Newell Rubbermaid Reports Second Quarter 2010 Results
ATLANTA, Jul 30, 2010 (BUSINESS WIRE) --
Copyright Business Wire 2010
--Gross Margin Expansion of 220 Basis Points
--Strong Operating Cash Flow
Newell Rubbermaid (NYSE: NWL) today announced second quarter 2010
financial results, including normalized earnings per share of $0.51, an
8.5 percent improvement over prior year results, and gross margin
expansion of 220 basis points. The company also reported operating cash
flow of $154.0 million, a 55.2 percent improvement over the prior year
quarter.
"I am very pleased with the performance of our business," said Mark
Ketchum, President and Chief Executive Officer. "We delivered strong
second quarter results across almost all metrics, including core sales
growth of almost 4 percent, if adjusted for the customer orders shift
from the second quarter to the first quarter in advance of an April SAP
implementation. This growth was the result of a combination of market
share gains and distribution wins as well as strong consumer demand in
Latin American and developing markets in EMEA. We also generated
significant improvement in gross margin this quarter driven by
productivity gains and improved product mix. The solid progress we've
made year to date despite a lackluster economy gives us increased
confidence that our business model is working."
Net sales in the second quarter were $1.50 billion, down 0.5 percent
compared with the prior year. Core sales improved 1.5 percent. Core
sales growth was 3.8 percent if adjusted for a timing shift in customer
buying patterns from the second quarter to the first quarter in advance
of an April SAP implementation at the Rubbermaid Consumer and Rubbermaid
Commercial Products business units. The year over year impact of last
year's product line exits reduced net sales by 1.9 percent, and foreign
currency translation had a nominal impact on sales.
Gross margin for the quarter was 39.3 percent, up 220 basis points from
last year as productivity gains and improved product mix more than
offset the impact of input cost inflation.
Operating income was $226.3 million, or 15.1 percent of sales, excluding
$22.8 million of Project Acceleration restructuring costs and
restructuring related costs incurred in connection with the European
Transformation Plan. In 2009, operating income was $229.0 million, or
15.2 percent of sales, excluding Project Acceleration restructuring
costs of $29.5 million.
Normalized earnings were $0.51 per diluted share, compared to prior year
results of $0.47 per diluted share, driven primarily by improved gross
margin and a lower tax rate resulting from the resolution of a tax
examination. For the second quarter 2010, normalized diluted earnings
per share exclude $0.06 per diluted share for restructuring and
restructuring related costs, net of tax, $0.05 per diluted share of
dilution related to the conversion feature of the convertible notes
issued in March 2009 and the impact of associated hedge transactions,
and a benefit of $0.01 per diluted share related to the impact of
hyperinflationary accounting for the company's Venezuelan operations.
For the second quarter 2009, normalized earnings per share exclude $0.08
per diluted share for Project Acceleration restructuring costs, net of
tax, $0.01 per diluted share of dilution related to the conversion
feature of the convertible notes issued in March 2009 and the impact of
associated hedge transactions, and one-time costs of $0.01 per diluted
share incurred for the early retirement of $325 million principal amount
of medium-term notes. (A reconciliation of the "as reported" results to
"normalized" results is included below.)
Net income, as reported, was $130.4 million, or $0.41 per diluted share,
for the second quarter. This compares to $105.7 million, or $0.37 per
diluted share, in the prior year.
The company generated operating cash flow of $154.0 million during the
second quarter, compared to $99.2 million in the comparable period last
year. The improvement was driven by increased earnings and working
capital improvement. Capital expenditures were $37.8 million in the
second quarter, compared to $38.3 million in the prior year.
Six Months Results
Net sales for the six months ended June 30, 2010 increased 3.5 percent
to $2.80 billion, compared to $2.71 billion in the prior year. Core
sales increased 4.1 percent for the six months. Foreign currency
translation increased net sales by 1.0 percent, while the year over year
impact of last year's product line exits lowered net sales by 1.6
percent.
Gross margin was 37.8 percent, a 160 basis point improvement versus the
prior year. Productivity gains and improved product mix more than offset
the effect of input cost inflation.
Normalized earnings, which exclude the same items as those in the second
quarter 2010, were $0.77 per diluted share, compared to $0.67 per
diluted share in the prior year. (A reconciliation of the "as reported"
results to "normalized" results is included below.)
Net income, as reported, was $188.8 million, or $0.61 per diluted share.
This compares to $139.4 million, or $0.49 per diluted share, in the
prior year.
The company generated operating cash flow of $183.4 million during the
first six months of 2010, compared to $88.0 million in the prior year,
driven by increased earnings and working capital improvement. Capital
expenditures were $69.3 million, compared to $70.7 million in the prior
year.
2010 Full Year Outlook
The company continues to expect 2010 net sales growth in the low to mid
single digit range. However, the company is raising its expectations for
core sales growth to mid single digits, as compared with low to mid
single digits in its previous guidance. The impact of 2009 product exits
is expected to be a negative one to two percent, and the impact from
foreign currency is expected to be modestly negative.
The company still expects gross margin to improve 75 to 100 basis points
with the combination of productivity, mix and pricing more than
offsetting the impact of expected input cost inflation.
The company is raising its guidance for expected 2010 normalized
earnings from its previously communicated range of $1.38 to $1.48 per
diluted share to its new expectation of $1.40 to $1.50 per diluted share.
Operating cash flow is expected to exceed $500 million for the full
year, including approximately $70 to $100 million in restructuring cash
payments. The company expects capital expenditures of approximately $160
to $170 million.
(A) No provision is made in the 2010 outlook for potential dilution from
the conversion feature of the convertible notes issued in March 2009 and
associated hedge transactions, as the amount of full year 2010 dilution
is dependent on the average stock price in each quarter of 2010. The
conversion feature of the convertible notes and associated hedge
transactions resulted in dilution of $0.07 per diluted share in the
first six months of 2010 and $0.06 per diluted share for the full year
2009.
Conference Call
The company's second quarter 2010 earnings conference call is scheduled
for today, July 30, 2010, at 9:00 am ET. To listen to the webcast, use
the link provided under Events & Presentations in the Investor Relations
section of Newell Rubbermaid's Web site at www.newellrubbermaid.com.
The webcast will be available for replay for two weeks. A brief
supporting slide presentation will be available prior to the call under
Quarterly Earnings in the Investor Relations section on the company's
Web site.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission.
Included in this release is a reconciliation of these non-GAAP financial
measures to the most directly comparable financial measures calculated
in accordance with GAAP.
About Newell Rubbermaid
Newell Rubbermaid Inc., an S&P 500 company, is a global marketer of
consumer and commercial products with 2009 sales of approximately $5.6
billion and a strong portfolio of brands, including Rubbermaid(R),
Sharpie(R), Graco(R), Calphalon(R), Irwin(R),
Lenox(R), Levolor(R), Paper Mate(R), Dymo(R),
Waterman(R), Parker(R), Goody(R), Technical
Concepts(TM) and Aprica(R).
This press release and additional information about Newell Rubbermaid
are available on the company's Web site, www.newellrubbermaid.com.
Caution Concerning Forward-Looking
Statements
Statements in this press release that are not historical in nature
constitute forward-looking statements. These forward-looking statements
relate to information or assumptions about the effects of sales,
income/(loss), earnings per share, operating income or gross margin
improvements or declines, Project Acceleration, the European
Transformation Plan, capital and other expenditures, cash flow,
dividends, restructuring costs, costs and cost savings, inflation or
deflation, particularly with respect to commodities such as oil and
resin, debt ratings, and management's plans, projections and objectives
for future operations and performance. These statements are accompanied
by words such as "anticipate," "expect," "project," "will," "believe,"
"estimate" and similar expressions. 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
global economic slowdown; currency fluctuations; competition with other
manufacturers and distributors of consumer products; major retailers'
strong bargaining power; changes in the prices of raw materials and
sourced products and our ability to obtain raw materials and sourced
products in a timely manner from suppliers; our ability to develop
innovative new products and to develop, maintain and strengthen our
end-user brands; our ability to expeditiously close facilities and move
operations while managing foreign regulations and other impediments; our
ability to implement successfully information technology solutions
throughout our organization; our ability to improve productivity and
streamline operations; our ability to refinance short-term debt on terms
acceptable to us, particularly given the uncertainties in the global
credit markets; changes to our credit ratings; significant increases in
the funding obligations related to our pension plans due to declining
asset values or otherwise; the imposition of tax liabilities greater
than our provisions for such matters; the risks inherent in our foreign
operations and those factors listed in the company's latest quarterly
report on Form 10-Q, and exhibit 99.1 thereto, filed with the Securities
and Exchange Commission. 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 Rubbermaid Inc.
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