Newell Brands Inc (NASDAQ: NWL) stock plunged 20.89% on Feb 15th, 2019 (Source: Google finance) after the company posted mixed results for the fourth quarter of FY 18 and provided a downbeat outlook. Normalized gross margin increased 170 basis points versus last year to 34.7% as the benefits from the Company’s productivity efforts, pricing actions, and the impact of the revenue recognition standard more than offset inflationary pressures including the effect of tariffs. Net interest expense of $104 million was down from $116 million a year ago as we ended the year with a net debt balance of $6.5 billion as compared to approximately $10.1 billion a year ago. Normalized net income from discontinued operations was $107 million, down from $196 million in the year-ago quarter, largely due to the loss of contribution from businesses that have been divested throughout the year, including Waddington, Rawlings, Goody, Pure Fishing and Jostens.
NWL in the fourth quarter of FY 18 has reported the adjusted earnings per share of 71 cents, but reported 6 percent fall in the adjusted revenue to $2.34 billion in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of $2.43 billion. The sales fell due to headwinds from foreign currency, the adoption of the 2018 revenue recognition standard, and a decline in core sales. Food and appliances sales 7.2% to $824 million, missing the FactSet consensus of $844 million; home and outdoor living sales declined 7.2% to $809 million, below expectations of $855 million; and learning and development sales slipped 3.2% to $707 million, missing expectations of $735 million. Looking ahead, the company expects adjusted EPS of $1.50 to $1.65, below the FactSet consensus of $1.91, and sales of $8.2 billion to $8.4 billion, below expectations of $8.79 billion.
In Q4, the business generated operating cash flow of $498 million compared to $990 million a year ago. During the fourth quarter, the company announced and closed on two transactions, Jostens and Pure Fishing, and applied the proceeds to share buyback as well as deleveraging. The company has also successfully completed tender offers for over $2.6 billion of debt, and reached the Company’s targeted leverage ratio of 3.5 times in 2018.
NWL purchased 44 million shares during the fourth quarter. During Q4, we also returned $1.1 billion to shareholders through share repurchases and dividends with the full year figure at over $1.9 billion.