Newell Brands continued its turnaround push by beating a Wall Street second-quarter earnings estimate while coming up a little short of a revenue forecast.
Net income was $45 million, or 11 cents per diluted share, versus $18 million, or four cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, Newell reported, net income was $151 million, or 36 cents per diluted share, versus $101 million, or 24 cents per diluted share, in the year-prior period.
An analyst consensus estimate published by Yahoo Finance anticipated earnings per adjusted diluted share of 21 cents and revenue of $2.05 billion.
Net sales were $2.03 billion as compared to $2.2 billion in the year-before quarter, the company reported. Operating income was $163 million versus $120 million in the year-previous period, while adjusted operating income was $219 million versus $201 million.
Core sales declined 4.2% year over year, Newell stated.
Newell’s Home & Commercial Solutions operation posted net sales of $962 million versus $1.1 billion in the year-past quarter, reflecting a core sales decline of 4.3%, as well as the impact of unfavorable foreign exchange and certain business exits. Core sales declined across all three business segments: kitchen, home fragrance and commercial. Operating income was $48 million versus an operating loss of $21 million in the year-past period while adjusted operating income was $71 million versus $23 million.
The Outdoor & Recreation operations posted net sales of $258 million versus $333 million in the year-past quarter, reflecting a core sales decline of 18.2%, as well as the impact of unfavorable foreign exchange and certain business exits. Operating loss was $11 million versus operating income of $5 million in the year-past period while adjusted operating loss was $1 million versus operating income of $14 million.
The Learning & Development operation posted net sales of $813 million, in-line with the year-past period, as the impact of unfavorable foreign exchange offset core sales growth. Core sales increased in both the writing and baby business segments. Operating income was $205 million versus $188 million in the year-past period while adjusted operating income was $212 million versus $199 million.
In announcing the financial results, Chris Peterson, Newell Brands president and CEO, said, “We are making significant progress in driving Newell’s turnaround. During the second quarter, we continued to deliver on our operational and financial priorities for the year, as results came in at the high-end or ahead of our plan across key metrics. Since implementing the new corporate strategy, we have taken decisive actions that have improved the company’s top line trajectory, driven significant gross and operating margin expansion, delevered the balance sheet and improved cash flow performance, while strengthening our team, Newell’s front-end commercial capabilities and fostering a high-performance, high-accountability culture. We remain laser focused on returning the business to sustainable and profitable growth and are confident that we are pursuing the right strategy to accomplish this.”
Mark Erceg, Newell Brands CFO, added, “Second quarter reported gross margin increased by 590 basis points versus last year, which builds on the 110, 360 and 380 basis point expansions that occurred during the three sequential quarters that preceded it, respectively. The rapid and dramatic improvement we have delivered in gross margin ties directly back to the development and implementation of our new strategy and has allowed us to invest more in advertising and critical front-end commercial capabilities, while also expanding reported operating margins, which were up 260 basis points versus last year in the second quarter. During each of the last four quarters we have also achieved significant year-over-year improvements in our cash conversion cycle and reduced Newell’s leverage ratio on a sequential basis. While the macroeconomic environment remains choppy, the transformation of our business is clearly underway, which has given us confidence to improve our financial outlook for the year.”
