Newell Brands (NWL) Q4 2014 earnings summary

Executive summary

• 2014 delivered 3.0% core sales growth, normalized operating margin of 13.8% and record normalized diluted EPS of $2.00, despite U.S. dollar strength and planned portfolio exits.

• The Growth Game Plan remained in its Strategic phase, shifting resources toward priority brands and capabilities while targeting accelerated growth from 2016.

Financial highlights

• Net sales were $5.727B, up from $5.607B in 2013; core sales growth was 3.0%, excluding currency and acquisitions.

• Reported operating income was $604.7M versus $615.1M; normalized operating income was $792.6M versus $750.3M.

• Operating cash flow increased to $634M; normalized diluted EPS rose 9.9% to $2.00 from $1.82, while reported diluted EPS was $1.35.

• Advertising spend doubled YoY; advertising and promotion reached 4.3% of sales, up 70 bps.

Outlook and guidance

• Targeting core sales growth above 4% and normalized EPS growth above 10% upon entering the Acceleration phase in 2016.

• Project Renewal phase 3 is expected to generate ~$200M in incremental savings; cumulative annualized savings are projected at $470M–$525M by end-2017, with most reinvested in growth.

• Brand support is planned to increase significantly again in 2015, alongside further overhead reduction, productivity gains and international expansion.