Newell Rubbermaid today announced its third quarter 2014 financial results. “We delivered another solid quarter with good sales growth and strong earnings,” said Michael Polk, Newell Rubbermaid’s president and CEO.
“Our strategy of accelerating advertising and promotion in support of our brands is working . . . [we’ve had] normalized earnings per share growth for the total company of over 11%. Since we began to significantly increase brand support in the second quarter of 2014, our global core growth has been 3.7% despite exiting certain markets and product lines in Europe and pulling back on less profitable volume in North America,” Polk added.
Polk further commented, “Beyond delivering solid results and making Newell Rubbermaid a leaner, more nimble company, we have also taken steps to strengthen our portfolio. We completed the acquisitions of both Ignite Holdings and bubba brands which combined will generate full year 2014 net sales of more than $175 million in one of the fastest growing consumer durables categories in North America.”
“The combination of the acquired Contigo, Avex and bubba brands, with Rubbermaid, establishes our company as the leader across the key channels in the U.S. on-the-go hydration and thermal bottle market,” he said.
Newell Rubbermaid reported that its sales in the third quarter were $1.48 billion compared with $1.47 billion in the prior year. Core sales grew 2.7%, excluding 200 basis points of negative foreign currency impacts and 60 basis points from the Ignite acquisition.
Reported gross margin was 38.8% a 110 basis point improvement versus prior year.
Normalized gross margin was 39.2%, a 140 basis point improvement versus the prior year. Rubbermaid’s third quarter reported operating margin was 11.7% compared with 12.2% in the prior year. The reported operating income was $173.2 million versus $178.5 million.
The company reported a normalized net income of $159.2 million, compared with $151.5 million in the prior year. Normalized diluted earnings per share were $0.58, an 11.5% increase versus $0.52 in the prior year. The improvement was primarily attributable to increased sales, gross margin expansion, a lower normalized tax rate, and the positive impact of fewer outstanding shares, partially offset by negative foreign currency impacts and a significant increase in Back-to-School advertising and promotion support, according to the company announcement.
Reported diluted earnings per share were $0.44, compared with the prior year’s $0.66 per diluted share. Reported net income was $122.3 million, compared with $193.3 million in the prior year. Operating cash flow was $339.2 million compared with $360.8 million in the prior year period.
The company reported that its Home Solutions net sales were $417.0 million, a 1.4% decline compared to prior year. The Ignite Holdings, LLC acquisition was completed on September 4 and contributed net sales of $9 million in the third quarter. Core sales declined 3.2%, as strong Rubbermaid food storage growth was more than offset by the absence of the 2013 inventory pipeline fill related to Black Friday merchandising and declines on certain lower margin Rubbermaid product lines. Normalized operating income was $64 million compared to $67.1 million in the prior year. Normalized operating margin decreased 60 basis points to 15.3 percent of sales as a result of increased advertising on Goody, Calphalon, and Rubbermaid food storage, the company reported.
The company also announced its decision to pursue the sale of its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses. “The divestiture of these businesses will create a faster growing, higher margin and more focused portfolio, enabling accelerated performance. The related results of operations of these businesses are reported as discontinued operations in the company’s statements of operations,” according to the company.