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Tupperware Brands Reports First Quarter 2016 Results; EPS Above High End of Guidance

-- First quarter sales up 1% in local currency+ and down 10% in dollars.-- GAAP diluted E.P.S. $0.86 versus $0.59 prior year, which included a non-cash fixed asset impairment charge. Adjusted*, diluted E.P.S. $0.91, up 10% in local currency and down 11% in dollars. Five cents above guidance range including a 4 cent benefit from exchange rates versus January guidance.-- South America sales up 24% in local currency and down 10% in dollars, driven by Brazil, up 21% in local currency.-- Tupperware North America segment sales up 14% in local currency and up 5% in dollars. Tupperware Mexico continued strong sales growth, up 20% in local currency, with United States and Canada up 9% in local currency.-- Full Year Guidance increased 27 cents on GAAP basis and 21 cents excluding items to $4.28 to $4.38 per share.

ORLANDO, Fla., April 20, 2016 /PRNewswire/ -- TUP, -2.80% Tupperware Brands Corporation today announced first quarter 2016 operating results.

Rick Goings, Chairman and CEO, commented, "First quarter sales were up 1% in local currency. While we continued to achieve strong performances in Argentina, Brazil, China, Tupperware Mexico and Tupperware U.S. and Canada, we have continued to need to navigate through economic and political headwinds. Even so, we were able to come in above the high end of our diluted earnings per share range, reflecting lower resin costs and our initiatives to manage costs, gross margin and leverage under our promotional programs, as well as improved exchange rates."

Goings continued, "While we continue to expect some softness in local currency sales growth in 2016, our business model is resilient and has built-in flexibility to sustain earnings and cash flow, while we continue to roll-out our Vision 20/20 initiatives that will 'Build our Core' and 'Extend our Reach' by further leveraging our 3.0 million global sales force."

First Quarter Executive Summary

  • First quarter 2016 net sales were $525.7 million, up 1% in local currency and down 10% in dollars. Emerging markets**, accounting for 64% of sales, achieved a 3% increase in local currency. The most significant contributions to the first quarter growth were in Argentina, Brazil, China, and Tupperware Mexico, partially offset by Egypt, Indonesia, Philippines and Turkey. Established markets were down 2% in local currency, primarily from BeautiControl and France, partially offset by good performance in Germany and Tupperware United States and Canada.
  • GAAP net income of $43.4 million versus prior year net income of $29.5 million. In 2015, net income included a pre-tax, non-cash impairment charge related to fixed assets in Venezuela. Adjusted, diluted earnings per share of $0.91 was 5 cents above the January outlook range, including 4 cents from the benefit of changes in foreign exchange rates versus 2015, compared with the guidance, lower resin costs and initiatives to control costs, manage gross margin and leverage promotional spending. Adjusted earnings per share was down 11% versus last year in dollars, including a negative 19 cent impact from changes in exchange rates on the comparison, and up 10% in local currency.
  • Total sales force of 3.0 million was up 4% versus prior year at the end of the quarter, and there were 2% less active sellers in the quarter.

First Quarter Business Highlights

Europe: Strong increases by two South African businesses, offset by Egypt and Turkey

  • Segment sales were down 4% in local currency (down 11% in dollars).
  • Emerging markets were down 8% in local currency. Tupperware South Africa, up 18% and Avroy Shlain in South Africa, up 13%, offset by a 67% decrease in the Middle East and North Africa, mainly from a curtailment of shipments into Egypt in light of currency controls, and Turkey, down 19%.
  • Established markets were down 2% in local currency. Germany, up 3%, was offset by Austria, down 15% and France, down 4%, both with smaller and less active sales forces.

Asia Pacific: China up double-digits offset by results in India, Indonesia, and Philippines

  • Sales for the segment were down 3% in local currency (down 9% in dollars).
  • Emerging Markets were down 3% in local currency. China, up 16% was offset by India, down 15%, Indonesia, down 8% and Philippines, down 14%, in connection with the 2015 decision to exit the fashion category.
  • Established markets were down 6% in local currency compared with prior year.

Tupperware North America: Both Tupperware Mexico and Tupperware United States and Canada leveraged strong fundamentals, growing segment sales in local currency by 14%

  • Segment sales up 14% in local currency (up 5% in dollars). Tupperware Mexico sales up 20% on 9% larger sales force versus prior year.
  • Tupperware United States and Canada local currency sales up 9%. Sales force size closed 13% above prior year.

Beauty North America: Segment sales were down 10% in local currency (down 22% in dollars)

  • BeautiControl local currency sales down 19% from lower sales force activity in light of sales force compensation changes at beginning of the second quarter of the prior year.
  • Fuller Mexico sales were down 7% in local currency from the prior year reflecting lower sales force additions and activity. Total sales force size down 9% at the end of March.

South America: Leveraged 8% larger sales force for higher volume along with inflation driven price increases

  • Segment sales up 24% in local currency (down 10% in dollars), driven by increases in Argentina and Brazil. Brazil was up 21% in local currency, reflecting higher volume from a large sales force size advantage and some pricing.
  • Net sales increase in Argentina of 50% in local currency, one-third from volume and two-thirds from inflation related higher prices.
  • Segment's active sales force was up 7%. The 17 point difference between the local currency sales and active seller comparisons primarily reflected higher prices throughout the segment.

2016 Outlook (Unaudited)

Based on current business trends and foreign currency rates, the Company's second quarter and fiscal 2016 full year guidance is provided below.

Company Level


13 Weeks Ending


13 Weeks


53 Weeks Ending


52 Weeks


June 25, 2016


Ended


Dec 31, 2016


Ended


Low

High


June 27, 2015


Low

High


Dec 26, 2015











USD Sales Growth vs Prior Year

(5)

%

(3)

%


(13)

%


(2)

%

0

%


(12)

%

GAAP EPS

$1.02


$1.07



$1.23



$4.08


$4.18



$3.69


GAAP Pre-Tax ROS

12.4

%

12.8

%


14.7

%


12.4

%

12.5

%


11.4

%











Local Currency+ Sales Growth vs Prior Year

1

%

3

%


4

%


2

%

4

%


4

%

EPS Excluding Items*

$1.07


$1.12



$1.21



$4.28


$4.38



$4.37


Pre-Tax ROS Excluding Items*

13.1

%

13.4

%


13.8

%


13.0

%

13.1

%


12.8

%











FX Impact on EPS Comparison (a)

($0.13)


($0.13)





($0.31)


($0.31)




Full Year 2016

  • Fiscal year includes a 53rd week estimated to have a positive impact on the year-over-year comparison of 1 point.
  • Tax rate to be about 25.5% excluding items and on a U.S. GAAP basis.
  • Excludes land sales that may occur.

Segment Level

  • For the full year, sales in local currency are expected to be down 3 or 4% in Europe, about even in Asia Pacific, up 12 or 13% in Tupperware North America, down 5 to 7% in Beauty North America and to increase in South America by 22 or 23%.
  • Segment profit return on sales, excluding items, is expected to decrease by about ½ point in Europe, to remain about the same in Asia Pacific, to increase approaching ½ point in Tupperware North America in dollars and close to 1 point in local currency, to decrease about 1 ½ points in dollars and 1 point in local currency in Beauty North America and to increase about 2 points in dollars and 1 point in local currency in South America.

* See Non-GAAP Financial Measures Reconciliation Schedules. ** The Company classifies Established Market Units as those operating in Western Europe, including Scandinavia, the United States, Canada, Australia and Japan and its remaining units as Emerging Market Units. [+] Local currency changes are measured by comparing current year results with those of the prior year translated at the current year's foreign exchange rates.

First Quarter Earnings Conference Call

Tupperware Brands will conduct a conference call today, Wednesday, April 20, 2016, at 8:30 am Eastern time. The conference call will be webcast and accessible, along with a copy of this news release and slides presented during the conference call, on www.tupperwarebrands.com.

Tupperware Brands Corporation, through an independent sales force of 3.0 million, is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands.

The Company's stock is listed on the New York Stock Exchange TUP, -2.80% Statements contained in this release, which are not historical fact and use predictive words such as "outlook", "guidance", "expects" or "target" are forward-looking statements. These statements involve risks and uncertainties that include recruiting and activity of the Company's independent sales forces relating to governmental actions and otherwise, the success of new product introductions and promotional programs, governmental approvals of materials for use in food containers and beauty and personal care products, the success of buyers in obtaining financing or attracting tenants for commercial and residential developments, the effects of economic and political conditions generally and foreign exchange risk in particular and other risks detailed in the Company's periodic reports as filed in accordance with the Securities Exchange Act of 1934, as amended.

The Company updates each month the impact of changes in foreign exchange rates versus the prior year, posting it on Tupperware Brands Foreign Exchange Translation Impact Update. Other than updating for changes in foreign currency exchange rates, the Company does not intend to update forward-looking information, except through its quarterly earnings releases, unless it expects diluted earnings per share for the current quarter, excluding items impacting comparability and changes versus its guidance of the impact of changes in foreign exchange rates, to be significantly below its previous guidance.

Non-GAAP Financial Measures

The Company has utilized non-GAAP financial measures in this release, which are provided to assist readers' understanding of the Company's results of operations. These amounts, identified as items impacting comparability, at times materially impact the comparability of the Company's results of operations. The adjusted information is intended to be indicative of Tupperware Brands' primary operations, and to assist readers in evaluating performance and analyzing trends across periods. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.

The non-GAAP financial measures exclude gains from the sale of property, plant and equipment and insurance settlements related to casualty losses, inventory obsolescence in conjunction with decisions to exit or significantly...


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