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Newell (NWL) Surpasses Earnings & Sales Estimates in Q1
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Newell Brands Inc. (NWL - Free Report) has reported impressive first-quarter 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and also grew year over year. Despite cost inflationary and supply-chain issues, results have gained from a solid demand, product innovation and robust core sales growth. Management retained the 2022 view and provided second-quarter guidance.
The company has also noted that it completed the sale of its CH&S business to Resideo Technologies for $593 million, subject to customary working capital and transaction adjustments.
The Zacks Rank #3 (Hold) stock lost 0.1% in the past three months against the industry’s 7.3% decline.
Image Source: Zacks Investment Research
Q1 Details
Newell Brands’ first-quarter normalized earnings per share of 36 cents outpaced the Zacks Consensus Estimate of 27 cents. Also, the metric grew 20% from 30 cents earned a year ago.
Net sales grew 4.4% year over year to $2,388 million and surpassed the Zacks Consensus Estimate of $2,270 million. The uptick can be attributed to core sales growth of 6.9%, as five of the seven business units witnessed higher core sales. Sales were offset by the adverse currency as well as the exiting of category and retail stores.
The normalized gross margin contracted 100 basis points (bps) year over year to 31.2%. The decline resulted from ongoing inflationary pressures mainly related to resin, sourced finished goods, transportation and labor, partly negated by gains from FUEL productivity savings and pricing.
The normalized operating margin expanded 50 bps year over year to 10.6%, driven by gains from reduced overhead costs, FUEL productivity savings and pricing, which offset significant cost inflation and currency headwinds.
Segment Details
Net sales in the Commercial Solutions segment were $510 million in the first quarter, up 8.3% from the prior-year period’s number. Core sales improved 7.4%, driven by gains in the Connected Home & Security business, which was partly offset by adverse currency rates.
The Home Appliances segment recorded net sales of $340 million in the first quarter, down 5.9% from the prior-year quarter’s figure. Core sales also declined 1.9% due to foreign-exchange headwinds, partly offset by the positive impacts of exits from low margin categories.
Net sales at the Home Solutions segment (Food, Outdoor products, Home Fragrance, and Connected Home & Security) totaled $500 million, down 0.8% from the prior-year period’s number. The segment’s top line was mainly fueled by core sales growth of 1.4%, offset by the closure of 38 underperforming Yankee Candle stores in the said quarter, as well as unfavorable currency impacts. Core sales benefited from growth in the Food business unit, offset by a modest decline in the Home Fragrance business unit.
The Learning and Development segment recorded net sales of $650 million, which grew 5% from the prior-year quarter’s reading. The uptrend is led by a 7.4% increase in core sales, resulting from strength in the Writing and the Baby businesses. Adverse currency rates also affected the segment’s sales in the quarter.
The Outdoor and Recreation segment’s net sales of $388 million improved 15.5% from the prior-year quarter’s level. This resulted from core sales growth of 22.9%, offset by foreign-exchange headwinds.
Other Financial Details
Newell Brands ended the quarter with cash and cash equivalents of $344 million, long-term debt of $4,880 million, net debt outstanding of $4.5 billion, and shareholders’ equity of $3,980 million, excluding non-controlling interests. In the first quarter, the company repurchased $275 million of its common shares and paid out dividends worth $100 million. NWL also used $272 million for operating activities in the said period.
Newell Brands Inc. Price, Consensus and EPS Surprise
Management provided its initial guidance for 2022. The company anticipates net sales of $9.93-$10.13 billion for 2022, with core sales of flat to up 2%. The normalized operating margin is expected to be 11.5-11.8%. Normalized earnings per share are forecast to be $1.85-$1.93 for 2022.
For 2022, the company envisions generating an operating cash flow of $800-$850 million.
For second-quarter 2022, net sales are envisioned to be $2.52-$2.57 billion, with core sales growth of low-single digits. For the quarter, the company expects a normalized operating margin of 11.7-12.1% and normalized earnings of 45-48 cents per share.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.
Duckhorn currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 11.3%. NAPA has a trailing four-quarter earnings surprise of 122.4%, on average. The company has declined 1.7% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial-year sales and earnings per share suggests growth of 9.6% and 3.5%, respectively, from the year-ago reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
Dutch Bros currently has a Zacks Rank #2. BROS has a trailing two-quarter earnings surprise of 93.75%, on average. It has an expected long-term earnings growth rate of 35.9%. The company has gained 4.8% in the past three months.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings per share suggests growth of 42.7% and 3.3%, respectively, from the corresponding year-ago reported numbers. The consensus mark for BROS’ earnings per share has been unchanged in the past 30 days.
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Newell (NWL) Surpasses Earnings & Sales Estimates in Q1
Newell Brands Inc. (NWL - Free Report) has reported impressive first-quarter 2022 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate and also grew year over year. Despite cost inflationary and supply-chain issues, results have gained from a solid demand, product innovation and robust core sales growth. Management retained the 2022 view and provided second-quarter guidance.
The company has also noted that it completed the sale of its CH&S business to Resideo Technologies for $593 million, subject to customary working capital and transaction adjustments.
The Zacks Rank #3 (Hold) stock lost 0.1% in the past three months against the industry’s 7.3% decline.
Image Source: Zacks Investment Research
Q1 Details
Newell Brands’ first-quarter normalized earnings per share of 36 cents outpaced the Zacks Consensus Estimate of 27 cents. Also, the metric grew 20% from 30 cents earned a year ago.
Net sales grew 4.4% year over year to $2,388 million and surpassed the Zacks Consensus Estimate of $2,270 million. The uptick can be attributed to core sales growth of 6.9%, as five of the seven business units witnessed higher core sales. Sales were offset by the adverse currency as well as the exiting of category and retail stores.
The normalized gross margin contracted 100 basis points (bps) year over year to 31.2%. The decline resulted from ongoing inflationary pressures mainly related to resin, sourced finished goods, transportation and labor, partly negated by gains from FUEL productivity savings and pricing.
The normalized operating margin expanded 50 bps year over year to 10.6%, driven by gains from reduced overhead costs, FUEL productivity savings and pricing, which offset significant cost inflation and currency headwinds.
Segment Details
Net sales in the Commercial Solutions segment were $510 million in the first quarter, up 8.3% from the prior-year period’s number. Core sales improved 7.4%, driven by gains in the Connected Home & Security business, which was partly offset by adverse currency rates.
The Home Appliances segment recorded net sales of $340 million in the first quarter, down 5.9% from the prior-year quarter’s figure. Core sales also declined 1.9% due to foreign-exchange headwinds, partly offset by the positive impacts of exits from low margin categories.
Net sales at the Home Solutions segment (Food, Outdoor products, Home Fragrance, and Connected Home & Security) totaled $500 million, down 0.8% from the prior-year period’s number. The segment’s top line was mainly fueled by core sales growth of 1.4%, offset by the closure of 38 underperforming Yankee Candle stores in the said quarter, as well as unfavorable currency impacts. Core sales benefited from growth in the Food business unit, offset by a modest decline in the Home Fragrance business unit.
The Learning and Development segment recorded net sales of $650 million, which grew 5% from the prior-year quarter’s reading. The uptrend is led by a 7.4% increase in core sales, resulting from strength in the Writing and the Baby businesses. Adverse currency rates also affected the segment’s sales in the quarter.
The Outdoor and Recreation segment’s net sales of $388 million improved 15.5% from the prior-year quarter’s level. This resulted from core sales growth of 22.9%, offset by foreign-exchange headwinds.
Other Financial Details
Newell Brands ended the quarter with cash and cash equivalents of $344 million, long-term debt of $4,880 million, net debt outstanding of $4.5 billion, and shareholders’ equity of $3,980 million, excluding non-controlling interests. In the first quarter, the company repurchased $275 million of its common shares and paid out dividends worth $100 million. NWL also used $272 million for operating activities in the said period.
Newell Brands Inc. Price, Consensus and EPS Surprise
Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote
Outlook
Management provided its initial guidance for 2022. The company anticipates net sales of $9.93-$10.13 billion for 2022, with core sales of flat to up 2%. The normalized operating margin is expected to be 11.5-11.8%. Normalized earnings per share are forecast to be $1.85-$1.93 for 2022.
For 2022, the company envisions generating an operating cash flow of $800-$850 million.
For second-quarter 2022, net sales are envisioned to be $2.52-$2.57 billion, with core sales growth of low-single digits. For the quarter, the company expects a normalized operating margin of 11.7-12.1% and normalized earnings of 45-48 cents per share.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely The Duckhorn Portfolio (NAPA - Free Report) , McCormick & Company (MKC - Free Report) and Dutch Bros (BROS - Free Report) .
McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. It also currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.
Duckhorn currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 11.3%. NAPA has a trailing four-quarter earnings surprise of 122.4%, on average. The company has declined 1.7% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial-year sales and earnings per share suggests growth of 9.6% and 3.5%, respectively, from the year-ago reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
Dutch Bros currently has a Zacks Rank #2. BROS has a trailing two-quarter earnings surprise of 93.75%, on average. It has an expected long-term earnings growth rate of 35.9%. The company has gained 4.8% in the past three months.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings per share suggests growth of 42.7% and 3.3%, respectively, from the corresponding year-ago reported numbers. The consensus mark for BROS’ earnings per share has been unchanged in the past 30 days.