Newell Brands Inc. reported its Outdoor & Recreation segment generated net sales of $453 million in the second quarter compared with $353 million in the prior-year period, a gain of 28.3 percent. The improvement reflects core sales growth of 25.0 percent and the impact of favorable foreign exchange. Net sales exceeded the 2019 level.

Reported operating income in the segment was $48 million, or 10.6 percent of sales, compared with reported operating income of $24 million, or 6.8 percent of sales, in the prior-year period. Normalized operating income was $52 million, or 11.5 percent of sales, compared with $33 million, or 9.3 percent of sales, in the prior-year period.

The Outdoor & Recreation segment includes Aerobed, Bubba, Campingaz, Coleman, Contigo, Marmot, Stearns, and ExOfficio.

Second Quarter 2021 Operating Results
Companywide, Newell net sales were $2.7 billion, a 28.3 percent increase compared to the prior-year period, as core sales growth of 25.4 percent and favorable foreign exchange were slightly offset by the impact of business and retail store exits. Net sales were 9.2 percent above the second 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 32.6 percent compared with 31.5 percent in the prior-year period, as the benefit from fixed cost leverage, FUEL productivity savings, business mix and pricing more than offset the significant headwind from inflation, particularly related to resin, sourced finished goods, transportation and labor. Normalized gross margin was 32.7 percent compared with 31.6 percent in the prior-year period.

Reported operating income was $305 million compared with reported operating income of $163 million in the prior-year period. Reported operating margin was 11.3 percent compared with 7.7 percent in the prior-year period. Normalized operating income was $341 million, or 12.6 percent of sales, compared with $215 million, or 10.2 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 $46 million compared with a tax provision of $15 million in the prior-year period, as both periods reflect discrete tax benefits. Normalized tax expense was $43 million compared with $16 million in the prior-year period.

The company reported a net income of $197 million, or $0.46 diluted earnings per share, compared with a net income of $78 million, or $0.18 diluted earnings per share, in the prior-year period.

Normalized net income was $239 million, or $0.56 normalized diluted earnings per share, compared with $127 million, or $0.30 normalized diluted earnings per share, in the prior-year period.

Balance Sheet and Cash Flow
Year to date, operating cash flow was $76 million compared with $132 million in the prior-year period, reflecting a working capital increase to support strong net sales growth, which more than offset the year-over-year improvement in operating income and cash conversion cycle.

At the end of the second quarter, Newell Brands had cash and cash equivalents of $637 million and net debt outstanding of $4.9 billion. The company maintained a strong liquidity position, with over $2 billion in available short-term liquidity, including cash on hand. Newell Brands exited the second quarter with a leverage ratio of 3.1x compared to 4.6x in the prior-year period and 3.5x at the end of 2020.

Leverage ratio is defined as the ratio of net debt to normalized EBITDA from continuing operations. An explanation of how the leverage ratio is calculated and a related reconciliation, as well as a reconciliation of reported results to normalized results, are included in the tables attached to this release.

Outlook For Full Year And Third Quarter 2021
The company updated its full-year outlook for 2021 and initiated its third-quarter 2021 guidance as follows:

  • Net Sales are expected to range between $10.1 to $10.35 billion, up from previous guidance of $9.9 to $10.1 billion;
  • Core Sales are expected to show 7 percent to 10 percent growth, up from previous guidance of 5 percent to 7 percent growth;
  • Normalized Operating Margin is expected to be 11.1 percent compared to 11.4 percent, down from previous guidance of 11.7 percent; and
  • Normalized EPS is still expected to arrive in the range of $1.63 to $1.73.

Photo courtesy Newell Brands/Coleman