Newell Brands Inc. (NWL)

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Newell Rubbermaid Inc. (NWL)

Consumer Analyst Group of New York (CAGNY) Conference

February 21, 2013 3:00 pm ET


Michael B. Polk - Chief Executive Officer, President and Director


Unknown Analyst

[Audio Gap]

and especially for sponsoring our 2:45 break just now. Thank you. On the dais today is Mike Polk, CEO; Doug Martin, CFO; and Nancy O'Donnell, VP of Investor Relations. Mike Polk joined Newell 18 months ago and since his arrival, he has restructured the company into 6 business units; announced a restructuring plan to capture $300 million in savings; strengthened the management team; and implemented the growth game plan to accelerate top line growth.

Here to tell you more about his plans at Newell is Mike Polk.

Michael B. Polk

Thanks, Rob. Good afternoon, everyone. Nancy, Doug and I are thrilled to be here today on behalf of all the colleagues that we represent from Newell Rubbermaid.

We've got 3 objectives for today. First is to share our perspective on the potential of the business as defined by the growth game plan, which is our blueprint for growth going forward; second, update you in the progress in driving the growth game plan into action; and third, discuss how that transformation has impacted our 2012 results and how we see 2013 playing out as we move forward.

Before we get going, the mandatory forwarding-looking disclaimer. With that done, let's sort of dive in.

For those of you that don't know us, we're a $6 billion company, branded goods businesses organized into 6 segments: Commercial Products, Tools, Writing, Home Solutions, Babies -- Baby and Specialty. Our top 14 brands represent 85% of our revenue. And while we generate the vast majority of our revenue in the developed markets, we have operations in nearly 100 markets around the world. And our fastest growing geographies are in the emerging markets where 15% percent of our revenue is growing roughly at 12%.

Now 18 months or so into my new role, I'm incredibly excited about the opportunities about what we are on the verge of unlocking at Newell Rubbermaid. And the reality is that opportunity is bigger than what I thought it was going to be when I originally started. We're convinced that our new corporate strategy that makes sharper choices for the future and releases significant cost to be reinvested to brands and capabilities will result in accelerated growth and compelling returns to shareholders.

We have leading brands that are almost always #1 or #2 in their home markets. And even better, the top 2 brands in these categories when looked at globally typically only represent 20% to 35% of the total category global share. Our markets do not have the strength of competition or the level of market share consolidation that you would find from nearly anybody else presenting at this conference this week. And many of our competitors don't play a true brand model, and this creates a compelling opportunity for us and our leading brands and sets us apart in the eyes of our customers. So leading brands with plenty of room for growth.

Beyond our brands, we have lived through a period of slow to no growth in the majority of our markets. And while I don't think 2013 will be a materially different year than 2012, over time we'd expect our markets to rebound with the eventual macro turn in the developed world contributing to a significant cyclical turn that creates plenty of room for growth for our markets. And with that tailwind behind our categories, we should see enhanced underlying growth.

This chart represents housing starts, which for about 1/3 of our portfolio is a relevant indicator. And as you can see, while there's a lot of news out there about the movement forward relative to recent history, it's sort of a bounce off the bottom. And so plenty of headroom in our markets for accelerated growth going forward.

Of course, our performance has plenty of headroom still, despite steady, consistent improvement in EPS over the last number of years. We have a clear line of sight with the program we have in place to deliver EPS growth in the 2013 full year guidance range of $1.78 to $1.84 with accelerating results as defined by the growth game plan in the years beyond. So good progress, but performance with plenty of room for growth.

We believe the investment thesis in Newell is strong. First, we have a clear and decisive corporate strategy, the growth game plan that drives virtually every choice we're making. Second, we have available cost savings that give us a line of sight to earnings and increased investment for the next number of years. The savings programs we've announced are worth cumulatively up to $0.60 a share, and this gives us a level of confidence in attractive returns and significantly derisks the transformation we're playing for. Third, we've made sharper portfolio choices and are investing in strength and capabilities with new experienced leadership, which when coupled with the increased investment, will yield accelerated growth and results. And finally, with our balance sheet reflecting a much improved capital structure and with our strong growth -- strong and growing free cash flow, we've got flexibility to both strengthen returns to shareholders and complement our expected acceleration and underlying performance with bolt-on M&A.

So the totality of these 4 observations is the promise of the growth game plan and explains our building excitement about the possibilities for our company. Of course, it's early, it's very early days still and there's a lot still to do. And as we've communicated at last year's CAGNY Conference, the growth game plan will be delivered in 3 stages.

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