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Newell Brands Inc. (NWL - Free Report) has reported third-quarter 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, whereas the top line lagged the same. Both metrics declined year over year. Results have been affected by a tough environment, reduced inventory, inflationary pressure and the impact of a stronger dollar. Management expects the headwinds to persist in the near term.
Shares of NWL fell nearly 2% before the trading session on Oct 10, following slashed view due to inflation and unfavorable currency. In the past three months, shares of this Zacks Rank #4 (Sell) company have lost 21.5% compared with the industry’s 12.6% decline.
Q3 Details
The company’s third-quarter normalized earnings per share of 53 cents outpaced the Zacks Consensus Estimate of 47 cents. Also, the metric fell slightly from 54 cents earned a year ago.
Net sales declined 19.2% year over year to $2,252 million and lagged the Zacks Consensus Estimate of $2,257 million. This includes the adverse impacts of the sale of the Connected Home & Security (CH&S) business, unfavorable foreign currency, and exit of its category and retail store. Also, core sales fell 10.8%, as one of the seven business units witnessed core sales growth.
The normalized gross margin contracted 120 bps year over year to 29.4%. The normalized operating margin contracted 120 bps year over year to 10.2% in the reported quarter.
Image Source: Zacks Investment Research
Segment Details
Net sales in the Commercial Solutions segment were $397 million in the third quarter, down 18.3% from the prior-year period’s number. The metric missed the consensus mark of $388.2 million. Core sales improved 9.2% year over year. On the flip side, the adverse impact of the sale of the CH&S business and unfavorable foreign currency impacts acted as deterrents.
The Home Appliances segment recorded net sales of $305 million in the third quarter, down 31.2% from the prior-year quarter. Also, the metric lagged the Zacks Consensus Estimate of $380.2 million. Core sales declined 23.2% due to foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Net sales at the Home Solutions segment (Food, Outdoor products, Home Fragrance, and Connected Home & Security) totaled $510 million, down 14.7% from the prior-year period. The segment’s top line was mainly fueled by a core sales decline of 11.6% due to the closure of 42 underperforming Yankee Candle stores in the first nine months of 2022, and unfavorable currency impacts. Also, the metric missed the consensus mark of $525.4 million.
The Learning and Development segment recorded net sales of $751 million, which declined 13.6% from the prior-year quarter’s reading. The metric missed the consensus mark of $832.1 million. The downtrend is led by a 9.9% decrease in core sales, resulting from weakness 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 $289 million declined 26.1% from the prior-year quarter. Also, the metric lagged the consensus mark of $354.9 million. However, core sales growth of 18.4% was offset by foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Other Financial Details
Newell Brands ended the quarter with cash and cash equivalents of $636 million, long-term debt of $4,762 million, net debt outstanding of $5.2 billion, and shareholders’ equity of $3,776 million. In the nine months ending Sep 30, 2022, the company repurchased $325 million of its common shares with $50 million remaining under its existing share repurchase authorization. NWL also used $567 million for operating activities in the said period.
Newell Brands Inc. Price, Consensus and EPS Surprise
Management slashed its guidance for 2022 to reflect the adverse impacts of unfavorable foreign currency and inflation. The company anticipates net sales of $9.35-$9.43 billion, down from the earlier mentioned $9.37-$9.58 billion. Core sales are expected to decline 3-4% compared with the prior stated 2-4% decrease, excluding the contribution from the CH&S business.
The normalized operating margin is expected to be 10-10.3%, down from the prior stated 10-10.5%. Normalized earnings per share are forecast to be $1.56-$1.61, down from the previously communicated $1.56-$1.70 for 2022.
For 2022, the company envisions generating an operating cash flow below its earlier mentioned $400-$500 million.
For fourth-quarter 2022, net sales are envisioned to be $2.18-$2.26 billion, with a core sales decline of 9-12%. For the quarter, the company expects a normalized operating margin of 5.1-6.5% and normalized earnings of 9-14 cents per share.
Both guidance’s include the impacts of unfavorable foreign currency, closures of Yankee Candle stores, and the exit of certain product categories, particularly in the Outdoor & Recreation, and Home Appliances segments.
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average. The company has gained 5.6% in the past year.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales suggests growth of 3.5% from the year-ago reported numbers, whereas the same for earnings suggests a decline of 5.1%. The consensus mark for STZ’s earnings per share has moved down 5.7% in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%. The company has declined 48.6% in the past year.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 51.2% from the prior-year reported number, whereas the same for earnings suggests a decline of 73.9%. The consensus mark for BROS’ earnings per share has moved down 25% in the past 30 days.
Limoneira currently carries a Zacks Rank #2. LMNR has a trailing two-quarter earnings surprise of 13.3%, on average. It has a long-term earnings growth rate of 15%. The company has declined 20.4% in the past year.
The Zacks Consensus Estimate for Limoneira’s current financial-year loss per share suggests growth of 67.9% from a loss per share of 28 cents reported in the year-ago quarter, whereas the same for sales suggests a decline of 1.6%. The consensus estimate for LMNR’s loss per share has narrowed by 2 cents in the past 30 days.
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Newell (NWL) Surpasses Q3 Earnings, Misses Sales Estimates
Newell Brands Inc. (NWL - Free Report) has reported third-quarter 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, whereas the top line lagged the same. Both metrics declined year over year. Results have been affected by a tough environment, reduced inventory, inflationary pressure and the impact of a stronger dollar. Management expects the headwinds to persist in the near term.
Shares of NWL fell nearly 2% before the trading session on Oct 10, following slashed view due to inflation and unfavorable currency. In the past three months, shares of this Zacks Rank #4 (Sell) company have lost 21.5% compared with the industry’s 12.6% decline.
Q3 Details
The company’s third-quarter normalized earnings per share of 53 cents outpaced the Zacks Consensus Estimate of 47 cents. Also, the metric fell slightly from 54 cents earned a year ago.
Net sales declined 19.2% year over year to $2,252 million and lagged the Zacks Consensus Estimate of $2,257 million. This includes the adverse impacts of the sale of the Connected Home & Security (CH&S) business, unfavorable foreign currency, and exit of its category and retail store. Also, core sales fell 10.8%, as one of the seven business units witnessed core sales growth.
The normalized gross margin contracted 120 bps year over year to 29.4%. The normalized operating margin contracted 120 bps year over year to 10.2% in the reported quarter.
Image Source: Zacks Investment Research
Segment Details
Net sales in the Commercial Solutions segment were $397 million in the third quarter, down 18.3% from the prior-year period’s number. The metric missed the consensus mark of $388.2 million. Core sales improved 9.2% year over year. On the flip side, the adverse impact of the sale of the CH&S business and unfavorable foreign currency impacts acted as deterrents.
The Home Appliances segment recorded net sales of $305 million in the third quarter, down 31.2% from the prior-year quarter. Also, the metric lagged the Zacks Consensus Estimate of $380.2 million. Core sales declined 23.2% due to foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Net sales at the Home Solutions segment (Food, Outdoor products, Home Fragrance, and Connected Home & Security) totaled $510 million, down 14.7% from the prior-year period. The segment’s top line was mainly fueled by a core sales decline of 11.6% due to the closure of 42 underperforming Yankee Candle stores in the first nine months of 2022, and unfavorable currency impacts. Also, the metric missed the consensus mark of $525.4 million.
The Learning and Development segment recorded net sales of $751 million, which declined 13.6% from the prior-year quarter’s reading. The metric missed the consensus mark of $832.1 million. The downtrend is led by a 9.9% decrease in core sales, resulting from weakness 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 $289 million declined 26.1% from the prior-year quarter. Also, the metric lagged the consensus mark of $354.9 million. However, core sales growth of 18.4% was offset by foreign-exchange headwinds and the negative impacts of exits from the low-margin categories.
Other Financial Details
Newell Brands ended the quarter with cash and cash equivalents of $636 million, long-term debt of $4,762 million, net debt outstanding of $5.2 billion, and shareholders’ equity of $3,776 million. In the nine months ending Sep 30, 2022, the company repurchased $325 million of its common shares with $50 million remaining under its existing share repurchase authorization. NWL also used $567 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 slashed its guidance for 2022 to reflect the adverse impacts of unfavorable foreign currency and inflation. The company anticipates net sales of $9.35-$9.43 billion, down from the earlier mentioned $9.37-$9.58 billion. Core sales are expected to decline 3-4% compared with the prior stated 2-4% decrease, excluding the contribution from the CH&S business.
The normalized operating margin is expected to be 10-10.3%, down from the prior stated 10-10.5%. Normalized earnings per share are forecast to be $1.56-$1.61, down from the previously communicated $1.56-$1.70 for 2022.
For 2022, the company envisions generating an operating cash flow below its earlier mentioned $400-$500 million.
For fourth-quarter 2022, net sales are envisioned to be $2.18-$2.26 billion, with a core sales decline of 9-12%. For the quarter, the company expects a normalized operating margin of 5.1-6.5% and normalized earnings of 9-14 cents per share.
Both guidance’s include the impacts of unfavorable foreign currency, closures of Yankee Candle stores, and the exit of certain product categories, particularly in the Outdoor & Recreation, and Home Appliances segments.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Constellation Brands (STZ - Free Report) , Dutch Bros (BROS - Free Report) and Limoneira Co (LMNR - Free Report) .
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average. The company has gained 5.6% in the past year.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales suggests growth of 3.5% from the year-ago reported numbers, whereas the same for earnings suggests a decline of 5.1%. The consensus mark for STZ’s earnings per share has moved down 5.7% in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%. The company has declined 48.6% in the past year.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 51.2% from the prior-year reported number, whereas the same for earnings suggests a decline of 73.9%. The consensus mark for BROS’ earnings per share has moved down 25% in the past 30 days.
Limoneira currently carries a Zacks Rank #2. LMNR has a trailing two-quarter earnings surprise of 13.3%, on average. It has a long-term earnings growth rate of 15%. The company has declined 20.4% in the past year.
The Zacks Consensus Estimate for Limoneira’s current financial-year loss per share suggests growth of 67.9% from a loss per share of 28 cents reported in the year-ago quarter, whereas the same for sales suggests a decline of 1.6%. The consensus estimate for LMNR’s loss per share has narrowed by 2 cents in the past 30 days.