Newell Year-End Earnings Reflect Growth - Analyst Blog


Newell Rubbermaid Inc. ( NWL ), the producer of Sharpie pens and Rubbermaid containers, reported fourth-quarter 2013 adjusted earnings per share of 47 cents, beating the Zacks Consensus Estimate by a penny and surpassing the year-ago quarter earnings of 43 cents. Results benefited from enhanced operating performance, lower share count and lower tax rate.

On a reported basis, including special items, the company reported earnings of 41 cents per share, compared with 35 cents in the comparable year-ago quarter.

During the quarter, Newell's net sales increased 2.9% to $1,489.8 million, compared with $1,447.2 million in the prior-year quarter. Core sales of the company grew 4.4%, excluding a negative impact from foreign currency translation. Moreover, the company's top line outpaced the Zacks Consensus Estimate of $1,482.0 million.

Newell's gross profit rose 3.8% year over year to $557.0 million, while adjusted gross profit grew 3.3% due to one-time items recorded in the year-ago quarter. Adjusted gross margin expanded 20 bps to 37.4%, benefiting from improved productivity and pricing, largely offset by cost inflation and a slightly unfavorable mix.

Adjusted operating income increased 3.2% year over year to $182.0 million, while operating margin remained flat at 12.2%. During the quarter, the company benefited from the cost savings generated by the Project Renewal initiatives that were diverted towards advertising and promotional expenses. This was offset by an over 80% increase in advertising expenses during the quarter compared to last year.

Analyzing Fiscal 2013

For fiscal 2013, the company reported adjusted earnings per share of $1.83, in line with the Zacks Consensus Estimate and above the prior-year earnings of $1.67. Net sales for the year totaled $5,692.5 million, up 2.0% year over year. However, full-year sales fell short of the Zacks Consensus Estimate of $5,685.0 million.

Other Financial Details

Newell ended the year with cash and cash equivalents of $226.3 million and long-term debt of $1,661.6 million. Shareholders' equity was $2,075.0 million.

During the fourth quarter, the company's capital expenditures came in at $52.5 million with full-year capital spends totaling $138.2 million. Total operating cash flows generated in the quarter were $304.2 million with full-year cash flows of $605.2 million. During the quarter, the company returned $42.0 million to shareholders through dividend payouts and repurchased 9.4 million shares under its $350 million share repurchase program.

Fiscal 2014 Guidance

Following a strong end to fiscal 2013, the company initiated its full-year 2014 projections, guiding adjusted earnings in the range of $1.94-$2.00 per share. The company's 2014 adjusted earnings forecast excludes $100 - $120 million expenses related to the Project Renewal restructuring and other restructuring activities.

Further, Newell anticipates core sales growth of 3%-4% and an improvement of up to 40 bps in the operating margin during fiscal 2014. The company's sales forecast assumes a negative impact of about $100 million from foreign currency translation.

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 fiscal 2015, through its Project Renewal program.

The initiative will be funded by savings through a reduction in 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 the business.

Other Stocks to Consider

Other stocks that are worth considering in the retail space include Conns Inc. ( CONN ), Haverty Furniture Companies Inc. ( HVT ) and Tempur Sealy International Inc. ( TPX ). Of these, Conns carries a Zacks Rank #1 (Strong Buy), while Haverty Furniture and Tempur Sealy hold a Zacks Rank #2 (Buy).

CONNS INC (CONN): Free Stock Analysis Report

HAVERTY FURNIT (HVT): Free Stock Analysis Report

NEWELL RUBBERMD (NWL): Free Stock Analysis Report

TEMPUR SEALY (TPX): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CONN , HVT , NWL , TPX

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