Mead Johnson Nutrition Reports Third Quarter and Nine Months 2016 Results; Reports Progress against Strategic Plan in Challenging Environment; Revises Near Term Outlook
Highlights are as follows:
Kasper Jakobsen, Chief Executive Officer, said, "We continue to make
progress against our global plan. Most critically, we have made
substantial progress in
(1) Constant dollar figures exclude the impact of changes in foreign currency exchange rates and are reconciled in the tables in the body of this earnings release and in the schedules titled “Reconciliation of non-GAAP to GAAP Results.” Non-GAAP results exclude Specified Items. For a description of Specified Items and a reconciliation of non-GAAP to GAAP, see the schedules titled “Reconciliation of non-GAAP to GAAP Results.”
Third Quarter 2016 | ||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
Three Months Ended September 30, | % Change | % Change Due to | ||||||||||||||||
% of | % of | Constant | Foreign | |||||||||||||||
Net Sales | 2016 | Total | 2015 | Total | Reported | Dollar | Volume | Price/Mix | Exchange | |||||||||
Asia | $463.2 | 49% | $476.8 | 49% | (3)% | 0% | (4)% | 4% | (3)% | |||||||||
Latin America | 160.6 | 17% | 184.5 | 19% | (13)% | 0% | (10)% | 10% | (13)% | |||||||||
North America/Europe | 313.7 | 34% | 316.2 | 32% | (1)% | 0% | (5)% | 5% | (1)% | |||||||||
Net Sales | $937.5 | 100% | $977.5 | 100% | (4)% | 0% | (5)% | 5% | (4)% | |||||||||
Three Months Ended September 30, | % Change | % Change Due to | |||||||||||||||||||
Earnings Before Interest and Income Taxes (EBIT) | 2016 | % of Sales | 2015 | % of Sales | Reported | Constant Dollar | Foreign Exchange | ||||||||||||||
Asia | $134.6 | 29 | % | $154.2 | 32 | % | (13 | )% | (7 | )% | (6 | )% | |||||||||
Latin America | 40.1 | 25 | % | 38.9 | 21 | % | 3 | % | 30 | % | (27 | )% | |||||||||
North America/Europe | 107.1 | 34 | % | 101.3 | 32 | % | 6 | % | 9 | % | (3 | )% | |||||||||
Corporate and Other (a) | (53.6 | ) | (68.4 | ) | 22 | % | |||||||||||||||
GAAP EBIT | 228.2 | 24 | % | 226.0 | 23 | % | 1 | % | 8 | % | (7 | )% | |||||||||
Non-GAAP EBIT | $244.2 | $239.0 | 2 | % | 9 | % | (7 | )% | |||||||||||||
(a) All Specified Items are included in Corporate and Other. |
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Nine Months 2016 | |||||||||||||||||||||||||||||
(Dollars in Millions) | |||||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||||
Nine Months Ended September 30, | % Change | % Change Due to | |||||||||||||||||||||||||||
% of | % of | Constant | Foreign | ||||||||||||||||||||||||||
Net Sales | 2016 | Total | 2015 | Total | Reported | Dollar | Volume | Price/Mix | Exchange | ||||||||||||||||||||
Asia | $ | 1,420.0 | 50 | % | $ | 1,571.0 | 51 | % | (10 | )% | (6 | )% | (7 | )% | 1 | % | (4 | )% | |||||||||||
Latin America | 487.4 | 17 | % | 587.3 | 19 | % | (17 | )% | (3 | )% | (12 | )% | 9 | % | (14 | )% | |||||||||||||
North America/Europe | 933.7 | 33 | % | 946.0 | 30 | % | (1 | )% | 0 | % | (2 | )% | 2 | % | (1 | )% | |||||||||||||
Net Sales | $ | 2,841.1 | 100 | % | $ | 3,104.3 | 100 | % | (8 | )% | (4 | )% | (6 | )% | 2 | % | (4 | )% | |||||||||||
Nine Months Ended September 30, | % Change | % Change Due to | |||||||||||||||||||
Earnings Before Interest and Income Taxes (EBIT) | 2016 | % of Sales | 2015 | % of Sales | Reported | Constant Dollar | Foreign Exchange | ||||||||||||||
Asia | $440.7 | 31 | % | $542.1 | 35 | % | (19 | )% | (13 | )% | (6 | )% | |||||||||
Latin America | 117.1 | 24 | % | 141.0 | 24 | % | (17 | )% | 2 | % | (19 | )% | |||||||||
North America/Europe | 288.3 | 31 | % | 264.9 | 28 | % | 9 | % | 13 | % | (4 | )% | |||||||||
Corporate and Other (a) | (253.4 | ) | (207.6 | ) | (22 | )% | |||||||||||||||
GAAP EBIT | 592.7 | 21 | % | 740.4 | 24 | % | (20 | )% | (12 | )% | (8 | )% | |||||||||
Non-GAAP EBIT | $718.7 | $761.2 | (6 | )% | 2 | % | (8 | )% | |||||||||||||
(a) All Specified Items are included in Corporate and Other. |
|||||||||||||||||||||
Cash Flow Items and Liquidity
Outlook
The company has revised its net sales outlook and now expects full year net sales of 6% to 7% below the prior year on a reported basis and 2% to 3% below the prior year on a constant dollar basis. Sales may be lower due to market share weaknesses in several markets, notably in the U.S., as well as continued macroeconomic challenges in several emerging markets.
The company has revised its 2016 GAAP EPS guidance to $2.80 to $2.87 due
to lower sales. GAAP EPS guidance may be impacted by potentially
significant future mark-to-market pension adjustments which cannot be
estimated and are classified as a Specified Item. The company now
expects non-GAAP EPS between $3.43 to $3.50. Specified Items include
charges related to Fuel for Growth and our
Kasper Jakobsen continued, "Given known headwinds over the next year, we anticipate only modest improvements to both our underlying sales and earnings per share in 2017. In this context, continued strong performance against our expense reduction targets will support our investment in longer term growth initiatives and protect our 'best in class' level of profitability. In the longer term, underlying fundamentals for our core category are still supportive of our growth ambitions. Hence, we remain committed to making the necessary investments in our future."
Conference Call Scheduled
Mead Johnson will host a conference call at
Forward-Looking Statements
Certain statements in this news release are forward-looking as defined
in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be identified by the fact they use words
such as “should,” “expect,” “anticipate,” “estimate,” “target,” “may,”
“project,” “guidance,” “intend,” “plan,” “believe” and other words and
terms of similar meaning and expression. Such statements are likely to
relate to, among other things, a discussion of goals, plans and
projections regarding financial position, results of operations, cash
flows, market position, product development, product approvals, sales
efforts, expenses, capital expenditures, performance or results of
current and anticipated products and the outcome of contingencies such
as legal proceedings and financial results. Forward-looking statements
can also be identified by the fact that they do not relate strictly to
historical or current facts. Such forward-looking statements are based
on current expectations that involve inherent risks, uncertainties and
assumptions that may cause actual results to differ materially from
expectations as of the date of this news release. These risks include,
but are not limited to: (1) the ability to sustain brand strength,
particularly the Enfa family of brands; (2) the effect on the company’s
reputation of real or perceived quality issues; (3) the effect of
regulatory restrictions related to the company’s products; (4) the
adverse effect of commodity costs; (5) increased competition from
branded, private label, store and economy-branded products; (6) the
effect of an economic downturn on consumers’ purchasing behavior and
customers’ ability to pay for product; (7) inventory reductions by
customers; (8) the adverse effect of changes in foreign currency
exchange rates; (9) the effect of changes in economic, political and
social conditions in the markets where we operate; (10) changing
consumer preferences; (11) the possibility of changes in the WIC
program, or participation in WIC(2); (12) legislative,
regulatory or judicial action that may adversely affect the company’s
ability to advertise its products, maintain product margins, or
negatively impact the company’s reputation or result in fines or
penalties that decrease earnings; and (13) the ability to develop and
market new, innovative products. For additional information regarding
these and other factors, see the company’s filings with the
About Mead Johnson
Mead Johnson, a global leader in pediatric nutrition, develops, manufactures, markets and distributes more than 70 products in over 50 markets worldwide. The company’s mission is to nourish the world’s children for the best start in life. The Mead Johnson name has been associated with science-based pediatric nutrition products for over 100 years. The company’s “Enfa” family of brands, including Enfamil® infant formula, is the world’s leading brand franchise in pediatric nutrition. For more information, go to www.meadjohnson.com.
(2)
MEAD JOHNSON NUTRITION COMPANY | ||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
(Dollars and shares in millions, except per share data) | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
NET SALES | $ | 937.5 | $ | 977.5 | $ | 2,841.1 | $ | 3,104.3 | ||||||||
Cost of Products Sold | 333.7 | 346.8 | 1,014.5 | 1,096.7 | ||||||||||||
GROSS PROFIT | 603.8 | 630.7 | 1,826.6 | 2,007.6 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Selling, General and Administrative | 190.0 | 216.1 | 595.6 | 679.5 | ||||||||||||
Advertising and Promotion | 162.3 | 156.1 | 480.1 | 490.7 | ||||||||||||
Research and Development | 23.1 | 26.3 | 74.9 | 79.9 | ||||||||||||
Other (Income)/Expenses—net | 0.2 | 6.2 | 83.3 | 17.1 | ||||||||||||
EARNINGS BEFORE INTEREST AND INCOME TAXES | 228.2 | 226.0 | 592.7 | 740.4 | ||||||||||||
Interest Expense—net | 26.3 | 14.8 | 78.9 | 42.5 | ||||||||||||
EARNINGS BEFORE INCOME TAXES | 201.9 | 211.2 | 513.8 | 697.9 | ||||||||||||
Provision for Income Taxes | 53.3 | 56.6 | 132.7 | 173.6 | ||||||||||||
NET EARNINGS | 148.6 | 154.6 | 381.1 | 524.3 | ||||||||||||
Less Net Earnings/(Loss) Attributable to Noncontrolling Interests | (0.7 | ) | (0.6 | ) | 4.0 | (1.2 | ) | |||||||||
NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS | $ | 149.3 | $ | 155.2 | $ | 377.1 | $ | 525.5 | ||||||||
Earnings per Share(a)– Basic | ||||||||||||||||
Net Earnings Attributable to Shareholders | $ | 0.80 | $ | 0.77 | $ | 2.02 | $ | 2.59 | ||||||||
Earnings per Share(a)– Diluted | ||||||||||||||||
Net Earnings Attributable to Shareholders | $ | 0.80 | $ | 0.77 | $ | 2.02 | $ | 2.59 | ||||||||
Weighted Average Shares—Diluted | 185.0 | 201.7 | 186.3 | 202.6 | ||||||||||||
Dividends Declared per Share | $ | 0.4125 | $ | 0.4125 | $ | 1.2375 | $ | 1.2375 | ||||||||
(a) The numerator for basic and diluted earnings per share is net earnings attributable to shareholders. Net earnings has been reduced by dividends and undistributed earnings attributable to unvested share based incentive plan awards. The denominator for basic earnings per share is the weighted-average shares outstanding during the period. The denominator for diluted earnings per share is the weighted-average shares outstanding adjusted for the effect of dilutive stock options and performance share awards.
MEAD JOHNSON NUTRITION COMPANY | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Dollars and shares in millions, except per share data) | ||||||||
(UNAUDITED) | ||||||||
September 30, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and Cash Equivalents | $ | 1,843.2 | $ | 1,701.4 | ||||
Receivables—net of allowances of $4.9 and $5.4, respectively | 397.2 | 342.5 | ||||||
Inventories | 476.0 | 484.9 | ||||||
Income Taxes Receivable | 29.2 | 13.2 | ||||||
Prepaid Expenses and Other Assets | 60.1 | 60.4 | ||||||
Total Current Assets | 2,805.7 | 2,602.4 | ||||||
Property, Plant and Equipment—net | 929.6 | 964.0 | ||||||
Goodwill | 112.8 | 126.0 | ||||||
Other Intangible Assets—net | 47.2 | 54.9 | ||||||
Deferred Income Taxes—net of valuation allowance | 131.4 | 118.5 | ||||||
Other Assets | 167.0 | 132.3 | ||||||
TOTAL | $ | 4,193.7 | $ | 3,998.1 | ||||
LIABILITIES AND EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Short-term Borrowings | $ | 1.8 | $ | 3.0 | ||||
Accounts Payable | 474.8 | 481.5 | ||||||
Dividends Payable | 76.6 | 77.8 | ||||||
Accrued Expenses | 230.9 | 213.0 | ||||||
Accrued Rebates and Returns | 418.3 | 376.8 | ||||||
Deferred Income | 19.0 | 35.5 | ||||||
Income Taxes Payable | 28.6 | 65.7 | ||||||
Total Current Liabilities | 1,250.0 | 1,253.3 | ||||||
Long-Term Debt | 3,008.4 | 2,981.0 | ||||||
Deferred Income Taxes | 5.6 | 8.7 | ||||||
Pension and Other Post employment Liabilities | 137.7 | 132.4 | ||||||
Other Liabilities | 230.7 | 215.2 | ||||||
Total Liabilities | 4,632.4 | 4,590.6 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
EQUITY | ||||||||
Shareholders’ Equity | ||||||||
Common Stock, $0.01 par value: 3,000 authorized, 189.7 and 191.4 issued, respectively | 1.9 | 1.9 | ||||||
Additional Paid-in/(Distributed) Capital | (522.6 | ) | (564.2 | ) | ||||
Retained Earnings | 782.2 | 640.4 | ||||||
Treasury Stock—at cost | (363.0 | ) | (362.6 | ) | ||||
Accumulated Other Comprehensive Income/(Loss) | (377.0 | ) | (347.8 | ) | ||||
Total Shareholders’ Equity/(Deficit) | (478.5 | ) | (632.3 | ) | ||||
Noncontrolling Interests | 39.8 | 39.8 | ||||||
Total Equity/(Deficit) | (438.7 | ) | (592.5 | ) | ||||
TOTAL | $ | 4,193.7 | $ | 3,998.1 |
MEAD JOHNSON NUTRITION COMPANY | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Dollars in millions) | ||||||||
(UNAUDITED) | ||||||||
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Earnings | $ | 381.1 | $ | 524.3 | ||||
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities: | ||||||||
Depreciation and Amortization | 74.4 | 73.4 | ||||||
Impairment of Long-Lived Assets | 45.9 | — | ||||||
Other | 60.8 | 63.1 | ||||||
Changes in Assets and Liabilities | (34.5 | ) | 34.7 | |||||
Pension and Other Post-employment Benefit Contributions | (17.0 | ) | (86.6 | ) | ||||
Net Cash Provided by Operating Activities | 510.7 | 608.9 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payments for Capital Expenditures | (110.2 | ) | (125.2 | ) | ||||
Proceeds from Sale of Property, Plant and Equipment | 0.2 | 0.4 | ||||||
Net Cash Used in Investing Activities | (110.0 | ) | (124.8 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from Short-term Borrowings | — | 1.5 | ||||||
Repayments of Short-term Borrowings | (0.8 | ) | (4.0 | ) | ||||
Debt Issuance Costs | (0.1 | ) | — | |||||
Proceeds from Long-term Revolver Borrowings | — | 322.0 | ||||||
Payments of Dividends | (232.3 | ) | (243.6 | ) | ||||
Stock-based Compensation related Proceeds and Excess Tax Benefits | 15.0 | 24.0 | ||||||
Stock-based Compensation Tax Withholdings | (4.2 | ) | (11.3 | ) | ||||
Payments for Repurchase of Common Stock | (0.4 | ) | (437.0 | ) | ||||
Purchase of Noncontrolling Interest Redeemable Shares | — | (24.2 | ) | |||||
Purchase of Trading Securities | — | (16.2 | ) | |||||
Sale of Trading Securities | — | 21.7 | ||||||
Distributions to Noncontrolling Interests | (3.1 | ) | (6.9 | ) | ||||
Net Cash Used in Financing Activities | (225.9 | ) | (374.0 | ) | ||||
Effects of Changes in Exchange Rates on Cash and Cash Equivalents | (33.0 | ) | (44.3 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 141.8 | 65.8 | ||||||
CASH AND CASH EQUIVALENTS: | ||||||||
Beginning of Period | 1,701.4 | 1,297.7 | ||||||
End of Period | $ | 1,843.2 | $ | 1,363.5 | ||||
Financial Information
(UNAUDITED)
Reconciliation of Non-GAAP to GAAP Results
This news release contains non-GAAP financial measures, each of which is listed in the tables below. The items included in GAAP measures, but excluded for the purpose of determining the non-GAAP financial measures, include significant income/expenses not indicative of underlying operating results, including the related tax effect and, at times, the impact of foreign exchange. The non-GAAP measures represent an indication of the company’s underlying operating results and are intended to enhance an investor’s overall understanding of the company’s financial performance and ability to compare the company’s performance to that of its peer companies. In addition, this information is among the primary indicators the company uses as a basis for evaluating company performance, setting incentive compensation targets and planning and forecasting of future periods. This information is not intended to be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Tables that reconcile non-GAAP to GAAP disclosure follow below.
Constant Dollar
Certain measures in this release are presented excluding the impact of
foreign currency exchange (constant dollar). To present this
information, current period results for entities reporting in currencies
other than
Specified Items
Non-GAAP measures presented within this release exclude Specified Items.
The company considers Specified Items to be significant income/expense
items as not indicative of underlying operating results, including the
related tax effect. See the company's Quarterly Report on Form 10-Q for
the period ended
Financial Information
(UNAUDITED)
Reconciliation of Non-GAAP to GAAP Results
Constant dollar gross sales
Three Months Ended September 30, | % Change | |||||||||||||
Foreign | Constant | |||||||||||||
Gross Sales | 2016 | 2015 | Reported | Exchange | Dollar | |||||||||
Total gross sales | $ | 1,289.5 | $ | 1,320.7 | (2)% | (3)% | 1% | |||||||
Constant dollar net sales
Three Months Ended | ||||||||||||||||||
September 30, | % Change | |||||||||||||||||
Constant | ||||||||||||||||||
Dollar | ||||||||||||||||||
Foreign | Constant | Impact of | Excluding | |||||||||||||||
Net Sales | 2016 | 2015 | Reported | Exchange | Dollar | Venezuela | Venezuela | |||||||||||
Asia | $ | 463.2 | $ | 476.8 | (3)% | (3)% |
0% |
|||||||||||
Latin America | 160.6 | 184.5 | (13)% | (13)% |
0% |
(5)% | 5% | |||||||||||
North America/Europe | 313.7 | 316.2 | (1)% | (1)% |
0% |
|||||||||||||
Net Sales | 937.5 | $ | 977.5 | (4)% | (4)% |
0% |
(1)% | 1% | ||||||||||
Impact of Foreign Exchange | 38.2 | |||||||||||||||||
Constant Dollar Sales | $ | 975.7 | ||||||||||||||||
Nine Months Ended | ||||||||||||||||||
September 30, | % Change | |||||||||||||||||
Constant | ||||||||||||||||||
Dollar | ||||||||||||||||||
Foreign | Constant | Impact of | Excluding | |||||||||||||||
Net Sales | 2016 | 2015 | Reported | Exchange | Dollar | Venezuela | Venezuela | |||||||||||
Asia | $ | 1,420.0 | $ | 1,571.0 | (10)% | (4)% | (6)% | |||||||||||
Latin America | 487.4 | 587.3 | (17)% | (14)% | (3)% | (9)% | 6% | |||||||||||
North America/Europe | 933.7 | 946.0 | (1)% | (1)% |
0% |
|||||||||||||
Net Sales | 2,841.1 | $ | 3,104.3 | (8)% | (4)% | (4)% | (2)% | (2)% | ||||||||||
Impact of Foreign Exchange | 147.9 | |||||||||||||||||
Constant Dollar Sales | $ | 2,989.0 | ||||||||||||||||
Non-GAAP constant dollar gross margin
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | Gross | Gross | Gross | Gross | |||||||||||||||||||||||||
Profit | Margin | Profit | Margin | Change | Profit | Margin | Profit | Margin | Change | |||||||||||||||||||||||
GAAP Gross Profit and Gross Margin | $ | 603.8 | 64.4 | % | $ | 630.7 | 64.5 | % | (0.1)% | $ | 1,826.6 | 64.3 | % | $ | 2,007.6 | 64.7 | % | (0.4)% | ||||||||||||||
Pension Remeasurement (a) | 1.4 | 0.2 | % | 3.9 | 0.4 | % | 8.0 | 0.3 | % | 3.4 | 0.1 | % | ||||||||||||||||||||
Foreign currency impact | 39.5 | 1.5 | % | — | 129.1 | 1.1 | % | — | ||||||||||||||||||||||||
Non-GAAP Constant Dollar Gross Profit and Gross Margin | $ | 644.7 | 66.1 | % | $ | 634.6 | 64.9 | % | 1.2% | $ | 1,963.7 | 65.7 | % | $ | 2,011.0 | 64.8 | % | 0.9% | ||||||||||||||
Non-GAAP constant dollar selling, general and administrative expenses
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||
GAAP SG&A | $ | 190.0 | $ | 216.1 | (12 | )% | $ | 595.6 | $ | 679.5 | (12 | )% | ||||||||||
Pension Remeasurement (a) | (2.4 | ) | (6.3 | ) | (13.1 | ) | (5.5 | ) | ||||||||||||||
Venezuela (d) | (2.0 | ) | — | (2.0 | ) | — | ||||||||||||||||
All Other (e) | (1.6 | ) | (0.6 | ) | (1.6 | ) | (1.9 | ) | ||||||||||||||
Foreign currency impact | 6.9 | — | 29.3 | — | ||||||||||||||||||
Non-GAAP Constant Dollar SG&A | $ | 190.9 | $ | 209.2 | (9 | )% | $ | 608.2 | $ | 672.1 | (10 | )% | ||||||||||
Constant dollar segment EBIT
Three Months Ended September 30, | % Change | |||||||||||||
Foreign | Constant | |||||||||||||
Earnings Before Interest and Income Taxes (EBIT) | 2016 | 2015 | Reported | Exchange | Dollar | |||||||||
Asia | $ | 134.6 | $ | 154.2 | (13)% | (6)% | (7)% | |||||||
Latin America | 40.1 | 38.9 | 3% | (27)% | 30% | |||||||||
North America/Europe | 107.1 | 101.3 | 6% | (3)% | 9% | |||||||||
Nine Months Ended September 30, | % Change | |||||||||||||
Foreign | Constant | |||||||||||||
Earnings Before Interest and Income Taxes (EBIT) | 2016 | 2015 | Reported | Exchange | Dollar | |||||||||
Asia | $ | 440.7 | $ | 542.1 | (19)% | (6)% | (13)% | |||||||
Latin America | 117.1 | 141.0 | (17)% | (19)% | 2% | |||||||||
North America/Europe | 288.3 | 264.9 | 9% | (4)% | 13% | |||||||||
Non-GAAP Corporate and Other EBIT
Three Months Ended September 30, | ||||||||||||
Corporate and Other | 2016 | 2015 | % Change | |||||||||
EBIT | $ | (53.6 | ) | $ | (68.4 | ) | 22% | |||||
Pension Remeasurement (a) | 4.2 | 11.4 | ||||||||||
Fuel for Growth (b) | 7.3 | — | ||||||||||
Venezuela (d) | 2.8 | — | ||||||||||
All Other (e) | 1.7 | 1.6 | ||||||||||
Non-GAAP EBIT | $ | (37.6 | ) | $ | (55.4 | ) | 32% | |||||
Nine Months Ended September 30, | ||||||||||||
Corporate and Other | 2016 | 2015 | % Change | |||||||||
EBIT | $ | (253.4 | ) | $ | (207.6 | ) | (22)% | |||||
Pension Remeasurement (a) | 23.4 | 9.9 | ||||||||||
Investigation Accrual (c) | — | 12.0 | ||||||||||
Fuel for Growth (b) | 18.4 | — | ||||||||||
Venezuela (d) | 81.2 | — | ||||||||||
All Other (e) | 3.0 | (1.1 | ) | |||||||||
Non-GAAP EBIT | $ | (127.4 | ) | $ | (186.8 | ) | 32% | |||||
Non-GAAP EBIT and constant dollar EBIT
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||||||
EBIT | $ | 228.2 | $ | 226.0 | 1 | % | $ | 592.7 | $ | 740.4 | (20 | )% | |||||||||||
Pension Remeasurement (a) | 4.2 | 11.4 | 23.4 | 9.9 | |||||||||||||||||||
Investigation Accrual (c) | — | — | — | 12.0 | |||||||||||||||||||
Fuel for Growth (b) | 7.3 | — | 18.4 | — | |||||||||||||||||||
Venezuela (d) | 2.8 | — | 81.2 | — | |||||||||||||||||||
All Other (e) | 1.7 | 1.6 | 3.0 | (1.1 | ) | ||||||||||||||||||
Non-GAAP EBIT | 244.2 | 239.0 | 2 | % | 718.7 | 761.2 | (6 | )% | |||||||||||||||
Foreign currency impact | 15.6 | — | 56.6 | — | |||||||||||||||||||
Non-GAAP Constant Dollar EBIT | $ | 259.8 | $ | 239.0 | 9 | % | $ | 775.3 | $ | 761.2 | 2 | % | |||||||||||
Non-GAAP diluted EPS
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||||||
GAAP EPS-Diluted | $ | 0.80 | $ | 0.77 | 4 | % | $ | 2.02 | $ | 2.59 | (22 | )% | |||||||||||
Pension Remeasurement (a) | 0.01 | 0.04 | 0.08 | 0.03 | |||||||||||||||||||
Investigation Accrual (c) | — | — | — | 0.03 | |||||||||||||||||||
Fuel for Growth (b) | 0.03 | — | 0.08 | — | |||||||||||||||||||
Venezuela (d) | 0.02 | — | 0.44 | — | |||||||||||||||||||
All Other (e) | 0.01 | (0.01 | ) | 0.01 | — | ||||||||||||||||||
Non-GAAP EPS | $ | 0.87 | $ | 0.80 | 9 | % | $ | 2.63 | $ | 2.65 | (1 | )% | |||||||||||
Consolidated Net Debt
September 30, 2016 | December 31, 2015 | ||||||
Short-term borrowings | $ | 1.8 | $ | 3.0 | |||
Long-Term Debt | 3,008.4 | 2,981.0 | |||||
Total Debt | 3,010.2 | 2,984.0 | |||||
Less: Cash and cash equivalents | 1,843.2 | 1,701.4 | |||||
Net debt | $ | 1,167.0 | $ | 1,282.6 | |||
Non-GAAP Guidance
High End | Low End | ||||||||||
Reported Sales | (6 | )% | (7 | )% | |||||||
Less impact of Foreign Currency | (4 | )% | (4 | )% | |||||||
Constant Dollar Sales | (2 | )% | (3 | )% | |||||||
GAAP Earnings per Share | $ | 2.87 | $ | 2.80 | |||||||
Less Specified Items |
(0.63 |
) |
(0.63 |
) |
|||||||
Non-GAAP Earnings per Share | $ | 3.50 | $ | 3.43 | |||||||
(a) Pension Remeasurement: When incurred, gains and losses related to the remeasurement of defined benefit pension and post-employment benefit plans are classified as Specified Items and excluded from non-GAAP performance measures. Pension remeasurement reflects changes in the pension assets and liabilities above what was estimated and included in periodic costs. Factors beyond our control such as changes in discount rates, market volatility and mortality assumptions drive the remeasurement amount. The majority of our pension and post-employment plans are frozen, and therefore the benefit provided to such employees is not related to our underlying operations.
(b) Fuel for Growth: The Company approved a plan to implement a business productivity program referred to as “Fuel for Growth,” during the third quarter of 2015, which is anticipated to be implemented over a three-year period. Fuel for Growth is designed to improve operating efficiencies and reduce costs. Fuel for Growth is expected to improve profitability and create additional investments behind brand building and growth initiatives. Fuel for Growth focuses on the optimization of resources within various operating functions and certain third party costs across the business.
(c) Investigation Accrual: An accrual made in connection with the SEC
settlement disclosed by the company in
(d)
(e) All Other: Primarily includes restructuring costs in 2016 and a marketable securities gain in 2015.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005803/en/
Source:
Mead Johnson Nutrition
Investors:
Kathy MacDonald,
847-832-2182
kathy.macdonald@mjn.com
or
Media:
Christopher
Perille, 847-832-2178
chris.perille@mjn.com
10/27/2016