Newell Brands (NWL) Q4 2012 earnings summary

Executive summary

• 2012 core sales grew 2.2%, led by Latin America and Asia Pacific; reported sales rose 0.6% as currency and Western Europe weakness offset some growth.

• Gross margin improved 20 bps; restructuring simplified the organization and shifted resources toward brand investment and growth initiatives.

Financial highlights

• Net sales were $5,902.7 million, up 0.6%; foreign currency reduced reported sales by 1.6%.

• Gross margin was $2,229.1 million, or 37.8%, versus $2,205.2 million, or 37.6%, in 2011; pricing and productivity exceeded input-cost inflation.

• Operating income was $651.9 million versus $257.2 million; excluding 2011 impairment charges of $382.6 million, 2011 operating income was $639.8 million.

• Net income was $401.3 million versus $125.2 million; diluted EPS was $1.37 versus $0.42.

• Operating cash flow increased to $618.5 million from $561.3 million, primarily on improved profitability and lower incentive compensation payments.

Outlook and guidance

• 2013 operating cash flow expected at $575–$625 million after $70–$90 million of restructuring cash payments and ~ $100 million for the primary U.S. pension plan.

• 2013 capital expenditures planned at $175–$200 million, including SAP implementation spending in Brazil.

• 2013 expected as a transition to the strategic phase of the Growth Game Plan, with increased investment in higher-growth “Win Bigger” businesses.

• Venezuela devaluation expected to drive a $10 million one-time Q1 pretax charge and reduce 2013 reported sales and operating income by $9 million and $5 million, respectively.