Newell Rubbermaid Q3 Profit Down; To Sell Endicia Online Postage Business

(RTTNews) - Newell Rubbermaid Inc. (NWL) reported third-quarter 2014 net income was $122.3 million, down from $193.3 million in the prior year quarter. Earnings per share declined to $0.44, from the prior year's $0.66 per share.

The year over year decline in reported earnings per share was primarily attributable to the absence of a 2013 gain on sale of the company's Hardware business, negative impact from foreign currency, and a significant increase in Back-to-School advertising and promotion support, partially offset by increased sales, gross margin expansion, lower restructuring costs, a lower tax rate, and the positive impact of fewer outstanding shares.

Normalized net income was $159.2 million, compared with $151.5 million in the prior year. Normalized earnings per share were $0.58, an 11.5 percent increase versus $0.52 in the prior year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items. The improvement was primarily attributable to increased sales, gross margin expansion, a lower normalized tax rate, and the positive impact of fewer outstanding shares, partially offset by negative foreign currency impacts and a significant increase in Back-to-School advertising and promotion support.

Net sales in the third quarter were $1.48 billion compared with $1.47 billion in the prior year. Core sales grew 2.7 percent, excluding 200 basis points of negative foreign currency impacts and 60 basis points from the Ignite acquisition. Wall Street expected revenues of $1.53 billion.

The company announced its decision to pursue the sale of its Endicia online postage and Calphalon retail outlet stores and kitchen electrics businesses.

The company announced an expansion of Project Renewal designed to release costs in the areas of procurement, manufacturing and distribution, and through further overhead reduction. The company expects to deliver these incremental savings by significantly reducing the complexity in the business and simplifying the company's approach to bringing products and programs to market.

The expansion of Project Renewal is expected to generate incremental annualized cost savings of approximately $200 million when fully implemented by the end of 2017. The company expects to incur costs of approximately $200 million over the same period.

Newell Rubbermaid reaffirmed its full year 2014 guidance. It expects Normalized earnings per share to be of $1.94 to $2.00; and Core sales growth of 3 to 4 percent. Analysts expect annual earnings of $2.00 per share.

The company reiterated its 2015 full year core sales growth and normalized EPS guidance. It projects Normalized earnings per share to be in the range of $2.16 to $2.22, and net sales growth of 3.5% to 4.0%. Analysts expect earnings of $2.20 per share for fiscal 2015.