Newell Brands Stock Falls After Q2 Results, Weak Q3 EPS Outlook

  • Newell Brands Inc NWL reported second-quarter FY21 sales growth of 28.3% year-on-year, to $2.71 billion, beating the analyst consensus of $2.55 billion. Core sales grew 25.4%.
  • Gross margin expanded 110 basis points to 32.6% of net sales. Normalized gross margin was 32.7%. 
  • Selling, general and administrative expenses rose 17.2% Y/Y to $572 million.
  • The operating margin was 11.3%, and operating income for the quarter rose 87.1% to $305 million.
  • The company held $648 million in cash and equivalents as of June 30, 2021. Net cash provided by operating activities for the six months contracted 42.2% Y/Y to $76 million.
  • Normalized EPS of $0.56 beat the analyst consensus of $0.45.
  • "We remain laser-focused on driving operational excellence throughout the organization and our teams have rallied to address short-term challenges surrounding extraordinary inflationary and supply chain pressures," said President and CEO Ravi Saligram.
  • Outlook: Newell raised FY21 sales guidance to $10.1 billion - $10.35 billion, (prior $9.9 billion - $10.1 billion), versus the consensus of $10.1 billion. Core sales growth outlook raised to 7%-10% (prior 5%-7%).
  • The company reiterated its normalized EPS forecast of $1.63-$1.73, versus the consensus of $1.72.
  • For Q3, Newell sees net sales of $2.7 billion - $2.78 billion, versus the consensus of $2.59 billion.
  • Core sales growth to be flat - 3% and Normalized EPS of $0.46 - $0.50, versus the consensus of $0.55.
  • Price action: NWL shares are trading lower by 8.92% at $24.79 on the last check Friday.
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