Tupperware's Q4 earnings climb 27.8% to US$84.1M, sales grow 20% to US$626M, driven by improved performance in emerging markets; Tupperware Japan, BeautiControl disappoint
February 1, 2010
– * Fourth Quarter Sales up 10% in local currency, versus October guidance of up 6 to 8%, and up 20% over last year reported
* Fourth Quarter GAAP diluted E.P.S. $1.31, up 25% over last year; excluding certain items impacting comparability*, diluted E.P.S. $1.22, versus October guidance range of 98 cents to $1.03, up 36% over last year **
* Full Year GAAP diluted E.P.S. $2.75, up 8% over last year; excluding certain items impacting comparability*, diluted E.P.S. $3.08, up 15% over last year **
* Stock repurchase authorization increased to $350 million from $150 million and term extended to February 1, 2015
Tupperware Brands Corporation (NYSE: TUP) Â today reported fourth quarter 2009 sales and profit. Â Fourth quarter 2009 sales increased in local currency by 10% versus 2008, before a positive impact from foreign exchange rates of 10%. Â This resulted in GAAP sales that were 20% above the fourth quarter of 2008. Â
Chairman and CEO, Rick Goings commented, "We are pleased to have finished the year with another strong quarter of local currency sales growth, which was above the high end of the guidance given in October. Â All five segments delivered top line growth in local currency. Our emerging markets, which comprised 51% of total sales in the quarter, were up 20% in local currency, continuing the significant improvement in the trend as we've moved through the year. Â There were a significant number of markets with double digit increases, including Tupperware Brazil, India, Indonesia, Malaysia, Mexico, Russia, South Africa, Turkey and Venezuela. Â The established markets were up 1% in local currency, which included strong increases by Tupperware Australia and Austria, as well as France which had record sales in the quarter that were 33% higher in local currency compared with 2008. Â Tupperware Japan and BeautiControl continued to have disappointing results."
"We had a strong close to 2009, as our management teams continued to focus on the fundamentals that drive our business. Â The heavy lifting of contemporizing our business model is resulting in enhanced performance. Â We were able to achieve 16% local currency diluted earnings per share growth, excluding items impacting comparability, and ended the quarter with a 6% advantage in our total sales force. Â We'll look to leverage our larger sales force and strong business models in 2010," said Rick Goings.
Diluted GAAP earnings per share of $1.31 for the fourth quarter of 2009 was up 26 cents versus last year. Â The 2009 fourth quarter included net positive 9 cents from items impacting comparability*, while 2008 had net positive 15 cents from those items.** Â There was also a positive 15 cent impact versus 2008 from stronger foreign currencies. Â Â Â
Adjusted diluted earnings per share of $1.22 in the quarter was 19 cents better than the high end of the guidance range given in October. Â This was up 32 cents, or 36% versus the prior year. Â Excluding the 15 cent positive impact of currency on the comparison, adjusted diluted earnings per share increased by 16%. Â The increase came from the contribution margin on higher sales, lower resin costs and more efficient promotional spending in some units, which was in part offset by investment in brand building and other sales enhancing investments, along with higher unallocated corporate expenses and a higher income tax rate. The fourth quarter included $3.5 million of pretax cost recorded when the year end balance sheet in Venezuela was translated for the first time at the "parallel" exchange rate available in that market. Â The Company had previously indicated that it would incur $8 million of cost in the fourth quarter of 2009 to convert cash in Venezuela at this exchange rate, but it did not do so. Â
Tupperware Brands will conduct a conference call tomorrow, Tuesday February 2, at 10:00 am Eastern time. Â The conference call will be webcast and archived along with a copy of this news release on www.tupperwarebrands.com. Â Â Â
Fourth Quarter Segment Highlights*
In Europe, fourth quarter sales were up 12% versus prior year in local currency (up 26% reported), continuing the trend of increasing sales growth every quarter in 2009. Â Established markets were up 6% compared to last year in local currency (up 21% reported) led by a 33% increase in France, as well as a high teen increase in Austria. Â The German business made progress on shrinking its salesforce deficit, and had a slight decrease in local currency sales versus 2008. Â The emerging markets were up 25% in local currency (up 36% reported). Â Growth came primarily from strong double digit increases in Tupperware Russia, South Africa and Turkey, as well as Avroy Shlain, one of the beauty businesses in South Africa. Â For Europe overall, pre-tax operating profit was up 31% versus prior year in local currency (up 48% reported). Â Total sales force in the segment was up 15% at the end of the fourth quarter.
Asia Pacific continued double digit sales growth with a 14% increase in local currency sales (up 29% reported) in the quarter. Â Emerging markets were up 27% in local currency (up 40% reported). Â Indonesia accounted for the majority of the growth, with a local currency sales increase of 87% in the quarter (up 129% reported). Â Tupperware India and Malaysia/Singapore were up strongly versus the prior year, partially offset by a low double digit decrease in China. Â The established markets were down 1% versus prior year in local currency (up 16% reported) from low double digit growth in Tupperware Australia offset by low double digit decreases in both businesses in Japan. Â Profit was up 24% in local currency (up 45% reported). Â Total sales force was up 25% at the end of the fourth quarter. Â
Tupperware North America sales were up 6% in local currency (up 8% reported) versus prior year, mainly from a double digit increase in Mexico, reflecting growth in the core business along with higher business to business sales in the quarter. Â Sales in the United States and Canada were down slightly for the quarter, after being up in the second and third quarters of 2009. Â Profit for the segment was up 55% in local currency (up 57% reported). Â The total sales force size at the end of December was up 6%.
Beauty Segments Â Â
Beauty North America sales were up 2% in local currency (up 3% reported) reflecting an increase by Fuller Mexico, partially offset by a decrease by BeautiControl. Â BeautiControl implemented a new sales force compensation plan at the beginning of 2010 that better aligns the earning opportunity for the sales force with the focus on selling through spa parties and recruiting. Â The segment's profit in the quarter increased 26% in local currency (up 30% reported) reflecting better value chain performance by both units. Â The total sales force size at the end of the quarter was down 8%, with both units contributing to the decreases.
Beauty Other sales were up 15% in local currency (up 28% reported), with most of the increase coming from Tupperware Brazil and Venezuela, although Nutrimetics France and Nuvo Uruguay had double digit increases as well. Â Fourth quarter reported profit grew from $3.2 million in 2008 to $7.5 million in 2009 primarily from the contribution margin associated with the higher local currency sales, along with value chain improvement in Brazil that included not having the loss that was incurred in 2008 by the separate Brazilian beauty business. Â There was also less amortization expense from purchase accounting intangible assets in 2009 than in 2008. Â Included in the segment's results was the $3.5 million cost recorded from translating the year end balance sheet of Venezuela at the "parallel" exchange rate. Â The total sales force size advantage for the segment at year end 2009 was 2%.
Full Year 2009 Results**
Full year company sales grew 6% in local currency (down 2% reported). Â Businesses operating in emerging markets, comprising 51% of total company sales grew 14% in local currency (even with last year reported) led by Tupperware Brazil, Indonesia, Malaysia, Mexico, Russia, South Africa, and Venezuela, while sales in China decreased. Â The rest of the businesses that operate in established markets were down 1% in local currency (down 4% reported) with notable increases by Tupperware Austria and France, and decreases by BeautiControl and Germany. Â The Tupperware brand segments grew 8% in local currency (up 1% reported) and the Beauty brand segments were up 3% in local currency (down 7% reported). Â Â
The total sales force was up 6% at the end of December and active sellers for the year were even with 2008. Â Profit from the operating segments rose 34% in local currency (up 22% reported), including double-digit improvements in all three Tupperware segments, a high single digit improvement by Â Beauty North America and $19.7 million in profit by the Beauty Other segment versus a $5.0 million loss in 2008. Â Diluted earnings per share was $2.75, up 25% in local currency (up 8% reported). Â Excluding certain adjustment items, diluted earnings per share was $3.08, up 32% in local currency (up 15% in dollars).
Full Year 2010 Outlook
The outlook for full year local currency sales growth remains at up 6 to 8%, and with a 1% benefit from foreign exchange is an increase of 7 to 9% on a reported basis. Â The local currency increase foreseen for units operating in emerging markets is 12 to 14%, and the increase for units operating in established markets is 1 to 2%. Â
The diluted earnings per share guidance is raised 8 cents from what was provided in October 2009 to a GAAP range of $3.25 to $3.35, with negative 16 cents from items impacting comparability. Â Excluding these items, diluted earnings per share is forecast to be $3.41 to $3.51 (see detail in the Non-GAAP Financial Measures Outlook Reconciliation schedule), which would represent a local currency increase of 9 to 12% versus 2009.Â The 8 cent increase from the previous guidance reflects the 19 cents 2009 actual results exceeded the 2009 guidance provided in October, offset in part by weaker foreign currencies since last October, particularly the euro. The positive impact, based on current exchange rates, on the comparison of 2010 earnings per share with 2009 is now 5 cents. Â There is no impact to the previous 2010 guidance from Venezuela, as the lower 2010 value of Venezuela's earnings from beginning in 2010 to use the parallel rate, is about offset by not incurring 2009 foreign exchange losses of $8.4 million.
Unallocated corporate expense for 2010 is expected to be about $50 million and net interest expense is expected to be about $27 million. Â At the high end of the sales and earnings per share range, excluding items impacting comparability, this would result in a 2010 pre-tax return on sales of 12.9% versus 2009 actual of 12.1%, along with a tax rate of 25.0% versus 23.5% in 2009. Â
First Quarter 2010 Outlook
The first quarter sales outlook is for an increase of 8 to 10% in local currency. Â Including a positive impact from exchange rates of 9%, sales in dollars are expected to increase by 17 to 19%. Â GAAP diluted earnings per share is expected to be 51 to 56 cents, with a negative 4 cent impact from items impacting comparability. Â Excluding these items, diluted earnings per share is forecast to be 55 to 60 cents. Â This compares with GAAP diluted earnings per share of 41 cents last year and 45 cents excluding certain items, indicating a 22% local currency increase in pretax profit at the high end of the range. Â The guidance reflects a positive impact on the comparison of 7 cents from stronger foreign currencies.
Rick Goings, Chairman and CEO, commented, "When the world seemed to stop at the beginning of 2009, our management teams didn't panic. Â Instead of going into cutback mode we introduced vigilance plans to take a proactive stance against the uncertainty of the year. We were pleased to see improvements in our results every quarter during 2009. Â Our continued focus on differentiated products, dynamic selling situations and compelling earning opportunities is paying off."
"In 2010 we will work to continue the momentum we've seen in our markets with dynamic sales growth. Â The tremendous progress we achieved in 2009 at Tupperware Brazil, France, Indonesia and South Africa illustrates how well our business models can work in both emerging and established markets. Â We will continue to apply what we've learned from our success stories and years of experience in direct selling to our other markets that are not growing as fast as we would like and where we're not profitable enough. Â I believe management's most important job is sustainability of the enterprise, and we will build off our larger sales force and strong business models in 2010 and beyond," said Rick Goings.
The Company's board today increased the Company's share repurchase authorization by $200 million to $350 million, and extended the term of the program to February 1, 2015. Â Repurchases are expected to be made using proceeds from stock option exercises and cash generated by the business to offset dilution associated with the Company's equity incentive plans.Â The goal of the program is to keep the number of shares outstanding at approximately 63 million. Â The Company had 63,054,627 shares outstanding at the end of its 2009 fiscal year. Â Since May 2007 to date, the Company has repurchased 3.8 million shares for $141.3 million, including the repurchase of 1.1 million shares for $50.6 million in the fourth quarter of 2009.
* See Non-GAAP Financial Measures Reconciliation Schedule. Â
** 2008 Basic and Diluted earnings per share has been recast to conform to new earnings per share accounting guidance adopted in the first quarter of 2009.Â This reduced 2008 fourth quarter and full year diluted earnings per share by $0.01 versus the originally reported amounts.Â Â Â Â
Tupperware Brands Corporation is a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories through an independent sales force of 2.4 million.Â Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products for consumers through the Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, Nuvo and Swissgarde brands.
The Company's stock is listed on the New York Stock Exchange (NYSE: TUP). Statements contained in this release, which are not historical fact and use predictive words such as "outlook", "expects" or "target" are forward-looking statements.Â These statements involve risks and uncertainties which include recruiting and activity of the Company's independent sales forces, the success of new product introductions and promotional programs, governmental approvals for use in food containers of materials such as polycarbonate, the success of buyers in obtaining financing or attracting tenants for commercial and residential developments, the effects of economic and political conditions generally and foreign exchange risk in particular and other risks detailed in the Company's most recent periodic report as filed in accordance with the Securities Exchange Act of 1934.Â The Company does not intend to update forward-looking information other than through its quarterly earnings releases unless it expects diluted earnings per share for the current quarter, excluding adjustment items and the impact of changes in foreign exchange rates, to be significantly below its previous guidance.
IndustryIntel Editor’s Note: In an omitted table, the company reported Q4 net sales of US$626 million, earnings of US$84.1 million and diluted earnings per share of US$1.31. For the same period a year ago, the company reported net sales of US$521.7 million, earnings of US$65.8 million and diluted earnings per share of US$1.05.
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