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8/2/2019 1 - MDK Analyst Day Strategic Overview FINAL
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Strategic Overview
Mark KetchumPresident & CEO
Todays Agenda
8:00 8:30 Strategic Overview Mark Ketchum, President & CEO
8:30 8:50 Building Brands That Matter Ted Woehrle, SVP & CMO
8:50 9:30 Home & Family Jay Gould, President H&F
9:30 9:45 Break
9:45 10:15 Tools, Hardware & Bill Burke, President TH&CP
Commercial Products
10:15 10:45 Office Products Penny McIntyre, President OP
10:45 11:15 Financial Outlook Juan Figuereo, EVP & CFO
11:15 12:15 Q&A
12:15 1:30 Lunch and Product Showcase
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Newell Rubbermaid Vision
Three Transformational Strategies
Strengthen the Portfolio
Leading brands in non-commoditized categories
Fewer, more focused business units
More global, more profitable, faster growing
Transform the Business Model
Consumer centric brands
Innovation driven
Higher Gross Margins to enable brand-building SG&A investment
Drive Best Cost and Efficiency
Restructure manufacturing and supply chain (Project Acceleration)
Leverage the scale of One Newell Rubbermaid
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Just as strong brands leverage their attributes to create value,
so too do effective companies.
BRAND NWLwill create shareholder value
through its portfolio of Brands That Matter.
Todays Focus: Brand NWL
Why Brand NWL Should Matter To You Today
We have createdthe right portfolio
Home & Family
anchored bystrong brands
that respond to
innovation andbrand building
in three logical
business segments
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Why Brand NWL Should Matter To You Today
We have created the right portfolio
Core sales growth has resumed
-18%
-15%
-12%
-9%
-6%
-3%
0%
3%
6%
9%
12%
2006 2007 2008 2009 2010
Quarterly CoreSales Growth Rates
We have created the right portfolio
Core sales growth has resumed
We are investing in Strategic Brand Building SG&A to drive future
sales growth, with an eventual target of ~8% of net sales
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2005 2006 2007 2008 2009 2010E Target
Why Brand NWL Should Matter To You Today
Annual Brand BuildingSG&A as % of Sales
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Why Brand NWL Should Matter To You Today
We have created the right portfolio
Core sales growth has resumed
We are investing in Brand Building SG&A to drive future sales
growth, with an eventual target of ~8% of net sales
We have further, immediate opportunities for increased operational
excellence and sustainable cost reduction
Long Term Objectives
Sustainable growth
Core sales 3-5%
Acquisitions add
1-2% on average
EPS growth >10%
Superior consumer
driven innovation and
branding capabilities
Best-in-class cost
structure
ShareholderValue
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NWL Investment Thesis Point #1
This is a New NWL.Our transformation is virtually complete.
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We operate in Categories That Matter
with Brands That Matter
with low cost product sourcing and relatively low capitalinvestment
with high quality business processes that add value to eachof our businesses
with healthy and still expanding gross margins, thatsupport investment in innovation and brand building
NWL Investment Thesis Point #1
This is a New NWL.
Our transformation is virtually complete.
Newell Rubbermaid Participates in Large,Global and Growing Categories
Home & Family
0
20
40
60
80
100%
Office ProductsTools, Hardware &
Commercial Products
Beauty -
Styling
Tools,
Accessories
& Heat
Styling
North
American
Kitchen Prep
North
American
Window
Baby &
Juvenile
Gear
Food
Storage
Home
OrganizationEveryday
Writing
Markers &
Highlighters
Fine
Writing
Technology/
Electronic
Learning
Power Tool
Accessories
Hand
Tools
Commercial
Facilities
Maintenance -
Non PoweredEquipment
7,400 3,800 7,000 8,500 3,800 26,000 8,100 4,8001,900
3,800 3,800 3,800 10,900$M Retail
Sales
14
3-5% CAGR1-2% 3-5% 0-2% 2-3% 2-3% 4-6% 4-6%2-4%
10%+2-4%
2-4% 3-4%
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with Brands That Matter
Over 60% of Newell Rubbermaids business grew share in
2009
2010 brand health tracking is very encouraging
Strong Brands 2/3 of our key brands have advantages in
awareness, past usage and future intent to purchase
Brands Getting Stronger - we have good diagnostics of the
attributes that drive brand health and are reacting accordingly
Our consumer research is becoming more sophisticated and is
driving growth
We operate in Categories That Matter
with Brands That Matter
with low cost product sourcing and relatively low capitalinvestment
with high quality business processes that add value to each
of our businesses
with healthy and still expanding gross margins, thatsupport investment in innovation and brand building
This is a New NWL.Our transformation is virtually complete.
NWL Investment Thesis Point #1
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Restructure NWL Owned Manufacturing
Driving Best Cost and Efficiency:Restructured Supply Chain
Plants Capacity Utilization Fixed Capital
Restructure DistributionDCs Capacity Utilization Avg. Warehouse Sq. Ft.
Transform Finished Product Supply BaseSourced Goods Low Cost Countries Nature of Suppliers
Ongoing Capital Spend (ex SAP)
~40
~50
136 $1.8B85-90%63% $0.6B
350K145K80-90%68%96
StrategicOpportunistic70%16%
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Drive Best Cost and Efficiency:Leverage One Newell Rubbermaid
SAP across the company
Shared Service Centers
Center-led distribution andtransportation
Center-led procurement
Consolidated andco-located offices
Newell OPEX process
Brand strategy process
Innovation process (CDI)
Sales excellence andcategory management
Personnel developmentand review process
Common culture/values
Economies of Scale Accelerate Advantage
Accelerate adoption of best-in-classbusiness processes versus what
business units could do on their own
SAP 65% completeAll others 90% complete
Harness scale company-wideto maximize cost efficiency innon-market-facing activities
100% deployed;working on optimization
NWL Investment Thesis Point #1
We operate in Categories That Matter
with Brands That Matter
with low cost product sourcing and relatively low capitalinvestment
with high quality business processes that add value to each
of our businesses
and healthy and still expanding gross margins, thatsupport investment in innovation and brand building.
This is a New NWL.Our transformation is virtually complete.
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24%
26%
28%
30%
32%
34%
36%
38%
40%
2005 2006 2007 2008 2009 2010E
29.9%*
35.2%
33.4%
36.7%
32.8%
40%
* As reported in 2005 Form 10K. In subsequent year reports, 2005 numbers were adjusted to reflect impact of divestitures.
Gross Margin
Gross Margin Expansion EnablingGreater Brand Building Investments
+75-100
bps
This is a New NWL.Our transformation is virtually complete.
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NWL Investment Thesis Point #2
The portfolio makes sense.
NWL Investment Thesis Point #2
We have divested or exited low consumer interest, low profitability
businesses, and added more global, innovation driven brands
Our remaining categories and product lines all respond to investments
in Innovation and Marketing
We have consolidated our categories into three focused, logical and
synergistic business groups products for the home & family,
products for office and education, and products for buildingconstruction and maintenance
The portfolio is well balanced, diversified and increasingly global
The portfolio makes sense.
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Reshaping the Portfolio Since 2004
Glassware
Anchor Hocking, Pyrex
Low End Cookware
Mirro, Wearever, Panex,Cookware Europe
Picture Frames
Burns of Boston, FramesEurope
Molded Resin Toys
Little Tikes
Commodity Resin Products
Curver (Europe)
Drapery Hardware
Home Dcor Europe
MiscellaneousGrumbacher, Dakota Balance,Bulldog UK
Chairmats
OPP Storage Totes
OPP Refuse
Plastic Desktop Organization
NA Woodcase Pencils
Plastic Shelving
Various Private Label
Office Products
Dymo
Mimio
Endicia
Card Scan
Rubbermaid Commercial
Tomki (Brazil)
United Metal Receptacle
Technical Concepts
Baby & Parenting
Bebe Sounds
Teutonia
Aprica
Beauty & Style
Solano
NWL Investment Thesis Point #2
We have divested or exited low consumer interest, low profitability
businesses, and added more global, innovation driven brands
Our remaining categories and product lines all respond to investments
in innovation and marketing
We have consolidated our categories into three focused, logical and
synergistic business groups products for the home & family,
products for office and education, and products for buildingconstruction and maintenance
The portfolio is well balanced, diversified and increasingly global
The portfolio makes sense.
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Standardized consumer driven innovation process
Brand management/marketing
Talent acquisition at VP and Director levels
Training and development at all levels
Brand building SG&A (R&D, Advertising, Consumer
Promotion) increased to meaningful levels
Our approach to brand building differentiates us from our
competitors, providing a competitive advantage
Invest inAwareness &Trial
ConsumerUnderstanding
Insights &Concepts
ProductInvention
Product &ConceptValidation
Investing in Brand Building Capability
NWL Investment Thesis Point #2
We have divested or exited low consumer interest, low profitability
businesses, and added more global, innovation-driven brands
Our remaining categories and product lines all respond to investments
in innovation and marketing
We have consolidated our categories into three focused, logical and
synergistic business groups products for the home & family,
products for office and education, and products for buildingconstruction and maintenance
The portfolio is well balanced, diversified and increasingly global
The portfolio makes sense.
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Strengthen Portfolio:Focus and Profitability
Business Segments 5 3
Business Units 24 13
Net Sales $6.3B* $5.6B
Gross Margin 29.9%* 36.7%
2005 2009
* As reported in 2005 Annual Report on Form 10-K. In subsequent Annual Reports, amounts have been retr oactively adjusted to reflect the impact of divestitures.
2009 Sales $2.4 billion
5 Global Business Units
~15% of sales outside
North America
Home & Family Group
Targets the femalehead of household
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2009 Sales $1.7 billion
4 Global Business Units
~50% of sales outside
North America
Office Products Group
Targets the office andeducation verticals, servingboth consumer andcommercial end users
2009 Sales $1.5 billion
4 Global Business Units
~25% of sales outside
North America
Tools, Hardware & Commercial Products
Targets buildingmaintenance andconstruction professionals
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NWL Investment Thesis Point #2
We have divested or exited low consumer interest, low profitability
businesses, and added more global, innovation driven brands
Our remaining categories and product lines all respond to investments
in innovation and marketing
We have consolidated our categories into three focused, logical and
synergistic business groups products for the home and family,
products for office and education, and products for building
construction and maintenance
The portfolio is well balanced, diversified and increasingly global
The portfolio makes sense.
OfficeProducts
Tools, Hardware& Commercial
ProductsHome &Family
14%
Balanced, Diversified, More Global Portfolio
2009 Net Sales: $5.6 billion
3 sizable, focused business
groups
Diversity of key customers and
competitors lowers risk
Organic growth, acquisitions
and category exits have
increased international sales
to >30% of the portfolioInternationalUnited States
30%
43%
27%
31%24%
2005 2009
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The portfolio makes sense.
NWL Investment Thesis Point #3
Our biggest opportunities are still ahead of us.
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NWL Investment Thesis Point #3
We are fully on track to reach our gross margin target of 40%
We will create increasingly important and more successful
innovation
We are increasing our investment in Brand Building SG&A
The accelerated pace of International growth will drive higher
total NWL growth
Investments in systems, processes and people will drive
best-in-class results
Our biggest opportunities are still ahead of us.
+350 bps
+185 bps
-240 bps
+390 bps
+75-100bps
29.9%*
35.2%
33.4%
36.7%
32.8%
40%
* As reported in 2005 Form 10K. In subsequent year reports, 2005 numbers were adjusted to reflect impact of divestitures.
Gross Margin
Gross Margin Expansion On Trackto Reach 40% Target in 3-4 Years
24%
26%
28%
30%
32%
34%
36%
38%
40%
2005 2006 2007 2008 2009 2010E Target
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Residual benefit from product line exits and Project Acceleration
Will accrue in 2010 and 2011
Ongoing productivity (OPEX)
Methodology delivers ever green improvements
Fixed manufacturing cost leverage
As sales rebound
Improved mix
Resulting from innovation, branding and prioritizing growth
Most significant new margin driver
Ongoing Drivers of FutureGross Margin Expansion
Mix improvement, productivity, innovation and branding
will drive Gross Margin expansion to 40% over next 3-4 years
NWL Investment Thesis Point #3
We are fully on track to reach our gross margin target of 40%
We will create increasingly important and more successful
innovation
We are increasing our investment in Brand Building SG&A
The accelerated pace of International growth will drive higher
total NWL growth
Investments in systems, processes and people will drive
best-in-class results
Our biggest opportunities are still ahead of us.
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Innovative Products Helped to Drive 2009 MarketGains Even Despite a Challenging Economy
Sharpie Pen Nonstick cookware that lets you cooklike a professional, with both sear andslide surfaces in each cookware set.
(Premier, Easy Find Lids, Produce Saver, Lock-Its)
Lids snap to each other and to bases; nest forcompact storage. Produce Saver keeps producefresh up to 33% longer. Lock-Its have locking tabsfor extra secure seal.
The everyday writing experienceof a Sharpie marker withoutthe ink bleed through.
Calphalon Unison
Rubbermaid Food Storage Systems
Robust Pipeline of Consumer Driven Innovationwill Drive Sales and Market Share 2010 and Beyond
Transforms seamlessly from anextremely functional highchair toan infant feeding booster, atoddler booster and a youth chair.
Trusted quality plus components that arebiodegradable in soil/compost.
Designed for superior performancein maintaining healthy, safeenvironments, including microfiber
mops (over 3x faster),microfiber cloths (clean25% better) andcomprehensive trainingand support system.
Graco Blossom 4-in-1Seating System
Paper Mate Biodegradable Pen
Rubbermaid HYGENMicrofiber Cleaning System
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Our brands are making bigger
investments in consumer
insights research
Our research mix is becoming
more sophisticated andgrowth-focused
ProductPerformance
Product Development
Focus Groups,Consumer Validation
Field Testing
Consumersand
Segmentation
Needs-based Segmentation
Usage Occasions
BrandFundamentals
Brand Positioning
Design Alternatives
Brand Tracking
Brand Hierarchy
ActivationEffectiveness
Market EntryCategory Entry
Brand Extensibility
Category ReframingCategory Creation
CategoryExpansionPricing
Shopper
Channel Strategies
Integrated Marketing Plan
Campaign Qualitative &
Quantitative
Communicating Benefits
POP/Display & Packaging
Attitude & UsageStudies
Power Users
Problem Identification
Insights Capability Building:Research Investment and Mix
SG&A Trends Rigorous Management in a Tough Environment
Rigorous expense management
SG&A $ have declined $225MM versus mid 2008 spend rate
Offset by significant deleveraging
SG&A % of Sales has increased 120bps since mid 2008 despiteabsolute dollar decline due to top line pressure
Mid 2008Run Rate*
2008Actual
2009Actual
2010Estimate
Revenue - $ millions 6,850 6,470 5,578 low to mid singledigit growth
SG&A - $ millions 1,600 1,503 1,375
SG&A/Revenue - % 23.4 23.2 24.6 25.0
We expect significant SG&A leverage as the top line rebounds
* Company guidance as of Q1 2008 earnings call.
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SG&A - % Sales Model
Brand Building
R&D, Advertising, Consumer Promotions
Other Ongoing Strategic
Direct Sales, Channel Marketing, Training & Development
Short Term Strategic
SAP, Transformation Expenses
Structural Expense
6%
6%
1%
12%
8%
7%
< 1%
~9%
2009 Target
25% total unchanged,
but components will change
NWL Investment Thesis Point #3
We are fully on track to reach our gross margin target of 40%
We will create increasingly important and more successful
innovation
We are increasing our investment in Brand Building SG&A
The accelerated pace of international growth will drive higher
total NWL growth
Investments in systems, processes and people will drive
best-in-class results
Our biggest opportunities are still ahead of us.
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>90% 50%-90%
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NWL Investment Thesis Point #3
We are fully on track to reach our gross margin target of 40%
We will create increasingly important and more successful
innovation
We are increasing our investment in Brand Building SG&A
The accelerated pace of international growth will drive higher
total NWL growth
Investments in systems, processes and people will drive
best-in-class results
Our biggest opportunities are still ahead of us.
Capability Investments Are Paying Off
Examples
Investment Payoff
Global SAP Platform Lower inventory and working capital
Better customer service
Better business analysis
Supply Chain Restructuring
(Project Acceleration)
Best cost
Business simplification andinnovation speed to market
Consumer Driven Innovation Process Brands that really matter
Share growth / category expansion
Training and Development More flexible, better performingorganization
More openings filled internally
Shared Services Lower cost and better performance
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Summary
This is a New NWL Our transformation is virtually complete
The portfolio The business model
The cost and margin structure
The portfolio makes sense
Three focused, synergistic segments leveraging business practices,innovation, brand building, and back office operations
Our biggest opportunities are still ahead of us
Margin growth, geographic expansion and leveraging out ourbest-in-class capability investments
And We Have The Right Team To Do It
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Summary
This is a New NWL Our transformation is virtually complete
The portfolio The business model
The cost and margin structure
The portfolio makes sense
Three focused, synergistic segments leveraging business practices,innovation, brand building, and back office operations
Our biggest opportunities are still ahead of us
Margin growth, geographic expansion and leveraging out ourbest-in-class capability investments