The segment reported a significantly smaller first quarter net loss, as adjusted, of $1.2 million, a record low segment loss for a fiscal first quarter, compared to a net loss of $4.5 million in the first quarter of fiscal 2013. The segment delivered its first positive adjusted EBITDA ever for a fiscal first quarter. Adjusted EBITDA of $1.7 million increased from a loss of $1.4 million a year ago due to higher volumes, improved product mix, cost improvement initiatives and operating expense management.
Hardware & Home Improvement
The Hardware & Home Improvement (HHI) segment, which was acquired on December 17, 2012, recorded net sales of $278.4 million in the first quarter of fiscal 2014, an increase of 23.3 percent compared to $225.8 million on a pro forma basis as if HHI was combined with Spectrum Brands for all of last year’s first quarter. The revenue growth was primarily driven by double-digit improvements in the U.S. residential security, builders’ hardware and plumbing categories. The segment recorded net income, as adjusted, of $35.7 million in the first quarter of fiscal 2014 compared to a net loss, as adjusted, of $3.5 million in the first quarter of fiscal 2013. Adjusted EBITDA in the first quarter of fiscal 2014 increased 48.1 percent to $49.6 million versus $33.5 million last year.
Liquidity and DebtSpectrum Brands completed its fiscal 2014 first quarter on December 29, 2013 with a solid liquidity position, including a cash balance of approximately $132 million and $167 million available on its ABL facility. During the first quarter of fiscal 2014, Spectrum Brands issued $215 million and €225 million of term debt to replace and reprice $513 million of existing term debt. The new term debt will reduce cash interest costs and, in addition, the Euro portion was placed in Germany to better align the Company’s cash inflows with cash outflows related to principal, interest and taxes.