Newell Brands Announces Fourth Quarter and Full Year 2021 Results

Newell Brands has announced its fourth quarter and full year 2021 financial results.

“We achieved an important milestone in 2021, as we returned the company to core sales growth, with strong results across each business unit and geographic region,” said Ravi Saligram, Newell Brands president and CEO. “I am proud of the way our team has navigated through a difficult operating and inflationary backdrop, delivering more than 12% growth in both core sales and normalized operating income, with further improvement on complexity reduction, productivity, cash conversion cycle and a robust innovation pipeline.”

Chris Peterson, chief financial officer and president, business operations, said, “In the fourth quarter, we delivered core sales growth of 5.8%, building on the strong momentum of the prior five quarters. Effective cost management, decisive actions to mitigate the impact of inflation, and stronger top line drove upside to our expectations on operating profit. We strengthened the balance sheet, exiting 2021 with a 3.0x leverage ratio, and reduced the cash conversion cycle, even as we decided to strategically build inventories. We expect 2022 to mark another year of progress, despite a challenging operating environment. For 2022, we forecast core sales growth of flat to 2%, normalized operating margin expansion of 50 to 80 basis points, and normalized diluted EPS of $1.85 to $1.93.”

Fourth Quarter 2021 Executive Summary

• Net sales were $2.8 billion, an increase of 4.3% compared with the prior year period, during which the company experienced elevated demand across many of its categories.
• Core sales grew 5.8% compared with the prior year period. Six of eight business units and every major region increased core sales compared with the prior year period.
• Reported operating margin was 6.0% compared with 9.2% in the prior year period, largely reflecting the headwinds from significant inflation, as well as non-cash impairment charges, which more than offset benefits from lower overhead costs, FUEL productivity savings, and pricing. Normalized operating margin was 9.9% compared with 11.4% in the prior year period.
• Reported diluted earnings per share were $0.22 compared with $0.30 per share in the prior year period, with the year over year change largely reflecting the decline in reported operating profit and a change in the tax provision due to a reduction in discrete tax benefits.
• Normalized diluted earnings per share were $0.42 compared with $0.56 per share in the prior year period.
• Full year 2021 operating cash flow was $884 million compared with $1.4 billion in the prior year period, reflecting a working capital increase to support strong net sales growth, which more than offset the year over year improvement in operating income and cash conversion cycle.
• In November, the company redeemed the remaining $250 million of its 4.00% senior notes that were due June 2022.
• The company’s leverage ratio improved to 3.0x at the end of 2021 from 3.5x at the end of 2020.
• The company initiated its full year 2022 outlook, with expected net sales of $9.93 billion to $10.13 billion and normalized earnings per share of $1.85 to $1.93.

Full Year 2021 Operating Results

Net sales for the full year ended December 31, 2021 were $10.6 billion, an increase of 12.8% compared with $9.4 billion in the prior year, largely reflecting core sales growth of 12.5 percent. Net sales were 9.0 percent above the full year 2019 level, with growth across all five operating segments.

Reported gross margin was 31.1% compared with 32.8% in the prior year, as significant headwind from inflation, particularly related to resin, sourced finished goods, transportation and labor, more than offset the benefits from fixed cost leverage, FUEL productivity savings and pricing. Normalized gross margin was 31.4% compared with 32.9% in the prior year.

Reported operating income was $946 million, or 8.9% of sales, compared with operating loss of $634 million, or negative 6.8% of sales in the prior year, which reflected a significant non-cash impairment charge. Normalized operating income was $1.2 billion, or 11.0% of sales, compared with $1.0 billion, or 11.1% of sales, in the prior year.

Reported net income was $572 million compared with net loss of $770 million in the prior year. Reported diluted earnings per share were $1.34 compared with a reported diluted loss per share of $1.82 in the prior year. Normalized net income was $778 million compared with $760 million in the prior year. Normalized diluted earnings per share were $1.82 compared with $1.79 in the prior year.

Outlook for Full Year and First Quarter 2022

Source: Newell Brands