Newell Brands (NWL) Q4 2015 earnings summary

Executive summary

• Growth Game Plan accelerated performance ahead of schedule; core sales grew 5.5%, with growth in every segment and geographic region.

• Strategic priorities centered on brand investment, innovation, portfolio shifts toward higher-growth categories, and the planned Jarden combination.

Financial highlights

• FY2015 reported net sales rose 3.3% to $5.92B; core sales increased 5.5% versus 3.0% in 2014.

• Normalized gross margin expanded 40 bps to 39.2%; normalized operating margin increased 50 bps to 14.3%.

• Normalized EPS rose 9% to a record $2.18; reported diluted EPS was $1.29 versus $1.35 in 2014.

• Advertising and promotion investment increased 17% to 4.9% of sales; value market share grew in 10 of 13 U.S. product categories measured.

Outlook and guidance

• Advertising and promotion investment expected to rise further in 2016, toward a long-term target of ~7% of sales; innovation rate expected to reach 30%.

• Jarden transaction expected to close in Q2 2016; anticipated cost savings of at least $500M within four years.

• Transaction accretion forecast at high single digits in year 1, mid- to high teens in year 2, and strong double digits in year 3.