Q1 EPS Above Guidance, Continued Gross Margin Expansion, Full Year EPS
Outlook Raised
ATLANTA, April 26, 2007 /PRNewswire-FirstCall/ -- Newell Rubbermaid
Inc. (NYSE: NWL) today reported first quarter 2007 results, reflecting
gross margin expansion ahead of the company's guidance.
Net sales for the first quarter ended March 31, 2007 rose 3.1 percent
to $1.38 billion, compared to $1.34 billion in the prior year. The Office
Products and Tools & Hardware segments each generated mid single digit
growth for the quarter.
"Our employees did a tremendous job building upon last year's momentum
in the first quarter of 2007," said Mark Ketchum, president and chief
executive officer of Newell Rubbermaid. "We continue to deepen our
understanding of the consumer and drive meaningful innovation to the
marketplace. Our people are embracing the transformation and driving the
necessary initiatives for us to become a global company of Brands That
Matter(TM)."
Gross margin for the first quarter 2007 improved to 34.3 percent, a 210
basis point improvement over the prior year. The expansion was driven
primarily by productivity, including the impact of Project Acceleration.
Normalized earnings, which excludes Project Acceleration restructuring
costs and the effect of one-time tax items, was $0.27 per share in the
first quarter 2007, a 23 percent increase over the prior year's result of
$0.22 per share.
Excluding Project Acceleration restructuring costs of $15.5 million in
the first quarter 2007 and $9.1 million in the prior year, income from
continuing operations was $78.0 million, or $0.28 per share, for the first
quarter 2007, compared to the prior year's result of $137.3 million, or
$0.50 per share. Income from continuing operations in the first quarter
2007 included a one- time tax benefit of $1.9 million, or $0.01 per share,
compared to a one-time tax benefit of $78.0 million, or $0.28 per share, in
the prior year. A reconciliation of the results "as reported" to results
"excluding charges" is attached to this press release.
Income from continuing operations, as reported, was $65.1 million, or
$0.23 per share, for the first quarter 2007, compared to $130.2 million, or
$0.47 per share, in the prior year.
Net cash provided by operating activities was $14.5 million in the
first quarter 2007, compared to a use of $11.7 million in the prior year.
Capital expenditures were $32.6 million, versus $25.3 million in the prior
year.
A reconciliation of the first quarter 2007 and last year's results is
as follows:
Q1 2007 Q1 2006
Diluted earnings per share from
continuing operations (as reported): $0.23 $0.47
Project Acceleration restructuring costs $0.05 $0.03
Diluted earnings per share from
continuing operations (excluding charges): $0.28 $0.50
Tax benefits ($0.01) ($0.28)
"Normalized" EPS: $0.27 $0.22
2007 Outlook
Second Quarter 2007
The company believes sales will increase 4 to 5 percent in the second
quarter 2007. Net cash provided by operating activities is forecast in the
range of $75 to $125 million and capital expenditures are projected to be
in the range of $35 to $45 million.
The company expects earnings per share from continuing operations for
the second quarter 2007 to be in the range of $0.50 to $0.52, excluding
approximately $20 to $40 million ($17 to $34 million after tax) of Project
Acceleration restructuring costs.
Full Year 2007
The company believes sales growth for the full year will be 3 to 5
percent, including approximately 75 basis points of favorable currency. The
company is now projecting full year gross margin expansion of 150 to 200
basis points.
Excluding Project Acceleration restructuring costs of approximately
$100 to $130 million ($85 to $110 million after tax), the company now
believes earnings per share from continuing operations will range from
$1.73 to $1.78 for the full year. Net cash provided by operating activities
continues to be forecast between $575 and $625 million, including
approximately $100 to $125 million in cash restructuring costs in
connection with Project Acceleration. Consistent with the update provided
at Analyst Day, Project Acceleration is projected to deliver annualized
savings in excess of $150 million upon completion in 2009, including $50
million of savings in 2007. The company continues to expect capital
expenditures of $140 to $160 million and dividends of approximately $235
million in 2007.
A reconciliation of the second quarter and full year 2007 earnings
outlook is as follows:
Q2 2007 FY 2007
Diluted earnings per share from
continuing operations (as reported): $0.41 - $0.43 $1.39 - $1.44
Project Acceleration restructuring costs $0.06 - $0.12 $0.30 - $0.39
Diluted earnings per share from
continuing operations (excluding charges): $0.50 - $0.52 $1.73 - $1.78
Tax benefits $0.00 ($0.01)
"Normalized" EPS: $0.50 - $0.52 $1.72 - $1.77
Conference Call
The company's first quarter 2007 earnings conference call is scheduled
for today, April 26, 2007, at 9:00 a.m. ET. To listen to the webcast, use
the link provided under Events & Presentations in the Investor Relations
section of Newell Rubbermaid's Web site at http://www.newellrubbermaid.com. The
webcast will be available for replay for two weeks. A brief supporting
slide presentation
will be available prior to the call under Quarterly Earnings in the
Investor Relations section on the company's Web site.
Caution Concerning Forward-Looking Statements
The statements in this press release that are not historical in nature
constitute forward-looking statements. These forward-looking statements
relate to information or assumptions about the effects of Project
Acceleration, sales, income/(loss), earnings per share, operating income or
gross margin improvements, capital and other expenditures, cash flow,
dividends, restructuring costs, costs and cost savings, debt ratings, and
management's plans, projections and objectives for future operations and
performance. These statements are accompanied by words such as "expect,"
"project," "will," "believes," "estimate" and similar expressions. Actual
results could differ materially from those expressed or implied in the
forward-looking statements. Important factors that could cause actual
results to differ materially from those suggested by the forward-looking
statements include, but are not limited to, our dependence on the strength
of retail economies; competition with other manufacturers and distributors
of consumer products; major retailers' strong bargaining power; changes in
the prices of raw materials; our ability to develop innovative new products
and to develop, maintain and strengthen our end-user brands; our ability to
expeditiously close facilities and move operations while managing foreign
regulations and other impediments; our ability to implement successfully
information technology solutions throughout our organization; our ability
to improve productivity and streamline operations; the risks inherent in
our foreign operations and those factors listed in the company's 2006
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of
Regulation G promulgated by the Securities and Exchange Commission.
Included in this release is a reconciliation of these non-GAAP financial
measures to the most directly comparable financial measures calculated in
accordance with GAAP.
About the Company
Newell Rubbermaid Inc. is a global marketer of consumer and commercial
products with sales of approximately $6 billion and a strong portfolio of
brands, including Sharpie(R), Paper Mate(R), DYMO(R), EXPO(R), Waterman(R),
Parker(R), Rolodex(R), IRWIN(R), LENOX(R), BernzOmatic(R), Rubbermaid(R),
Graco(R), Calphalon(R) and Goody(R). The company is headquartered in
Atlanta, Ga., and has approximately 23,500 employees worldwide.
This press release and additional information about the company are
available on the company's Web site http://www.newellrubbermaid.com.
NWL-EA
Newell Rubbermaid Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Reconciliation of Results "As Reported" to Results "Excluding Charges"
Three Months Ended March 31,
2007
As Reported Charges (1) Excl. Charges
Net sales $1,384.4 $1,384.4
Cost of products sold 909.7 - 909.7
GROSS MARGIN 474.7 - 474.7
% of sales 34.3% 34.3%
Selling, general &
administrative expenses 338.4 - 338.4
% of sales 24.4% 24.4%
Restructuring costs 15.5 (15.5) -
OPERATING INCOME 120.8 15.5 136.3
% of sales 8.7% 9.8%
Nonoperating expenses:
Interest expense, net 27.4 - 27.4
Other expense 0.8 - 0.8
28.2 - 28.2
INCOME BEFORE INCOME TAXES 92.6 15.5 108.1
% of sales 6.7% 7.8%
Income taxes 27.5 2.6 30.1
Effective rate 29.7% 27.8%
INCOME FROM CONTINUING
OPERATIONS 65.1 12.9 78.0
% of sales 4.7% 5.6%
Discontinued operations, net of tax:
Net loss (15.8) 15.8 -
NET INCOME $49.3 $28.7 $78.0
% of sales 3.6% 5.6%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.24 $0.04 $0.28
Diluted $0.23 $0.05 $0.28
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.06) $0.06 $ -
Diluted $(0.05) $0.05 $ -
EARNINGS PER SHARE:
Basic $0.18 $0.10 $0.28
Diluted $0.18 $0.10 $0.28
Average shares outstanding:
Basic 275.9 275.9
Diluted 277.9 277.9
Three Months Ended March 31,
2006 YOY
As Reported Charges(2) Excl. Charges %Change
Net sales $1,342.6 $1,342.6 3.1%
Cost of products sold 910.5 - 910.5
GROSS MARGIN 432.1 - 432.1 9.9%
% of sales 32.2% 32.2%
Selling, general &
administrative expenses 313.2 313.2 8.0%
% of sales 23.3% 23.3%
Restructuring costs 9.1 (9.1) -
OPERATING INCOME 109.8 9.1 118.9 14.6%
% of sales 8.2% 8.9%
Nonoperating expenses:
Interest expense, net 33.7 - 33.7
Other expense 2.5 - 2.5
36.2 - 36.2 (22.1)%
INCOME BEFORE INCOME
TAXES 73.6 9.1 82.7 30.7%
% of sales 5.5% 6.2%
Income taxes (56.6) 2.0 (54.6) (155.1)%
Effective rate (76.9)% (66.0)%
INCOME FROM CONTINUING
OPERATIONS 130.2 7.1 137.3 (43.2)%
% of sales 9.7% 10.2%
Discontinued operations, net
of tax:
Net loss (75.4) 75.4 -
NET INCOME $54.8 $82.5 $137.3 (43.2)%
% of sales 4.1% 10.2%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.47 $0.03 $0.50
Diluted $0.47 $0.03 $0.50
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.27) $0.27 $-
Diluted $(0.27) $0.27 $-
EARNINGS PER SHARE:
Basic $0.20 $0.30 $0.50
Diluted $0.21 $0.29 $0.50
Average shares outstanding:
Basic 274.5 274.5
Diluted 283.3 283.3
(1) Charges excluded from "as reported" results for 2007 consist of
$15.5 million of Project Acceleration restructuring costs and a $15.8
million net loss related to discontinued operations.
(2) Charges excluded from "as reported" results for 2006 consist of $9.1
million of Project Acceleration restructuring costs and a $75.4
million net loss related to discontinued operations.
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
March 31, March 31,
Assets: 2007 2006
Cash and cash equivalents $217.8 $176.1
Accounts receivable, net 979.3 950.5
Inventories, net 934.4 906.1
Deferred income taxes 96.3 105.1
Prepaid expenses and other 127.1 119.5
Current assets of discontinued
operations - 309.3
Total Current Assets 2,354.9 2,566.6
Property, plant and equipment, net 735.6 831.5
Goodwill 2,441.9 2,373.3
Other intangible assets, net 471.9 408.4
Other assets 232.5 189.7
Total Assets $6,236.8 $6,369.5
Liabilities and Stockholders' Equity:
Accounts payable $555.1 $541.8
Accrued compensation 98.1 99.8
Other accrued liabilities 617.9 606.4
Income taxes payable 0.9 -
Notes payable 21.6 2.3
Current portion of long-term debt 2.2 411.4
Current liabilities of discontinued
operations - 122.2
Total Current Liabilities 1,295.8 1,783.9
Long-term debt 2,320.8 2,325.9
Other non-current liabilities 726.9 601.6
Stockholders' Equity 1,893.3 1,658.1
Total Liabilities and
Stockholders' Equity $6,236.8 $6,369.5
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
For The Three Months Ended March 31,
2007 2006
Operating Activities:
Net income $49.3 $54.8
Adjustments to reconcile net income
to net cash provided by/(used in)
operating activities:
Depreciation and amortization 46.1 48.8
Deferred income taxes 37.6 32.5
Impairment charges - 50.9
Non-cash restructuring costs 1.2 17.9
Loss on sale of assets 0.3 1.4
Stock-based compensation expense 8.5 6.9
Loss on disposal of discontinued
operations 15.6 1.6
Other (1.9) (3.3)
Changes in current accounts,
excluding the effects of acquisitions:
Accounts receivable 140.2 164.0
Inventories (77.7) (105.3)
Accounts payable 3.1 (52.4)
Accrued liabilities and other (207.8) (230.6)
Discontinued operations - 1.1
Net cash provided by/(used in)
operating activities $14.5 $(11.7)
Investing Activities:
Acquisitions, net of cash acquired $(8.3) $(23.2)
Capital expenditures (32.6) (25.3)
Disposals of non-current assets and
sale of businesses (7.3) 29.8
Net cash used in investing activities $(48.2) $(18.7)
Financing Activities:
Proceeds from issuance of debt $349.7 $148.3
Payments on notes payable and long-
term debt (253.0) (1.9)
Cash dividends (58.6) (58.2)
Proceeds from exercised stock options
and other 11.7 2.0
Net cash provided by financing
activities $49.8 $90.2
Exchange rate effect on cash and cash
equivalents $0.7 $0.8
Increase in cash and cash equivalents 16.8 60.6
Cash and cash equivalents at
beginning of year 201.0 115.5
Cash and cash equivalents at end of
period $217.8 $176.1
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
For The Three Months Ended March 31,
Free Cash Flow (in millions): 2007 2006
Net cash provided by/(used in)
operating activities $14.5 $(11.7)
Capital expenditures (32.6) (25.3)
Free Cash Flow $(18.1) $(37.0)
(1) Free Cash Flow is defined as cash flow provided by/(used in)
operating activities less capital expenditures.
Newell Rubbermaid Inc.
Financial Worksheet
In Millions
2007
Excluding Charges Reconciliation (1)
Ex- Ex Oper-
Net Reported cluded Charges ating
Sales OI Charges OI Margin
Q1:
Cleaning, Organization
& Decor $457.4 $57.2 $- $57.2 12.5%
Office Products 406.3 35.2 - 35.2 8.7%
Tools & Hardware 293.9 34.2 - 34.2 11.6%
Home & Family 226.8 30.4 - 30.4 13.4%
Restructuring Costs (15.5) 15.5 -
Corporate (20.7) - (20.7)
Total $1,384.4 $120.8 $15.5 $136.3 9.8%
2006
Excluding Charges Reconciliation (1)
Ex- Ex Oper-
Net Reported cluded Charges ating
Sales OI Charges OI Margin
Q1:
Cleaning, Organization
& Decor $449.7 $38.4 $- $38.4 8.5%
Office Products 390.8 32.3 - 32.3 8.3%
Tools & Hardware 276.8 33.1 - 33.1 12.0%
Home & Family 225.3 32.7 - 32.7 14.5%
Restructuring Costs (9.1) 9.1 -
Corporate (17.6) - (17.6)
Total $1,342.6 $109.8 $9.1 $118.9 8.9%
Year-over-year changes
Net Sales Operating Income
$ % $ %
Q1:
Cleaning, Organization
& Decor $7.7 1.7% $18.8 49.0%
Office Products 15.5 4.0% 2.9 9.0%
Tools & Hardware 17.1 6.2% 1.1 3.3%
Home & Family 1.5 0.7% (2.3) (7.0)%
Restructuring Costs -
Corporate (3.1)
Total $41.8 3.1% $17.4 14.6%
(1) Charges are related to restructuring.
Newell Rubbermaid Inc.
Three Months Ended March 31, 2007
In Millions
Currency Analysis
By Segment 2007 2006
Sales as Currency Adjusted Sales as
Reported Impact Sales Reported
Cleaning, Organization
& Decor $457.4 $(0.4) $457.0 $449.7
Office Products 406.3 (10.1) 396.2 390.8
Tools & Hardware 293.9 (4.9) 289.0 276.8
Home & Family 226.8 (3.2) 223.6 225.3
Total Company $1,384.4 $(18.6) $1,365.8 $1,342.6
By Geography
United States $1,019.9 $- $1,019.9 $1,015.1
Canada 79.1 1.1 80.2 77.7
North America 1,099.0 1.1 1,100.1 1,092.8
Europe 192.5 (18.4) 174.1 162.4
Central & South America 48.7 0.4 49.1 47.0
All Other 44.2 (1.7) 42.5 40.4
Total Company $1,384.4 $(18.6) $1,365.8 $1,342.6
Currency Analysis
By Segment Year-over-year Increase (Decrease)
Excluding Including Currency
Currency Currency Impact
Cleaning, Organization
& Decor 1.6% 1.7% 0.1%
Office Products 1.4% 4.0% 2.6%
Tools & Hardware 4.4% 6.2% 1.8%
Home & Family (0.8)% 0.7% 1.4%
Total Company 1.7% 3.1% 1.4%
By Geography Year-over-year Increase (Decrease)
Excluding Including Currency
Currency Currency Impact
United States 0.5% 0.5% 0.0%
Canada 3.2% 1.8% (1.4)%
North America 0.7% 0.6% (0.1)%
Europe 7.2% 18.5% 11.3%
Central & South America 4.5% 3.6% (0.9)%
All Other 5.2% 9.4% 4.2%
Total Company 1.7% 3.1% 1.4%
SOURCE Newell Rubbermaid Inc.
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http://www.newellrubbermaid.com
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CONTACT:
Ron Hardnock, Vice President, Investor
Relations; or David Doolittle, Director, Corporate
Communications, both of Newell Rubbermaid Inc., +1-770-407-3994,
Fax: +1-770-407-3983
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