Newell Brands Inc. · NASDAQ:NWL
Newell Brands — Consumer Analyst Group of New York (CAGNY) 2018
55 slides from Newell Brands's conference presentation, Feb 22, 2018
Slide 1: Consumer Analyst Group of New York – Michael B. Polk, CEO
Consumer Analyst Group of New York Michael B. Polk - Chief Executive Officer February 22, 2018 live. learn. work. play.
Slide 2: Forward-looking Statements
Forward-looking Statements Forward-looking statements in this presentation are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to, but are not limited to, information or assumptions about the effects
Slide 3: Additional Information
Additional information Additional Information In connection with Newell’s 2018 Annual Meeting of Shareholders, Newell will file with the U.S. Securities and Exchange Commission and mail to the shareholders of record entitled to vote at the 2018 Annual Meeting a definitive proxy statement and other d
Slide 4: Key messages for CAGNY 2018
Key messages for CAGNY 2018 Organization transition to operating company largely complete Invested to extend brand/innovation/eCommerce capabilities to JAH brands Excellent progress on innovation and eCommerce; our confidence in model high External environment tougher than anticipated (retailer land
Slide 5: One Company, One Corporate Strategy
One Company, One Corporate Strategy Leading brands in large, growing, unconsolidated global categories Scale and capabilities to out-spend and out-grow competition Diversified, global branded consumer products company with sales of about $15bn Operating model delivering consistent competitive growth
Slide 6: Transformation is on track
Transformation is on track We are here 2016/H1 2017 Simplify Organization Portfolio (divest) Divisional Costs Procurement 2H 2017/2018 Strengthen Innovation/Design eCommerce Deployment (near neighbors) Corporate/bought costs Supply chain costs Portfolio (divest) 2019-21 Scale Innovation/Design eComm
Slide 7: Why reshape the portfolio now?
Why reshape the portfolio now? Sharpens focus on core and enables quicker response to market conditions Maximizes growth and margin potential via 20% US eCommerce exposure Reduces future fixed cost margin exposure to B&M consolidation Simplification accelerates margin development and strengthens FCF
Slide 8: Significant complexity reduction
Significant complexity reduction 25% of Revenue under review 53% in Factories 47% in Distribution Centers 50% in Retailers & Distributors ~40% in Brands 25% in Employees ~100% in OEM and Private Label
Slide 9: Good progress in 2017
Good progress in 2017 Reorganized from 32 to 16 divisions Q1 17 eCommerce team scaled faster: 350 new hires Development and Design capability broadened 300+ innovation/renovation projects Tripled legacy Jarden innovation funnel value Restructured portfolio: 8 divestitures, 3 acquisitions Realized $3
Slide 10: Continuous improvement activity accelerating
Continuous improvement activity accelerating Division Organization Monthly operating reviews reinforce accountability Daily order tracking yields real-time visibility $160m annualized savings boost margins and fund reinvestment Cost & Cash Initiatives Launched $150m Supply Chain Savings program; low
Slide 11: Growth eCommerce driven, sell-out accelerating
Growth eCommerce driven . . . sell-out accelerating Global Core Sales Growth Budget* Actual* 19% +SDD% 3.25% 0.8% 1.7% - LSD% NWL B&M eCom *Actual and Budgeted Core Sales Growth are Non-GAAP measures. Estimated and Actual Net Sales Growth and the corresponding GAAP measures are presented in Appendix
Slide 12: Broad based market share gains in US
Broad based market share gains in US 2017 US Market Share Change (bps) +71 bps market share gain in 2017 60% of portfolio gaining share 56% of category growth Source: NPD for Baby Gear, Writing (ex Glue & Labelling), A&CW & O&R; IRI for Food Storage and Home Fragrance; SSI for Fishing.
Slide 13: Market share trend strengthening on both legacy businesses
Market share trend strengthening on both legacy businesses US Market Share Growth (bps) versus prior year Newell Rubbermaid brands benefit from more than five years of design, innovation and 3 years of eCommerce investment Jarden legacy brands have begun to respond to eCommerce approach and will ben
Slide 14: Confidence based on track record of share growth
Confidence based on track record of share growth U.S. Market Share 2014 through 2017 Baby Gear Writing (ex Glue) Food Storage Source: Baby Gear: NPD, Writing ex Glue: NPD, Food storage: IRI .
Slide 15: Retailer inventory reduction, sell-in/sell-out disconnect
Retailer inventory reduction . . . sell-in/sell-out disconnect US retailer weeks of Inventory on hand (measured channels) change vs. PY Source: Trade inventory and POS data provided direct from retailers (eg Retail Link for WMT); WOH calculated using average of last 13 weeks POS
Slide 16: And pricing challenges in inflationary environment
And pricing challenges in inflationary environment Difficult Pricing Environment % of categories with flat to declining prices Growing Promotion Expectation % of category $ sold on promo Resin Inflation Resin cost per pound Source: IRI, average basket of goods across multiple Newell and non Newell c
Slide 17: Resulted in margin compression net of synergies/savings
Resulted in margin compression net of synergies/savings Pricing/ Inflation Fixed Cost Absorption & Mix eCom Invest Synergies/ Savings Expect Margin progression through 2018
Slide 18: Expect sell-in/sell-out divergence to be transitory
Source:. POS data provided direct from retailers (eg Retail Link from WMT), covering 76% of NWL US consumer facing businesses; invoice data from internal financial systems Expect sell-in/sell-out divergence to be transitory US Sell-out to Sell-in Differential (US Consumer Facing Business Only)
Slide 19: Synergies/savings expected ~$275m in 2018
Synergies/savings expected ~$275m in 2018 1 $1.3 billion in combined Renewal and Synergies 2016 to 2021
Slide 20: Winning in the new retail environment
Winning in the new retail environment Build leading brands to win share and grow categories Create advantaged capabilities enabled by the scale and efficiency of an operating company Design innovative and differentiated products (form, finish, function) Scale eCommerce globally Reallocate and focus
Slide 21: Four key activities key to success
Four key activities key to success Grow Categories/ Take Share Drive Operational Efficiency Simplify Operations Increase Free Cash Flow Productivity Grow Operating Income Lower Working Capital Reduce Restructuring
Slide 22: We are well positioned to build leading brands
We are well positioned to build leading brands Brands touch hundreds of millions everyday Leading brand activity and consumer insights capability Large addressable categories Partner with winning customers to expand categories Advantaged capabilities and scale to outperform eCommerce leadership Best
Slide 23: Innovation funnel scaled (tripled legacy JAH)
Innovation funnel scaled (tripled legacy JAH) Innovation Funnel Composition – Number of Projects Only charter+ projects included Excludes divestures | D&D businesses only
Slide 24: New concept results look very promising
New concept results look very promising Over 100 concepts tested per month Total* Differentiation Relevance Q4 2017 * Achieves MH-H on both Differentiation and Relevance *Database comparisons are defined according to Ipsos global norms for concept testing. The levels are set as quintiles so each rep
Slide 25: Coleman Dark Room Tents
Coleman® Dark Room™ Tents Blocks 90% of sunlight, reducing the heat within the tent. Sleep in after the sun rises or put the kids to bed early while the sun is still up.
Slide 26: Graco UNO2DUO Travel System
Graco® UNO2DUO™ Travel System A single stroller that extends 5 inches into a double stroller for two children as families grow from one to two, giving parents and children 18 customizable ways to ride.
Slide 27: Marmot Featherless
Marmot® Featherless With warmth equal to 700 fill power down, Featherless’ synthetic insulation is ultralight, packable and stays warm when wet, so adventure-minded athletes will never think twice about the weather.
Slide 28: Candle Power Pop-Up Shop
Candle Power Pop-Up Shop An experiential boutique featuring Yankee Candle®, WoodWick® and Chesapeake Bay Candle® complete with immersive, multi-sensory installations, personalized candles, a scent test bar, craftsmanship area and gift bar.
Slide 29: First Alert Onelink Safe & Sound
First Alert® Onelink Safe & Sound Combines intelligent protection from smoke, fire and carbon monoxide with superior audio capabilities, compatibility with connected home platforms, premium home speakers and hands-free voice commands.
Slide 30: Crock-Pot Express Crock Multi-Cooker
Crock-Pot® Express Crock Multi-Cooker 8-in-1 Multi-Cooker that can cook meals up to 70% faster than traditional cooking, while also offering the versatility of slow cooking, steaming and sautéing.
Slide 31: Calphalon Premier Space Saving Cookware
Calphalon Premier™ Space Saving Cookware Securely stacks to save 30% more space*. The unique design allows for the cookware to stack and nest in any order**, saving space and helping to organize the kitchen cupboard. *Average space saved vs. like non-stacking Calphalon® cookware items when stacked w
Slide 32: 2H 2018 – Calphalon Appliances
2H 2018 – Calphalon Appliances
Slide 33: eCommerce penetration increasing
eCommerce penetration increasing FY 2017, US, % of total sales from eCommerce US consumer facing business 20% eComm “Under review” consists of businesses under review for strategic options
Slide 34: Huge opportunity ahead (as result of new organization)
Huge opportunity ahead (as result of new organization) 2018 eCommerce International under-leveraged (NWL 90% US at leading pureplay etailer) European eCommerce hub opens mid-2018 Scaling US core categories at retailer.coms Investment in demand creation and impulse Direct to Consumer expansion as bra
Slide 35: New Brand Direct-to-Consumer Brand Store
New Brand Direct-to- Consumer Brand Store @theheartoflife brand store to launch in the fourth quarter of 2018 leveraging common infrastructure and integrated learning out of eCommerce DTC team.
Slide 36: Four activities key to success
Four activities key to success Grow Categories/ Take Share Drive Operational Efficiency Simplify Operations Increase Free Cash Flow Productivity Grow Operating Income Lower Working Capital Reduce Restructuring
Slide 37: Strengthening core COGS productivity
Strengthening core COGS productivity Productivity Procurement VA/VE Network Optimization
Slide 38: Four activities key to success
Four activities key to success Grow Categories/ Take Share Drive Operational Efficiency Simplify Operations Increase Free Cash Flow Productivity Grow Operating Income Lower Working Capital Reduce Restructuring
Slide 39: Under review key brands
Under review Key brands CCS Waddington Process Solutions Team Sports Beauty USPC
Slide 40: Newell Brands Post Transformation
Newell Brands Post Transformation Divisions Key Brands Writing Appliances & Cookware Outdoor & Recreation Baby Home Fragrance Food Fishing Jostens Safety & Security and Ball® TMs Ball Corporation, used under license. ©2015 Hearthmark, LLC. All Rights Reserved.
Slide 41: Organization unchanged (90% people in commercial hubs)
Organization unchanged (90% people in commercial hubs) Division Led P&L Ownership Co-Located with Divisions (Center Led) Centralized Sales Marketing Supply Chain Finance Human Resources International General Managers Innovation, Brand/Category Strategy, R&D, CMI IT, Legal, eCommerce, Design, Corpora
Slide 42: Three SG&A efficiency drivers; 200bps opportunity
Three SG&A efficiency drivers; 200bps opportunity Key drivers of cost savings Accelerated ERP Deployment Global Business Services Continued Corporate Rightsizing
Slide 43: Accelerating transformation: a clear business model
Accelerating transformation: a clear business model CORE BUSINESS (2019) UNDER REVIEW Net sales ($bn) ~$11bn ~$4bn Brand investment (A&P ratio) ~4% ~2% Top 10 US customers % invoice sales 66% 43% US eCommerce penetration Above 20% ~2% Normalized Gross margin % Above Fleet Below Fleet Normalized Oper
Slide 44: Financial potential of the transformation
Financial potential of the transformation Transformation About $6 billion in net proceeds ~$4 billion in debt repayment (leverage ratio to ~3x) ~$2 billion available to largely offset dilution Annual dividend at $0.92 per share NWL 2020 >$11 billion net sales Core growth ahead of markets Operating m
Slide 45: Priorities for capital allocation
Priorities for capital allocation Invest profitably in the core business Hold dividend (through the transformation); then grow with earnings Deleverage the balance sheet Repurchase shares Fund strategic, accretive, bolt-on M&A (2020+)
Slide 46: Reaffirmed 2018 guidance
Reaffirmed 2018 guidance Net Sales $14.4 to $14.8 billion Normalized EPS $2.65 to $2.85 Weighted Average Diluted Shares ~489 million Effective Tax Rate 20 - 21% Operating Cash Flow $1.15 to $1.45 billion The company has presented forward-looking statements regarding normalized earnings per share for
Slide 47: 2018 Performance Incentives
2018 Performance Incentives Corporate Division Management Bonus Normalized EPS 50% 12.5% Operating Cash Flow 50% 12.5% Division Operating Income $ n/a 75.0% Long Term Incentive Relative TSR 100% 100%
Slide 48: Strengthening the Board with experienced operators
Strengthening the Board with experienced operators Jim Craigie Non-exec Chairman Church & Dwight Former Chairman & CEO CHD Debra Crew Former President & CEO Reynolds American Judy Sprieser Former President & CEO Transora.com
Slide 49: Key messages for CAGNY 2018
Key messages for CAGNY 2018 Organization transition to operating company largely complete Invested to extend brand/innovation/eCommerce capabilities to JAH brands Excellent progress on innovation and eCommerce; our confidence in model high External environment tougher than anticipated (retailer land
Slide 50: Consumer Analyst Group of New York – Michael B. Polk, CEO
Consumer Analyst Group of New York Michael B. Polk - Chief Executive Officer February 22, 2018 live. learn. work. play.
Slide 51: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations
Slide 52: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission and includes a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated
Slide 53: Reconciliation of Budgeted Core Sales Growth for FY 2017
Reconciliation of Budgeted Core Sales Growth for FY 2017 NEWELL BRANDS INC. RECONCILIATION OF BUDGETED CORE SALES GROWTH Year Ending December 31, 2017 Year Ending December 31, 2017 Estimated net sales growth (GAAP) 9.5% to 11.0% Foreign currency 1.5% to 2.5% Acquisitions, net of divestitures (1) -7.
Slide 54: Reconciliation of Core Sales Growth for FY 2017
Reconciliation of Core Sales Growth for FY 2017 NEWELL BRANDS INC. CORE SALES ANALYSIS - ACTUAL AND ADJUSTED PRO FORMA BASIS (UNAUDITED) ($ in millions) December 31, 2017 December 31, 2016 Acquisitions/ 2017 Divestitures 2016 Increase (Decrease) Net Sales and Other, Net Net Sales Currency 2017 Net S
Slide 55: Reconciliation of Core Sales Growth for FY 2016
Reconciliation of Core Sales Growth for FY 2016 NEWELL BRANDS INC. CORE SALES ANALYSIS - ACTUAL AND ADJUSTED PRO FORMA BASIS (UNAUDITED) ($ in millions) For the twelve months ended December 31, 2016 Increase/(Decrease) 2016 2015 Net Sales Acquisitions/ Net Sales Currency 2016 Net Sales Divestitures
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