Newell Brands said its Outdoor & Recreation segment generated net sales of $391 million in the third quarter compared with $383 million in the prior-year period, primarily reflecting core sales growth of 1.7 percent and the impact of favorable foreign exchange. Net sales exceeded the 2019 level.
Reported operating income in the segment was $27 million, or 6.9 percent of sales, down from the reported operating income of $39 million, or 10.2 percent of sales, in the prior-year period. Normalized operating income was $34 million, or 8.7 percent of sales, compared with $46 million, or 12.0 percent of sales, in the prior-year period.
The Outdoor & Recreation segment includes Aerobed, Bubba, Campingaz, Coleman, Contigo, Marmot, Stearns, and ExOfficio.
In the 2020 third quarter, core sales had grown 8.1 percent. Normalized operating income had improved to $46 million, or 12.0 percent of sales, compared with $37 million, or 10.4 percent of sales, in the prior year period.
Third Quarter 2021 Operating Results
Companywide, net sales were $2.8 billion, a 3.3 percent increase compared to the prior-year period, largely reflecting core sales growth of 3.2 percent. Net sales were 8.5 percent above the third quarter 2019 level.
Newell operates four other segments: Commercial Solutions, Home Appliances, Home Solutions, and Learning & Development. Its other major brands outside the Outdoor & Recreation segment include Rubbermaid, Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Coleman, Marmot, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Contigo, First Alert, Mapa, Spontex, and Yankee Candle.
Reported gross margin was 30.4 percent compared with 33.9 percent in the prior-year period, as the headwinds from inflation, particularly related to resin, sourced finished goods, transportation and labor, more than offset the benefits from fuel productivity savings, business mix and pricing. The normalized gross margin was 30.6 percent compared with 33.9 percent in the prior-year period.
Reported operating income was $281 million compared with the reported operating income of $363 million in the prior-year period. Reported operating margin was 10.1 percent compared with 13.4 percent in the prior-year period, largely reflecting the headwinds from inflation and an increase in advertising and promotion expense, which more than offset benefits from lower overhead costs, fuel productivity savings, business mix and pricing. Normalized operating income was $317 million, or 11.4 percent of sales, compared with $403 million, or 14.9 percent of sales, in the prior-year period.
Interest expense was $65 million compared with $71 million in the prior-year period.
The company reported a tax provision of $25 million compared with a tax benefit of $21 million in the prior-year period, reflecting a reduction in discrete tax benefits. Normalized tax expense was $20 million compared with a tax benefit of $23 million in the prior-year period.
The company reported a net income of $190 million, or $0.44 diluted earnings per share, compared with a net income of $304 million, or $0.71 diluted earnings per share, in the prior-year period. The year-over-year change largely reflects the decline in reported operating profit and a change in the tax provision due to a reduction in discrete benefits.
Normalized net income was $231 million, or $0.54 normalized diluted earnings per share, compared with $356 million, or $0.84 normalized diluted earnings per share, in the prior-year period.
“We continued to execute very well throughout the third quarter and our results reflect the effectiveness of our strategy, as well as the resilience and agility of our operating model. Strong consumer demand, supported by innovation, fueled core sales growth of 3.2 percent, at the high-end of our evergreen target, on top of a difficult year-ago comparison of 7.2 percent,” said Ravi Saligram, president and CEO. “While we are taking action to address the significant inflationary pressures and supply chain bottlenecks, we are also advancing our strategic priorities, by continuing to reduce complexity, capitalizing on the international opportunity, and building operational excellence throughout the organization. I am confident the company has a long runway for value creation, as we position it for sustainable and profitable growth while building competitive advantage.”
