Jarden's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Jarden Corp. ( JAH)

Q4 2011 Earnings Call

February 15, 2012 04:45 pm ET

Executives

Rachel Schacter - ICR

Martin Franklin - Executive Chairman

Ian Ashken - Vice Chairman & CFO

Jim Lillie - CEO

Analysts

Bill Chappell - SunTrust

Joe Altobello - Oppenheimer

Charlie Strauzer - CJS Securities

Greg Badishkanian - Citigroup

Jason Gere - RBC Capital Markets

Andrew Burns - D.A. Davidson

Karru Martinson - Deutsche Bank

Presentation

Operator

Good afternoon ladies and gentlemen and welcome to the Jarden Corporation’s conference call. As a reminder today's conference is being recorded. This afternoon’s call will begin with management making some formal remarks. When they have concluded a question-and-answer period will follow. (Operator Instructions)

I will now turn the call over to Rachel Schacter with ICR. Please go ahead.

Rachel Schacter

Good afternoon and thank you for joining us for Jarden’s 2011 fourth quarter and full-year results conference call. In accordance with Regulation FD, or Fair Disclosure, we are webcasting this conference call. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Jarden is strictly prohibited.

Before we begin, please take note of our cautionary statement regarding forward-looking statements at the end of our earnings press release issued today. While forward-looking statements made during this conference call are based on currently available information, our actual results could differ materially from those predicted. However, we undertake no obligation to update any such statements, whether as a result of new information, future events, or otherwise.

Please note that the company has posted supplemental financial data slides, as well as reconciliations of certain non-GAAP to comparable GAAP financial measures to its website. The presentation can be downloaded in the section "For Investors" on Jarden's website under the "Presentations" heading.

And now, I'd like to turn the call over to Executive Chairman, Martin Franklin. Martin, please go ahead.

Martin Franklin

Thank you, Rachel. Good afternoon ladies and gentlemen. With me on the call today are Ian Ashken, our Vice Chairman and CFO; and Jim Lillie, our CEO. Hopefully, you have all had a chance to review the earnings release we issued earlier today.

For 2011, Jarden delivered record revenues, segment earnings and adjusted earnings per share to culminate what has been a decade of outstanding performance. We met all of our principle financial goals for 2011, we achieved organic sales growth of over 3% with actual sales growth of almost 11%. We generated cash flow from operations of over $425 million against our target of $350 million and up significantly from $289 million in 2010. And we recorded an increase in adjusted earnings per share of approximately 18% well in excess of our 10% growth target.

We were very close to achieving our long-term goal of expanding gross margins by 50 basis points per annum with a companywide increase of 44 basis points this year on an adjusted basis. Additionally, we ended the year with over $800 million of cash. We have continued along our path of consistent profitable growth and once again our record results are a testament to the strength and diversified business model and our proactive entrepreneurial culture. We are very proud of the performance we delivered in 2011 and remain confident that the strategies we have implemented to leverage our market leading brands with product innovation and geographic expansion will allow us to increase our future sales rates above GDP growth while expanding margins.

As many of you know in 2011, Jarden celebrated its tenth anniversary since Ian and I joined the company and took over leadership in September 2001. Over this time, we’ve remained true to the core principles on which Jarden has been built and as encapsulated in Jarden’s DNA. We have remained focus on our strategic mission to provide consumers with authentic brands they can trust, product innovation and compelling value. Through a combination of organic growth and disciplined acquisitions, we have grown from a primarily US focused company with annual revenues of approximately $300 million into a Global Fortune 500 consumer products company with annual revenues approaching $7 billion.

As we have grown, we have sought diversification; diversification across our brands, product lines, distribution and supply chain. Today almost 40% of our sales are generated outside the United States versus less than 2% ten years ago. We are the largest hard goods, sporting goods company in the world, a major player in the small appliance market in the Americas as well as a leader in a number of other niche domestic markets such infant care, food preservation and home safety.

This diversity in product strength creates natural hedges, which, in my view are a key differentiating factor that has allowed us to outperform our peers during the recent turbulent times. Today, our company is not only larger but far stronger. This was certainly put to the test in the recent economic crisis and the company proved its extraordinary resiliency.

While our stock price has risen by more than a 1000% over the last decade significantly outperforming the S&P 500, we’re disappointed that this increase has been driven almost entirely by Jarden’s earnings per share growth rather than any multiple expansion.

In our opinion, the quality and resilience of our company has not been fully recognized by the public markets. As such, given the strength in our liquidity, in August 2011, the Board approved a new share repurchase program to purchase up to $500 million in value of our shares from time to time. Since the time of this authorization, we’ve been active in the market, but limited in our ability to acquire a meaningful number of shares due to daily volume rules and quiet period restrictions.

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