Newell Brands (NWL) Q4 2009 earnings summary

Executive summary

• 2009 normalized EPS rose 8% to $1.31; gross margin expanded 390 bps to 36.7%, and operating cash flow increased 33% to $603 million despite recession-driven sales declines.

• About two-thirds of businesses gained market share despite end-user market declines of 5%–25%; all three segments showed sequential sales-trend improvement in Q4.

Financial highlights

• Net sales were $5,577.6 million, down 13.8% YoY; core sales declined 7.3%, with product-line exits contributing 5.2% and FX 2.1% to the reported sales decline.

• Gross margin was 36.7%, up 390 bps; reported operating income was $574.9 million versus $200.8 million, including $100.0 million of restructuring costs in 2009 and $299.4 million of impairment charges in 2008.

• Net income was $285.5 million; diluted EPS was $0.97, while normalized EPS was $1.31 versus $1.21 in 2008.

• Operating income excluding charges was $674.9 million, or 12.1% of sales, versus $620.5 million, or 9.6%, in 2008.

Outlook and guidance

• 2010 outlook called for modest sales growth in a flat-to-slightly-positive economy, with recovery rates expected to vary by business.

• 2010 operating cash flow was expected to exceed $500 million after $70–$80 million of restructuring cash payments; planned capital expenditures were approximately $160 million, including SAP implementation.

• Project Acceleration was expected to finish by year-end 2010, with $60–$80 million of additional costs and cumulative annualized savings above $200 million upon completion; more than $160 million had been realized.