Newell Rubbermaid Inc.
), the producer of Sharpie pens and Rubbermaid containers, posted
first-quarter 2014 adjusted earnings per share of 35 cents, which
surpassed the Zacks Consensus Estimate of 32 cents. However,
quarterly adjusted earnings were flat year over year since the
benefits from increased gross margin and lower share count were
fully offset by weak performance at the company's Baby and Home
On a reported basis, including special items, the company
reported earnings of 19 cents per share, which was in line with
the year-ago comparable quarter figure.
During the quarter, Newell's net sales dropped 0.7% to
$1,232.2 million from $1,240.8 million in the prior-year quarter
and lagged the Zacks Consensus Estimate of $1,249 million.
However, core sales of the company rose 0.7%, excluding a
negative impact of 140 basis points (bps) from foreign currency
Newell's gross profit fell 0.9% year over year to $469.3
million, while adjusted gross profit grew nearly 1% due to
one-time items recorded in the reported quarter. Adjusted gross
margin expanded 60 bps to 38.8% owing to improved productivity
and pricing, partly offset by cost inflation and unfavorable
currency exchange rates.
Adjusted operating income decreased 2.1% year over year to
$135.9 million while operating margin contracted 20 bps to
Other Financial Details
Newell ended the quarter with cash and cash equivalents of
$136.8 million and long-term debt of $1,666.7 million.
Shareholders' equity was $2,070.0 million.
During the first quarter, the company's capital expenditures
came in at $31.9 million. Total operating cash flows used in the
quarter were $92.1 million. During the quarter, the company
returned $42.9 million to shareholders through dividend payouts
and repurchased 1.5 million shares for $44.4 million under its
$350 million share repurchase program.
Along with its earnings release, the company's board of
directors raised the quarterly dividend by 13% to 17 cents per
share, marking the fourth dividend hike in the last three
Reiteration of Fiscal 2014 Guidance
The company reiterated its full-year 2014 adjusted earnings
projection of $1.94-$2.00 per share. The company's 2014 adjusted
earnings forecast exclude $100-$120 million expenses related to
Project Renewal restructuring and other restructuring
Further, Newell continues to anticipate core sales growth of
3%-4% and an improvement of up to 40 bps in the operating margin
during fiscal 2014.
Newell expects to generate operating cash flow in the range of
$600-$650 million in 2014, with planned capital expenditures
between $150 million and $175 million.
Moreover, this Zacks Rank #3 (Hold) company expects to achieve
its targeted annualized cost savings of $270-$325 million by the
second quarter of 2015 through its Project Renewal program.
The initiative will be funded by savings generated through
reduction of structural selling as well as general and
administrative expenses. The Project Renewal scheme will enable
the company to reduce the complexities of the organization, while
increasing investments in the most important growth areas within
Other Stocks to Consider
Other stocks that warrant a look in the retail space include
Leggett & Platt, Incorporated
Best Buy Co., Inc.
). While Aaron's sports a Zacks Rank #1 (Strong Buy), Leggett
& Platt and Best Buy hold a Zacks Rank #2 (Buy).
AARONS INC (AAN): Free Stock Analysis Report
BEST BUY (BBY): Free Stock Analysis Report
LEGGETT & PLATT (LEG): Free Stock Analysis
NEWELL RUBBERMD (NWL): Free Stock Analysis
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