Q3 2012 Earnings Presentation

1

Q3 2012 Earnings Call Presentation

October 26, 2012

2

Statements in this presentation that are not historical in nature constitute forward-looking statements. These forward-looking statements relate to information or assumptions about the effects of sales, income/(loss), earnings per share, operating income, operating or gross margin improvements or declines, Project Renewal, the European Transformation Plan, capital and other expenditures, cash flow, dividends, restructuring and restructuring-related costs, costs and cost savings, inflation or deflation, particularly with respect to commodities such as oil and resin, debt ratings, and management's plans, projections and objectives for future operations and performance. These statements are accompanied by words such as "anticipate," "expect," "project," "will," "believe," "estimate" and similar expressions. Actual results could differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, our dependence on the strength of retail, commercial and industrial sectors of the economy in light of the continuation or escalation of the global economic slowdown or regional sovereign debt issues; currency fluctuations; competition with other manufacturers and distributors of consumer products; major retailers' strong bargaining power; changes in the prices of raw materials and sourced products and our ability to obtain raw materials and sourced products in a timely manner from suppliers; our ability to develop innovative new products and to develop, maintain and strengthen our end-user brands; our ability to expeditiously close facilities and move operations while managing foreign regulations and other impediments; our ability to implement successfully information technology solutions throughout our organization; our ability to improve productivity and streamline operations; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values, declining interest rates or otherwise; the imposition of tax liabilities greater than our provisions for such matters; the risks inherent in our foreign operations and those factors listed in the company’s latest quarterly report on Form 10-Q and Exhibit 99.1 thereto filed with the Securities and Exchange Commission. Changes in such assumptions or factors could produce significantly different results. The information contained in this presentation is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. This presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this presentation is a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.

Nancy O’Donnell

VP, Investor Relations

(770) 418-7723

[email protected]

Alisha Pennix

Sr. Manager, Investor Relations

(770) 418-7706

[email protected]

INVESTOR RELATIONS CONTACTS:

Forward-looking statement

3

Net Sales of $1.54 billion, 0.9% below prior year, reflecting 1.5% core sales growth and 2.4% unfavorable foreign currency impact

Gross Margin up 50 basis points versus prior year to 37.9% as pricing and productivity more than offset the negative impact of input cost inflation

Normalized Operating Margin of 13.7%, flat to last year, as gross margin expansion was offset by an increase in SG&A expense attributable to the absence of certain prior year compensation-related benefits

Normalized EPS of $0.47, as compared with $0.45 in the prior year

Operating cash flow of $305.1 million, versus $295.3 million last year

The company increased the quarterly dividend by 50% to $0.15 a share

The company repurchased 1.5 million shares at a cost of $25.9 million

Q3 2012 summary

4

Net Sales of $4.38 billion, a 0.3% increase versus prior year, reflecting a 2.2% core sales growth and 1.9% unfavorable foreign currency impact

Gross Margin up 50 basis points versus prior year to 38.2% as productivity gains and pricing more than offset the effect of input cost inflation

Normalized Operating Margin up 20 basis points versus prior year to 12.9%

Normalized EPS of $1.27, as compared with $1.19 in the prior year

Operating cash flow of $357.2 million, versus $279.8 million last year

The company repurchased 3.8 million shares at a cost of $67.2 million

Q3 YTD 2012 summary

5

Q3 2012 Consumer Professional

Baby & Parenting Essentials

Total Net

Sales

Core Sales (0.4) 2.5 7.8 1.5

Currency Translation (1.7) (3.6) (2.6) (2.4)

Net Sales (2.1) (1.1) 5.2 (0.9)

Q3 2012: sales percent change by segment

6

Q3 YTD 2012 Consumer Professional

Baby & Parenting Essentials

Total Net

Sales

Core Sales (1.2) 4.3 11.2 2.2

Currency Translation (1.4) (2.6) (1.6) (1.9)

Net Sales (2.6) 1.7 9.6 0.3

Q3 YTD 2012: sales percent change by segment

7

* Reflects outlook communicated in the October 26, 2012 Q3 2012 Earnings Release and Earnings Call

** See reconciliation included in the Appendix

FY 2012 Outlook*

Core Sales 2% to 3%

Currency Translation -1.5% to -2%

Net Sales Growth 0% to 1.5%

“Normalized” Operating Margin Up to +20 basis points

“Normalized” EPS** $1.63 to $1.69

Cash Flow from Operations $550 to $600 million

Capital Expenditures $200 to $225 million

FY 2012 outlook

8

Expansion of Project Renewal

9

Expansion of Project Renewal

Expansion of Project Renewal is expected to generate incremental annualized cost savings of $180 to $225 million when fully implemented by the end of the second quarter of 2015

Expect to incur incremental cash costs of $225 to $250 million and record pretax restructuring charges of $250 to $275 million over the same period

Majority of savings reinvested to drive faster growth and geographic expansion in priority emerging markets

Cumulative costs of the expanded Project Renewal are now expected to be $340 to $375 million pretax, with cash costs of $300 to $340 million

Project Renewal in total is expected to generate annualized costs savings of $270 to $325 million by the end of the second quarter of 2015

The company is on track to realize annualized cost savings from first phase of Project Renewal of $90 to $100 million by the first half of 2013

10

Project Renewal: Five new work streams

Supply Chain Footprint

Best Cost Back Office

Best Cost Finance

EMEA Transformation

Organizational Simplification

11

Project Renewal: Expected outcomes

Flatter and simplified organization with strengthened Brand and Category Development and Execution and Delivery capabilities

Accelerated release of costs, the majority of which will be invested in faster growth and the geographic expansion of our leading brands

A greater line of sight to earnings and operating cash flow growth while the company invests to accelerate performance

Strengthened leadership team that can drive faster implementation of Growth Game Plan

12

New Organizational Model

13

BU

SIN

ESS

MO

DEL

5 W

AY

S TO

WIN

WH

ERE

TO P

LAY

WIN BIGGER

WIN WHEREWE ARE

INCUBATEFOR

GROWTH

CT&A, IP&S, LABELING, COMMERCIAL PRODUCTSFINE WRITINGWRITING & CREATIVE EXPRESSION

HOME ORGANIZATION & STYLECULINARY LIFESTYLESHARDWARE

BABY & PARENTINGENDICIA, MIMIORUBBERMAID MEDICAL SOLUTIONS

NWL is a growing brand-led business with a strong home in the United States and global ambition

Our Consumer brands win at the point of decision through excellence in performance, design and innovation

Our Professional brands win the loyalty of the chooser by improving the productivity and performance of the user

We collaborate with our supplier and customer partners across the total enterprise in a shared commitment to growth and creating value

We deliver competitive returns to our shareholders through consistent, sustainable and profitable growth

Sharpen brand strategies on highest impact growth levers

Launch new USA customer development organization

Deliver European Transformation, Project Renewal savings, and working capital reduction

Drive performance culture aligned to business strategy

Accelerate Latin Americaand Asia in Win BiggerCategories.

MAKE OUR BRANDS REALLY MATTER

BUILD AN EXECUTIONPOWERHOUSE

UNLOCK TRAPPEDCAPACITY FOR GROWTH

DEVELOP THE TEAMFOR GROWTH

EXTEND BEYONDOUR BORDERS

Partner to win with customers and suppliers

Develop joint business plans for new channel penetration and broader distribution

Simplify everything to release costs for growth

Build a more global perspective and talent base

Strategic insight program in China

Newell Rubbermaid helps people flourish every day, where they live, learn, work and play

EDGE: EVERY DAY GREAT EXECUTION

PU

RP

OSE

AM

BIT

ION

Growth Game Plan

14

Make brands really matter

Build an execution powerhouse

Unlock trapped capacity for growth

Extend our boundaries

Develop a growth team

5 Ways to Win shape activities

15

Development

Marketing & Insight

Advertising

R&D

Industrial Design

e-Branding Building

Public Relations

Delivery

General Management

Customer Development

Planning

Procurement

Manufacturing

Customer Service

Interdependent and Equal in Importance

Two capabilities of equal stature

16

Create new Development Organization accountable for building big brand ideas, high-impact disruptive innovation, and a true point of difference through superior design and product experience

Create new Delivery Organization accountable for P&L management and delivering the maximum commercial value from the growth ideas built by the Development Organization

Create much flatter structures giving bigger roles to key leaders while driving simplification in order to focus on growth

Delayer top structures eliminating two operating Groups (Consumer and Professional) and further consolidating Global Business Units from 9 to 6 reporting Business Segments

New Business Segments are part of Delivery Organization

Structure follows Strategy

17

Six new Business Segments

Home Solutions

Baby & Parenting

Writing

Commercial Products

Tools

Specialty

18

New Newell Executive Team

19

30 years of management and marketing experience (10 years NWL, 20 years Black & Decker)

Previously President – Newell Professional Group and President of Lenox

Accelerated international expansion in the Professional businesses

Repositioned the Lenox brand to deliver double-digit sales growth

Businesses under his leadership have been the most significant growth contributors over the last few years

Key appointments

William A. Burke III Chief Operating Officer

20

Former head of Global Corporate Strategy at Unilever reporting to the Global Chief Executive Officer

Founder of international consulting firm Tarchetti & Co. Ltd.

Drove development of Growth Game Plan with top executive team

Served in variety of senior strategy, business and finance roles at Unilever for 14 years

Originally from United Kingdom

Key appointments

Mark Tarchetti Chief Development Officer

21

Key appointments

Doug Martin Chief Financial Officer

25 years of experience at Newell Rubbermaid in virtually every aspect of corporate and operating finance

Recently appointed to serve as CFO and coordinate all of the company’s cost and cash initiatives to unlock the trapped capacity for growth

As Deputy CFO, designed roadmap for streamlining the company’s cost structure

Previously Vice President of Finance – Newell Consumer Group; Vice President of Finance – Office Products; and Treasurer

22

Key appointments

Jim Sweet Chief Human Resources Officer

Over 28 years of human resources management experience with diverse global companies

Provided strong change management leadership and business partnering to the company’s leadership

Former President and Co-Founder of Capital H Inc., a human resource services company

Held top-level human resource roles with the Kohler Co., Keystone International and the Brady Corporation

23

Key appointments

John Stipancich Chief Legal Officer & EMEA Lead

Broad legal and business background including experience in private equity

Recently assumed responsibility for the European Team managing the company’s results in EMEA in addition to role as Chief Legal Officer and General Counsel

Previously Executive Vice President and General Counsel of Evenflo, a former Kohlberg Kravis Roberts & Co. portfolio company

24

Over 28 years of customer development experience (8 years Unilever, 20 years Kraft Foods)

Led customer development for Unilever’s $11 billion North American business

Responsible for catapulting Unilever to top 5 placement in the U.S. consumer goods industry as measured by Kantar

Responsible for transforming customer development capabilities at Kraft and Unilever

Key appointments

Joe Cavaliere Global Chief Customer Officer

25

Key appointments

Chuck Jones Chief Design and R&D Officer

Successfully built global design and development teams that deliver high-impact innovations at Whirlpool, Masco, Xerox and Herman Miller

Winner of prestigious Smithsonian National Design Award; named a Master of Design by Fast Company

Elected to the Academy of Fellows of the World Technology Network and the Academy of Fellows of the International Design Society

26

Over 30 years of marketing, insights and brand strategy experience

Built and led Unilever’s Global Insights function of more than 700 people in over 50 countries

Proven track record of creating brands and bringing innovation to consumers

Lived and worked in Taiwan, Korea, Japan, UK

Originally from New Zealand

Key appointments

Richard Davies Chief Marketing & Insights Officer

27

Key appointments

Gordon Steele Chief Information Officer

Over 20 years of senior management experience in information technology

Previously Vice President and CIO for Global Information Technology at Nike, where he led the successful implementation of SAP on a global basis

Also served in leadership capacities with Mentor Graphics Corporation, Warwick Financial Systems, US Bancorp and Fred Meyer Savings & Loan

28

Appendix

29

29

Reconciliation: Q3 2012 and Q3 2011 “Normalized” EPS

Q3 2012* Q3 2011*

Diluted earnings per share (as reported): $0.37 ($0.61)

Impairment charges $0.00 $1.05

Restructuring and restructuring-related costs $0.06 $0.06

Discontinued operations ($0.01) $0.04

CEO transition costs $0.00 $0.01

Income tax - discrete contingencies, expiration of

statutes of limitation and resolution of examinations $0.03 ($0.10)

Loss related to the extinguishment of debt $0.01 $0.00

Other items $0.00 ($0.01)

"Normalized" EPS $0.47 $0.45

* totals may not add due to rounding

30

30

Reconciliation: Q3 YTD 2012 and Q3 YTD 2011 “Normalized” EPS

Q3 YTD 2012 Q3 YTD 2011*

Diluted earnings per share (as reported): $1.02 $0.15

Impairment charges $0.00 $1.03


Discontinued operations ($0.01) $0.03

CEO transition costs $0.00 $0.01

Income tax - discrete contingencies, expiration of

statutes of limitation and resolution of examinations$0.07 ($0.17)

Loss related to the extinguishment of debt $0.01 $0.01

"Normalized" EPS $1.27 $1.19

* totals may not add due to rounding

31

31

Reconciliation: Full Year 2012 Outlook for “Normalized” EPS

FY 2012

Diluted earnings per share $1.27 to $1.33

Restructuring and restructuring-related costs [ 1 ] $0.27 to $0.32

Discontinued operations ($0.01)

Income tax - discrete contingencies, expiration of statutes of

limitation and resolution of examinations $0.07

Loss related to the extinguishment of debt $0.01

"Normalized" EPS $1.63 to $1.69

[ 1 ] Restructuring and restructuring-related costs include impairment charges, employee

termination benefits and other costs associated with the European Transformation Plan and

Project Renewal.

32

32

$ millions

Reconciliation: Q3 2012 and Q3 2011 Operating Income, As Reported, to Normalized Operating Income

Q3 2012 Q3 2011

Net sales $1,535.3 $1,549.9

Operating income (as reported) $188.4 ($192.2)

CEO transition costs $ - $4.4

Impairment charges $ - $382.6


Operating income (normalized) $210.7 $211.8

Operating margin (normalized) 13.7% 13.7%

33

33

$ millions

Reconciliation: Q3 YTD 2012 and Q3 YTD 2011 Operating Income, As Reported, to Normalized Operating Income

Q3 YTD 2012 Q3 YTD 2011

Net sales $4,383.9 $4,369.4

Operating income (as reported) $498.1 $131.7

CEO transition costs $ - $4.4

Impairment charges $ - $382.6


Operating income (normalized) $564.7 $556.8

Operating margin (normalized) 12.9% 12.7%

Q3 2012 Earnings Presentation

Investor Relations

Transcript of Q3 2012 Earnings Presentation