Notable Runner: Newell Brands Inc. (NASDAQ: NWL)

On Wednesday, Shares of Newell Brands Inc. (NASDAQ: NWL) lost -0.78% to $15.36. The stock grabbed the investor’s attention and traded 1,779,518 shares as compared to its average daily volume of 6.75M shares.

Newell Brands (NWL) recently declared its fourth quarter and full year 2018 financial results.

Fourth Quarter 2018 Operating Results:

Net sales were $2.3B, contrast to $2.5B in the prior year period, a 6.0 percent decline attributable to headwinds from the adoption of the new 2018 revenue recognition standard, unfavorable foreign exchange and a decline in core sales. Stated gross margin was 34.7 percent contrast with 32.7 percent in the prior year period, resulting from pricing, productivity, lower integration and restructuring costs and the impact of the new revenue recognition standard, which more than offset the headwinds from foreign exchange and inflation related to higher input costs, tariffs and transport costs. Normalized gross margin was 34.7 percent contrast with 33.0 percent in the prior year period.

The company recorded $157.0M non-cash impairment charge from continuing operations mainly associated with intangible assets in certain attained businesses. The impairment charge is attributable to the most recent cash flow projections associated with these businesses.

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Stated operating income was $17.8M, or 0.8 percent of sales, contrast with $142.0M, or 5.7 percent of sales, in the prior year period, as improved gross margin and a reduction in overhead, integration and restructuring costs, were more than offset by the impact of the non-cash impairment charge and a boost in accrued incentive compensation. Normalized operating income was $268.0M contrast with $267.0M in the prior year period. Normalized operating margin was 11.4 percent contrast to 10.7 percent in the prior year period.

The company stated a tax benefit of $254.0M contrast with a benefit of $1.5B in the prior year period, with the difference mainly attributable to the absence of the $1.4B benefit from tax reform in 2017. The normalized tax rate was negative 30.0 percent, for a benefit of $49.5M, contrast with 3.7 percent, or a provision of $5.4M, in the prior year period.

The company stated net income of $208.0M contrast with $1.7B in the prior year period, with the decline mainly attributable to the absence of the tax benefit recorded in 2017. Continuing operations posted net income of $164.0M contrast with $1.5B in the fourth quarter of last year. Suspended operations generated net income of $44.3M as compared to $154.0M in the year-ago period. Stated diluted earnings per share for the total company were $0.46 contrast with $3.38 in the prior year period. Stated diluted earnings per share from continuing operations were $0.36 as compared to $3.07 in the prior year period. Stated diluted earnings per share from suspended operations were $0.10 contrast with $0.31 in the prior year period.

Normalized net income for the total company was $321.0M, or $0.71 per share, contrast with $335.0M, or $0.68 per share, in the prior year period. Normalized diluted earnings per share from continuing operations were $0.47, contrast with $0.28 in the prior year period. Normalized diluted earnings per share from suspended operations were $0.24 contrast with $0.40 in the prior year period.

Operating cash flow was $498.0M contrast with $990.0M in the prior year period, with the difference attributable to the absence of the operating cash flow contribution from divested businesses, increased cash taxes and transaction-related costs, and a change in the timing of vendor payments relative to the prior year.

Full Year 2018 Results:

Net sales for the full year ended December 31, 2018 were $8.6B, a decline of 9.6 percent contrast with $9.6B in the prior year. Core sales declined 5.2 percent. Stated gross margin was 34.9 percent, contrast with 34.2 percent in the prior year. Normalized gross margin was 34.8 percent, in line with the prior year.

The company stated a full year 2018 operating loss of $7.8B contrast with operating income of $386.0M in the prior year. Stated operating margin was negative 90.7 percent contrast with 4.0 percent in the prior year. Normalized operating income was $878.0M contrast with $1.1B in the prior year. Normalized operating margin was 10.2 percent contrast with 11.1 percent in the prior year.

Stated net loss was $6.9B contrast with net income of $2.7B in the prior year. Stated diluted loss per share was $14.60 contrast with stated diluted earnings per share of $5.63 in the prior year. Normalized net income was $1.3B, about in line with the prior year. Normalized diluted earnings per share were $2.68 contrast with $2.75 in the prior year.

Operating cash flow was $680.0M contrast to $966.0M in the prior year, reflecting taxes paid in 2018 related to gains from divested businesses, the absence of cash flow contributions from divested businesses and unfavorable working capital movements. The company exited the year with a gross debt leverage ratio of 3.5x.

NWL has a market value of $6.99B while its EPS was booked as $-14.96 in the last 12 months. The stock has 451.50M shares outstanding. In the profitability analysis, the company has gross profit margin of 34.90% while net profit margin was -80.20%. Beta value of the company was 1.05; beta is used to measure riskiness of the security. Analyst recommendation for this stock stands at 2.70.

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