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TheStreet Open House

Spectrum Brands Holdings Reports Record Fiscal 2014 First Quarter Results

Spectrum Brands Holdings, Inc. (NYSE: SPB), a global and diversified consumer products company with market-leading brands, today reported record fiscal 2014 first quarter results for the period ended December 29, 2013, and reconfirmed its outlook for a fifth consecutive year of record performance from the legacy business, coupled with continuing growth from its Hardware and Home Improvement (HHI) business.

The Company’s record first quarter was highlighted by solid results from its HHI and Home and Garden divisions; strong European results; margin improvements; net income, GAAP earnings per share, adjusted diluted earnings per share and adjusted EBITDA growth; and a record fiscal first quarter level of savings from continuous improvement programs across all divisions.

Spectrum Brands reiterated plans to reduce term debt by approximately $250 million in fiscal 2014 and expectations for free cash flow to increase to at least $350 million, a significant improvement from a record $254 million in fiscal 2013 and $208 million in fiscal 2012.

Separately today, Spectrum Brands said its Board of Directors approved a 20 percent increase in the quarterly common stock dividend to $0.30 per share from $0.25, reaffirming the Company’s consistent and ongoing ability to generate strong free cash flow and its commitment to deliver attractive returns to its shareholders.

Fiscal 2014 First Quarter Results Highlights:

  • Net sales of $1.10 billion in the first quarter of fiscal 2014, including the acquired HHI business, increased 26.5 percent versus $870.3 million a year ago; including HHI in the full prior year period on a pro forma basis, net sales increased 3.6 percent and 3.8 percent excluding the negative impact of foreign exchange.
  • Net income of $54.3 million and diluted income per share of $1.03 in first quarter of fiscal 2014 improved from a net loss of $13.4 million and diluted loss per share of $0.26 in the prior year quarter.
  • Adjusted diluted earnings per share, a non-GAAP measure, of $1.09 in the first quarter of fiscal 2014 increased 39.7 percent compared to $0.78 last year, including HHI in the full prior year period on a pro forma basis.
  • Adjusted EBITDA, a non-GAAP measure, of $178.8 million in the first quarter of fiscal 2014 grew 36.8 percent versus $130.7 million in fiscal 2013; including HHI as if acquired at the beginning of fiscal 2013, adjusted EBITDA increased 11.4 percent.
  • Adjusted EBITDA margin in the first quarter of fiscal 2014 increased to 16.2 percent compared to 15.1 percent in the year-ago quarter, including HHI in the full prior year period on a pro forma basis.
  • Legacy Spectrum Brands adjusted EBITDA of $129.2 million in the first quarter of fiscal 2014 increased 1.7 percent versus the prior year, representing the 13 th consecutive quarter of year-over-year adjusted EBITDA growth; legacy business fiscal 2014 first quarter adjusted EBITDA margin grew to 15.7 percent compared to 15.2 percent last year.
  • Fiscal 2014 net cash provided from operating activities after purchases of property, plant and equipment (free cash flow, a non-GAAP measure) expected to be at least $350 million compared to $254 million in fiscal 2013 and $208 million in fiscal 2012.
  • Company expects to use its strong free cash flow to reduce term debt by approximately $250 million and lower its balance sheet leverage in the second half of fiscal 2014, consistent with the seasonality of its cash flows.
  • Spectrum Brands issued $215 million and €225 million of term debt in the first quarter of fiscal 2014 to replace and reprice $513 million of existing term debt, which will reduce cash interest costs and, through the Euro portion placed in Germany, better align cash inflows with cash outflows related to principal, interest and taxes.
  • In early January 2014 the Company’s Home and Garden division acquired The Liquid Fence Company, the U.S. leader in the consumer animal repellents market in an immediately accretive transaction that provides a new and complementary position in a rapidly expanding segment of the $1.5 billion U.S. retail lawn and garden controls market.

“Our record first quarter results give us a strong start on delivering a fifth consecutive year of record financial performance from our legacy business along with strong growth from our HHI division,” said Dave Lumley, Chief Executive Officer of Spectrum Brands Holdings. “We reported net income of $54 million and delivered adjusted EPS and adjusted EBITDA growth in the quarter with excellent margin improvements. Our HHI and Home and Garden divisions had especially solid results and, geographically, Europe once again was a bright performer.

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