3Q’19 Revenues Totaled $3.6 Billion, Up 4% Versus Prior Year, Driven By Organic Growth And Acquisitions
Operating Margin Rate Was 13.3%; Excluding Charges Operating Margin Rate Was 14.5%, Flat Versus Prior Year While Overcoming $90 Million Of External Headwinds
3Q’19 Diluted GAAP EPS Was $1.53; Excluding Charges, 3Q’19 Diluted EPS Was $2.13
Announcing New Cost Reduction Program Expected To Deliver $200 Million In Annual Cost Savings
Revising 2019 Full Year Diluted GAAP EPS Guidance Range To $6.50 - $6.60 From $7.50 - $7.70 And Adjusted EPS Guidance Range To $8.35 - $8.45 From $8.50 - $8.70
3Q’19 Key Points:
Net sales for the quarter were $3.6 billion, up 4% versus prior year, as positive contributions from volume (+3%), acquisitions (+3%) and price (+1%) more than offset currency (-2%) and divestitures (-1%).
The gross margin rate for the quarter was 34.1%. Excluding charges, the gross margin rate for the quarter was 34.3%, down 120 basis points versus prior year as volume leverage, productivity and price were more than offset by tariffs and foreign exchange.
SG&A expenses were 20.8% of sales. Excluding charges, SG&A expenses were 19.8% of sales compared to 21.0% in 3Q’18, reflecting continued disciplined cost management.
The tax rate was 20.1%. Excluding charges, the tax rate was 21.5% versus 19.5% in 3Q’18.
Average diluted shares outstanding for the quarter were 150.6 million, consistent with the prior year.
Working capital turns for the quarter were 5.9, up 0.2 turns versus prior year.
2019 Outlook & Cost Reduction Program
Management is revising its 2019 EPS outlook to $6.50 - $6.60 from $7.50 - $7.70 on a GAAP basis primarily due to restructuring charges associated with the cost reduction program announced today, in addition to the factors below.
The Company is reducing its adjusted EPS range to $8.35 - $8.45 from $8.50 - $8.70 and reiterating its free cash flow conversion estimate of approximately 85% - 90%.
The cost reduction program is currently being implemented and is expected to deliver $200 million in annual cost savings with an approximate pre-tax restructuring charge of $150 million expected to be recognized primarily in 2019.