Strong Six Month Internal Sales Growth
Company Raises Full Year Guidance on EPS, Sales and Gross Margin Growth
ATLANTA, July 27 /PRNewswire-FirstCall/ -- Newell Rubbermaid Inc.
(NYSE: NWL) today reported second quarter 2006 results, reflecting strong
sales growth and improved gross margins.
Net sales in the second quarter 2006 rose 9.6 percent to $1.70 billion,
compared to $1.55 billion in the prior year. Internal sales increased 5.7
percent, due primarily to continued progress in the Home and Family,
Cleaning and Organization, and Office Products segments. All reported sales
figures exclude the results of the company's Home Decor Europe business,
which was classified as discontinued operations in the second quarter 2006,
as discussed below.
"Our strong results this quarter reflect the team's dedication to
simultaneously driving internal sales growth and gross margin expansion,"
said Mark Ketchum, chief executive officer of Newell Rubbermaid. "We will
continue investing in our strongest brands and optimizing our portfolio.
The transformation of our company is now in full swing, fundamentally
changing our finished product sourcing model, our business model and our
culture."
Excluding restructuring charges for Project Acceleration and impairment
charges, income from continuing operations was $149.6 million, or $0.54 per
share, for the quarter ended June 30, 2006, exceeding company guidance and
the prior year's result of $111.9 million, or $0.41 per share. Income from
continuing operations, as reported, was $135.7 million, or $0.49 per share,
compared to $87.4 million, or $0.32 per share, in the prior year. The
second quarter 2006 included a one-time tax benefit of $22.7 million, or
$0.08 per share. The company recorded Project Acceleration restructuring
costs of $19.8 million in the second quarter 2006 and impairment charges of
$31.4 million in the second quarter 2005. A reconciliation of the results
"as reported" to results "excluding charges" is attached to this press
release.
Gross margin for the second quarter 2006 improved to 33.9 percent, a
250 basis point improvement over the prior year. The expansion was driven
by strong productivity savings, pricing and favorable mix, which more than
offset raw material inflation.
Net cash from operating activities was $103.8 million in the second
quarter 2006, above the company's guidance, compared to net cash provided
by operating activities of $36.4 million in the prior year. Capital
expenditures in the second quarter 2006 were $31.9 million, versus $22.9
million in the prior year. The company paid dividends of $58.2 million, or
$0.21 per share, in the quarter.
Consistent with the company's focus on building and maintaining a
portfolio of businesses that can leverage brand strength and innovation,
the company's Board of Directors has authorized management to sell the Home
Decor Europe business. This unit designs, manufactures and sells drapery
hardware and window treatments under Gardinia(R) and other local brands.
This business contributed approximately $375 million in revenue in 2005,
previously included in the company's Home Fashions segment. This business
has been classified as discontinued operations, recording a net loss from
operations of $14.9 million in the second quarter 2006. Any intended sale
would be subject to completion of all required regulatory approvals,
including consultation proceedings with works councils, trade unions and
employee representatives in the affected countries. At this time, Newell
Rubbermaid has not entered into any definitive agreement with respect to an
intended sale. This announcement does not affect the company's US Home
Fashions business, which sells products primarily under the Levolor(R) and
Kirsch(R) trademarks.
Six Month Results
Net sales for the six months ended June 30, 2006 grew 10.4 percent to
$3.10 billion, compared to $2.81 billion in the prior year. Internal sales
increased 6.2 percent, due primarily to strong core sales growth and
favorable pricing. The Calphalon, Goody, Irwin and Lenox branded businesses
posted double digit sales growth, and Rubbermaid Commercial grew in the
high single digits.
Excluding restructuring charges for Project Acceleration and impairment
charges, income from continuing operations was $284.7 million, or $1.03 per
share, for the six months ended June 30, 2006, a 36.7 percent increase over
the prior year's result of $208.2 million, or $0.76 per share. Income from
continuing operations, as reported, for the six months ended June 30, 2006
was $254.5 million, or $0.92 per share, compared to $183.7 million, or
$0.67 per share, in the prior year period. Income from continuing
operations for the first six months of 2006 included one-time tax benefits
of $100.7 million, or $0.36 per share, versus a tax benefit of $58.6
million, or $0.21 per share, in the first six months of 2005. The company
recorded Project Acceleration restructuring charges of $43.3 million for
the six months ended June 30, 2006, and impairment charges of $31.4 million
for the six months ended June 30, 2005.
Gross margin for the six months ended June 30, 2006 was 32.7 percent, a
290 basis point increase over the prior year. The improvement reflects
strong productivity savings, pricing and favorable mix, which more than
offset raw material inflation.
Net cash from operating activities was $92.1 million for the first six
months of 2006, compared to $91.9 million for the first six months of 2005.
Capital expenditures for the first six months of 2006 were $57.2 million,
compared to $46.0 million for the first six months of 2005. Dividends were
$116.4 million for the first six months of 2006, compared to $115.8 million
for the first six months of 2005.
For the six months ended June 30, 2006, the company recorded a net loss
from discontinued operations of $80.2 million, related primarily to the
company's Home Decor Europe business. The net loss from discontinued
operations includes a $50.9 million impairment charge recorded in the first
quarter to write off the goodwill for certain businesses in the company's
Home Decor Europe unit.
2006 Outlook
Third Quarter
The company expects diluted earnings per share from continuing
operations for the third quarter 2006 to be in the range of $0.35 to $0.39,
excluding approximately $55 to $75 million ($45 to $65 million after tax)
of Project Acceleration restructuring charges.
For the third quarter 2006, the company expects internal sales growth
in the low- to mid-single digit range, cash from operating activities in
the range of $250 to $300 million and capital expenditures in the range of
$35 to $45 million. Dividends are expected to be approximately $58 million.
Full Year
For the full year 2006, the company now expects internal sales growth
in the low- to mid-single digits, up from the previous guidance of
low-single digits. This performance would be the product of mid-single
digit growth in the company's Invest businesses and flat sales in its Fix
businesses. The company estimates full year gross margin expansion of 225
to 275 basis points, compared to the previous guidance of 200 to 250 basis
points.
Excluding restructuring charges associated with Project Acceleration,
the company expects earnings per share from continuing operations of $1.75
to $1.85 for the full year. Cash flow from operating activities is now
forecast between $575 and $625 million, net of approximately $75 million in
restructuring charges in connection 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 second quarter and 2006 earnings outlook is as
follows:
Q2 2006 Q3 2006 Full Year
Diluted earnings per share
from continuing operations
(as reported): $0.54 $0.15-$0.20 $1.24-$1.35
Restructuring costs $0.05 $0.16-$0.23 $0.45-$0.56
Diluted earnings per share
from continuing operations
(excluding charges): $0.49 $0.35-$0.39 $1.75-$1.85
Conference Call
The company's second quarter 2006 earnings conference call is scheduled
for today, July 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 most recent quarterly report on Form 10-Q,
including Exhibit 99.1 thereto, 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 $6.0 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 June 30,
2006
As Excl.
Reported Charges (1) Charges
Net sales $1,696.8 $1,696.8
Cost of products sold 1,122.4 - 1,122.4
GROSS MARGIN 574.4 - 574.4
% of sales 33.9% 33.9%
Selling, general &
administrative expenses 353.6 - 353.6
% of sales 20.8% 20.8%
Impairment charges - - -
Restructuring costs 19.8 (19.8) -
OPERATING INCOME 201.0 19.8 220.8
% of sales 11.8% 13.0%
Nonoperating expenses:
Interest expense, net 35.6 - 35.6
Other expense, net 1.0 - 1.0
36.6 - 36.6
INCOME BEFORE INCOME TAXES 164.4 19.8 184.2
% of sales 9.7% 10.9%
Income taxes 28.7 5.9 34.6
Effective rate 17.5% 18.8%
INCOME FROM CONTINUING
OPERATIONS 135.7 13.9 149.6
% of sales 8.0% 8.8%
Loss from discontinued operations,
net of tax: (16.2) 16.2 -
NET INCOME $119.5 $30.1 $149.6
% of sales 7.0% 8.8%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.49 $0.05 $0.55
Diluted $0.49 $0.05 $0.54
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.06) $0.06 $-
Diluted $(0.06) $0.06 $-
EARNINGS PER SHARE:
Basic $0.44 $0.11 $0.55
Diluted $0.43 $0.11 $0.54
Average shares outstanding:
Basic 274.6 274.6 274.6
Diluted 283.6 283.6 283.6
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Three Months Ended June 30,
2005
As Charges Excl. YOY
Reported (2) Charges % Change
Net sales $1,548.6 $1,548.6 9.6%
Cost of products sold 1,063.2 - 1,063.2
GROSS MARGIN 485.4 - 485.4 18.3%
% of sales 31.3% 31.3%
Selling, general &
administrative expenses 292.9 292.9 20.7%
% of sales 18.9% 18.9%
Impairment charges 31.4 (31.4) -
Restructuring costs 0.3 - 0.3
OPERATING INCOME 160.8 31.4 192.2 14.9%
% of sales 10.4% 12.4%
Nonoperating expenses:
Interest expense, net 31.1 - 31.1
Other expense, net 2.2 - 2.2
33.3 - 33.3 9.9%
INCOME BEFORE INCOME TAXES 127.5 31.4 158.9 15.9%
% of sales 8.2% 10.3%
Income taxes 40.1 6.9 47.0 (26.4)%
Effective rate 31.5% 29.6%
INCOME FROM CONTINUING
OPERATIONS 87.4 24.5 111.9 33.7%
% of sales 5.6% 7.2%
Loss from discontinued operations,
net of tax: (21.2) 21.2 -
NET INCOME $66.2 $45.7 $111.9 33.7%
% of sales 4.3% 7.2%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.32 $0.09 $0.41
Diluted $0.32 $0.09 $0.41
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.08) $0.08 $-
Diluted $(0.08) $0.08 $-
EARNINGS PER SHARE:
Basic $0.24 $0.17 $0.41
Diluted $0.24 $0.17 $0.41
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.7 274.7 274.7
(1) Charges excluded from "as reported" results for 2006 consist of $19.8
million of Project Acceleration restructuring costs and a $16.2
million net loss related to discontinued operations.
(2) Charges excluded from "as reported" results for 2005 consist of a
$31.4 million impairment charge and a $21.2 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"
Six Months Ended June 30,
2006
As Excl.
Reported Charges (1) Charges
Net sales $3,102.1 $3,102.1
Cost of products sold 2,087.2 - 2,087.2
GROSS MARGIN 1,014.9 - 1,014.9
% of sales 32.7% 32.7%
Selling, general &
administrative expenses 678.0 - 678.0
% of sales 21.9% 21.9%
Impairment charges - - -
Restructuring costs 43.3 (43.3) -
OPERATING INCOME 293.6 43.3 336.9
% of sales 9.5% 10.9%
Nonoperating expenses:
Interest expense, net 69.3 - 69.3
Other expense, net 3.7 - 3.7
73.0 - 73.0
INCOME BEFORE INCOME TAXES 220.6 43.3 263.9
% of sales 7.1% 8.5%
Income taxes (33.9) 13.1 (20.8)
Effective rate (15.4)% (7.9)%
INCOME FROM CONTINUING
OPERATIONS 254.5 30.2 284.7
% of sales 8.2% 9.2%
Loss from discontinued operations,
net of tax: (80.2) 80.2 -
NET INCOME $174.3 $110.4 $284.7
% of sales 5.6% 9.2%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.93 $0.11 $1.04
Diluted $0.92 $0.11 $1.03
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.29) $0.29 $-
Diluted $(0.28) $0.28 $-
EARNINGS PER SHARE:
Basic $0.63 $0.40 $1.04
Diluted $0.64 $0.39 $1.03
Average shares outstanding:
Basic 274.5 274.5 274.5
Diluted 283.5 283.5 283.5
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Six Months Ended June 30,
2005
As Charges Excl. YOY
Reported (2) Charges % Change
Net sales $2,811.1 $2,811.1 10.4%
Cost of products sold 1,974.1 - 1,974.1
GROSS MARGIN 837.0 - 837.0 21.3%
% of sales 29.8% 29.8%
Selling, general &
administrative expenses 560.7 - 560.7 20.9%
% of sales 19.9% 19.9%
Impairment charges 31.4 (31.4) -
Restructuring costs 6.8 - 6.8
OPERATING INCOME 238.1 31.4 269.5 25.0%
% of sales 8.5% 9.6%
Nonoperating expenses:
Interest expense, net 61.9 - 61.9
Other expense, net 0.4 - 0.4
62.3 - 62.3 17.2%
INCOME BEFORE INCOME TAXES 175.8 31.4 207.2 27.4%
% of sales 6.3% 7.4%
Income taxes (7.9) 6.9 (1.0) 1980.0%
Effective rate (4.5)% (0.5)%
INCOME FROM CONTINUING
OPERATIONS 183.7 24.5 208.2 36.7%
% of sales 6.5% 7.4%
Loss from discontinued operations,
net of tax: (80.9) 80.9 -
NET INCOME $102.8 $105.4 $208.2 36.7%
% of sales 3.7% 7.4%
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS:
Basic $0.67 $0.09 $0.76
Diluted $0.67 $0.09 $0.76
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS:
Basic $(0.29) $0.29 $-
Diluted $(0.29) $0.29 $-
EARNINGS PER SHARE:
Basic $0.37 $0.38 $0.76
Diluted $0.37 $0.38 $0.76
Average shares outstanding:
Basic 274.4 274.4 274.4
Diluted 274.7 274.7 274.7
(1) Charges excluded from "as reported" results for 2006 consist of $43.3
million of Project Acceleration restructuring costs and an $80.2
million net loss related to discontinued operations.
(2) Charges excluded from "as reported" results for 2005 consist of a
$31.4 million impairment charge and an $80.9 million net loss related
to discontinued operations.
Newell Rubbermaid Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
June 30, June 30,
Assets: 2006 2005
Cash and cash equivalents $116.3 $212.2
Accounts receivable, net 1,157.5 1,073.5
Inventories, net 967.8 937.7
Deferred income taxes 131.8 74.0
Prepaid expenses and other 96.6 98.8
Current assets of discontinued
operations 209.4 242.9
Total Current Assets 2,679.4 2,639.1
Other assets 188.2 201.6
Property, plant and equipment, net 832.4 1,027.3
Goodwill 2,420.0 1,727.2
Deferred income taxes - 6.1
Other intangible assets, net 415.7 282.9
Non-current assets of discontinued
operations - 200.2
Total Assets $6,535.7 $6,084.4
Liabilities and Stockholders' Equity:
Notes payable $20.9 $13.0
Accounts payable 634.8 535.7
Accrued compensation 130.2 116.3
Other accrued liabilities 667.1 623.6
Income taxes payable 11.3 20.9
Current portion of long-term debt 408.6 25.4
Current liabilities of discontinued
operations 77.3 120.1
Total Current Liabilities 1,950.2 1,455.0
Long-term debt 2,245.6 2,380.5
Deferred income taxes 32.1 -
Other non-current liabilities 579.9 537.6
Long-term liabilities of discontinued
operations - 6.3
Stockholders' Equity 1,727.9 1,705.0
Total Liabilities and
Stockholders' Equity $6,535.7 $6,084.4
Newell Rubbermaid Inc.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(in millions)
For The Six Months Ended June 30,
2006 2005
Operating Activities:
Net income $174.3 $102.8
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 105.1 105.8
Impairment charges - continuing - 31.4
Impairment charges - discontinued 50.9 -
Non-cash restructuring costs 26.3 1.1
Deferred income taxes 10.7 12.2
Loss (Gain) on sale of
assets/debt extinguishment 2.5 (4.3)
Stock-based compensation expense 15.4 2.9
Loss on disposal of discontinued operations 2.9 63.2
Other (6.7) (6.8)
Changes in current accounts, excluding
the effects of acquisitions:
Accounts receivable (28.5) (24.3)
Inventories (127.0) (104.4)
Accounts payable 8.7 (52.5)
Accrued liabilities and other (151.7) (69.6)
Discontinued operations 9.2 34.4
Net cash provided by operating activities $92.1 $91.9
Investing Activities:
Acquisitions, net of cash acquired $(46.3) $(35.0)
Capital expenditures (57.2) (46.0)
Disposals of non-current assets
and sale of businesses 40.2 22.1
Net cash used in investing activities $(63.3) $(58.9)
Financing Activities:
Proceeds from issuance of debt $167.2 $131.7
Payments on notes payable and long-term debt (82.0) (335.7)
Cash dividends (116.4) (115.8)
Proceeds from exercised stock options and other 2.3 -
Net cash used in financing activities $(28.9) $(319.8)
Exchange rate effect on cash and
cash equivalents $0.9 $(6.6)
Increase (Decrease) in cash and cash equivalents 0.8 (293.4)
Cash and cash equivalents at beginning of year 115.5 505.6
Cash and cash equivalents at end of period $116.3 $212.2
Newell Rubbermaid Inc.
Calculation of Free Cash Flow (1)
For The Three Months Ended June 30,
Free Cash Flow (in millions): 2006 2005
Net cash provided by operating activities $103.8 $36.4
Capital expenditures (31.9) (22.9)
Free Cash Flow $71.9 $13.5
For The Six Months Ended June 30,
Free Cash Flow (in millions): 2006 2005
Net cash provided by operating activities $92.1 $91.9
Capital expenditures (57.2) (46.0)
Free Cash Flow $34.9 $45.9
(1) Free Cash Flow is defined as cash flow 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 Esther Lippman,
Senior Manager, Public Relations, +1-770-407-3994, or Fax,
+1-770-407-3983, both of Newell Rubbermaid Inc.
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