Newell Brands Announces Strong Second Quarter Results

Net Sales Growth of 147.2%
Core Sales Growth of 5.0%
Deleveraging
on Track
Reaffirms 2016 Guidance

Second Quarter 2016 Executive Summary

Net sales growth of 147.2 percent to $3.86 billion; core sales growth of
5.0 percent

$0.30 reported diluted earnings per share compared with $0.55 in the
prior year, largely attributable to the income contribution from the
acquired Jarden businesses, strong income growth on the legacy Newell
Rubbermaid businesses, and a $161.0 million gain on the sale of the
Levolor® and Kirsch® window coverings (“Décor”)
business, more than offset by higher share count and expenses related to
the Jarden transaction, including the inventory step-up, increased
amortization of intangibles, and increased interest and other expenses

$0.78 normalized diluted earnings per share compared with $0.64 in the
prior year, a 21.9 percent increase driven by strong sales growth,
earnings contribution from acquisitions and Project Renewal savings,
which more than offset an increase in advertising and promotion support,
negative foreign currency impact, increased interest and increased
shares outstanding resulting from the Jarden transaction

Operating cash flow was $596.5 million compared with $102.5 million in
the prior year

Gross debt of $12.99 billion, reflecting a $750 million reduction of the
$1.5 billion term loan related to the Jarden transaction

Newell Brands reiterated its guidance for the 12 months ending December
31, 2016 of 3 to 4 percent core sales growth and normalized EPS of $2.75
to $2.90 per share

ATLANTA–(BUSINESS WIRE)–Newell Brands Inc. (NYSE: NWL) announced its second quarter 2016
financial results today.

“We are pleased to report a very good quarter, our first as Newell
Brands. Our results benefited from the combination with Jarden and
strong top line growth in a number of key businesses, including Writing,
Baby, Food & Beverage, Yankee Candle and Appliances,” said Newell Brands
Chief Executive Officer Michael Polk. “Increased investment in
consumer-driven innovation and advertising and promotion helped drive
broad-based market share gains on our strategic businesses and in our
priority geographies. Gross margin and operating cash flow were on plan,
and we believe we are well positioned to achieve our full year financial
outlook.

“We are making good progress on the integration of the legacy Newell
Rubbermaid and Jarden businesses. A number of work streams are in full
flight and we are confident in our plans to deliver both the savings
associated with Project Renewal and the $500 million in cost synergies
expected over the next four years related to the Jarden transaction.
Importantly, the strategic analysis critical to re-shaping our
priorities and investment choices is well underway. This work has
increased our confidence in our potential to consistently deliver
leading levels of value creation for our shareholders and has heightened
our excitement about the future of Newell Brands.”

Second Quarter 2016 Operating Results

Net sales increased 147.2 percent to $3.86 billion, compared with $1.56
billion in the prior year, largely due to the inclusion of $2.22 billion
in net sales from the acquired Jarden business.

Core sales grew 5.0 percent. (As of April 15, 2016, Newell Brands core
sales include pro forma core sales associated with the Jarden
transaction as if the combination occurred April 15, 2015.) Core sales
exclude a negative 130 basis point impact from foreign currency and a
net positive 1,600 basis point contribution from acquisitions,
divestitures and the December 31, 2015 deconsolidation of the company’s
Venezuelan operations.

Reported gross margin was 28.4 percent compared with 39.8 percent in the
prior year, largely the result of a $333.7 million charge for the
inventory step-up related to the Jarden transaction.

Normalized gross margin was 37.2 percent compared with 40.0 percent in
the prior year. The negative mix effect from the Jarden acquisition and
the deconsolidation of Venezuela, as well as the impact of adverse
foreign currency, were partially offset by the benefits of productivity
and pricing.

Reported operating income was $137.7 million compared with $214.7
million in the prior year. Reported operating margin was 3.6 percent of
sales compared with 13.8 percent of sales in the prior year. In addition
to the factors cited in the explanation of gross margin, reported
operating margin was negatively impacted by transaction related costs,
acquisition-related amortization costs and costs associated with the
integration of the legacy Newell Rubbermaid and Jarden businesses.

Normalized operating income was $607.9 million compared with $249.4
million in the prior year. Normalized operating margin decreased 20
basis points to 15.8 percent of sales as the negative mix effect from
the Jarden acquisition, the impact of increased advertising and
promotion and negative foreign currency was partially offset by Project
Renewal savings, cost synergies and the positive mix effect of strong
Writing growth.

The reported tax rate for the quarter was 20.3 percent, compared with
22.7 percent in the prior year. The normalized tax rate was 29.2
percent, compared with 24.5 percent in the prior year, a reflection of
the inclusion of the Jarden business with its historically higher tax
rate and the geographic mix effect of strong U.S. performance across the
total portfolio.

Reported net income was $135.2 million compared with $148.5 million in
the prior year. Reported diluted earnings per share were $0.30 compared
with $0.55 in the prior year. The decline was largely attributable to
the income related to the acquired Jarden businesses, strong income
growth on the legacy Newell Rubbermaid businesses and a $161.0 million
gain on the sale of the Décor business, offset by dilution from a higher
share count and expenses related to the Jarden transaction, including
inventory step-up, increased amortization of intangibles, and increased
interest and other expenses.

Normalized net income was $349.2 million compared with $174.5 million in
the prior year. Normalized diluted earnings per share increased 21.9
percent to $0.78 compared with $0.64 in the prior year. The improvement
was driven by strong sales growth, the contribution from the Jarden and
Elmer’s acquisitions and Project Renewal savings, partially offset by an
increase in advertising and promotion support, negative foreign currency
impact, a higher income tax rate, increased interest expense and
increased shares outstanding.

Operating cash flow was $596.5 million compared with $102.5 million in
the prior year, reflecting the contribution from the Jarden acquisition,
including contributions from Jostens and Waddington, improved operating
results and favorable working capital movements.

A reconciliation of the “as reported” results to “normalized” results is
included in the appendix.

Second Quarter 2016 Operating Segment Results

Writing net sales increased 15.8 percent to $574.4 million, with strong
core sales growth and the benefit of the Elmer’s acquisition partially
offset by the deconsolidation of Venezuelan operations and the negative
impact of foreign currency. Writing core sales increased 11.3 percent,
reflecting strong innovation such as Paper Mate® InkJoy™ Gel
Pens, excellent Back-to-School sell in, increased advertising and
promotion support and pricing. Reported operating income was $154.1
million compared with $132.5 million in the prior year. Reported
operating margin was 26.8 percent compared with 26.7 percent in the
prior year. Normalized operating income was $159.0 million versus $133.0
million last year. Normalized operating margin was 27.7 percent of
sales, a 90 basis point increase versus last year, as pricing,
productivity and cost management more than offset increased advertising
and promotion spending and the negative mix impact of the
deconsolidation of Venezuela.

Home Solutions net sales decreased 1.1 percent to $433.5 million as
strong Food & Beverage growth driven by innovation such as the Rubbermaid®
FreshWorks™ produce saver and strong growth of the Contigo®
and bubba® beverageware brands was more than offset by the
continued planned contraction of the lower margin Rubbermaid Consumer
Storage business, a decline in the divested Décor business and
unfavorable foreign currency. Home Solutions core sales increased 1.7
percent. Reported operating income was $41.7 million compared with $68.7
million in the prior year, due largely to a significant increase in
advertising and promotion on new products and unfavorable foreign
currency. Reported operating margin was 9.6 percent of sales, a 610
basis point decrease compared with the prior year. Normalized operating
income was $47.9 million versus $69.9 million last year. Normalized
operating margin was 11.0 percent of sales, a 490 basis point decrease
versus last year.

Tools net sales declined 3.8 percent to $197.4 million driven by
continued macroeconomic challenges in Brazil, industrial sector softness
in China and negative foreign currency, partially offset by growth in
North America and Europe. Tools core sales decreased 2.3 percent.
Reported operating income was $22.2 million compared with $23.4 million
in the prior year. Reported operating margin was 11.2 percent of sales,
a 20 basis point decrease compared with the prior year due to the
negative impact of foreign currency and increased Project Renewal costs.
Normalized operating income was $23.1 million versus $23.4 million last
year. Normalized operating margin was 11.7 percent of sales, a 30 basis
point increase versus last year as geographic mix, productivity and
pricing more than offset the challenging growth and negative foreign
currency impact in Brazil.

Commercial Products net sales declined 7.9 percent to $194.0 million,
primarily due to the divestiture of the Rubbermaid medical cart
business, the negative impact of foreign currency and softness in the
North American distributive trade channel, largely related to planned
complexity reduction activity. Core sales decreased 1.4 percent.
Reported operating income was $25.4 million compared with $28.9 million
in the prior year. Reported operating margin was 13.1 percent of sales,
a 60 basis point decrease versus the prior year due to the negative
impact of foreign currency and increased Project Renewal costs.
Normalized operating income was $26.7 million versus $29.0 million last
year. Normalized operating margin was 13.8 percent of sales, flat to
last year as pricing and productivity offset the negative impact of
foreign currency.

Baby & Parenting net sales increased 12.4 percent to $236.9 million,
largely due to continued strong sales momentum in North America, driven
by innovative new products such as the Graco® Extend2Fit™
Convertible Car Seat. Core sales increased 11.1 percent. Reported
operating income was $24.4 million compared with $16.7 million in the
prior year. Reported operating margin was 10.3 percent of sales, a 240
basis point increase compared with prior year. Normalized operating
income was $26.0 million versus $16.8 million last year. Normalized
operating margin was 11.0 percent of sales, a 300 basis point increase
versus last year. Normalized operating margin improvement was
attributable to strong volume growth and favorable foreign currency.

Branded Consumables net sales were $777.3 million. On a pro forma basis,
net sales increased 36.8 percent versus prior year, largely due to the
Waddington acquisition. Core sales increased 7.8 percent on a pro forma
basis compared with prior year, attributable primarily to strong growth
at Yankee Candle and Home & Family in Europe. The segment had a reported
operating loss of $26.0 million reflecting inventory step-up and
integration and other costs related to the Jarden transaction. Reported
operating margin was not meaningful due to the operating loss.
Normalized operating income was $107.7 million. Normalized operating
margin was 13.9 percent of sales.

Consumer Solutions net sales were $406.6 million. On a pro forma basis,
net sales increased 4.9 percent versus prior year, driven by strong
growth in kitchen appliances, offset by negative foreign exchange. Core
sales increased 8.3 percent on a pro forma basis compared with prior
year. The segment had a reported operating loss of $16.5 million
reflecting inventory step-up and integration and other costs related to
the Jarden transaction. Reported operating margin was not meaningful due
to the operating loss. Normalized operating income was $49.5 million.
Normalized operating margin was 12.2 percent of sales.

Outdoor Solutions net sales were $953.4 million. On a pro forma basis,
net sales increased 53.6 percent compared with the prior year, largely
attributable to the Jostens acquisition. Core sales increased 0.5
percent on a pro forma basis compared with prior year with growth in
Pure Fishing largely offset by weather related declines on the winter
sensitive businesses. Reported operating income was $55.4 million
reflecting the contribution of Jostens, partially offset by inventory
step-up and integration and other costs related to the Jarden
transaction. Reported operating margin was 5.8 percent of sales.
Normalized operating income was $215.7 million. Normalized operating
margin was 22.6 percent of sales, with good Jostens performance in the
seasonally important second quarter contributing to segment margins.

Process Solutions net sales were $85.1 million. On a pro forma basis,
net sales increased 0.2 percent versus prior year. Core sales increased
0.5 percent on a pro forma basis compared with prior year. The segment
had a reported operating loss of $1.4 million reflecting inventory
step-up and integration and other costs related to the Jarden
transaction. Reported operating margin was not meaningful due to the
operating loss. Normalized operating income was $10.8 million.
Normalized operating margin was 12.7 percent of sales.

Outlook for the Twelve Months Ending December
31, 2016

Newell Brands reaffirmed its 2016 full year core sales growth and
normalized earnings per share guidance metrics as follows:

     

2016 Full Year Guidance

 
Core sales growth 3.0% to 4.0%
 
Normalized earnings per share $2.75 to $2.90
 

As of April 15, 2016, Newell Brands core sales include pro forma core
sales associated with the Jarden transaction as if the combination
occurred April 15, 2015. Core sales exclude the impact of foreign
currency, all acquisitions (other than the Jarden acquisition) until
their first anniversary and all planned and completed divestitures
(which includes the deconsolidation of Venezuela). Core sales include
the negative impact of planned product line exits. Newell Brands expects
to exit product lines with annual sales of $250 million to $300 million
over the next two to three years.

Beginning with the second quarter of 2016, the company is excluding the
amortization of intangible assets associated with acquisitions from its
calculation of normalized earnings per share. The company expects the
full year share count to be approximately 430 million shares. The
company expects the effective tax rate for 2016 to be 29 to 30 percent.

Conference Call

The company’s second quarter 2016 earnings conference call will be held
today, July 29, 2016, at 8:30 a.m. ET. A link to the webcast is provided
under Events & Presentations in the Investor Relations section of Newell
Brands’ website at www.newellbrands.com.
A webcast replay and a supporting slide presentation will be made
available in the Investor Relations section on the company’s website
under Quarterly Earnings.

Non-GAAP Financial Measures

This release 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 in accordance
with GAAP.

The company uses certain non-GAAP financial measures that are included
in this press release and the additional financial information both in
explaining its results to stockholders and the investment community and
in its internal evaluation and management of its businesses. The
company’s management believes that these non-GAAP financial measures and
the information they provide are useful to investors since these
measures (a) permit investors to view the company’s performance using
the same tools that management uses to evaluate the company’s past
performance, reportable business segments and prospects for future
performance and (b) determine certain elements of management’s incentive
compensation.

The company’s management believes that core sales provides a more
complete understanding of underlying sales trends by providing sales on
a consistent basis as it excludes the impacts of acquisitions (other
than the Jarden acquisition, which is included in core sales on a pro
forma basis starting in the second quarter of 2016), planned or
completed divestitures, the deconsolidation of the company’s Venezuelan
operations and changes in foreign currency from year-over-year
comparisons. As reflected in the Currency Analysis, the effect of
foreign currency on reported sales is determined by applying a fixed
exchange rate, calculated as the 12-month average in the prior year, to
the current and prior year local currency sales amounts (excluding
acquisitions and divestitures), with the difference in these two amounts
being the increase or decrease in core sales, and the difference between
the change in as reported sales and the change in constant currency
sales reported as the currency impact. The company’s management believes
that “normalized” gross margin, “normalized” SG&A expense, “normalized”
operating income, “normalized” earnings per share, “normalized” interest
and “normalized” tax rates, which exclude restructuring and other
expenses and one-time and other events such as costs related to certain
product recalls, the extinguishment of debt, certain tax benefits and
charges, impairment charges, pension settlement charges, discontinued
operations, costs related to the acquisition, integration and financing
of acquired businesses, amortization of intangible assets associated
with acquisitions (beginning in the second quarter of 2016), advisory
costs for process transformation and optimization initiatives, costs of
personnel dedicated to integration activities and transformation
initiatives under Project Renewal and certain other items, are useful
because they provide investors with a meaningful perspective on the
current underlying performance of the company’s core ongoing operations.

The company determines the tax effect of the items excluded from
normalized diluted earnings per share by applying the estimated
effective rate for the applicable jurisdiction in which the pre-tax
items were incurred, and for which realization of the resulting tax
benefit, if any, is expected. In certain situations in which an item
excluded from normalized results impacts income tax expense, the company
uses a “with” and “without” approach to determine normalized income tax
expense.

While the company believes that these non-GAAP financial measures are
useful in evaluating the company’s performance, this information should
be considered as supplemental in nature and not as a substitute for or
superior to the related financial information prepared in accordance
with GAAP. Additionally, these non-GAAP financial measures may differ
from similar measures presented by other companies.

About Newell Brands

Newell Brands (NYSE: NWL) is a leading global consumer goods company
with a strong portfolio of well-known brands, including Paper Mate®,
Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Jostens®, Marmot®,
Rawlings®, Irwin®, Lenox®, Oster®, Sunbeam®, FoodSaver®, Mr. Coffee®,
Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®,
Rubbermaid®, Contigo®, First Alert®, Waddington and Yankee Candle®.
Driven by a sharp focus on the consumer, leading investment in
innovation and brands, and a performance-driven culture, Newell Brands
helps consumers achieve more where they live, learn, work and play.

This press release and additional information about Newell Brands are
available on the company’s website, www.newellbrands.com.

Caution Concerning Forward-Looking Statements

Statements in this press release 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,
earnings per share, operating income, operating margin or gross margin
improvements or declines, Project Renewal, capital and other
expenditures, cash flow, dividends, restructuring and other project
costs, costs and cost savings, inflation or deflation, particularly with
respect to commodities such as oil and resin, debt ratings, changes in
exchange rates, expected benefits and financial results from the Jarden
transaction and other recently completed acquisitions and related
integration activities and planned divestitures 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 and consolidation of our retail
customers; 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, including
the ability to realize anticipated benefits of increased advertising and
promotion spend; product liability, product recalls or regulatory
actions; our ability to expeditiously close facilities and move
operations while managing foreign regulations and other impediments; a
failure of one of our key information technology systems or related
controls; our ability to attract, retain and motivate key employees;
future events that could adversely affect the value of our assets and
require impairment charges; 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, including
exchange controls and pricing restrictions; our ability to complete
planned divestitures; our ability to successfully integrate acquired
businesses, including the recently acquired Jarden business; our ability
to realize the expected benefits and financial results from our recently
acquired businesses and planned divestitures; and those factors listed
in our most recently filed Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission.

Contacts

Newell Brands Inc.
Investor Contact:
Nancy
O’Donnell, +1-770-418-7723
Vice President, Investor Relations
nancy.odonnell@newellco.com
or
Media
Contacts
:
Nicole Quinlan, +1-770-418-7251
Senior
Manager, Global Communications
nicole.quinlan@newellco.com
or
Weber
Shandwick
Liz Cohen, +1-212-445-8044
liz.cohen@webershandwick.com

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