Strong First Quarter Internal Sales Growth and Gross Margin Expansion
Company Raises Full Year Internal Sales and EPS Guidance
ATLANTA, April 27 /PRNewswire-FirstCall/ -- Newell Rubbermaid Inc.
(NYSE: NWL) today reported its first quarter 2006 results, delivering
strong sales growth and continuing earnings per share that exceeded company
guidance. Net sales in the first quarter 2006 were $1.48 billion, compared
to $1.36 billion in the prior year, an increase of 8.9 percent. Internal
sales increased 4.8 percent and were primarily driven by strong core sales
growth and favorable pricing, partially offset by unfavorable foreign
currency.
"I am proud of the entire Newell Rubbermaid team for delivering strong
sales growth and margin expansion while embracing the company's revised
strategy of building Brands That Matter, creating scale advantages through
horizontal integration, commercializing innovation across the enterprise
and creating a structure for business globalization," said Mark Ketchum,
chief executive officer of Newell Rubbermaid. "We are making the necessary
investments as we transform the business for long-term success."
Excluding restructuring charges related to Project Acceleration and
impairment charges, income from continuing operations was $129.9 million,
or $0.47 per share, for the quarter ended March 31, 2006, compared to $89.4
million, or $0.33 per share, in the prior year. Income from continuing
operations for the first quarter 2006 included a tax benefit of $78.0
million, or $0.28 per share, versus a tax benefit of $58.6 million, or
$0.21 per share, in the first quarter of 2005. Income from continuing
operations for the quarter ended March 31, 2006, was $56.4 million, or
$0.21 per share, compared to $89.4 million, or $0.33 per share, in the
prior year. A reconciliation of the results "as reported" to results
"excluding charges" is attached to this press release.
"We are moving from Newell's historic focus on excellence in
manufacturing and distributing products to excellence in innovating and
marketing brands," added Ketchum. The company's Invest and Fix businesses
exceeded internal plans. The Calphalon, Goody, Graco and Rubbermaid
Commercial businesses grew double digits for the quarter, along with high
single-digit growth in the Rubbermaid Food, and IRWIN and LENOX branded
tool businesses. Businesses categorized as Fix also delivered sales growth
in the quarter, benefiting from the timing of certain sales and favorable
year-over-year comparisons.
Gross margin for the first quarter 2006 improved to 30.9 percent, a 340
basis point improvement over the prior year. The company's favorable
pricing, productivity savings, and mix, driven largely by the DYMO
acquisition, more than offset the impact of raw material inflation.
Related to Project Acceleration, the company recorded restructuring
charges of $29.8 million in the first quarter of 2006. The company also
recorded a non-cash impairment charge of $50.9 million in the quarter to
write off the goodwill for certain businesses in the company's Home
Fashions segment.
Net cash used in operating activities was $11.7 million in the first
quarter 2006, consistent with the company's guidance, compared to net cash
provided by operating activities of $55.5 million in the prior year. The
decrease was primarily driven by an approximately $21 million payment to
fund the company's 401(k) defined contribution retirement plan, and the
timing of payments related to certain accrued liabilities. Capital
expenditures in the first quarter 2006 were $25.3 million, compared to
$23.1 million in the prior year. The company paid a strong dividend in the
quarter of $58.2 million, or $0.21 per share.
2006 Outlook
Second Quarter
The company expects diluted earnings per share from continuing
operations for the second quarter 2006 to be in the range of $0.39 to
$0.43. This outlook does not include approximately $20 to $35 million ($15
to $30 million after tax) of Project Acceleration restructuring charges.
The company expects internal sales growth in the low single-digit range
in the second quarter 2006, cash from operating activities in the range of
$20 to $60 million and capital expenditures in the range of $30 to $40
million. Dividends are expected to be approximately $58 million.
Full Year
The company now expects internal sales for the full year 2006 to grow
in the low single digits, up from the previous flat sales guidance, driven
by low- to mid-single digit growth in the company's Invest businesses and
mid- single digit declines in its Fix businesses. The company now expects
gross margin expansion of 200 to 250 basis points.
Excluding restructuring charges associated with Project Acceleration
and impairment charges, the company now expects earnings per share from
continuing operations of $1.65 to $1.75 for the full year, an increase of
$0.10 per share over the previous range. This increase reflects the
company's higher than expected tax benefit, higher sales outlook,
improvement in gross margin and increased SG&A investments. The company
continues to expect $550 to $600 million in cash from operating activities,
including approximately $100 million of cash restructuring charges
associated with Project Acceleration. The company also continues to expect
capital expenditures of $125 to $150 million and dividends of approximately
$232 million for the full year 2006.
A reconciliation of the 2006 earnings per share outlook is as follows:
Q1 2006 Q2 2006 Full Year
Diluted earnings per
share from continuing operations
(as reported): $0.21 $0.31-$0.35 $0.90-$1.00
Impairment charge $0.18 - $0.18
Restructuring charges $0.08 $0.06-$0.10 $0.52-$0.62
Diluted earnings per share from
continuing operations (excluding
charges): $0.47 $0.39-$0.43 $1.65-$1.75
Conference Call
The company's first quarter 2006 earnings conference call is scheduled
for today, April 27, 2006, at 8:30 a.m. ET. To listen to the webcast, use
the link provided under Events & Presentations in the Investor Relations
section of Newell Rubbermaid's website at http://www.newellrubbermaid.com. The
webcast will be available for replay for two weeks.
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, impairment and other charges, potential losses on
divestiture, costs and cost savings and the value thereof, 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," "enable," "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 in various parts of the world; competition with
numerous other manufacturers and distributors of consumer products; major
retailers' strong bargaining power; changes in the prices of raw materials
used by the company; 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 in the face of foreign
regulations and other impediments; our ability to implement successfully
information technology solutions throughout our organization; our ability
to improve productivity and streamline operations; our ability to complete
strategic acquisitions; our ability to integrate previously acquired
businesses; the risks inherent in our foreign operations and those factors
listed in the company's 2005 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 2005 sales of $6.3 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 28,000 employees worldwide.
This press release and additional information about the company are
available on the company's website at http://www.newellrubbermaid.com.
NWL-EA
Newell Rubbermaid Inc.
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,
2006
Excl.
As Reported Charges(1) Charges
Net sales $1,484.8 $1,484.8
Cost of products sold 1,026.0 - 1,026.0
GROSS MARGIN 458.8 - 458.8
% of sales 30.9% 30.9%
Selling, general &
administrative expense 346.9 - 346.9
% of sales 23.4% 23.4%
Impairment charge 50.9 (50.9) -
Restructuring costs 29.8 (29.8) -
OPERATING INCOME 31.2 80.7 111.9
% of sales 2.1% 7.5%
Nonoperating expenses:
Interest expense, net 33.7 - 33.7
Other expense (income) 3.1 - 3.1
36.8 - 36.8
(LOSS) INCOME BEFORE INCOME TAXES (5.6) 80.7 75.1
% of sales (0.4)% 5.1%
Income taxes (62.0) 7.2 (54.8)
Effective rate 1107.1% (73.0)%
INCOME FROM CONTINUING OPERATIONS 56.4 73.5 129.9
% of sales 3.8% 8.7%
Discontinued operations, net of tax:
Net loss (1.6) 1.6 -
NET INCOME $54.8 $75.1 $129.9
% of sales 3.7% 8.7%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.21 $0.27 $0.47
Diluted $0.21 $0.27 $0.47
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.01) $0.01 $-
Diluted $(0.01) $0.01 $-
EARNINGS PER SHARE:
Basic $0.20 $0.27 $0.47
Diluted $0.20 $0.27 $0.47
Average shares outstanding:
Basic 274.5 274.5 274.5
Diluted 275.0 275.0 283.3
(1) Charges excluded from "as reported" results for 2006 consist of a
$50.9 million impairment charge, $29.8 million of Project
Acceleration restructuring costs, and a $1.6 million net loss related
to discontinued operations.
(2) Charges excluded from "as reported" results for 2005 consist of a
$52.8 million net loss related to discontinued operations.
Newell Rubbermaid Inc.
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,
2005
As Excl. YOY
Reported Charges(2) Charges % Change
Net sales $1,363.1 $1,363.1 8.9%
Cost of products sold 988.4 - 988.4
GROSS MARGIN 374.7 - 374.7 22.4%
% of sales 27.5% 27.5%
Selling, general &
administrative expense 297.6 - 297.6 16.6%
% of sales 21.8% 21.8%
Impairment charge - - -
Restructuring costs 5.9 - 5.9
OPERATING INCOME 71.2 - 71.2 57.2%
% of sales 5.2% 5.2%
Nonoperating expenses:
Interest expense, net 30.8 - 30.8
Other expense (income) (2.3) - (2.3)
28.5 - 28.5 29.1%
(LOSS) INCOME BEFORE INCOME TAXES 42.7 - 42.7 75.9%
% of sales 3.1% 3.1%
Income taxes (46.7) - (46.7) 17.3%
Effective rate (109.4)% (109.4)%
INCOME FROM CONTINUING OPERATIONS 89.4 - 89.4 45.3%
% of sales 6.6% 6.6%
Discontinued operations, net of tax:
Net loss (52.8) 52.8 -
NET INCOME $36.6 $52.8 $89.4 45.3%
% of sales 2.7% 6.6%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.33 $- $0.33
Diluted $0.33 $- $0.33
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.19) $0.19 $-
Diluted $(0.19) $0.19 $-
EARNINGS PER SHARE:
Basic $0.13 $0.19 $0.33
Diluted $0.13 $0.19 $0.33
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.9 274.9 274.9
(1) Charges excluded from "as reported" results for 2006 consist of a
$50.9 million impairment charge, $29.8 million of Project
Acceleration restructuring costs, and a $1.6 million net loss related
to discontinued operations.
(2) Charges excluded from "as reported" results for 2005 consist of a
$52.8 million net loss related to discontinued operations.
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
March 31, March 31,
Assets: 2006 2005
Cash and cash equivalents $176.1 $429.8
Accounts receivable, net 1,043.4 1,014.4
Inventories, net 997.6 1,030.8
Deferred income taxes 105.1 74.0
Prepaid expenses and other 130.2 121.5
Current assets of discontinued operations - 116.0
Total Current Assets 2,452.4 2,786.5
Other assets 190.1 190.8
Property, plant and equipment, net 929.1 1,174.7
Goodwill 2,373.3 1,819.9
Deferred income taxes - 13.4
Other intangible assets, net 424.6 308.8
Non-current assets of discontinued operations - 38.1
Total Assets $6,369.5 $6,332.2
Liabilities and Stockholders' Equity:
Notes payable $2.3 $18.5
Accounts payable 605.9 608.1
Accrued compensation 113.0 115.5
Other accrued liabilities 643.7 634.1
Income taxes payable - 0.1
Current portion of long-term debt 411.4 195.4
Current liabilities of discontinued operations - 59.4
Total Current Liabilities 1,776.3 1,631.1
Long-term debt 2,325.9 2,383.8
Other non-current liabilities 609.2 581.6
Long-term liabilities of discontinued
operations - 2.5
Stockholders' Equity 1,658.1 1,733.2
Total Liabilities and
Stockholders' Equity $6,369.5 $6,332.2
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
For The Three Months
Ended March 31,
2006 2005
Operating Activities:
Net income $54.8 $36.6
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 53.5 53.9
Impairment charges 50.9 -
Non-cash restructuring costs 17.9 3.2
Deferred income taxes 32.8 10.8
Loss (Gain) on sale of assets/debt extinguishment 1.4 (3.7)
Stock-based compensation expense 6.9 1.3
Loss on disposal of discontinued operations 1.6 49.1
Other (3.3) (3.4)
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable 168.2 173.1
Inventories (115.4) (121.7)
Accounts payable (44.8) (26.8)
Accrued liabilities and other (236.2) (130.1)
Discontinued operations - 13.2
Net cash (used in) provided by operating activities $(11.7) $55.5
Investing Activities:
Acquisitions, net of cash acquired $(23.2) $(30.3)
Capital expenditures (25.3) (23.1)
Disposals of non-current assets and sale of businesses 29.8 12.9
Net cash used in investing activities $(18.7) $(40.5)
Financing Activities:
Proceeds from issuance of debt $148.3 $1.9
Payments on notes payable and long-term debt (1.9) (31.1)
Cash dividends (58.2) (58.0)
Proceeds from exercised stock options and other 2.0 -
Net cash provided by (used in) financing activities $90.2 $(87.2)
Exchange rate effect on cash and cash equivalents $0.8 $(3.6)
Increase (Decrease) in cash and cash equivalents 60.6 (75.8)
Cash and cash equivalents at beginning of year 115.5 505.6
Cash and cash equivalents at end of period $176.1 $429.8
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
For The Three Months
Ended March 31,
Free Cash Flow (in millions): 2006 2005
Net cash (used in) provided by operating activities $(11.7) $55.5
Capital expenditures (25.3) (23.1)
Free Cash Flow $(37.0) $32.4
(1) Free Cash Flow is defined as cash flow (used in) provided by
operating activities less capital expenditures.
SOURCE Newell Rubbermaid Inc.
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Related links:
http://www.newellrubbermaid.com
http://www.prnewswire.com/comp/138728.html /
CONTACT:
Nancy de Jonge Davis, Vice President,
Investor Relations & Corporate Communications, or Cari Davidson,
Manager, Public Relations, +1-770-407-3994, or Fax,
+1-770-407-3983, both of Newell Rubbermaid Inc.
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