Newell Brands (NWL) Tops Q3 EPS by 41c, Revenues Beat; Offers FY20 EPS/Revenue Guidance Above Consensus

Newell Brands (NASDAQ: NWL) reported Q3 EPS of $0.84, $0.41 better than the analyst estimate of $0.43. Revenue for the quarter came in at $2.7 billion versus the consensus estimate of $2.44 billion.

Third Quarter 2020 Executive Summary

• Net sales were $2.7 billion, an increase of 5.1 percent compared with the prior year period.
• Core sales grew 7.2 percent compared with the prior year period. Seven of eight business units and all major regions delivered core sales growth.
• Reported operating margin was 13.4 percent compared with a negative 33.4 percent in the prior year period. Normalized operating margin was 14.9 percent compared with 12.7 percent in the prior year period.
• Reported diluted earnings per share were $0.71 compared with a $1.48 diluted loss per share in the prior year period.
• Normalized diluted earnings per share were $0.84 compared with $0.73 per share in the prior year period.
• Year to date operating cash flow was $820 million compared with $424 million in the prior year period, with the improvement driven by working capital.
• The company redeemed the remaining $305 million of its 4.7 percent senior notes upon maturity.
• The company's leverage ratio improved to 3.9x at the end of the third quarter from 4.6x at the end of the previous quarter.
• The company reinstituted guidance for 2020, with projected full-year normalized earnings per share of $1.63 to $1.69 and operating cash flow of $1.1 to $1.2 billion.

"We delivered very strong third quarter results, including broad-based sales growth underpinned by strong consumption, and significant improvement in operating margin and cash flow generation, as the organization rallied behind our strategic priorities,” said Ravi Saligram, Newell Brands President and CEO. “We are heading into the fourth quarter with a renewed sense of energy as we chase demand in certain high growth categories. We remain laser focused on increasing shareholder value by sustaining growth momentum, driving meaningful innovations that leverage consumer trends, building a competitive edge through omni-channel and significantly reducing organizational complexity."

Chris Peterson, Chief Financial Officer and President, Business Operations, said, “Stronger than anticipated top line growth, along with disciplined expense control, restructuring savings, sustained progress on complexity reduction and FUEL productivity savings drove significant year-over-year improvement in operating margin. Diligent execution behind working capital initiatives resulted in a substantial reduction in the company's cash conversion cycle time, with operating cash flow nearly doubling year-over-year during the first three quarters of 2020. For the full year, we expect to generate operating cash flow of $1.1 to $1.2 billion, with free cash flow productivity well over 100%.”

GUIDANCE:

Newell Brands sees Q4 2020 EPS of $0.40-$0.46, versus the consensus of $0.45. Newell Brands sees Q4 2020 revenue of $2.5-2.6 billion, versus the consensus of $2.57 billion.

Newell Brands sees FY2020 EPS of $1.63-$1.69, versus the consensus of $1.27. Newell Brands sees FY2020 revenue of $9.2-9.3 billion, versus the consensus of $9.07 billion.

For earnings history and earnings-related data on Newell Brands (NWL) click here.

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