Newell Brands, the parent company of Marmot, Ex Officio, Stearns, Bubba, Coleman, and Contigo, among others, reported that its third quarter was the fifth full quarter since the company deployed its new corporate strategy. Based on reported results, management said Newell Brand’s business transformation is underway.
Newell Brands reported that its Outdoor & Recreation segment generated net sales of $183 million in the third quarter, a 20.8 percent decline compared with $231 million in the prior-year Q3 period. This reflects a core sales decline of 16.8 percent and the impact of unfavorable foreign exchange and certain business exits.
The segment’s reported operating loss in the quarter was $23 million, or negative 12.6 percent of sales, compared with $42 million, or negative 18.2 percent of sales, in Q3 last year, including a non-cash impairment charge of $22 million in the prior-year Q3 period.
The Outdoor & Recreation segment’s normalized operating loss was reported to be $15 million, or negative 8.2 percent of sales, in the period, compared with a loss of $16 million, or negative 6.9 percent of sales, in the prior-year period.
Consolidated Results
Consolidated net sales were $1.9 billion in Q3, a 4.9 percent decline compared with the prior-year period, reflecting a core sales decline of 1.7 percent and the impact of unfavorable foreign exchange and business exits. Pricing in international markets to offset inflation and currency movements contributed to the company’s core sales performance.
Core Sales Growth by Segment
Income Statement Summary
Reported gross margin was 34.9 percent of net sales in the quarter, compared with 30.3 percent in the prior-year Q3 period, as the positive impact from productivity savings and lower restructuring-related charges more than offset the headwinds from lower sales volume, inflation and foreign exchange.
Normalized gross margin was 35.4 percent compared with 30.7 percent in the prior year period. This represents the fifth consecutive quarter of year-over-year improvement.
Reported operating loss was $121 million in Q3, compared with $159 million in the prior-year Q3 period. Non-cash impairment charges of $260 million and $263 million were incurred in the current- and prior-year periods, respectively, related to goodwill and intangible assets. Reported operating margin was negative 6.2 percent compared with negative 7.8 percent in the prior year period, mainly reflecting benefits from higher gross profit and savings from restructuring actions that were partially offset by higher incentive compensation expense, advertising and promotions costs and additional amortization of certain tradenames.
Normalized operating income was $185 million, or 9.5 percent of sales, compared with $152 million, or 7.4 percent of sales, in the prior year period.
Net interest expense was $75 million compared with $69 million in the prior-year period.
Third quarter reported tax benefit was $7 million compared with a benefit of $80 million in the prior-year period. The normalized tax provision was $34 million compared with a benefit of $79 million in the prior year period.
Reported net loss was $198 million in the quarter, compared with $218 million in the prior year period. Normalized net income was $69 million in Q3 compared with $154 million in the prior-year Q3 period. Normalized EBITDA was $250 million compared with $218 million in the prior year period.
Reported diluted loss per share was 48 cents in Q3, compared with 53 cents in the prior-year Q3 period. Normalized diluted earnings per share were 16 cents in Q3 this year, compared with 37 cents in the prior-year Q3 period. Normalized diluted earnings per share included a negative 2 cents impact associated with a change in the company’s normalization practice.
Image courtesy Marmot, Chart courtesy Newell Brands
