Newell Brands (NWL) Q4 2011 earnings summary

Executive summary

• FY11 net sales $5,864.6m, up 3.6%; core sales rose 1.8%, with foreign currency contributing 1.8%.

• Net income was $125.2m and diluted EPS $0.42; reported operating income included $382.6m of noncash impairment charges.

• Excluding impairment charges, operating income was $639.8m, or 10.9% of sales, versus reported operating income of $257.2m, or 4.4%.

Financial highlights

• Gross margin was 37.6%, down 40 bps YoY; input and sourced-product inflation was partly offset by pricing and productivity.

• SG&A was $1,515.3m, or 25.8% of sales, versus $1,447.8m, or 25.6%, in 2010; higher strategic spending and restructuring costs partly offset lower structural costs.

• Interest expense fell to $86.2m from $118.4m; 2010 included $218.6m of debt-extinguishment losses, versus $4.8m in 2011.

• Operating cash flow was $561.3m, down from $582.6m; incremental customer program payments used $114.0m of cash, partly offset by lower pension contributions and taxes paid.

Outlook and guidance

• FY12 operating cash flow expected at $550m-$600m after $110m-$120m of restructuring and related cash payments; capital expenditures planned at $200m-$225m, including European SAP work.

• Project Renewal expected to incur $75m-$90m cash costs and $90m-$100m pretax restructuring charges through 2012; targeted annual savings of $90m-$100m by year-end 2012, mostly reinvested.

• European Transformation Plan expected to finish by end-2012, with annual after-tax savings of $55m-$65m; most savings had already been realized in 2011 results.

• Expected 2012 pension and postretirement contributions were $105m; available cash, operations, capital markets and committed facilities expected to cover existing cash needs.