| Moderated By: Steven G. Trapp & Company -- (Not Moderated) -- Started: 11/7/1998 9:18:00 PM Revision History |
Newell is a manufacturer and full-service marketer of consumer products sold through the mass-retailers. Our basic strategy is to market a multi-product offering of brand-name consumer products to these mass retailers, emphasizing excellent customer service, in order to achieve maximum results for our stockholders. Under this strategy, Newell has continually demonstrated growth, evolving from a small drapery hardware manufacturer with sales of approximately $30 million 25 years ago, into the $3 billion multi-product marketer of consumer goods it is today.
Strategy and Financial Goals...
At the foundation of the Newell growth strategy is acquisitions. Since the late 1960s, Newell has acquired more than 75 companies. In the 1990s alone, Newell has completed eighteen (18) major acquisitions, representing over $2 billion in additional sales.
Newell has typically acquired companies with unrealized profit potential. "Newellization" is the profit improvement and productivity enhancement process that is implemented to bring newly acquired product lines up to Newell's high standards of profitability.
In addition to growth provided through acquisitions, Newell has built a sustainable internal growth momentum. For the future, the combination of internal growth and acquisitions should provide earnings per share growth averaging 15% per year.
Financial Goal Attainment
Abundant acquisition opportunities, utilization of the Newellization process and an internal growth momentum all support Newell's effort toward achieving its financial goals. By adhering to a tightly focused business strategy, Newell has established a sustainable competitive advantage and has consistently attained its aggressive financial objectives. These financial objectives are:
Maintain return on beginning equity at 20% or above
Achieve earnings per share growth averaging 15% per year
Increase Newell's dividend consistent with earnings growth
Maintain a prudent degree of leverage
Newell's Financial Record...
In 1997, sales were over $3.2 billion. Over the past ten years, sales have grown an average 20% per year.
Earnings per share have grown at an average 17% per year over 10 years, reaching $1.82 in 1997. Dividends have grown in line with earnings, and were increased 13% in the first quarter of 1998 to an indicated rate of 72 cents per share.
Newell has achieved its goal of a 20% or better return on beginning equity in 9 of the last 10 years. Newell's ten year average ROE is 21%.
We feel that, while continuing to grow through acquisition, we must also maintain a manageable debt level. Over the past ten years, Newell's debt to total capital has averaged 27%. At March 31, 1998 debt was 20% of total capital, reflecting recent strong acquisition activity, but still well within the range of what we consider prudent.
History and Background
Newell Manufacturing Company, Inc., a manufacturer of curtain rods, is founded in Ogdensburg, N.Y.
Affiliated companies are founded in Canada and Freeport, Illinois.
The various Newell companies pursue programs of acquisition and growth intended to improve their position in the window accessory field. In 1962, the Newell Companies, including Western Newell in Freeport, which would later become a separate division, Newell Window Furnishings, and Newell Manufacturing of Ogdensburg, are consolidated into a single corporation with a Freeport headquarters.
Daniel C. Ferguson is named president of Newell and develops acquisition strategy based on his intention to build a strong multi-product line.
Window shades are added to product line via joint venture with Breneman Inc. Acquisitions during period include Newell Manufacturing of Canada and Mirra Cote Industries. The addition of the latter's bathroom hardware to the line is the company's first non-window related product offering. Acquired E.M. Tate Co. (now known as Bulldog Home Hardware) of Boston, a maker of picture hanging wire, and Dorfile Manufacturing (now called System Works), a maker of shelving systems.
Newell goes public; shares are traded over the counter.
In 1973, Newell acquires EZ Paintr Corp. of Milwaukee, the world's largest maker of paint applicators. The mid-70s see various consolidations among subsidiaries and sales of non-strategic operating units. Introduction of patented MagicFit Window Shade.
Acquisitions include Los Angeles-based shelving maker Edgecraft Company and Baker Brush (now part of EZ Paintr) of Louisiana. Sales exceed $100 million for first time. Return on beginning stockholders' equity exceeds 20 percent for second straight year.
Newell lists on the New York Stock Exchange.
A number of complementary acquisitions are made, the most significant of which is Mirro Corporation, cookware maker with well-known brand identification. The transaction, Newell's first foray into the housewares industry, creates a wealth of new opportunities for growth that are later enhanced by acquisitions of two more cookware companies, Foley and Enterprise. Other acquisitions during the period that broaden Newell's line include, BernzOmatic Corporation, the leader in hand torches.
In its biggest purchase to date, Newell acquires Anchor Hocking Corporation, whose elements include Anchor Hocking glassware, Anchor Hocking Specialty Glass, Anchor Hocking Plastics, and Amerock cabinet hardware.
A series of smaller, but very strategic acquisitions -- WearEver aluminum Cookware, the Paint Applicator Division of Thomas Industries, REMA bakeware--are undertaken to extend Newell's product lines and creating good-better-best merchandising strategies. The company completes its 20th consecutive year of sales growth, surpassing $1 billion in sales.
Newell acquires W.T. Rogers Company and Keene Manufacturing, two makers of office supplies that later become Newell Office Products. The transactions give Newell access to the fast-growing market for office supplies and become the first step in building a multi-product line suitable for offering to high-volume office supplies purchasers.
Following up on the Rogers and Keene office products acquisitions, Newell acquires Sanford, a leading maker of markers and writing instruments, whose brand names include Sharpie and Expo, and Stuart Hall, a maker of school supplies and stationery. The same year Newell acquires Intercraft, a maker of picture frames.
Sales exceed $1.5 billion. Newell acquires Goody, a maker of hair accessories, LeeRowan, a maker of wire shelving and home storage products and Levolor, a maker of window treatments including aluminum mini-blinds.
Sales jump past the $2 billion mark. Newell acquires DelMar and LouverDrape, two makers of window treatments that are added to Levolor. Late in the year Newell acquires Eberhard Faber, a maker of markers and writing instruments including the Uni•Ball. Eberhard Faber is combined with Sanford. Newell also acquires the European operations of Corning Consumer Glass.
Sales reach $2.5 billion. Newell completes two complementary acquisitions. The first, Decorel, a maker of picture frames, is combined with Intercraft. The second, Berol, a maker of pencils and writing instruments, is added to Sanford.
Newell acquires Holson Burnes, a maker of picture frames. Including the Intercraft and Decorel product lines, Newell becomes the world's largest manufacturer of picture frames, framed art and photo albums. Newell acquires Holson Burnes, a maker of picture frames. Including the Intercraft and Decorel product lines, Newell becomes the world's largest manufacturer of picture frames, framed art and photo albums. Sales reach $2.9 billion
1997 Newell acquires Rolodex, a maker of card files and organization products; Kirsch, an international manufacturer and marketer of drapery hardware and custom window coverings; and the office products business of Rubbermaid, a leading maker of computer and desk accessories, resin-based furniture, and storage and organization products under the Eldon and MicroComputer Accessories brand names. Sales reach $3.2 billion.