Spectrum Brands Holdings, Inc. (NYSE: SPB), a global and diversified consumer products company with market-leading brands, today reported record fiscal 2013 third quarter results for the period ended June 30, 2013.
The Company reaffirmed its outlook for a fourth consecutive year of record profitability for its legacy business, including expectations for net sales and profit growth in the fourth quarter of fiscal 2013. Spectrum Brands estimated higher fiscal 2013 total Company net sales of $4,060 million to $4,100 million and adjusted EBITDA of $640 million to $650 million versus the comparable prior year period.
Separately, the Company announced plans to refinance its $950 million of 9.5 percent senior secured notes due 2018, which is expected to result in a lower cost of capital and reduced cash interest expense. The Company also announced the approval by its Board of Directors for a new $200 million common stock repurchase program, effective for 24 months. The Company also said it had completed $100 million of term debt reduction to date and reaffirmed its program to significantly reduce debt and delever its balance sheet.
Third Quarter Fiscal 2013 Results Highlights:
- Net sales of $1.09 billion, including the HHI acquisition, increased 32.1 percent in third quarter of fiscal 2013 versus $824.8 million a year ago; including HHI in last year’s fiscal third quarter on a pro forma basis, net sales increased 1.1 percent.
- HHI delivered improved quarter-over-quarter results in second full quarter since its acquisition on December 17, 2012.
- Net income of $36.1 million and diluted income per share of $0.69 in third quarter of fiscal 2013 decreased versus net income of $58.7 million and diluted income per share of $1.13 in the third quarter of fiscal 2012, primarily due to increased interest expense attributable to the HHI acquisition, a $20 million swing to a tax expense from a tax benefit, higher non-cash stock compensation expense and higher restructuring and related charges.
- Adjusted diluted earnings per share, a non-GAAP measure, of $0.90 in the third quarter of fiscal 2013 declined from $1.12 last year, including HHI in the prior year period on a pro forma basis, due to an increase in non-cash stock compensation expense driven by employee stock-based award programs.
- Adjusted EBITDA, a non-GAAP measure, of $188.5 million in third quarter of fiscal 2013 increased 1.9 percent compared to $185.0 million a year ago, including HHI in the prior year period on a pro forma basis; excluding the negative impact of foreign exchange, adjusted EBITDA in the third quarter increased 3.0 percent.
- Adjusted EBITDA margin, a non-GAAP measure, in third quarter of fiscal 2013 of 17.3 percent was higher compared to 17.2 percent in the prior year, including HHI in the prior year period on a pro forma basis; adjusted EBITDA margin for legacy business of 16.8 percent reached all-time record quarterly level.
- Legacy Spectrum Brands, which excludes the HHI business, reported adjusted EBITDA of $135.5 million in the third quarter of fiscal 2013, which represented the 11 th consecutive quarter of year-over-year adjusted EBITDA growth; excluding the negative impact of foreign exchange, legacy Spectrum Brands’ adjusted EBITDA grew 3.9 percent versus $132.5 million in the year-ago quarter.
- Company estimates increased net sales and adjusted EBITDA in the fourth quarter as compared to last year, including HHI in the prior year period on a pro forma basis; legacy business net sales and adjusted EBITDA in fourth quarter also expected to increase.
- Company estimates higher total Company fiscal 2013 net sales of $4,060 million to $4,100 million and adjusted EBITDA of $640 million to $650 million versus the comparable prior year period.
- Fiscal 2013 net cash provided from operating activities after purchases of property, plant and equipment (free cash flow) expected to be at least $240 million, net of HHI acquisition costs.
- Company on schedule to use its strong free cash flow, enhanced by the HHI acquisition, to reduce debt by approximately $200 million and delever its balance sheet in the fourth quarter of fiscal 2013, consistent with the seasonality of its cash flows.
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