7 | )% | $ | 8,706.1 | $ | 877.6 | 10.2 | % | $ | 9,552.0 | $ | 385.5 | 4.0 | % | $ | 671.6 | $ | 1,057.1 | 11.1 | % | $ | (921.1 | ) | (9.6 | )% | $ | (179.5 | ) | (17.0 | )% |
[1] | The three months ended December 31, 2018 excluded items consists of $47.4 million of costs primarily associated with the Accelerated Transformation Plan, $18.0 million of which was charged to restructuring; $2.5 million of transaction and related costs; $11.0 million of divestiture costs; $(1.3) million net of recoveries for fire-related losses in the Writing business; $1.2 million of consulting for accounting standard adoptions; $32.5 million of acquisition amortization costs and $156.7 million of impairment charges primarily related to goodwill, tradenames and customer relationships. |
[2] | The three months ended December 31, 2017 excluded items consist of $6.2 million of costs associated with Project Renewal ($1.7 million of which was charged to restructuring); $78.1 million primarily related to the Jarden integration ($17.5 million of which was charged to restructuring); $2.4 million of costs related to the fair value step-up of inventory related to the Chesapeake® acquisition; $7.1 million of transaction costs primarily related to the Sistema® and Chesapeake® acquisitions; $2.5 million of costs primarily related to the divestiture of the Winter Sports business; $(3.6) million of fire-related losses net of recoveries in the Writing business; $(2.0) million reversal of previously recognized bad debt related to a customer in the Baby business; $2.2 million of consulting expenses for new accounting standards adoption and $32.0 million of amortization of acquisition-related intangible assets. |
NEWELL BRANDS INC. | ||||||||||||||||||||||||||||||
CORE SALES ANALYSIS BY SEGMENT (UNAUDITED) | ||||||||||||||||||||||||||||||
FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 AND 2017 | ||||||||||||||||||||||||||||||
in Millions | ||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||
2018
Net Sales (REPORTED) |
Acquisitions
and Divestitures, Net [1] [2] |
Net Sales
Base Business |
Currency Impact
[3] |
2018
Core Sales |
2017
Net Sales [4] |
Divestitures and Other, Net
[1] |
ASC 606
Revenue Recognition Adjustments [3] |
2017
Core Sales |
Increase (Decrease)
Core Sales $ % |
|||||||||||||||||||||
FOOD AND APPLIANCES | 823.6 | ─ | 823.6 | 20.1 | 843.7 | 887.9 | (0.1 | ) | (29.1 | ) | 858.7 | (15.0 | ) | (1.7 | )% | |||||||||||||||
HOME AND OUTDOOR LIVING | 808.8 | (0.7 | ) | 808.1 | 9.3 | 817.4 | 871.6 | (13.5 | ) | (15.2 | ) | 842.9 | (25.5 | ) | (3.0 | )% | ||||||||||||||
LEARNING AND DEVELOPMENT | 706.7 | (0.8 | ) | 705.9 | 13.3 | 719.2 | 729.7 | (7.9 | ) | (14.8 | ) | 707.0 | 12.2 | 1.7 | % | |||||||||||||||
OTHER | 1.5 | (1.5 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ % | ||||||||||||||||||
TOTAL COMPANY | $ | 2,340.6 | $ | (3.0 | ) | $ | 2,337.6 | $ | 42.7 | $ | 2,380.3 | $ | 2,489.2 | $ | (21.5 | ) | $ | (59.1 | ) | $ | 2,408.6 | $ | (28.3 | ) | (1.2 | )% | ||||
CORE SALES ANALYSIS BY GEOGRAPHY (UNAUDITED) | ||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||
2018
Net Sales (REPORTED) |
Acquisitions
and Divestitures, Net [1] [2] |
Net Sales
Base Business |
Currency Impact
[3] |
2018
Core Sales |
2017
Net Sales [4] |
Divestitures and Other, Net
[1] |
ASC 606
Revenue Recognition Adjustments [3] |
2017
Core Sales |
Increase (Decrease)
Core Sales $ % |
|||||||||||||||||||||
NORTH AMERICA | 1,703.4 | (2.0 | ) | 1,701.4 | 4.1 | 1,705.5 | 1,803.4 | (4.9 | ) | (51.2 | ) | 1,747.3 | (41.8 | ) | (2.4 | )% | ||||||||||||||
EUROPE, MIDDLE EAST, AFRICA | 278.4 | (0.4 | ) | 278.0 | 9.7 | 287.7 | 302.7 | (8.7 | ) | (4.6 | ) | 289.4 | (1.7 | ) | (0.6 | )% | ||||||||||||||
LATIN AMERICA | 198.0 | (0.1 | ) | 197.9 | 22.8 | 220.7 | 207.0 | 0.1 | (3.7 | ) | 203.4 | 17.3 | 8.5 | % | ||||||||||||||||
ASIA PACIFIC | 160.8 | (0.5 | ) | 160.3 | 6.1 | 166.4 | 176.1 | (8.0 | ) | 0.4 | 168.5 | (2.1 | ) | (1.2 | )% | |||||||||||||||
TOTAL COMPANY | $ | 2,340.6 | $ | (3.0 | ) | $ | 2,337.6 | $ | 42.7 | $ | 2,380.3 | $ | 2,489.2 | $ | (21.5 | ) | $ | (59.1 | ) | $ | 2,408.6 | $ | (28.3 | ) | (1.2 | )% |
“Core Sales” provides a consistent basis for year-over-year comparisons in sales as it excludes the impacts of acquisitions, completed divestitures, retail store openings and closings, changes in foreign currency and the impact of the adoption of revenue recognition standard ASC 606 as of January 1, 2018. Core Sales Increases/(Decreases) excludes the impact of currency, acquisitions and divestitures. | |
[1] | Divestitures include actual divestitures of two winter sports units, Völkl® and K2® products and a remaining portion of the Rubbermaid® Consumer Storage business; the exit of a distribution agreement with Sprue Aegis during the first quarter of 2018; the transition of regional sales to a licensing arrangement for Graco® within the European region and the removal of specialized writing sales associated with the Bond® brand in anticipation of closing the business. |
[2] | Acquisitions exclude net sales until the one year anniversary of their respective dates of acquisition, comprised primarily of Chesapeake® Bay Candle. Since the completion of the Jarden acquisition and consistent with standard retail practice, the Home Fragrance and the Outdoor and Recreation businesses in the Home and Outdoor Living 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 through their closing dates. |
[3] | “Currency Impact” represents the effect of foreign currency on 2018 reported sales and is calculated as the difference between the 2018 reported sales and by applying the prior year average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures). |
[4] | The Company has revised the classification of certain items, principally related to customer supply chain related payments, formerly included in costs of goods sold. The impact to net sales for the three months ended December 31, 2017 was a decrease of $9.5 million. |
[5] | Certain costs and cash payments made to customers previously recorded in costs of products sold and selling, general and administrative expenses have been reclassified against sales as they do not meet the specific criteria of providing a distinct good or service under the new guidance - ASC 606. |
NEWELL BRANDS INC. | ||||||||||||||||||||||||||||||||
CORE SALES ANALYSIS BY SEGMENT (UNAUDITED) | ||||||||||||||||||||||||||||||||
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2018 AND 2017 | ||||||||||||||||||||||||||||||||
in Millions |
||||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 |
|
||||||||||||||||||||||||||||||
2018 Net Sales (REPORTED) |
Acquisitions and |
Net Sales
Base Business |
Currency |
2018
Core Sales |
2017
Net Sales [4] |
Divestitures [1] |
ASC 606 Revenue Recognition Adjustments |
2017
Core Sales |
Increase (Decrease) |
|||||||||||||||||||||||
$ |
% |
|||||||||||||||||||||||||||||||
FOOD AND APPLIANCES | 2,699.1 | (30.8 | ) | 2,668.3 | 32.6 | 2,700.9 | 2,921.1 | (2.9 | ) | (105.7 | ) | 2,812.5 | (111.6 | ) | (4.0 | )% | ||||||||||||||||
HOME AND OUTDOOR LIVING | 2,946.7 | (65.3 | ) | 2,881.4 | (14.0 | ) | 2,867.4 | 3,114.1 | (44.5 | ) | (65.1 | ) | 3,004.5 | (137.1 | ) | (4.6 | )% | |||||||||||||||
LEARNING AND DEVELOPMENT | 2,981.6 | (3.3 | ) | 2,978.3 | (1.6 | ) | 2,976.7 | 3,269.1 | (16.3 | ) | (53.3 | ) | 3,199.5 | (222.8 | ) | (7.0 | )% | |||||||||||||||
OTHER | 3.5 | (3.5 | ) | ─ | ─ | ─ | 247.7 | (245.6 | ) | (2.5 | ) | (0.4 | ) | 0.4 |
(100.0 |
)% |
||||||||||||||||
TOTAL COMPANY | $ | 8,630.9 | $ | (102.9 | ) | $ | 8,528.0 | $ | 17.0 | $ | 8,545.0 | $ | 9,552.0 | $ | (309.3 | ) | $ | (226.6 | ) | $ | 9,016.1 | $ | (471.1 | ) | (5.2 | )% | ||||||
CORE SALES ANALYSIS BY GEOGRAPHY (UNAUDITED) | ||||||||||||||||||||||||||||||||
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
2018
Net Sales (REPORTED) |
Acquisitions and |
Net Sales
Base Business |
Currency Impact
[3] |
2018
Core Sales |
2017
Net Sales [4] |
Divestitures [1] |
ASC 606 Revenue Recognition Adjustments [3] |
2017
Core Sales |
Increase (Decrease) Core Sales |
|||||||||||||||||||||||
$ |
% |
|||||||||||||||||||||||||||||||
NORTH AMERICA | 6,202.4 | (62.8 | ) | 6,139.6 | 0.4 | 6,140.0 | 6,936.4 | (175.7 | ) | (190.6 | ) | 6,570.1 | (430.1 | ) | (6.5 | )% | ||||||||||||||||
EUROPE, MIDDLE EAST, AFRICA | 1,096.1 | (13.2 | ) | 1,082.9 | (37.8 | ) | 1,045.1 | 1,215.6 | (79.7 | ) | (15.7 | ) | 1,120.2 | (75.1 | ) | (6.7 | )% | |||||||||||||||
LATIN AMERICA | 647.8 | (0.1 | ) | 647.7 | 50.8 | 698.5 | 679.7 | (8.9 | ) | (12.0 | ) | 658.8 | 39.7 | 6.0 | % | |||||||||||||||||
ASIA PACIFIC | 684.6 | (26.8 | ) | 657.8 | 3.6 | 661.4 | 720.3 | (45.0 | ) | (8.3 | ) | 667.0 | (5.6 | ) | (0.8 | )% | ||||||||||||||||
TOTAL COMPANY | $ | 8,630.9 | $ | (102.9 | ) | $ | 8,528.0 | $ | 17.0 | $ | 8,545.0 | $ | 9,552.0 | $ | (309.3 | ) | $ | (226.6 | ) | $ | 9,016.1 | $ | (471.1 | ) | (5.2 | )% |
“Core Sales” provides a consistent basis for year-over-year comparisons in sales as it excludes the impacts of acquisitions, completed divestitures, retail store openings and closings, changes in foreign currency and the impact of the adoption of revenue recognition standard ASC 606 as of January 1, 2018. Core Sales Increases/(Decreases) excludes the impact of currency, acquisitions and divestitures. | |
[1] | Divestitures include actual divestitures of Tools (excluding Dymo Industrial Labelling) in the first quarter of 2017; Fire Building, Lehigh® and Teutonia® businesses in the second quarter of 2017; two winter sports units, Völkl® and K2® products and a remaining portion of the Rubbermaid® Consumer Storage business during the third quarter of 2017; the exit of a distribution agreement with Sprue Aegis during the first quarter of 2018; the transition of regional sales to a licensing arrangement for Graco® within the European region entered into during the third quarter of 2018 and the removal of specialized writing sales associated with the Bond® brand in anticipation of closing the business. |
[2] | Acquisitions exclude net sales until the one year anniversary of their respective dates of acquisition, comprised of Chesapeake® Bay Candle and Sistema®. Since the completion of the Jarden acquisition and consistent with standard retail practice, the Home Fragrance and the Outdoor and Recreation businesses in the Home and Outdoor Living 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 through their closing dates. |
[3] | “Currency Impact” represents the effect of foreign currency on 2018 reported sales and is calculated as the difference between the 2018 reported sales and by applying the prior year average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures). |
[4] | The Company has revised the classification of certain items, principally related to customer supply chain related payments, formerly included in costs of goods sold. The impact to net sales for the twelve months ended December 31, 2017 was a decrease of $40.1 million. |
[5] | Certain costs and cash payments made to customers previously recorded in costs of products sold and selling, general and administrative expenses have been reclassified against sales as they do not meet the specific criteria of providing a distinct good or service under the new guidance - ASC 606. |
NEWELL BRANDS INC. | ||||
Reconciliation of Non-GAAP Measures | ||||
in Millions | ||||
Reconciliation of Net Debt and Adjusted EBITDA: | ||||
As Reported | ||||
At December 31, 2018 | ||||
NET DEBT RECONCILIATION: | ||||
Short term debt and current portion of long term debt | $ | 318.7 | ||
Long term debt | 6,696.3 | |||
Gross debt | 7,015.0 | |||
Less: Cash and cash equivalents | 495.7 | |||
NET DEBT | $ | 6,519.3 | ||
EBITDA RECONCILIATION: | ||||
Net Income (loss) | (6,917.9 | ) | ||
Income tax provision (benefit) | (1,242.0 | ) | ||
Interest expense, net | 446.3 | |||
Loss on extinguishment of debt | 4.1 | |||
Depreciation and amortization | 433.9 | |||
Earnings before interest, taxes, depreciation and amortization (EBITDA) | (7,275.6 | ) | ||
Impairment charges | 9,789.5 | |||
Restructuring costs, net | 90.0 | |||
Integration costs | 115.9 | |||
Transaction and related costs | 15.4 | |||
Divestiture costs | 69.0 | |||
Other non-recurring costs | 25.0 | |||
Net gain (loss) on sale of business | (832.9 | ) | ||
Earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) | $ | 1,996.3 | ||
GROSS DEBT TO ADJUSTED EBITDA RATIO | 3.5 |
The Company defines net debt as total debt less the total of cash, cash equivalents and current and long term marketable securities. | |
The Company believes net debt is meaningful to investors as it considers net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. | |
The Company defines Leverage Ratio as Gross Debt divided by Adjusted EBITDA. | |
The Company's debt has certain financial covenants such as a debt to equity ratio and interest coverage ratio; however, the Gross Debt Leverage ratio is a ratio used by management and is not prescribed in the Company's debt covenants. |
NEWELL BRANDS INC. | ||||||
Reconciliation of Non-GAAP Measures | ||||||
Core Sales Outlook | ||||||
For the Three Months Ending March 31, 2019 | ||||||
Estimated Net Sales Change (GAAP) | -6% | to | -8% | |||
Add: Unfavorable Foreign Exchange and Divestitures [1] [2] | 4% | to | 4% | |||
Core Sales Change | -2% | to | -4% |
[1] | “Currency Impact” represents the effect of foreign currency on 2019 projected sales and is calculated as the difference between the 2019 reported sales vs 2019 sales when applying the prior year average monthly exchange rates to the current year local currency sales amounts (excluding acquisitions and divestitures). |
[2] | Divestitures include the exit of a distribution agreement with Sprue Aegis during the first quarter of 2018, the transition of regional sales to a licensing arrangement for Graco® within the European region entered into during the third quarter of 2018, the removal of specialized writing sales associated with the Bond® brand in anticipation of exiting the business and, consistent with standard retail practice, current and prior period net sales from retail store closures from the decision date to close through their closing dates. |
NEWELL BRANDS INC. | ||||||||||||||||||||||||||||||||||
Reconciliation of GAAP and Non-GAAP Information | ||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | ||||||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||||||
For the three months ended March 31, 2018 | ||||||||||||||||||||||||||||||||||
GAAP Measure | Acquisition | Transaction | Other | Net gain/(loss) | Non-GAAP Measure | |||||||||||||||||||||||||||||
Integration | amortization | and | Divestiture | non-recurring | on sale | Percentage | ||||||||||||||||||||||||||||
Reported | costs [1] | costs [2] | related costs [3] | costs [4] | items [5] | of business [6] | Normalized* | of Sales | ||||||||||||||||||||||||||
Cost of products sold | $ | 1,206.2 | $ | (1.2 | ) | ─ | ─ | ─ | $ | 2.8 | ─ | $ | 1,207.8 | 66.7 | % | |||||||||||||||||||
Gross profit | 605.3 | 1.2 | ─ | ─ | ─ | (2.8 | ) | ─ | 603.7 | 33.3 | % | |||||||||||||||||||||||
Selling, general and administrative expenses | 626.3 | (29.2 | ) | (33.5 | ) | (5.6 | ) | (1.9 | ) | (27.6 | ) | ─ | 528.5 | 29.2 | % | |||||||||||||||||||
Restructuring costs | 5.4 | (5.4 | ) | ─ | ─ | ─ | ─ | ─ | ─ | |||||||||||||||||||||||||
Impairment charges | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||
Operating income | (26.4 | ) | 35.8 | 33.5 | 5.6 | 1.9 | 24.8 | ─ | 75.2 | 4.2 | % | |||||||||||||||||||||||
Non-operating (income) expenses | 114.7 | ─ | ─ | ─ | ─ | (0.2 | ) | 0.6 | 115.1 | |||||||||||||||||||||||||
Income (loss) before income taxes | (141.1 | ) | 35.8 | 33.5 | 5.6 | 1.9 | 25.0 | (0.6 | ) | (39.9 | ) | |||||||||||||||||||||||
Income taxes [7] | (86.4 | ) | 8.6 | 8.0 | 1.3 | 0.4 | 5.9 | (0.1 | ) | (62.3 | ) | |||||||||||||||||||||||
Net income (loss) from continuing operations | (54.7 | ) | 27.2 | 25.5 | 4.3 | 1.5 | 19.1 | (0.5 | ) | 22.4 | ||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 108.0 | 4.9 | 24.1 | ─ | 4.2 | 0.1 | ─ | 141.3 | ||||||||||||||||||||||||||
Net income (loss) | $ | 53.3 | $ | 32.1 | $ | 49.6 | $ | 4.3 | $ | 5.7 | $ | 19.2 | $ | (0.5 | ) | $ | 163.7 | |||||||||||||||||
Diluted earnings per share** | $ | 0.11 | $ | 0.07 | $ | 0.10 | $ | 0.01 | $ | 0.01 | $ | 0.04 | $ ─ | $ | 0.34 |
* 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. | |
**Totals may not add due to rounding. | |
[1] During the three months ended March 31, 2018, the Company incurred costs primarily associated with the Accelerated Transformation Plan of $42.2 million ($6.4 million of which is reported in discontinued operations), including $7.9 million of restructuring costs ($2.5 million of which is reported in discontinued operations). |
|
[2] During the three months ended March 31, 2018 the Company incurred acquisition amortization costs of $65.1 million ($31.6 million of which is reported in discontinued operations). | |
[3] During the three months ended March 31, 2018, the Company recognized transaction and related costs of $5.6 million. |
|
[4] During the three months ended March 31, 2018, the Company recognized $7.4 million of costs ($5.5 million of which are reported in discontinued operations) primarily related to costs associated with the planned divestitures of Goody, Waddington, Team Sports, Process Solutions and Commercial and Consumer Solutions businesses. | |
(5) During the three months ended March 31, 2018, the Company recorded $2.8 million, net of recoveries, for fire-related losses in the Writing business; $21.6 million of bad debt related to a customer in the Baby business; $6.0 million of costs related to the proxy contest, and $0.3 million of pension settlement costs. | |
[6] During the three months ended March 31, 2018, the Company recognized a gain of $0.6 million for working capital adjustment related to the sale of the Tools business. | |
[7] 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 | ||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | ||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||||||||||
For the three months ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||||
GAAP Measure | Acquisition | Transaction | Other | Net gain/(loss) | Non-GAAP Measure | |||||||||||||||||||||||||||||||||
Integration | amortization | and | Divestiture | non-recurring | on sale | Percentage | ||||||||||||||||||||||||||||||||
Reported | costs [1] | costs [2] | related costs [3] | costs [4] | items [5] | of business [6] | Tax items [7] | Normalized* | of Sales | |||||||||||||||||||||||||||||
Cost of products sold | $ | 1,426.8 | $ | (1.6 | ) | ─ | ─ | ─ | $ | 2.4 | ─ | ─ | $ | 1,427.6 | 64.8 | % | ||||||||||||||||||||||
Gross profit | 774.8 | 1.6 | ─ | ─ | ─ | (2.4 | ) | ─ | ─ | 774.0 | 35.2 | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 613.6 | (22.0 | ) | (32.8 | ) | (5.6 | ) | (2.2 | ) | (15.8 | ) | ─ | ─ | 535.2 | 24.3 | % | ||||||||||||||||||||||
Restructuring costs | 45.7 | (45.7 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||
Impairment charges | 31.6 | ─ | (31.6 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||
Operating income | 83.9 | 69.3 | 64.4 | 5.6 | 2.2 | 13.4 | ─ | ─ | 238.8 | 10.8 | % | |||||||||||||||||||||||||||
Non-operating (income) expenses | 107.3 | ─ | ─ | ─ | ─ | 11.0 | ─ | ─ | 118.3 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | (23.4 | ) | 69.3 | 64.4 | 5.6 | 2.2 | 2.4 | ─ | ─ | 120.5 | ||||||||||||||||||||||||||||
Income taxes [7] | 53.0 | (26.8 | ) | (24.9 | ) | (2.2 | ) | (0.8 | ) | (0.9 | ) | 5.6 | 2.5 | 5.5 | ||||||||||||||||||||||||
Net income (loss) from continuing operations | (76.4 | ) | 96.1 | 89.3 | 7.8 | 3.0 | 3.3 | (5.6 | ) | (2.5 | ) | 115.0 | ||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 208.1 | 8.0 | 458.5 | ─ | 19.1 | 0.2 | (411.9 | ) | 3.9 | 285.9 | ||||||||||||||||||||||||||||
Net income (loss) | $ | 131.7 | $ | 104.1 | $ | 547.8 | $ | 7.8 | $ | 22.1 | $ | 3.5 | $ | (417.5 | ) | $ | 1.4 | $ | 400.9 | |||||||||||||||||||
Diluted earnings per share** | $ | 0.27 | $ | 0.21 | $ | 1.12 | $ | 0.02 | $ | 0.05 | $ | 0.01 | $ | (0.86 | ) | $ | 0.00 | $ | 0.82 |
* 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. | |
**Totals may not add due to rounding. | |
[1] During the three months ended June 30, 2018, the Company incurred costs primarily associated with the Accelerated Transformation Plan of $76.6 million ($7.3 million of which is reported in discontinued operations), including $48.2 million of restructuring costs ($2.5 million of which is reported in discontinued operations). |
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[2] During the three months ended June 30, 2018, the Company incurred acquisition amortization costs of $42.2 million ($9.4 million of which is reported in discontinued operations). During the three months ended June 30, 2018, the Company recognized impairment charges of $485.6 million ($31.6 million, primarily related to Home Fragrance fixed assets impairments, and $454.0 million reported in discontinued operations related to goodwill impairment attributable to the Process Solutions businesses held for sale). | |
[3] During the three months ended June 30, 2018, the Company recognized transaction and related costs of $5.6 million. |
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[4] During the three months ended June 30, 2018, the Company recognized $19.3 million of costs ($17.1 million of which were reported in discontinued operations) primarily related to costs associated with the planned divestitures of Goody, Waddington, Team Sports, Process Solutions and Commercial and Consumer Solutions businesses. | |
(5) During the three months ended June 30, 2018, the Company recorded $2.4 million, net of recoveries, for fire-related losses in the Writing business; $3.9 million of bad debt related to a customer in the Baby business; $10.7 million of costs related to the proxy contest, $1.2 million of consulting for accounting standard adoption, $11.3 million gain on legacy Jarden investment, and $0.3 million of pension settlement costs. | |
[6] During the three months ended June 30, 2018, the Company recognized a gain of $597.6 million related to the sale of the Waddington business and a loss of $136.4 million related to the sale of the Rawlings business. | |
[7] 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 | ||||||||||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | ||||||||||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||
GAAP Measure | Acquisition | Transaction | Other | Net gain/(loss) | Non-GAAP Measure | |||||||||||||||||||||||||||||||||
Integration | amortization | and | Divestiture | non-recurring | on sale | Percentage | ||||||||||||||||||||||||||||||||
Reported | costs [1] | costs [2] | related costs [3] | costs [4] | items [5] | of business [6] | Tax items [7] | Normalized* | of Sales | |||||||||||||||||||||||||||||
Cost of products sold | $ | 1,460.2 | $ | (0.2 | ) | $ ─ | $ ─ | $ ─ | $ | 4.0 | $ ─ | $ ─ | $ | 1,464.0 | 64.3 | % | ||||||||||||||||||||||
Gross profit | 817.0 | 0.2 | ─ | ─ | ─ | (4.0 | ) | ─ | ─ | 813.2 | 35.7 | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 575.7 | (19.5 | ) | (32.6 | ) | (1.7 | ) | (3.9 | ) | (0.6 | ) | ─ | ─ | 517.4 | 22.7 | % | ||||||||||||||||||||||
Restructuring costs | 11.4 | (11.4 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||
Impairment charges | 8,133.7 | ─ | (8,133.7 | ) | ─ | ─ | ─ | ─ | ─ | ─ | ||||||||||||||||||||||||||||
Operating income (loss) | (7,903.8 | ) | 31.1 | 8,166.3 | 1.7 | 3.9 | (3.4 | ) | ─ | ─ | 295.8 | 13.0 | % | |||||||||||||||||||||||||
Non-operating (income) expenses | 109.5 | ─ | ─ | ─ | ─ | (0.2 | ) | ─ | ─ | 109.3 | ||||||||||||||||||||||||||||
Income (loss) before income taxes | (8,013.3 | ) | 31.1 | 8,166.3 | 1.7 | 3.9 | (3.2 | ) | ─ | ─ | 186.5 | |||||||||||||||||||||||||||
Income taxes [8] | (1,218.0 | ) | 7.0 | 1,141.1 | 0.4 | 0.9 | (0.7 | ) | ─ | ─ | (69.3 | ) | ||||||||||||||||||||||||||
Net income (loss) from continuing operations | (6,795.3 | ) | 24.1 | 7,025.2 | 1.3 | 3.0 | (2.5 | ) | ─ | ─ | 255.8 | |||||||||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | (515.7 | ) | 3.4 | 622.8 | ─ | 4.2 | 0.1 | (13.9 | ) | 27.6 | 128.5 | |||||||||||||||||||||||||||
Net income (loss) | $ | (7,311.0 | ) | $ | 27.5 | $ | 7,648.0 | $ | 1.3 | $ | 7.2 | $ | (2.4 | ) | $ | (13.9 | ) | $ | 27.6 | $ | 384.3 | |||||||||||||||||
Diluted earnings per share** | $ | (15.52 | ) | $ | 0.06 | $ | 16.23 | $ ─ | $ | 0.02 | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.06 | $ | 0.81 |
* 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 481.7 million shares for the nine months ended September 30, 2018. | |
Totals may not add due to rounding. | |
[1] During the three months ended September 30, 2018, the Company incurred costs primarily associated with the Accelerated Transformation Plan of $36.8 million ($5.7 million of which is reported in discontinued operations), including $14.2 million of restructuring costs ($2.8 million of which is reported in discontinued operations). | |
[2] During the three months ended September 30, 2018, the Company incurred acquisition amortization costs of $32.6 million. During the three months ended September 30, 2018, the Company recognized impairment charges of $8.8 billion ($4.5 billion related to goodwill, $4.3 billion to tradenames) of which $628.8 million was reported in discontinued operations primarily related to the Jostens and Gaming businesses held for sale. | |
[3] During the three months ended September 30, 2018, the Company recognized transaction and related costs of $1.7 million. | |
[4] During the three months ended September 30, 2018, the Company recognized $11.0 million of costs ($7.1 million of which were reported in discontinued operations) primarily related to the divestitures of Goody, Waddington, Team Sports and the planned divestitures of Process Solutions and Commercial and Consumer Solutions businesses. |
[5] During the three months ended September 30, 2018, the Company recorded $4.0 million, net of recoveries, for fire-related losses in the Writing business; $0.6 million of consulting costs for accounting standard adoption, and $0.3 million of pension settlement costs ($0.1 million of which is reported in discontinued operations). | |
[6] During the three months ended September 30, 2018, the Company recognized a gain of $20.4 million related to the sale of the Goody business, $5.7 million and $1.4 million net gains primarily due to working capital adjustments related to the sale of the Rawlings and Waddington businesses, respectively. | |
[7] During the three months ended September 30, 2018 the Company recognized deferred tax expense related to the difference between the book and tax basis in the Goody, Jostens, Gaming and Fishing businesses divested and held for sale. | |
[8] 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. | ||||||||||||||||||||||||||||||
2018 Normalized Results, Adjusted for Normalization Practice Change | ||||||||||||||||||||||||||||||
CERTAIN LINE ITEMS | ||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||
Q1 2018 | Adjustments for | Q1 2018 | Q2 2018 | Adjustments for | Q2 2018 | Q3 2018 | Adjustments for | Q3 2018 | Q4 2018 | Adjustments for | Q4 2018 | FY 2018 | Adjustments for | FY 2018 | ||||||||||||||||
Normalized* | 2019 Normalization | Normalized* | Normalized* | 2019 Normalization | Normalized* | Normalized* | 2019 Normalization | Normalized* | Normalized* | 2019 Normalization | Normalized* | Normalized* | 2019 Normalization | Normalized* | ||||||||||||||||
As Presented | Practice [1] | As Adjusted | As Presented | Practice [1] | As Adjusted | As Presented | Practice [1] | As Adjusted | As Presented | Practice [1] | As Adjusted | As Presented | Practice [1] | As Adjusted | ||||||||||||||||
Cost of products sold | $ 1,207.8 | $ 1.2 | $ 1,209.0 | $ 1,427.6 | $ 1.6 | $ 1,429.2 | $ 1,464.0 | $ 0.2 | $ 1,464.2 | $ 1,528.8 | $ 1.4 | $ 1,530.2 | $ 5,628.2 | $ 4.4 | $ 5,632.6 | |||||||||||||||
Gross profit | 603.7 | (1.2) | 602.5 | 774.0 | (1.6) | 772.4 | 813.2 | (0.2) | 813.0 | 811.8 | (1.4) | 810.4 | 3,002.7 | (4.4) | 2,998.3 | |||||||||||||||
Selling, general and administrative expenses | 528.5 | 29.2 | 557.7 | 535.2 | 23.0 | 558.2 | 517.4 | 20.1 | 537.5 | 544.0 | 19.1 | 563.1 | 2,125.1 | 91.4 | 2,216.5 | |||||||||||||||
Operating income (loss) | 75.2 | (30.4) | 44.8 | 238.8 | (24.6) | 214.2 | 295.8 | (20.3) | 275.5 | 267.8 | (20.5) | 247.3 | 877.6 | (95.8) | 781.8 | |||||||||||||||
Non-operating (income) expenses | 115.1 | ─ | 115.1 | 118.3 | ─ | 118.3 | 109.3 | ─ | 109.3 | 103.0 | ─ | 103.0 | 445.7 | ─ | 445.7 | |||||||||||||||
Income before income taxes | (39.9) | (30.4) | (70.3) | 120.5 | (24.6) | 95.9 | 186.5 | (20.3) | 166.2 | 164.8 | (20.5) | 144.3 | 431.9 | (95.8) | 336.1 | |||||||||||||||
Income taxes (benefit) | (62.3) | (7.6) | (69.9) | 5.5 | (6.2) | (0.7) | (69.3) | (5.1) | (74.4) | (49.5) | (5.1) | (54.6) | (175.6) | (24.0) | (199.6) | |||||||||||||||
Net income (loss) from continuing operations | 22.4 | (22.8) | (0.4) | 115.0 | (18.4) | 96.6 | 255.8 | (15.2) | 240.6 | 214.3 | (15.4) | 198.9 | 607.5 | (71.8) | 535.7 | |||||||||||||||
Income (loss) from discontinued operations, net of tax | 141.3 | (3.0) | 138.3 | 285.9 | (3.7) | 282.2 | 128.5 | (2.3) | 126.2 | 106.8 | (0.3) | 106.5 | 662.5 | (9.3) | 653.2 | |||||||||||||||
Net income (loss) | 163.7 | (25.8) | 137.9 | 400.9 | (22.1) | 378.8 | 384.3 | (17.5) | 366.8 | 321.1 | (15.7) | 305.4 | 1,270.0 | (81.1) | 1,188.9 | |||||||||||||||
Diluted earnings per share** | $ 0.34 | $ (0.05) | $ 0.28 | $ 0.82 | $ (0.05) | $ 0.78 | $ 0.81 | $ (0.04) | $ 0.77 | $ 0.71 | $ (0.03) | $ 0.68 | $ 2.68 | $ (0.17) | $ 2.51 |
* Normalized results are Non-GAAP financial measures and exclude normalized adjustments. See the respective Reconciliation of GAAP and Non-GAAP Information for each respective quarter for a discussion of each of these adjustments. | |
**Totals may not add due to rounding. | |
[1] Effective in 2019, the Company will no longer exclude from its normalized earnings the cost of its Transformation Office, consisting of consulting costs and employees fully dedicated to executing the integration of the merger of Newell Rubbermaid and Jarden Corporation, as well as other costs primarily related to the integration and startup of the combined business, in recognition of the progress toward completion of the integration. For comparability purposes, the 2018 normalized results for the quarterly and annual periods presented above were adjusted to illustrate the impact as if the new 2019 Normalization Practice was in effect during 2018. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190215005187/en/
Source:
Investor Contact:
Nancy O’Donnell
SVP, Investor Relations and Corporate Communications
+1 (201) 610-6857
nancy.odonnell@newellco.com
Media Contact:
Claire-Aude Staraci
Director, External
Communications
+1 (201) 610-6717
claireaude.staraci@newellco.com