Newell Brands Inc. reported  sales increased 3.8 percent at its Outdoor Solutions segment, formerly Jarden Outdoor, versus the prior year.

Pro forma core sales, which exclude the K2 Sports and the Marker and Volkl winter sports businesses that are being held for sale, increased 2.9 percent compared with prior year, primarily driven by strong growth in Fishing, Technical Apparel and Team Sports, partially offset by declines on Coleman related to early 2016 distribution losses.

The quarterly performance marks a rebound. In the third quarter, pro forma core sales declined 3.2 percent compared with prior year, with growth at Pure Fishing more than offset by declines at Coleman.

Newell Brands Inc. was formed early last year by the merger of Jarden Corp. and Newell Rubbermaid Inc. Jarden Corp. included the $2.74-billion-a-year Jarden’s Outdoor Solutions segment, which owns more than 5o sporting  goods brands.

The Outdoor Solutions segment’s net sales were $730.6 million in the quarter. Operating income was $53.4 million and reported operating margin was 7.3 percent of sales. Normalized operating income was $73.2 million and normalized operating margin was 10 percent of sales.

For the full year, net sales for the Outdoor Solutions segment were $2.4 billion. Reported operating income was $90.1 million and reported operating margin was 3.7 percent of sales. Normalized operating income was $371.9 million and normalized operating margin was 15.8 percent of sales.

On October 4, Newell Brands said that as the result of a recently completed strategic review of its portfolio it plans to sell about 10 percent of its portfolio, including: its winter sports business, its Heaters, Humidifiers and Fans business within the Consumer Solutions Segment and the Rubbermaid Consumer Storage business within the Home Solutions segment.

Other brands in the Outdoor Solutions segment in its Jarden Group acquisition that are for sale include Marker, Dalbello, Line, Full Tilt and Madshus in the Winter Sports segment as well as Zoot, the triathlon running shoe brand, and Squadra, the designer and manufacturer of custom cycling and triathlon apparel.

Continuing brands in the Outdoor Solutions group include Marmot and Coleman, as well as the Abu Garcia, Berkley and Shakespeare fishing brands and Rawlings baseball, basketball and softball game-related product lines. Other smaller brands in the Outdoor & Recreation segment that are also  include: Campingaz, ExOfficio, Fenwick, Greys, Gulp!, Hardy, Invicta, Jostens, Mitchell, Neff, Penn, Stearns, Stren and Trilene.

Companywide, net sales for Newell Brands increased 165 percent to $4.14 billion compared with $1.56 billion in the prior year, primarily due to the inclusion of net sales from the acquired Jarden business. Core sales grew 2.5 percent, driven by strong results from the Writing, Baby, Home Solutions and Outdoor Solutions businesses. All operating segments reported core sales growth with the exception of the small continuing portion of the Tools segment not held for sale.

The company reported net income of $165.6 million compared with net income of $13.2 million in the prior year. Reported diluted earnings per share were 34 cents compared with diluted earnings per share of 5 cents in the prior year. The contribution from the acquired Jarden business and strong operating income growth on both legacy businesses more than offset the negative impact of increased advertising and promotion investment, foreign currency, increased amortization of intangibles, increased interest expense, a higher tax rate and a higher share count. Normalized net income was $389.9 million compared with $151.1 million in the prior year. Normalized diluted earnings per share increased 42.9 percent to 80 cents compared with 56 cents in the prior year.

Sales for the full year ended December 31, 2016 were $13.26 billion, an increase of 124.2 percent compared with $5.92 billion in the prior year. Core sales increased 3.7 percent. Reported net income was $527.8 million compared with $350 million in the prior year. Reported diluted earnings per share were $1.25 compared with $1.29 in the prior year. Normalized net income was $1.22 billion compared to $590.7 million in the prior year. Normalized diluted earnings per share were $2.89 compared with $2.18 in the prior year, an increase of 32.6 percent.

Outlook For The 12 Months Ending December 31, 2017
Newell Brands has provided the following guidance metrics for 2017: full-year net sales dollars, core sales growth rate and normalized earnings per share.

The company has added a net sales guidance range in 2017 given the scope of mergers and acquisition activity and the continued volatility of foreign exchange. The company’s net sales full-year guidance range is $14.52 billion to $14.72 billion. This outlook reflects current expectations for timing of acquisitions and divestitures, the negative impact related to foreign exchange and the latest core sales growth expectations. The net sales guidance range represents net sales growth of 9.5 percent to 11 percent compared with prior year.

The company has broadened its 2017 core sales growth guidance range to 2.5 to 4 percent versus its previous guidance of 3 to 4 percent, reflecting revised expectations on the company’s businesses with larger U.S. mall-based retail presence given lowered expectations for U.S. retail mall foot traffic. The full-year guidance reflects an expectation that the company’s core sales growth rate will accelerate through the year as the pace of change related to the company’s transformation lessens, with the first-quarter core growth about in line with the core sales growth rate in the fourth quarter of 2016.

The company has raised its normalized earnings per share outlook to $2.95 to $3.15, as compared with its previous guidance of $2.85 to $3.05, to reflect its latest view on timing of acquisitions and divestitures, the further negative impact of foreign exchange and the positive impact of a lower tax rate reflecting anticipated discrete tax benefits. The company expects the previously communicated 2017 tax rate of 26 to 27 percent will be sustained through most of the year, with a one-time low rate likely realized in the third quarter of 2017 resulting in a full year tax rate of about 23 percent.

Newell Brands full fourth quarter 2016 release is here.

Photo courtesy Coleman