Jarden Reports Second Quarter Results

Second Quarter Organic Net Sales Growth of 7%

Record Second Quarter Net Sales of Over $2 Billion

Record Second Quarter Segment Earnings of $259 Million

Jul 29, 2015, 07:25 ET from Jarden Corporation

MIAMI, July 29, 2015 /PRNewswire/ -- Jarden Corporation (NYSE: JAH) today reported its financial results for the second quarter ended June 30, 2015.

For the quarter ended June 30, 2015:

  • Organic net sales grew 7.0% or $138 million in the second quarter of 2015;
  • Reported net sales were $2.01 billion for the second quarter 2015 and $1.98 billion for the same period in 2014;
  • Reported gross margin was 30.3% for second quarter 2015, compared to 30.5% for the same period in 2014;
  • Net income of $85.9 million for second quarter of 2015, compared to net income of $52.1 million for the same period in 2014;
  • Earnings per share was $0.44 per diluted share for second quarter 2015, compared to earnings of $0.28 per diluted share for the same period in 2014;
  • Adjusted gross margin was 31.0% in the second quarter 2015, compared to 30.8% for the same period in 2014;
  • Adjusted net income was $116 million in the second quarter of 2015, compared to $116 million for the same period in 2014; and
  • Adjusted earnings per share was $0.59 per diluted share in the second quarter of 2015, compared to $0.62 per diluted share for the same period in 2014.

For the six months ended June 30, 2015:

  • Organic net sales grew 5.9% or $220 million;
  • Reported net sales were $3.74 billion compared to $3.71 billion for the same period in 2014;
  • Reported gross margin was 29.6%, compared to 30.1% for the same period in 2014;
  • Net income of $30.4 million, compared to net income of $55.8 million for the same period in 2014;
  • Earnings per share was $0.16 per diluted share, compared to $0.29 per diluted share for the same period in 2014;
  • Adjusted gross margin was 30.4%, compared to 30.6% for the same period in 2014;
  • Adjusted net income was $127 million, compared to $142 million for the same period in 2014; and
  • Adjusted earnings per share was $0.65 per diluted share, compared to $0.74 per diluted share for the same period in 2014.    

"We are pleased to announce another quarter of record net sales and record segment earnings. The business continues to perform in line with our expectations. Jarden's authentic brands, supported by innovation and a robust operational platform, continue to drive our performance. We look forward to completing our acquisition of Waddington Group as we move through the third quarter and to leveraging revenue synergies with them across our Branded Consumables segment in the years to come," said Martin E. Franklin, Executive Chairman.

James E. Lillie, Chief Executive Officer, commented, "Our positive momentum has continued and we are pleased with our progress year-to-date. Posting second quarter organic growth of 7.0% and a six-month organic growth rate of 5.9% further affirms our comfort with meeting or exceeding our goal of 3%-5% average organic annual growth and double digit adjusted earnings per share growth, on a currency neutral basis. It was particularly encouraging that this positive momentum was broad based with each of our segments reporting healthy organic growth."

Effective March 31, 2015, the Company deconsolidated its businesses in Venezuela and recorded the charges related to this accounting change, which are detailed in the notes to this release.

All earnings per share and shares outstanding amounts have been adjusted to reflect the effect of the 3-for-2 split of the Company's outstanding shares of common stock that occurred during the fourth quarter of 2014.  

Please see the schedule accompanying this release for a reconciliation of non-GAAP organic net sales growth, adjusted gross margins, segment earnings, adjusted net income and adjusted basic and diluted earnings per share to the comparable GAAP measures.

The Company will be hosting a conference call at 8:30 a.m. (EDT) today, July 29, 2015, to further discuss its second quarter results. To listen to the call by telephone, please dial 800-344-6698 (domestic) or 785-830-7979 (international) and provide passcode: 7165138. The call will be simultaneously webcast at www.jarden.com. Supplemental information can be found in the For Investors section of the Company's website. A replay of the call and webcast will be available for three weeks shortly after completion of the live call. To access the replay, call 888-203-1112 (domestic) or 719-457-0820 (international) and provide passcode: 7165138 or visit www.jarden.com.

About Jarden Corporation

Jarden Corporation is a diversified, global consumer products company with a portfolio of over 120 trusted, authentic brands. Jarden's record of strong financial performance and organic growth is supported by a focused operating culture coupled with value enhancing acquisitions and shareholder focused capital allocation. Jarden operates in three primary business segments through a number of well recognized brands, including: Branded Consumables: Ball®, Bee®, Bernardin®, Bicycle®, Billy Boy®, Crawford®, Diamond®, Envirocooler®, Fiona®, First Alert®, First Essentials®, Hoyle®, Kerr®, Lehigh®, Lifoam®, Lillo®, Loew Cornell®, Mapa®, Millefiori®, NUK®, Pine Mountain®, Quickie®, Spontex®, Tigex®, Yankee Candle® and YOU®; Outdoor Solutions: Abu Garcia®, AeroBed®, Berkley®, Campingaz® and Coleman®, Dalbello®, ExOfficio®, Fenwick®, Greys®, Gulp!®, Hardy®, Invicta®, K2®, Marker®, Marmot®, Mitchell®, PENN®, Rawlings®, Shakespeare®, Squadra®, Stearns®, Stren®, Trilene®, Völkl® and Zoot®; and Consumer Solutions: Bionaire®, Breville®, Cadence®, Crock-Pot®, FoodSaver®, Health o meter®, Holmes®, Mr. Coffee®, Oster®, Patton®, Rainbow®, Rival®, Seal-a-Meal®, Sunbeam®, VillaWare® and White Mountain®. Headquartered in Florida, Jarden ranks #348 on the Fortune 500 and has over 30,000 employees worldwide.  For further information about Jarden, please visit www.jarden.com.

Note: This news release contains "forward-looking statements" within the meaning of the federal securities laws and is intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's earnings per share and adjusted diluted earnings per share, expected or estimated revenue, meeting financial goals, segment earnings, net interest expense, income tax provision, cash flow from operations, restructuring costs and other non-cash charges, the outlook for the Company's markets and the demand for its products, consistent profitable growth, free cash flow, future revenues and gross, operating and EBITDA margin improvement requirement and expansion, organic net sales growth, performance trends, bank leverage ratio, the success of new product introductions, growth in costs and expenses, the impact of commodities, currencies and transportation costs and the Company's ability to manage its risk in these areas, repurchase of shares of common stock from time to time under the Company's stock repurchase program, our ability to raise new debt, and the impact of acquisitions, divestitures, restructurings, and other unusual items, including the Company's ability to integrate and obtain the anticipated results and synergies from its consummated acquisitions, the ability of the Company  to close the Waddington Group, Inc. acquisition and the ability of the Company to raise the funds needed to close the Waddington Group, Inc. acquisition.   These projections and statements are based on management's estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those projected as a result of certain factors. A discussion of factors that could cause results to vary is included in the Company's periodic and other reports filed with the Securities and Exchange Commission.

 

JARDEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except earnings per share)

 Three months ended 

June 30, 2015

June 30, 2014

 As 

 Adjusted 

 As 

 Adjusted 

 Reported 

 Adjustments 

 (Non-GAAP) 

 Reported 

 Adjustments 

 (Non-GAAP) 

 (GAAP) (2) 

(1)(4)

(1)(2)(4)

 (GAAP) (2) 

(1)(4)

(1)(2)(4)

 Net sales 

$       2,005.7

$                 -

$       2,005.7

$       1,975.1

$                 -

$       1,975.1

 Cost of sales 

1,398.2

(14.0)

1,384.2

1,373.1

(5.9)

1,367.2

 Gross profit 

607.5

14.0

621.5

602.0

5.9

607.9

30.3 %

31.0 %

30.5 %

30.8 %

 Selling, general and administrative expenses 

416.0

(12.4)

403.6

409.6

(18.7)

390.9

20.7 %

20.1 %

20.7 %

19.8 %

 Restructuring costs, net 

1.9

(1.9)

-

2.3

(2.3)

-

Operating earnings 

189.6

28.3

217.9

190.1

26.9

217.0

 Interest expense, net 

51.9

(9.7)

42.2

52.9

(9.1)

43.8

 Loss on early extinguishment of debt 

-

-

-

54.4

(54.4)

-

 Income before taxes 

137.7

38.0

175.7

82.8

90.4

173.2

 Income tax provision 

51.8

7.9

59.7

30.7

26.4

57.1

Net income 

$            85.9

$            30.1

$          116.0

$            52.1

$            64.0

$          116.1

 Earnings per share: 

Basic 

$ 0.46

$ 0.62

$ 0.28

$ 0.63

Diluted 

$ 0.44

$ 0.59

$ 0.28

$ 0.62

 Weighted average shares outstanding: 

Basic 

186.2

186.2

184.7

184.7

Diluted 

195.4

195.4

187.7

187.7

See Notes to Earnings Release attached

 

 

JARDEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except earnings per share)

 Six months ended 

June 30, 2015

June 30, 2014

 As 

 Adjusted 

 As 

 Adjusted 

 Reported 

 Adjustments 

 (Non-GAAP) 

 Reported 

 Adjustments 

 (Non-GAAP) 

 (GAAP) (2) 

(1)(4)

(1)(2)(4)

 (GAAP) (2) 

(1)(4)

(1)(2)(4)

 Net sales 

$       3,737.2

$                 -

$       3,737.2

$       3,706.9

$                 -

$       3,706.9

 Cost of sales 

2,629.2

(29.3)

2,599.9

2,590.5

(17.4)

2,573.1

 Gross profit 

1,108.0

29.3

1,137.3

1,116.4

17.4

1,133.8

29.6 %

30.4 %

30.1 %

30.6 %

 Selling, general and administrative expenses 

944.7

(85.3)

859.4

860.5

(30.3)

830.2

25.3 %

23.0 %

23.2 %

22.4 %

 Restructuring costs, net 

4.5

(4.5)

-

2.6

(2.6)

-

 Operating earnings 

158.8

119.1

277.9

253.3

50.3

303.6

 Interest expense, net 

104.8

(19.3)

85.5

106.9

(14.8)

92.1

 Loss on early extinguishment of debt 

-

-

-

54.4

(54.4)

-

 Income before taxes 

54.0

138.4

192.4

92.0

119.5

211.5

 Income tax provision 

23.6

41.8

65.4

36.2

33.5

69.7

 Net income 

$            30.4

$            96.6

$          127.0

$            55.8

$            86.0

$          141.8

 Earnings per share: 

 Basic 

$ 0.16

$ 0.68

$ 0.30

$ 0.76

 Diluted 

$ 0.16

$ 0.65

$ 0.29

$ 0.74

 Weighted average shares outstanding: 

 Basic 

185.8

185.8

186.2

186.2

 Diluted 

194.6

194.6

190.4

190.4

See Notes to Earnings Release attached

 

 

JARDEN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)

June 30, 2015

June 30, 2014

December 31, 2014

 Assets: 

 Cash and cash equivalents  

$                729.9

$                665.3

$             1,164.8

 Accounts receivable, net 

1,256.5

1,265.2

1,277.9

 Inventories 

1,884.0

1,695.8

1,504.7

 Deferred taxes on income 

222.0

214.9

166.2

 Prepaid expenses and other current assets 

164.7

166.3

204.4

 Total current assets 

4,257.1

4,007.5

4,318.0

 Property, plant and equipment, net 

810.4

848.9

849.9

 Goodwill 

2,885.2

2,690.8

2,880.2

 Intangible assets, net 

2,579.0

2,412.4

2,598.5

 Other assets 

150.0

168.7

152.7

 Total assets 

$        10,681.7

$        10,128.3

$        10,799.3

 Liabilities and stockholders' equity: 

 Short-term debt and current portion of long-term debt 

$                588.5

$                767.2

$                594.9

 Accounts payable 

800.1

724.4

809.9

 Accrued salaries, wages and employee benefits 

171.6

175.6

195.1

 Other current liabilities 

425.7

405.5

477.3

 Total current liabilities 

1,985.9

2,072.7

2,077.2

 Long-term debt 

4,437.0

3,963.5

4,464.0

 Deferred taxes on income 

1,228.7

1,164.7

1,222.1

 Other non-current liabilities 

439.7

378.1

426.7

 Total liabilities 

8,091.3

7,579.0

8,190.0

 Total stockholders' equity 

2,590.4

2,549.3

2,609.3

 Total liabilities and stockholders' equity 

$        10,681.7

$        10,128.3

$        10,799.3

See Notes to Earnings Release attached

 

 

JARDEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

 Three months ended 

 Six months ended 

 June 30, 2015 

 June 30, 2014 

 June 30, 2015 

 June 30, 2014 

 Cash flows from operating activities: 

 Net income 

$           85.9

$           52.1

$           30.4

$           55.8

 Adjustments to reconcile net income to net cash 

      provided by (used in) operating activities: 

 Depreciation and amortization 

49.5

47.1

97.0

92.7

 Venezuela related charges 

-

-

60.6

-

 Stock-based compensation 

2.3

6.1

41.2

41.0

 Excess tax benefits from stock-based compensation 

(1.7)

(1.6)

(21.5)

(34.9)

 Other non-cash items 

1.0

2.1

0.7

(4.9)

 Changes in operating assets and liabilities, net effects from acquisitions: 

 Accounts receivable 

(55.9)

30.0

(2.3)

(27.4)

 Inventory 

(149.7)

(61.2)

(405.3)

(236.8)

 Accounts payable 

77.8

35.3

(8.0)

58.3

 Other current assets and liabilities 

39.4

(26.2)

(64.8)

(118.2)

 Net cash provided by (used in) operating activities 

48.6

83.7

(272.0)

(174.4)

 Cash flows from financing activities: 

 Net change in short-term debt 

53.8

39.5

(6.4)

34.0

 Proceeds from issuance of long-term debt 

2.0

1.4

4.0

691.6

 Payments on long-term debt 

(12.1)

(520.9)

(24.3)

(551.0)

 Issuance (repurchase) of common stock, net 

1.1

(75.9)

(33.5)

(269.8)

 Excess tax benefits from stock-based compensation 

1.7

1.6

21.5

34.9

 Debt issue costs 

-

(0.6)

-

(16.6)

 Other 

-

(6.6)

(0.4)

(8.2)

 Net cash provided by (used in) financing activities 

46.5

(561.5)

(39.1)

(85.1)

 Cash flows from investing activities: 

 Additions to property, plant and equipment 

(49.6)

(58.2)

(97.7)

(99.3)

 Acquisition of businesses, net of cash acquired 

-

(108.4)

(33.2)

(108.4)

 Other 

(0.8)

1.5

39.1

4.8

 Net cash used in investing activities 

(50.4)

(165.1)

(91.8)

(202.9)

 Effect of exchange rate changes on cash and cash equivalents 

4.6

2.0

(32.0)

(0.8)

 Net increase (decrease) in cash and cash equivalents 

49.3

(640.9)

(434.9)

(463.2)

 Cash and cash equivalents at beginning of period 

680.6

1,306.2

1,164.8

1,128.5

 Cash and cash equivalents at end of period 

$         729.9

$         665.3

$         729.9

$         665.3

See Notes to Earnings Release attached

 

 

JARDEN CORPORATION

NET SALES AND OPERATING EARNINGS BY SEGMENT (Unaudited)

(in millions)

 Branded Consumables 

 Consumer Solutions 

 Outdoor Solutions

 Process Solutions

 Intercompany Elimination (a)

 Total Operating Segments

 Corporate/ Unallocated

 Consolidated 

 Three months ended June 30, 2015 

 Net sales 

$     677.3

$     473.6

$     753.3

$     124.6

$     (23.1)

$  2,005.7

$           -

$     2,005.7

 Segment earnings (loss) 

$     115.9

$       64.2

$       84.9

$       19.5

$             -

$     284.5

$    (25.8)

$        258.7

 Adjustments to reconcile to reported  

                   operating earnings (loss): 

 Restructuring costs, net 

(1.9)

-

-

-

-

(1.9)

-

(1.9)

 Acquisition-related and other costs 

(5.5)

(4.5)

(6.5)

-

-

(16.5)

(1.2)

(17.7)

 Depreciation and amortization 

(21.3)

(9.3)

(14.2)

(3.0)

-

(47.8)

(1.7)

(49.5)

           Operating earnings (loss) 

$       87.2

$       50.4

$       64.2

$       16.5

$             -

$     218.3

$    (28.7)

$        189.6

 Branded Consumables

 Consumer Solutions

 Outdoor Solutions

 Process Solutions 

 Intercompany Elimination (a)

 Total Operating Segments

 Corporate/ Unallocated

 Consolidated 

 Three months ended June 30, 2014 

 Net sales 

$     684.4

$     445.6

$     754.9

$     111.8

$     (21.6)

$  1,975.1

$           -

$     1,975.1

 Segment earnings (loss) 

$     105.5

$       55.3

$     100.2

$       18.3

$             -

$     279.3

$    (20.8)

$        258.5

 Adjustments to reconcile to reported  

                   operating earnings (loss): 

 Fair market value adjustment to inventory 

-

(1.3)

-

-

-

(1.3)

-

(1.3)

 Restructuring costs, net 

-

(0.7)

(1.6)

-

-

(2.3)

-

(2.3)

 Acquisition-related and other costs 

(1.4)

(1.0)

(5.2)

-

-

(7.6)

(0.5)

(8.1)

 Venezuela related charges (b) 

-

-

-

-

-

-

(9.6)

(9.6)

 Depreciation and amortization 

(21.9)

(6.7)

(14.3)

(2.8)

-

(45.7)

(1.4)

(47.1)

           Operating earnings (loss) 

$       82.2

$       45.6

$       79.1

$       15.5

$             -

$     222.4

$    (32.3)

$        190.1

(a)      Intersegment sales are recorded at cost plus an agreed-upon intercompany profit on intersegment sales.

(b)     Foreign exchange losses on Venezuela cash conversion in 2014.

 

 

JARDEN CORPORATION

NET SALES AND OPERATING EARNINGS BY SEGMENT (Unaudited)

(in millions)

 Branded Consumables 

 Consumer Solutions 

 Outdoor Solutions 

 Process Solutions 

 Intercompany Elimination (a) 

 Total Operating Segments 

 Corporate/ Unallocated 

 Consolidated 

 Six months ended June 30, 2015 

 Net sales 

$  1,322.6

$     852.8

$  1,378.2

$     228.7

$     (45.1)

$  3,737.2

$           -

$     3,737.2

 Segment earnings (loss) 

$     190.5

$       94.3

$     125.3

$       30.8

$             -

$     440.9

$    (83.2)

$        357.7

 Adjustments to reconcile to reported  

                   operating earnings (loss): 

 Restructuring costs, net 

(2.5)

-

-

-

-

(2.5)

(2.0)

(4.5)

 Acquisition-related and other costs 

(9.9)

(9.2)

(14.7)

-

-

(33.8)

(3.0)

(36.8)

 Venezuela related charges (b) 

-

-

-

-

-

-

(60.6)

(60.6)

 Depreciation and amortization 

(41.8)

(19.0)

(27.3)

(5.8)

-

(93.9)

(3.1)

(97.0)

           Operating earnings (loss) 

$     136.3

$       66.1

$       83.3

$       25.0

$             -

$     310.7

$  (151.9)

$        158.8

 Branded Consumables 

 Consumer Solutions 

 Outdoor Solutions 

 Process Solutions 

 Intercompany Elimination (a) 

 Total Operating Segments 

 Corporate/ Unallocated 

 Consolidated 

 Six months ended June 30, 2014 

 Net sales 

$  1,306.2

$     789.6

$  1,439.0

$     214.1

$     (42.0)

$  3,706.9

$           -

$     3,706.9

 Segment earnings (loss) 

$     180.5

$       91.8

$     155.5

$       30.6

$             -

$     458.4

$    (73.6)

$        384.8

 Adjustments to reconcile to reported  

                   operating earnings (loss): 

 Fair market value adjustment to inventory 

-

(1.3)

-

-

-

(1.3)

-

(1.3)

 Restructuring costs, net 

-

(1.0)

(1.6)

-

-

(2.6)

-

(2.6)

 Acquisition-related and other costs 

(6.4)

(4.0)

(10.4)

-

-

(20.8)

(0.5)

(21.3)

 Venezuela related charges (b) 

-

-

-

-

-

-

(13.6)

(13.6)

 Depreciation and amortization 

(41.9)

(14.4)

(28.1)

(5.6)

-

(90.0)

(2.7)

(92.7)

           Operating earnings (loss) 

$     132.2

$       71.1

$     115.4

$       25.0

$             -

$     343.7

$    (90.4)

$        253.3

(a)      Intersegment sales are recorded at cost plus an agreed-upon intercompany profit on intersegment sales.

(b)     Venezuela non-cash impairment, balance sheet remeasurement and deconsolidation charges in 2015 and foreign exchange losses on Venezuela cash conversion in 2014.

 

JARDEN CORPORATION NOTES TO EARNINGS RELEASE

Note 1: Adjustments relate to items that are excluded from the "As Reported" results to arrive at the "Adjusted" results for the three and six months ended June 30, 2015 and 2014.

For the three months ended June 30, 2015, adjustments to net income included $1.9 million of restructuring costs primarily associated with lease exit costs; $17.7 million of costs, primarily associated with rationalization of manufacturing and distribution facilities and other product related costs; $8.7 million of amortization of acquired intangible assets; and $9.7 million of non-cash original issue discount amortization on convertible notes.  Also included in the adjustments to net income for the three months ended June 30, 2015 is the tax provision adjustment of $7.9 million, which reflects the normalization of the adjusted results to the Company's 2015 estimated 34% effective tax rate.

For the three months ended June 30, 2014, adjustments to net income included $1.3 million associated with the manufacturer's profit in inventory charged to cost of sales, which is the purchase accounting fair value adjustment to inventory associated with a tuck-in acquisition; $2.3 million of restructuring costs primarily associated with international operations;  $8.1 million of acquisition-related and other costs primarily associated with the rationalization of international manufacturing facilities; $9.6 million of Venezuela foreign exchange losses on cash conversion; $5.6 million of amortization of acquired intangible assets; $9.1 million of non-cash original issue discount amortization on convertible notes; and $54.4 million related to the loss on early extinguishment of debt.  Also included in the adjustments to net income for the three months ended June 30, 2014 is the tax provision adjustment of $26.4 million, which reflects the normalization of the adjusted results to the Company's 2014 estimated 33% effective tax rate.

For the six months ended June 30, 2015, adjustments to net income included $60.6 million of Venezuela related charges, consisting of a non-cash impairment charge related to fixed assets, balance sheet remeasurement charges, and loss on deconsolidation; $36.8 million of costs primarily associated with European distribution realignment, rationalization of manufacturing and distribution facilities and other product related costs, Venezuela inventory write-down, and acquisition-related and other costs; $17.2 million of amortization of acquired intangible assets; $4.5 million of restructuring costs primarily associated with lease exit costs; and $19.3 million of non-cash original issue discount amortization on convertible notes.  Also included in the adjustments to net income for the six months ended June 30, 2015 is the tax provision adjustment of $41.8 million, which reflects the normalization of the adjusted results to the Company's 2015 estimated 34% effective tax rate.

For the six months ended June 30, 2014, adjustments to net income included $1.3 million associated with the manufacturer's profit in inventory charged to cost of sales, which is the purchase accounting fair value adjustment to inventory associated with a tuck-in acquisition; $2.6 million of restructuring costs primarily associated with international operations;  $21.3 million of acquisition-related and other costs primarily associated with the rationalization of international manufacturing facilities; $13.6 million of Venezuela foreign exchange losses on cash conversion; $11.5 million of amortization of acquired intangible assets; $14.8 million of non-cash original issue discount amortization on convertible notes; and $54.4 million related to the loss on early extinguishment of debt.  Also included in the adjustments to net income for the six months ended June 30, 2014 is the tax provision adjustment of $33.5 million, which reflects the normalization of the adjusted results to the Company's 2014 estimated 33% effective tax rate.

Note 2:  All earnings per share and shares outstanding amounts have been adjusted to reflect the effect of the 3-for-2 split of the Company's outstanding shares of common stock that occurred during the fourth quarter of 2014.

Note 3:  Organic net sales growth is a non-GAAP measure of net sales growth excluding the impacts of foreign exchange, certain acquisitions and exited businesses from year-over-year comparisons.  The Company believes this measure provides investors with a more complete understanding of the underlying sales trends by providing net sales on a consistent basis.  Organic net sales growth is also one of the measures used by management to analyze operating performance.  The following table provides a reconciliation of organic net sales growth to the comparable GAAP measure of net sales growth for the three and six months ended June 30, 2015:

 Three months ended 

 Six months ended 

 June 30, 2015 

 June 30, 2015 

 Reconciliation of Non-GAAP measure 

 Net sales increase 

$              30.6

1.5 %

$              30.3

0.8 %

 Foreign exchange impacts 

120.2

6.1 %

212.5

5.7 %

 (Acquisitions) exited businesses, net 

(13.2)

(0.6)%

(23.0)

(0.6)%

 Organic net sales growth 

$            137.6

7.0 %

$            219.8

5.9 %

 Note 4: This earnings release contains non-GAAP financial measures that may not be directly comparable to other similarly titled measures used by other companies. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in monitoring and evaluating the Company's ongoing financial results and trends.  Management uses this non-GAAP information as an indicator of business performance, and evaluates overall management with respect to such indicators.  Additionally, the Company uses non-GAAP financial measures because the Company's credit agreement provides for certain adjustments in calculations used for determining whether the Company is in compliance with certain credit agreement covenants, including, but not limited to, non-cash impairment charges of goodwill, intangibles and other assets, adjustments relating to certain restructuring costs, acquisition-related and other costs, non-cash purchase accounting adjustments, the elimination of manufacturer's profit in inventory, Venezuela related charges (deconsolidation, hyperinflationary and foreign exchange-related charges), non-cash stock-based compensation costs, gain (loss) on sale of certain assets, loss on early extinguishment of debt, non-cash original issue discount amortization and other items, as applicable. Adjusted gross margin is calculated by dividing adjusted gross profit by net sales.  Segment earnings (As Adjusted EBITDA) margin is calculated by dividing segment earnings (As Adjusted EBITDA) by net sales.  Adjusted selling, general and administrative expenses (SG&A) margin is calculated by dividing adjusted SG&A by net sales.  Adjusted net interest expense is calculated by deducting original issue discount amortization from net interest expense.  Adjusted income tax provision is calculated by adding the income tax provision adjustment, which reflects the normalization of the adjusted results to the Company's estimated effective tax rate, to the income tax provision.  These non-GAAP measures should be considered in addition to, but not as a substitute for, measures of financial performance prepared in accordance with GAAP.

Adjusted gross margins:

 Three months ended 

 Six months ended 

 June 30, 

 June 30, 

 Increase/ 

 June 30, 

 June 30, 

 Increase/ 

2015

2014

 (Decrease) 

2015

2014

 (Decrease) 

 Gross margins as reported 

30.3 %

30.5 %

(0.2)%

29.6 %

30.1 %

(0.5)%

 Fair market value adjustment to inventory 

-

0.1 %

(0.1)%

-

-

-

 Acquisition-related and other costs, net 

0.7 %

0.2 %

0.5 %

0.8 %

0.5 %

0.3 %

 Adjusted gross margins 

31.0 %

30.8 %

0.2 %

30.4 %

30.6 %

(0.2)%

 

Adjusted selling, general administrative (SG&A) expenses as a percent of sales:

 Three months ended 

 Six months ended 

 June 30, 

 June 30, 

 Increase/ 

 June 30, 

 June 30, 

 Increase/ 

2015

2014

 (Decrease) 

2015

2014

 (Decrease) 

 Reported SG&A expenses 

              as a percent of sales 

20.7 %

20.7 %

-

25.3%

23.2 %

2.1 %

 Acquisition-related and other costs, net 

(0.2)%

(0.1)%

(0.1)%

(0.2)%

(0.1)%

(0.1)%

 Venezuela related charges 

-

(0.5)%

0.5 %

(1.6)%

(0.4)%

(1.2)%

 Amortization of acquired intangibles 

(0.4)%

(0.3)%

(0.1)%

(0.5)%

(0.3)%

(0.2)%

 Adjusted SG&A expenses 

20.1 %

19.8 %

0.3 %

23.0 %

22.4 %

0.6 %

              as a percent of sales 

 

SOURCE Jarden Corporation



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