Newell Brands posted a big third-quarter earnings beat versus Wall Street estimates but fell short of analyst forecasts on sales, including sales declines in its home product businesses.
The company reported a net loss of $218 million, or 53 cents per diluted loss per share, compared with net income of $19 million, or five cents per diluted share, in the prior year period. Adjusted for one-time events, net income was $163 million, or 39 cents per diluted share, versus $208 million, or 50 cents per diluted share, in the prior year period, the company noted.
A Yahoo Finance analyst consensus estimate called for earnings per adjusted diluted share of 23 cents and revenue of $2.12 billion.
Net sales were $2.05 billion, down 9.1% compared with the year-previous quarter, as core sales declined 9.2%, Newell stated. Operating loss was $159 million versus operating income of $40 million in the year-before period, while adjusted operating income was $167 million versus $234 million.
The Home & Commercial Solutions segment generated net sales of $1.1 billion compared with $1.2 billion in the prior-year period. Newell cited a core sales decline of 7.1% and the impact of certain category exits, partially offset by the impact of favorable foreign exchange. Core sales decreased in all three businesses: Kitchen, Home Fragrance and Commercial.
Reported operating income on Home & Commercial Solutions was $64 million compared with operating loss of $75 million in the prior-year period. Normalized operating income was $95 million versus $63 million in the prior-year period.
In announcing the financial results, Chris Peterson, Newell Brands president and CEO, said, “Since introducing a new strategy in June, we have been laser-focused on implementing the organizational, operational and cultural changes required to strengthen the company’s front-end consumer-facing capabilities while harnessing the scale and power of One Newell. We have improved gross margin and strengthened operating cash flow, which were the top two financial priorities we established at the start of the year. The substantial progress we are making gives me great confidence that our new strategy, which focuses on our leading brands in top markets and puts consumer understanding and insights at the center of everything we do, will accelerate the company’s performance and drive significant value creation over time, despite a challenging macroeconomic backdrop.”
Mark Erceg, Newell Brands CFO, added, “During the third quarter, we improved the structural economics of the business by increasing gross margin both sequentially and versus last year. Year-to-date, we increased operating cash flow by more than $1.2 billion and reduced net debt by nearly $400 million. Based on these strong results, we expect gross margin will continue to improve during the fourth quarter, and we have raised our cash flow outlook for the year, even as top-line expectations and earnings per share estimates have been tempered.”
