Investor presentation, Nov 2012
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Transcript of Investor presentation, Nov 2012
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Investor Presentation
November 2012
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Statements in this presentation that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating or gross margin improvements or declines, Project Renewal, the European Transformation Plan, capital and other expenditures, cash flow, dividends, restructuring and restructuring-related costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands; our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; our ability to implement successfully information technology solutions throughout our organization; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations and those factors listed in the company’s latest quarterly report on Form 10-Q and Exhibit 99.1 thereto filed with the Securities and Exchange Commission. Changes in such assumptions or factors could produce significantly different results. The information contained in this presentation is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this presentation is a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.
Nancy O’Donnell
VP, Investor Relations
(770) 418-7723
Alisha Pennix
Sr. Manager, Investor Relations
(770) 418-7706
INVESTOR RELATIONS CONTACTS:
Forward-looking statement
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$6 billion business of leading brands
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strong competitive positions
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2.2% Core Sales Growth
+6.7% Normalized EPS Growth
$67M Shares Repurchased
good year-to-date performance
+20 bps Normalized Operating Margin
88% Increase in Quarterly Dividend
* through 9/30/12
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FY 2012 Outlook
Core Sales 2% to 3%
Currency Translation -1.5% to -2%
Total Sales Growth 0% to 1.5%
“Normalized” Operating Margin Up to +20 bps
“Normalized” EPS*
versus last year:
$1.63 to $1.69
+3% to +6%
Cash Flow from Operations
versus last year:
+ $550 to $600M
about flat
* See reconciliation included in the Appendix.
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affirmed full year guidance
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Working Capital
Reduction Initiative
New US Customer
Development Organization
Strengthened Balance Sheet
Indirect Procurement
Program
Project Renewal
SAP/EPC EMEA
driving delivery and driving change
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Delivery
Consistently do what we say
Strategic
Shape the future
Acceleration
Accelerate performance
good progress...much more to do
We are here
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next chapter more growth dependent than last
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Growth
Margin
Other
growth unlocks higher earnings
Sources of EPS growth
BU
SIN
ESS
MO
DEL
5 W
AYS
TO
WIN
WH
ERE
TO P
LAY
WIN BIGGER
WIN WHEREWE ARE
INCUBATEFOR
GROWTH
CT&A, IP&S, LABELING, COMMERCIAL PRODUCTSFINE WRITINGWRITING & CREATIVE EXPRESSION
HOME ORGANIZATION & STYLECULINARY LIFESTYLESHARDWARE
BABY & PARENTINGENDICIA, MIMIORUBBERMAID MEDICAL SOLUTIONS
NWL is a growing brand-led business with a strong home in the United States and global ambition
Our Consumer brands win at the point of decision through excellence in performance, design and innovation
Our Professional brands win the loyalty of the chooser by improving the productivity and performance of the user
We collaborate with our supplier and customer partners across the total enterprise in a shared commitment to growth and creating value
We deliver competitive returns to our shareholders through consistent, sustainable and profitable growth
Sharpen brand strategies on highest impact growth levers
Launch new USA customer development organization
Deliver European Transformation, Project Renewal savings, and working capital reduction
Drive performance culture aligned to business strategy
Accelerate Latin Americaand Asia in Win BiggerCategories.
MAKE OUR BRANDS REALLY MATTER
BUILD AN EXECUTIONPOWERHOUSE
UNLOCK TRAPPEDCAPACITY FOR GROWTH
DEVELOP THE TEAMFOR GROWTH
EXTEND BEYONDOUR BORDERS
Partner to win with customers and suppliers
Develop joint business plans for new channel penetration and broader distribution
Simplify everything to release costs for growth
Build a more global perspective and talent base
Strategic insight program in China
Newell Rubbermaid helps people flourish every day, where they live, learn, work and play
EDGE: EVERY DAY GREAT EXECUTION
PU
RP
OSE
AM
BIT
ION
* Assumes performance in line with long term objectives. For illustrative use only – not to be construed as guidance.
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Growth Game Plan directing actions B
USI
NES
S M
OD
EL5
WA
YS T
O W
IN
WH
ERE
TO P
LAY
WIN BIGGER
WIN WHEREWE ARE
INCUBATEFOR
GROWTH
CT&A, IP&S, LABELING, COMMERCIAL PRODUCTSFINE WRITINGWRITING & CREATIVE EXPRESSION
HOME ORGANIZATION & STYLECULINARY LIFESTYLESHARDWARE
BABY & PARENTINGENDICIA, MIMIORUBBERMAID MEDICAL SOLUTIONS
NWL is a growing brand-led business with a strong home in the United States and global ambition
Our Consumer brands win at the point of decision through excellence in performance, design and innovation
Our Professional brands win the loyalty of the chooser by improving the productivity and performance of the user
We collaborate with our supplier and customer partners across the total enterprise in a shared commitment to growth and creating value
We deliver competitive returns to our shareholders through consistent, sustainable and profitable growth
Sharpen brand strategies on highest impact growth levers
Launch new USA customer development organization
Deliver European Transformation, Project Renewal savings, and working capital reduction
Drive performance culture aligned to business strategy
Accelerate Latin Americaand Asia in Win BiggerCategories.
MAKE OUR BRANDS REALLY MATTER
BUILD AN EXECUTIONPOWERHOUSE
UNLOCK TRAPPEDCAPACITY FOR GROWTH
DEVELOP THE TEAMFOR GROWTH
EXTEND BEYONDOUR BORDERS
Partner to win with customers and suppliers
Develop joint business plans for new channel penetration and broader distribution
Simplify everything to release costs for growth
Build a more global perspective and talent base
Strategic insight program in China
Newell Rubbermaid helps people flourish every day, where they live, learn, work and play
EDGE: EVERY DAY GREAT EXECUTION
PU
RP
OSE
AM
BIT
ION
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Win bigger
Win where we are
Incubate for growth
sharper portfolio choices
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resources focused to portfolio roles
Win bigger
Commercial Products
Writing CT&A IP&S Labeling Fine
Writing
Win where we are
Hardware Home Org
& Style Culinary Lifestyles
Incubate for growth
Endicia Baby Medical
Solutions Mimio
consumer facing professional facing
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Win Bigger
75%
Win Where Are
15%
Incubate
10%
5 Year Growth Contribution
growth accelerated by portfolio choices
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North America
EMEA
Latin America
APAC
revenue
N America ~60% of revenue
APAC and L America > 30% of revenue
EMEA ~10% of revenue
10
ye
ar a
bso
lute
gro
wth
growth accelerated by wider footprint
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operating income margin %
emerging
developed
full portfolio, local needs and local price points
investment in sales and marketing
enabled by reducing high cost in developed world
requires reset of our algorithm
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Delivery
Consistently do what we say
Strategic
Shape the future
Acceleration
Accelerate performance
confidence to accelerate transformation
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fast return projects enable reinvestment
Restructuring Cost
Savings
Actual to date Q312
$63 $90 - $100
On Plan ($46M to date) $90 - $100
$Millions Phase I
Project Renewal
Payback ~1.5 years
$250 - $275
$180 - $225
Phase II
$340 - $375
$270 - $325
Total Renewal
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supply chain footprint
best cost back office
best cost finance
EMEA transformation
organization – align structure to strategy
five key work streams
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Project Renewal: expected outcomes
Flatter and simplified organization with strengthened capabilities in Brand & Category Development and Execution & Delivery
Accelerated release of costs, the majority of which will be invested in faster growth and the geographic expansion of our leading brands
A greater line of sight to earnings and operating cash flow growth while the company invests to accelerate performance
Strengthened leadership team that can drive faster implementation of Growth Game Plan
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aligning structure with strategy
Make brands really matter
Build an execution powerhouse
Unlock trapped capacity for growth
Extend our boundaries
Develop a growth team
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• big brand ideas
• high impact
innovation
• superior products
and design
• e-brand building
• e-commerce
• strategic customer
management
• strategic channel
management
• market-leading
supply chain
• superior service at
best cost
specific
responsibilities
shared accountability
development delivery
two capabilities of equal stature
Interdependent and Equal in Importance
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six new business segments
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industrial
office
writing
tools
home solutions
commercial products
baby
specialty
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Chief Executive Officer
Michael B. Polk
Chief Operating Officer
Bill Burke
Chief Supply Chain Officer
Meri Stevens
Chief Customer Officer
Joe Cavaliere
Chief Development
Officer
Mark Tarchetti
Chief Design and R&D Officer
Chuck Jones
Chief Marketing & Insights
Officer
Richard Davies
Chief Financial Officer
Doug Martin
Chief Information
Officer
Gordon Steele
Chief Human Resource Officer
Jim Sweet
Chief Legal Officer/EMEA
Lead
John Stipancich
a new Newell Executive team
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Key leadership appointments
William A. Burke III Chief Operating Officer
Mark Tarchetti Chief Development Officer
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Key leadership appointments
Joe Cavaliere Chief Customer Officer
Meredith Stevens Chief Supply Chain Officer
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Key leadership appointments
Richard Davies Chief Marketing & Insights Officer
Chuck Jones Chief Design and R&D Officer
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Delivery
Consistently do what we say
Strategic
Shape the future
Acceleration
Accelerate performance
Consistent growth (sales, EPS)
Strengthened leverage metrics
Increased dividends
Repurchased shares
Accelerated growth (sales, EPS)
Strong earnings and cash flow
Increased dividends
Surplus cash
2012/2013 2013/2014 2015 and beyond
Compelling value creation story
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Operating cash flow
$3.5B
~$1.5 billion in uncommitted free cash flow over next 5 years provides flexibility for:
• Accelerated structural cost reductions
• Increased dividends
• Share repurchase
• Bolt-on acquisitions
Capex $1.0B
Dividends $0.7B
~$3.5B ~$3.5B
Share repurchase $0.3B
$1.5B Uncommitted Free Cash Flow
Operating cash flow
$3.5B
* Assumes performance in line with long term objectives. For illustrative use only – not to be construed as guidance.
Next 5 years*
Uncommitted free cash flow provides flexibility
1. Acceleration in emerging markets
2. Accelerated cost reductions
3. Increased dividends and/or share repurchases
4. Bolt-on acquisitions
Increased borrowing capacity adds even more flexibility
Strong cash flow and increased borrowing capacity enables value creation flexibility for shareholders
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Growth Game Plan will drive accelerated performance
Opportunity to release unproductive costs to fund investment
Strong, growing free cash flow provides fuel for accelerated performance and returns to shareholders
Investment thesis strong
Driven by sharper portfolio choices and strengthened capabilities
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Appendix
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Reconciliation: Q3 YTD 2012 and Q3 YTD 2011 Core Sales
Newell Rubbermaid Inc.
RECONCILIATION OF NON-GAAP INFORMATION
Core Sales
(dollars in millions)
Q1 2012 Q2 2012 Q3 2012
Nine months ended
September 30, 2012
Sales as reported 1,332.4$ 1,516.2$ 1,535.3$ 4,383.9$
Currency Impact 7.8 34.9 38.5 81.2
Core Sales (1) 1,340.2$ 1,551.1$ 1,573.8$ 4,465.1$
Q1 2011 Q2 2011 Q3 2011
Nine months ended
September 30, 2011
Sales as reported 1,274.2$ 1,545.3$ 1,549.9$ 4,369.4$
Including Currency 0.3%
Excluding Currency 2.2%
Currency impact (1.9)%
Core Sales
(1) "Core Sales" is determined by applying the prior year monthly exchange rates to the current year local currency monthly sales amounts,
with the difference in the current year reported sales and Core Sales representing changes attributable to foreign currency translation,
reported in the table as "Currency Impact".
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$ millions
Reconciliation: Q3 YTD 2012 and Q3 YTD 2011 Operating Income, As Reported, to Normalized Operating Income
Q3 YTD 2012 Q3 YTD 2011
Net sales $4,383.9 $4,369.4
Operating income (as reported) $498.1 $131.7
CEO transition costs $ - $4.4
Impairment charges $ - $382.6
Restructuring and restructuring-related costs $66.6 $38.1
Operating income (normalized) $564.7 $556.8
Operating margin (normalized) 12.9% 12.7%
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Reconciliation: Q3 YTD 2012 and Q3 YTD 2011 “Normalized” EPS
Q3 YTD 2012 Q3 YTD 2011*
Diluted earnings per share (as reported): $1.02 $0.15
Impairment charges $0.00 $1.03
Restructuring and restructuring-related costs $0.18 $0.12
Discontinued operations ($0.01) $0.03
CEO transition costs $0.00 $0.01
Income tax - discrete contingencies, expiration of
statutes of limitation and resolution of examinations$0.07 ($0.17)
Loss related to the extinguishment of debt $0.01 $0.01
"Normalized" EPS $1.27 $1.19
* totals may not add due to rounding
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Reconciliation: Full Year 2012 Outlook for “Normalized” EPS
FY 2012
Diluted earnings per share $1.27 to $1.33
Restructuring and restructuring-related costs [ 1 ] $0.27 to $0.32
Discontinued operations ($0.01)
Income tax - discrete contingencies, expiration of statutes of
limitation and resolution of examinations $0.07
Loss related to the extinguishment of debt $0.01
"Normalized" EPS $1.63 to $1.69
[ 1 ] Restructuring and restructuring-related costs include impairment charges, employee
termination benefits and other costs associated with the European Transformation Plan and
Project Renewal.