fourth quarter 2014 earnings call - …/media/files/t/...fourth quarter 2014 earnings call january...
TRANSCRIPT
FOURTH QUARTER 2014 EARNINGS CALL
January 28, 2015
Forward Looking Statements
We are making some forward looking statements today that use words like “outlook” or “target” or similar predictive words. Such forward looking statements involve risks and uncertainties detailed in our recent periodic reports as filed in accordance with the Securities and Exchange Act of 1934. These risks and uncertainties may cause actual results to differ materially from our statements today.
2 Visit www.tupperwarebrands.com or download our Investor Relations app
Fourth Quarter Highlights
• Sales +6% local currency • Emerging markets, +10% (64% of sales) • Established markets, -1% (36% of sales)
• Adjusted EPS of $1.72. Up 9% in local currency, down 5% in dollars
• Returned $84M to shareholders from $34M dividends and $50M/769K shares in open market share repurchases
• Total Sales Force count up 2% year over year
• Board of Directors declares quarterly dividend of 68 cents per share
3
Units Over $100M in Annual Sales
Over $200M
• Brazil
• Fuller Mexico
• Indonesia
Over $100M
• China
• France
• Germany • Malaysia/
Singapore
• TW Mexico
• TW U.S. & Canada
4
Fourth Quarter Sales +6% in Local Currency
5
Established Markets 36% Share, -1%
Brazil +43%
Indonesia +16%
Malaysia/ Singapore
-4%
Turkey +9%
India -8%
TW Mexico -11%
China +20%
Germany -5%
France -1%
TW S. Africa Even
TW U.S./Canada
+7%
BeautiControl +7%
Fuller Mexico -4%
CIS -3%
Italy +8%
Avroy Shlain +10%
Korea +15%
Argentina +56%
Emerging Markets 64% Share, +10%
FINANCIAL HIGHLIGHTS
Q4 Earnings per Share Roll-Forward*(diluted)
7 *See information on GAAP basis in appendix
$1.81 ($0.23)
$1.58 ($0.01) ($0.02)
$0.11 $0.03
$0.03 $1.72
$1.50
$1.55
$1.60
$1.65
$1.70
$1.75
$1.80
$1.85
$1.90
2013 FX 2013 at 2014Rates
Unallocated Tax Ops - SalesImprovement
Ops - ROSImprovement
Shares 2014
5% Decrease in Reported $
9% Increase in Local Currency
Return On Sales*
8
Fourth Quarter Guidance
Q4 2014 Actual
Full Year 2014 Actual
2013 Pretax ROS 17.0% 17.0% 14.1%
Translation FX (50) bp (50) bp (70) bp
2013 Pretax ROS (constant currency) 16.5% 16.5% 13.4%
LC Operating Margin Improvement (95) bp 30 bp 64 bp
Net interest expense (8) 4 (23) bp
Other, rounding 1 6 9
2014 Pretax ROS 15.6% 16.9% 13.9%
*Excluding items. See GAAP information in the appendix.
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Decrease inActive Sales
Force
Mix Productivity Sales Increasein Local
Currency
+5pp +6%
+2pp -1%
Total Sales Force +2% -- Increased Local Currency Sales Despite Lower Active Sales Force
• +2 points from mix Toward China and Brazil and away from Fuller Mexico & CIS
• +5 points productivity Price increases in S. America and Indonesia
• +6% sales increase • +1 point volume • +5 points price
9
Q4 2014
Uses of Cash
10 *Quarterly Dividends based on 50% of trailing full year Earnings per Share without items **Based on full year diluted shares and for 2015 guidance provided on January 28, 2015
2: Quarterly Dividends +10% to $2.72 $134 million
3: Open Market Share Repurchases 1.2 million Shares Repurchases
$84 million
Cash Returned to Shareholders** $4.26
Full Year 2014 1: Invest into the Business
2: Quarterly Dividends*
Maintain $2.72 $132M million
3: Open Market Share Repurchases
$50 million
$3.63
Full Year 2015 Guidance 1: Invest into the Business
Outlook*
11
First Quarter 2015
Full-year 2015
USD Sales* (12)% to (10)% (6)% to (4)% GAAP EPS $0.89 – $0.94 $4.58 – $4.68 GAAP Pre-tax ROS 10.2 – 10.5% 12.6 – 12.6%
Local Currency Sales +2% to 4% +4 to 6% EPS, excluding items** $0.98 – $1.03 $4.90 – $5.00 Pre-tax ROS, excluding items 11.3% – 11.6% 13.5% – 13.5%
FX Impact on EPS comparison, excluding items ($0.29) ($0.83)
*Venezuelan operating activity at 6.3, 10.8 and 50 bolivars/$ in 1Q, 2Q and 2H of 2014 forward respectively **GAAP to non-GAAP reconciliation attached to 4Q earnings release
Full Year 2015 EPS* Outlook
12 *High end of 2015 outlook range excluding items, GAAP to non-GAAP reconciliation attached to earnings release
$5.38 ($0.83)
($0.03) ($0.07) ($0.01)
$0.47 $0.09 $5.00
$4.20
$4.40
$4.60
$4.80
$5.00
$5.20
$5.40
$5.60
$5.80
2014 FX 2013 at 2014Rates
Int Exp Tax Unalloc Ops Shares 2015
$4.55
7% Decrease in Reported $
10% Increase in Local Currency
Return On Sales*
13
First Quarter Guidance
2015 Full Year Guidance
2014 Pretax ROS 13.5% 13.9%
Translation FX (150) bp (90) bp
2014 Pretax ROS (constant currency) 12.0% 13.0%
LC Operating Margin Improvement (60) bp 45 bp
Net interest expense 10 (10)
Other, rounding 10 15
2015 Pretax ROS (high end guidance)** 11.6% 13.5%
*Venezuelan operating activity at 6.3, 10.8 and 50 bolivars/$ in 1Q, 2Q and 2H respectively
**GAAP to non-GAAP reconciliation attached to 4Q earnings release
Quarterly Dividends Declared
14
$0.22 $0.25 $0.30
$0.36
$0.62 $0.68 $0.68
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
1996-2009 2010 2011 2012 2013 2014 2015
Dividend per Share
+20%
Annualized Dividend
2011 $1.20 2012 1.44 2013 2.48 2014 2.72 2015 2.72
Announced 50% Payout target on EPS ex. items
YIELD* 4.6%
+20%
+72% +10% EVEN
*Annual dividend yield is based on the January 27, 2015 closing price of $59.74
Analyst Day – Morning of February 25th
• Vision 20/20 strategies to enable long-term local currency growth
• Speakers Include • Tricia Stitzel,
Group President, Americas • Asha Gupta,
Group President, Asia Pacific • Georges Jaggy,
Chief Global Marketing Officer
15
SEE OUR VISION COME INTO FOCUS
QUESTIONS & ANSWERS
APPENDIX
Long Range Outlook
Double Digit EPS Growth driven by: • Local Currency Sales: +6% to 8%
• Emerging markets about 10% • Established markets low single digit
• Pre-Tax ROS, excluding items: • 50 bps improvement per year into the mid- to high-teens
• Some offset from tax rate: • Going to 27-28% over time
• CAPEX $70 - $80 million a year
• Share repurchases 18
Non-GAAP Financial Reconciliation
19 *High end of guidance range provided in January 28, 2015 Earnings Release. Impact of changes in foreign currency versus prior year are updated monthly and posted on: http://ir.tupperwarebrands.com/foreign-exchange-impact.cfm
2011 2012 2013 Q4 2014 2014 Q1 2015* 2015*
Net Income (GAAP) $218.3 $193.0 $274.2 $79.9 $212.0 $47.0 $234.4
Adjustments: Gains on disposal of assets including insurance recoveries (3.8) (7.9) (0.7) (0.4) (2.7) Re-engineering and other restructuring costs 9.6 22.1 9.3 2.8 13.4 3.8 11.3
Impact of Venezuelan bolivar devaluation from balance sheet positions 4.2 0.2 42.4 Swap impairment and debt cost write-off 19.8 Acquired intangible asset amortization 2.9 2.1 4.8 2.9 11.9 2.7 10.9 Purchase accounting intangibles and goodwill impairment 36.1 76.9 Income tax impact of adjustments (9.6) (4.8) (3.5) 1.4 (2.4) (1.8) (6.4)
Net Income (Adjusted) $273.3 $281.4 $288.3 $86.8 $274.6 $51.7 $250.2
Adjusted ROS 13.9% 14.1% 14.1% 16.9% 13.9 % 11.6% 13.5% Average number of diluted shares (millions) 61.4 56.4 53.1 50.6 51.0 50.1 50.1
Q4 Global Portfolio
20
Europe, 29%
Asia Pacific, 34%
TW North America, 13%
Beauty North America, 10%
South America, 14%
Q4 2014 Segment Sales as % of Total Q4 2014 Sales, +6% Local Currency
$194.0
$230.2
$90.4 $70.9
$94.4
$-
$50.0
$100.0
$150.0
$200.0
$250.0
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
Q4 - 2012 Q4 - 2013 Q4 - 2014
Q4 Emerging Market Sales By Segment Reported
21
Q4 2014 Emerging Market Sales, +10% in LC, -1% in USD Emerging/Established %
$60.0
$185.8
$38.9 $53.2
$94.4
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
Q4 2012 Q4 2013 Q4 2014
31%
81%
43%
75%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
Emerging Established
Full Year 2014 Global Portfolio
22
Europe, 28%
Asia Pacific, 33%
TW North America, 13%
Beauty North America, 11%
South America, 15%
2014 Segment Sales as % of Total 2014 Sales, +5% Local Currency
$730.3
$849.9
$349.9 $290.9
$385.1
$-
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
2012 2013 2014
2014 Full Year Emerging Market Sales By Segment Reported
23
2014 Emerging Market Sales, +10% in LC, -4% in USD
Emerging/Established %
$246.6
$691.1
$167.1 $220.6
$385.1
$-
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
2012 2013 2014
34%
81%
48%
76%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Europe Asia Pacific TW NorthAmerica
Beauty NorthAmerica
South America
Emerging Established
Venezuela FX Impact in 2014 and 2015
24
1H – 2014
Q3 – 2014
Q4 – 2014
FY 2014
Q1 – 2015
Q2 – 2015
FY 2015
Percentage Point Impact on Sales from Changes in Rate (0.7pp) (3.5pp) (3.4pp) (2.1pp) (4.3pp) (2.8pp) (1.8pp)
Translation Impact of Changes in Rate on Diluted EPS Comparison ($0.04) ($0.10) ($0.08) ($0.21) ($0.12) ($0.11) ($0.23)
Transaction Impacts on Net Monetary Assets for 1H – 2014 and gain on conversion of bolivars to U.S. dollars (Q3)*
($0.51) $0.09 ($0.08)** ($0.50) N/A N/A N/A
Transaction Impacts on Inventory Flowing thru at Stronger Rates than Sales*
($0.12) ($0.23) $0.01** ($0.35) N/A N/A N/A
*The pretax expense impact from amounts on the balance sheet when the bolivar devalued are included in the U.S. GAAP earnings per share and return on sales data above, but not in the data excluding items. **Reflects tax recognized on an annualized basis under U.S. GAAP.
FOURTH QUARTER 2014 EARNINGS CALL
January 28, 2015