Newell Brands Q3 Earnings Top Estimates, Notes Margin Pressure

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  • Newell Brands Inc NWL reported third-quarter FY21 sales growth of 3.3% year-on-year, to $2.787 billion, marginally beating the analyst consensus of $2.78 billion. Core sales grew 3.2%.
  • The Commercial Solutions segment sales decreased 9.2% Y/Y to $486 million, Home Appliances grew 3% to $443 million, Home Solutions declined 4% to $598 million, Learning & Development increased 19.4% to $869 million.
  • The gross margin for the quarter declined 350 basis points Y/Y to 30.4%, and the gross profit fell 7.2% to $848 million.
  • The operating margin contracted 330 basis points to 10.1%, and operating income for the quarter fell 22.6% to $281 million.
  • The company held $494 million in cash and equivalents as of September 30, 2021. Year to date, operating cash flow totaled $490 million.
  • Adjusted EPS of $0.54 beat the analyst consensus of $0.50.
  • "While we are taking action to address the significant inflationary pressures and supply chain bottlenecks, we are also advancing our strategic priorities, by continuing to reduce complexity, capitalizing on the international opportunity," said CEO Ravi Saligram.
  • Outlook: Newell sees Q4 adjusted EPS of $0.29 - $0.33 versus the consensus of $0.37.
  • The company expects Q4 sales of $2.60 billion - $2.68 billion, versus the consensus of $2.60 billion.
  • Newell raised the lower end of FY21 adjusted EPS outlook to $1.69 - $1.73 (prior view $1.63 - $1.73) versus the consensus of $1.72.
  • The company also raised the FY21 sales outlook to $10.38 billion - $10.46 billion (prior $10.1 billion - $10.35 billion) against the consensus of $10.38 billion.
  • Price Action: NWL shares traded higher by 3.35% at $22.5 in the premarket session on the last check Friday.
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