Investor Presentation

Transcription

1 Investor Presentation March 2010

2 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/(loss), earnings per share, operating income or gross margin improvements or declines, Project Acceleration, capital and other expenditures, cash flow, dividends, restructuring 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 global economic slowdown; 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; our ability to refinance short-term debt on terms acceptable to us, particularly given the uncertainties in the global credit markets; changes to our credit ratings; significant increases in the funding obligations related to our pension plans due to declining asset values 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 most recent quarterly report on Form 10-K, 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 news release is as of the date indicated. The company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments. INVESTOR RELATIONS CONTACTS: Nancy O Donnell VP, Investor Relations +1 (770) nancy.odonnell@newellco.com Alisha Pennix Manager, Investor Relations +1 (770) alisha.pennix@newellco.com 2

3 Company Overview 3

4 Newell Rubbermaid Vision 4

5 Well-Balanced, Diversified Portfolio Segment Geography Tools, Hardware & Commercial Products 27% Home & Family Asia Pacific 6% Latin America 5% 14% EMEA 43% 30% 75% Office Products North America 2009 Net Sales: $5,578 million 5

6 Home & Family Group» 2009 Sales $2.4 billion» 5 Global Business Units» ~15% of sales outside North America» Market-leading brands 2009 Sales Contribution Home & Family 43% 6

7 Home & Family Group Target Market: Female Head of Household Culinary Lifestyles Beauty & Style Baby & Parenting Rubbermaid Food & Home Dècor 7

8 Office Products Group» 2009 Sales $1.7 billion» 4 Global Business Units» ~50% of sales outside North America» Market-leading brands 2009 Sales Contribution 30% Office Products 8

9 Office Products Group Serving Retail/Commercial Consumers in Office & Education Fine Writing Markers & Highlighters Everyday Writing Technology 9

10 Tools, Hardware & Commercial Products» 2009 Sales $1.5 billion» 4 Global Business Units» ~25% of sales outside North America» Market-leading brands 2009 Sales Contribution Tools, Hardware & Commercial Products 27% 10

11 Tools, Hardware & Commercial Products Serving Tradesmen in Maintenance & Construction Construction Tools & Accessories Commercial Products Industrial Products & Services Hardware 11

12 Strong, Diverse & Long-Standing Customer Relationships Mass Retail Home Improvement Office Superstores Specialty Retail Drug / Grocery Commercial Distributors Department Stores 12

13 Why Invest in Newell Rubbermaid? This is a different Newell Rubbermaid Through a focused strategy, Newell Rubbermaid has made demonstrable progress in its transformation to a best-in-class, growth-oriented consumer products company Gross Margin Expansion trend back on track Recent portfolio enhancements, ongoing actions to achieve best cost and efficiency, and disciplined cost management have positioned NWL to resume historical trend of gross margin expansion and profitability improvement Portfolio and Business Model changes set us up for future growth Our portfolio of strong brands, continued investments in consumer-driven innovation, branding and marketing, and significant opportunities for global expansion will help drive broad and sustainable growth as the economy recovers 13

14 Excellent Progress in Transforming the Business Model FROM Manufacturing Products Customer Push Marketing Commoditized Products Represent Significant Part of Portfolio TO Marketing Brands That Matter TM To Consumers Consumer Pull Demand Creation Branded, Differentiated Portfolio North American- Centric Footprint Growing Global Footprint 14

15 Expanding Gross Margins and Improving Profitability 15

16 Resuming Trend of Gross Margin Expansion Gross Margin 40% 38% 36% 34% 32% 30% +350 bps 33.4% +185 bps 35.2% -240 bps 32.8% +390 bps 36.7% 40% 28% 29.9%* 26% 24% Long-term Target * As reported in 2005 Form 10K. In subsequent year reports, 2005 numbers were adjusted to reflect impact of divestitures. 16

17 and Improving Profitability Operating Margin 15% 14% +210 bps +120 bps +250 bps 15% 13% 12% 11% 10% 9% 8% 7% 9.6%* 11.7% 12.9% -330 bps 9.6% 12.1% 6% 5% Long-term Target * As reported in 2005 Form 10K. In subsequent year reports, 2005 numbers were adjusted to reflect impact of divestitures. See Appendix for reconciliation. 17

18 Drivers of Sustainable Gross Margin Expansion Mix improvement, cost reductions, innovation and branding will drive Gross Margin expansion to 40% over next 3-5 years» Exit/divestiture of $500M in sales of low margin, commoditized product categories Product category exits were completed in 2009, adding 200bps to gross margins» Improved product mix due to enhanced portfolio and continued investments in innovation and branding» Achieving best cost in manufacturing, sourcing, distribution and transportation Project Acceleration restructuring program will be complete by end of 2010 $200M+ in annual cost savings upon completion Ongoing productivity initiatives» Resumption of top-line sales growth and higher capacity utilization 18

19 Driving Best Cost and Efficiency: Project Acceleration Nearing Completion Rationalize manufacturing and sourcing Optimize distribution & transportation network Expand North American shared services Streamline and strengthen European structural costs Rationalize product portfolio $200M+ in Annual Cost Savings by End of

20 Driving Best Cost and Efficiency: Restructuring the Supply Chain Manufacturing Facilities Sourced Finished Goods Nature of Suppliers Distribution Centers Capacity Utilization Average Size (sq ft) % Opportunistic 96 68% 145K 2010E ~40 50% Strategic ~ % >350K 20

21 Driving Best Cost and Efficiency: Leveraging One Newell Rubbermaid» Successfully implementing SAP globally Enables best-in-class business processes including more efficient management of inventories, direct and indirect spend North America mostly complete by end of 2010, Europe in 2011 and ROW in 2012» Regional Shared Service Centers leverage non-market facing functional capabilities HR, IT, Customer Service, Supply Chain and Finance» Centralized procurement and distribution & transportation» Consolidating and co-locating offices» Sharing best practices and leveraging talent across the organization 21

22 Rigorous Cost Management Provides Greater Leverage as Top Line Rebounds SG&A Expenses $1,700 9% Reduction $1,500 $1,300 $1,503M $1,100 $900 $1,375M $700 $ Increased investment in strategic advertising and promotion and R&D funded by targeted permanent reductions in structural SG&A 22

23 Driving Broad & Sustainable Sales Growth 23

24 Levers for Sustainable Growth» Investments in strategic SG&A are driving robust consumermeaningful innovation and a healthy new product pipeline» Opportunity to further leverage our Brands That Matter to gain share Fragmented categories Many competitors are not investing in innovation or branding» Significant opportunities for global expansion Vision to increase sales outside of U.S. to 50% from ~30% currently» Focused long-term M&A strategy will add a point or two of annualized growth 24

25 Poised to Resume Organic Sales Growth as the Economy Recovers Internal Sales Growth* 5% 4% 3% 2% 4.7% 3.3% 3.3% 3% to 5% 1% 0% * Excludes significant acquisitions H Long-term Target 25

26 #1 or #2 Market Share Positions in Major Product Categories 26

27 Investing in Brand Building Capability» Consumer Driven Innovation Process Consumer Understanding Insights & Concepts Product Invention Product & Concept Validation Invest in Awareness & Trial» Building the organization Talent acquisition Training and development Standardizing best-in-class innovation and brand building processes across all GBUs Our investments in brand building capability provide a distinct competitive advantage in many of our product categories 27

28 Increasing Strategic Investment in R&D and Advertising & Promotion Investment in Strategic SG&A as a Percentage of Sales 8% 7% 6% 5% 4% 3% 2% 1% 0% 4% 6% ~8% Long-term Target 28

29 Robust Consumer-Meaningful Innovation Rubbermaid Food Storage» Rubbermaid Food has grown sales and gained market share on the strength of innovative new food storage platforms introduced over the past two years» Unique features include: Easy Find Lids that snap to each other and to bases Common shapes that nest for compact storage Produce Saver keeps produce fresh up to 33% longer Premier offers stain resistance and soft seal lids Lock-Its have locking tabs for extra security 29

30 Robust Consumer-Meaningful Innovation Culinary Lifestyles» Our Culinary Lifestyles GBU generated mid-single digit sales growth in 2009, fueled by exciting new product introductions» The new Calphalon Unison Nonstick line of premium, dishwasher-safe, gourmet cookware combines two revolutionary non-stick surfaces in the same set Slide for easy release and Sear to seal in flavor 30

31 Robust Consumer-Meaningful Innovation Rubbermaid Commercial Products» The new Rubbermaid HYGEN Microfiber Cleaning System provides innovative solutions designed for proven superior performance in maintaining healthy, safe environments» Microfiber mops clean over 3x faster» Microfiber cloths clean 25% better» Flexi Frame mop head maximizes productivity» Comprehensive training and support system provides a sustainable competitive advantage 31

32 Robust Consumer-Meaningful Innovation Baby & Parenting» Graco has gained market share through the successful launch of innovative new products that offer both performance and value» The Pack 'n Play Playard with Newborn Napper is the first ever playard with a separate station designed to cuddle your newborn» The Newborn Napper station offers gentle vibration and plays music and nature sounds to soothe and comfort your baby 32

33 International Markets Offer Significant Sales Growth Opportunities» Brands with <10% of global sales outside North America» Brands with 10-50% of global sales outside North America» Brands with >50% of global sales outside North America 33

34 Longer-Term, M&A Strategy Supports Higher Growth, Higher Margin Portfolio M&A Criteria» Strong, consumer-meaningful brands» Receptive to innovation, branding and marketing» Global / global potential» Strong intellectual property» High market share in defined categories» Adequate scale» Manageable integration into NWL platforms» Cost or distribution synergies Future M&A Focus Areas» Baby & Parenting» Culinary Lifestyles» Beauty & Style» Office Technology» Commercial Products» Industrial Products & Services 34

35 Financial Outlook 35

36 FY 2010 Outlook* Net Sales Growth Low single digit growth Core Sales Low single digit growth Product Line Exits -2% Currency Translation Slightly positive Gross Margin +75 to 100 basis points "Normalized" EPS $1.35 to $1.45 Cash Flow from Operations Capital Expenditures $500 million $160 million * Reflects guidance communicated in Q Earnings Release and Earnings Call on January 29, Guidance reflects management s outlook as of the date given and is not being updated hereby. See Appendix for reconciliation. 36

37 Strong 2009 Cash Flow Performance Despite Challenging Economic Environment Operating Cash Flow ($M) $700 $600 $500 $400 $300 $200 $100 $643M $655M $455M $603M» Generated $603M of operating cash flow in FY2009, up $148M or 33% to the prior year» Strong cash flow driven by increased earnings and better working capital management, particularly inventory» Improvement of 12 inventory days contributed $243M to operating cash flow $

38 Strong Cash and Solid Liquidity Position» Sufficient liquidity to satisfy all debt maturities until 2013 without need to access the capital markets» $278M cash at December 31, 2009» Continued strong projected operating cash flows» Investment grade credit rating» Near-term primary use of cash is debt reduction» Committed to regaining a solid investment grade ratings profile» Target Debt/EBITDA level of 2.5x 3.0x» Long-term capital allocation goals» Selected strategic acquisitions» Maintain dividend payout ratio in line with peers 38

39 Long-Term Post-Recession Outlook Annual Growth Internal Sales: +3% to +5% Earnings per Share: +Double digits Margin and SG&A Investment Model Gross Margin: Brand Building Reinvestment: Margin expansion to 40% over next 3-5 years Funded through reductions in structural SG&A Operating Margin: Continued progress towards 15% 39

40 Why Invest in Newell Rubbermaid? This is a different Newell Rubbermaid Through a focused strategy, Newell Rubbermaid has made demonstrable progress in its transformation to a best-in-class, growth-oriented consumer products company Gross Margin Expansion trend back on track Recent portfolio enhancements, ongoing actions to achieve best cost and efficiency, and disciplined cost management have positioned NWL to resume historical trend of gross margin expansion and profitability improvement Portfolio and Business Model changes set us up for future growth Our portfolio of strong brands, continued investments in consumer-driven innovation, branding and marketing, and significant opportunities for global expansion will help drive broad and sustainable growth when the economy recovers 40

41 Appendix 41

42 Operating Income Excluding Charges Operating Income As Reported $522.2* $ $ $ $ Add: Restructuring and other one time charges $ 51.3 $ 66.4 $ 86.0 $ $ Add: Impairment Charges $ 34.4 $ - $ - $ $ - Operating Income Excluding Charges $607.9* $ $ $ $ Net Sales * $ 6,201.0 $ 6,407.3 $ 6,470.6 $ 5,577.6 Operating Income % to Sales 9.6%* 11.7% 12.9% 9.6% 12.1% * As reported in 2005 annual report. In subsequent year reports, 2005 numbers were adjusted to reflect impact of divestitures 42

43 FY 2010 Outlook for Normalized EPS FY 2010 Diluted earnings per share: $1.15 to $1.25 Project Acceleration restructuring costs, net of tax [ 1 ] $0.15 to $0.25 Convertible notes dilution [ 2 ] TBD "Normalized" EPS: $1.35 to $1.45 [ 1 ] Restructuring costs include impairment charges, employee termination benefits and other costs associated with Project Acceleration, and the related tax effects. [ 2 ] No provision is made in the 2010 outlook for potential dilution from the conversion feature of the convertible notes issued in March 2009 or the associated hedge transactions, as the amount of 2010 dilution will be determined by the average stock price for the year. In 2009, the conversion feature of the convertible notes and the associated hedge transactions resulted in dilution of $0.06 per diluted share. 43