Spectrum Brands Holdings Reports Improved Fiscal 2011 Full-Year and Strong Fourth-Quarter Results, Meets or Exceeds Full-Year Financial Guidance
Spectrum Brands Holdings, Inc. (NYSE: SPB):Company delivered increased fiscal 2011 net sales and adjusted
EBITDA in line with guidance and significantly exceeded free cash flow
targetNet sales of $3.2 billion in fiscal 2011 grew 24.1 percent versus
fiscal 2010; 2.4 percent net sales growth including the Russell Hobbs
businesses for all of fiscal 2010Company reported strong increases in adjusted EBITDA and net sales
in fourth quarter of fiscal 2011, up 14.8 percent and 4.9 percent,
respectivelyMajor distribution gains continued in all business segments,
validating the Spectrum Value Model strategyStrong liquidity position at fiscal 2011 year-end with$142
million of cash and zero cash drawn on ABL facility as of September
30, 2011Company exceeded aggressive debt reduction target of at least $200
million in fiscal 2011 with $225 million of payments on original $750
million Senior Secured Term Loan, as previously announced, to reach
year-end leverage ratio (total debt to adjusted EBITDA) of 3.4 timesCompany expects fiscal 2012 net sales to grow at or above the rate
of GDP, with a higher increase in adjusted EBITDA, and a free cash
flow goal of at least $200 millionCompany expects further cumulative debt reduction in fiscal 2012 to
achieve a year-end leverage ratio at or below the 2011 year-end level
of 3.4 timesCompany increases annual cost synergies target from Russell Hobbs
transaction to $35-$40 million from $30-$35 million and savings from
Global Pet Supplies restructuring to $10-$15 million from $7-$11
million, both expected to be realized by the end of fiscal 2012
Spectrum Brands Holdings, Inc. (NYSE: SPB), a global and diversified
consumer products company with market-leading brands, today announced
improved financial results for fiscal 2011, strong growth in its fourth
quarter, and achievement of full-year financial targets for the period
ended September 30, 2011.
“We delivered higher fiscal 2011 results, including a very strong fourth
quarter performance, and met or surpassed our financial targets for the
year,” said Dave Lumley, Chief Executive Officer of Spectrum Brands
Holdings. “Adjusted EBITDA grew a solid 6 percent for the year, and we
significantly exceeded our $155-$165 million free cash flow target with
$191 million for the year, reinforcing the free cash flow generation
strength our Company enjoys.
“We ended 2011 in a strong liquidity position and exceeded our
aggressive debt reduction target with $225 million of Term Loan debt
paydown to reduce our leverage ratio to a year-end level of 3.4 times,”
Mr. Lumley said. “We are rapidly integrating our Russell Hobbs
acquisition, and have increased our cost synergies target for that
acquisition once again, as well as for our Global Pet restructuring
activities.
“Spectrum’s value creation strategy includes targeted, fold-in
acquisitions, primarily in our Pet Supplies and Home and Garden
divisions,” Mr. Lumley said. “Given that several of these transactions
could happen in coming months, we successfully raised more than $200
million of opportunistic liquidity in early November to be able to close
these potential complementary and synergistic acquisitions. These
potential deals, which will be excellent strategic fits like our Black
Flag/TAT brands acquisition of November 1, would further accelerate our
EBITDA and free cash flow growth in 2012, and likely would enable us to
finish the year at an even lower leverage ratio than the 3.4 times we
reported at year-end fiscal 2011.
“Our Spectrum Value Model is working. We continue to believe it is the
best retail customer strategy for our largely every day,
non-discretionary, replacement consumer products, particularly in this
challenging environment of sluggish retail activity, inflationary
pressure, and rising commodity and Asian supply chain costs,” he said.
“We continue to generally outperform our competition and categories
around the world because our Spectrum Value Model resonates with
retailers and consumers. It delivers genuine value to the consumer with
products that work as well as, or better than, our competitors for a
lower cost. It also provides higher margins and lower acquisition costs
to our retail customers, along with excellent category management.
“We are offsetting significant commodity and Chinese cost increases
through our continuous improvement programs, restructuring and
integration cost synergies programs, retail distribution gains, and
select pricing actions,” he said. “Stringent cost control programs
remain in place, along with additional cost reduction initiatives to
maintain an operating structure aligned with today’s market conditions.
“Spectrum Brands’ time is truly now, and we expect yet another year of
measured growth and additional value creation in fiscal 2012,” Mr.
Lumley said. “We see a continuance of accelerating sales, EBITDA and
free cash flow in 2012 from organic growth and bolt-on acquisitions, and
a continued emphasis on debt paydown and balance sheet deleveraging.
These are exciting times for our Company.”
Russell Hobbs Transaction
On June 16, 2010, the transaction to combine Spectrum Brands, Inc. with
Russell Hobbs, Inc. was completed pursuant to the previously announced
agreement and plan of merger dated February 9, 2010. The addition of
Russell Hobbs’ well-respected family of small appliance brands, with
such notable names as Black & Decker®, George Foreman®, Littermaid®,
Farberware® and Toastmaster®, created a strong global consumer products
company with solid free cash flow potential and an improved combined
balance sheet.
The reader should note that the 12-month periods presented in Tables 1
and 2 of this press release, which reflect GAAP numbers, include the
results of the Russell Hobbs’ businesses only from the date of the close
of the transaction, June 16, 2010, through the end of the Company’s
fiscal 2011 fourth quarter on September 30, 2011.
Tables 3, 4 and 5 bridge the Company’s GAAP results to reflect the
acquisition as if it occurred at the beginning of the earliest periods
presented.
Segment Reporting Structure Update
Effective October 1, 2010, the Company decided to manage the businesses
in three vertically integrated, product-focused reporting segments: (i)
Global Batteries & Appliances, which consists of the Company’s worldwide
battery, shaving and grooming, personal care, small electrical
appliances in the kitchen and home product categories, and portable
lighting business; (ii) Global Pet Supplies, which consists of the
Company’s worldwide pet supplies business; and (iii) Home and Garden
Business, which consists of the Company’s lawn and garden and insect
control businesses. This current reporting segment structure reflects
the combination of the former Global Batteries & Personal Care segment
with substantially all of the former Small Appliances segment, which
consisted of the Russell Hobbs businesses acquired on June 16, 2010, to
form Global Batteries & Appliances. In addition, certain pest control
and pet products in the former Small Appliances segment have been
reclassified into the Home and Garden Business and Global Pet Supplies
segments, respectively. These reclassifications have been made for all
periods presented.
Fiscal 2011 Consolidated Financial Results
Spectrum Brands Holdings reported consolidated GAAP net sales of $3.19
billion for fiscal 2011, a 24.1 percent increase compared with $2.57
billion for fiscal 2010. The increase was predominantly the result of
the Russell Hobbs acquisition along with higher net sales for the
Company’s personal care product (Remington) category. Including the
results for the Russell Hobbs’ businesses as if combined with Spectrum
Brands as of the beginning of last year, net sales of $3.19 billion for
fiscal 2011 increased 2.4 percent compared with $3.11 billion in 2010.
The sales results were positively impacted by $45.8 million of foreign
exchange. Spectrum Brands’ fiscal 2011 GAAP gross profit of $1.13
billion increased 22.5 percent versus $921.3 million in fiscal 2010.
The Company reported a GAAP net loss of $75.2 million, or $1.47 diluted
loss per share, for fiscal 2011 on average shares outstanding of 51.1
million, compared with a net loss of $190.1 million, or $5.28 diluted
loss per share, for fiscal 2010 based upon average shares of 36.0
million. Adjusted for certain items in both years, which management
believes are not indicative of the Company’s ongoing normalized
operations and are presented in Table 3 of this press release, the
Company generated adjusted diluted earnings per share of $1.83, a
non-GAAP measure, for fiscal 2011, an increase of 51.2 percent versus
adjusted diluted earnings per share of $1.21 in fiscal 2010.
Consistent with the Company’s guidance, fiscal 2011 consolidated
adjusted EBITDA, a non-GAAP measurement of profitability which the
Company believes is a useful indicator of the operating health of the
business and its trends, was $457.1 million. This represented a 5.9
percent increase versus consolidated adjusted EBITDA for fiscal 2010 of
$431.8 million, which includes the results of Russell Hobbs’ businesses
(now part of the Global Batteries & Appliances segment) as if combined
with Spectrum Brands as of the beginning of last year. Foreign exchange
had a $26.6 million favorable impact on adjusted EBITDA for fiscal 2011.
Fiscal 2011 Fourth-Quarter Consolidated Financial Results
Spectrum Brands Holdings reported consolidated GAAP net sales of $827.3
million for the fourth quarter of fiscal 2011, an increase of 4.9
percent compared with $789.0 million for the same period in fiscal 2010.
All three of the Company’s reporting segments contributed to the net
sales improvement. The net sales results were positively impacted by
$22.6 million of foreign exchange, or 2.9 percent. Spectrum Brands’
gross profit of $280.5 million in the fourth quarter of fiscal 2011 grew
2.2 percent versus $274.5 million in the comparable year-ago period.
The Company reported a net loss of $33.8 million, or $0.65 diluted loss
per share, for the fourth quarter of fiscal 2011 on average shares
outstanding of 51.9 million, which included a pre-tax, non-cash
intangibles impairment charge of $32.5 million. This compared with a net
loss of $24.3 million, or $0.48 diluted loss per share, in the year-ago
quarter based upon average shares outstanding of 50.4 million. Adjusted
for certain items in both year’s fourth quarters, the Company reported
adjusted diluted earnings per share of $0.47, a non-GAAP measure, for
the fourth quarter of fiscal 2011, an 88.0 percent increase compared
with adjusted diluted earnings per share of $0.25 in fiscal 2010’s
fourth quarter.
Fiscal 2011 fourth-quarter consolidated adjusted EBITDA was $114.5
million, a 14.8 percent increase versus consolidated adjusted EBITDA for
the fourth quarter of fiscal 2010 of $99.7 million. Foreign exchange had
a $12.6 million positive impact on adjusted EBITDA in the fourth quarter
of fiscal 2011.
Fiscal 2011 Fourth-Quarter Segment Level DataGlobal Batteries & Appliances
The Global Batteries & Appliances segment reported fiscal 2011
fourth-quarter net sales of $592.9 million, an increase of 4.5 percent
versus $567.6 million in last year’s fourth quarter. The increase was
driven by improvements in the personal care and small electrical
appliance product categories. Fourth-quarter 2011 segment sales were
positively impacted by $19.0 million of foreign exchange.
Global battery sales of $260.5 million for the fourth quarter of fiscal
2011 were essentially unchanged from $261.1 million in the year-ago
quarter. Foreign exchange positively impacted these results by $8.6
million. North American battery sales increased 4.2 percent to $122.1
million versus $117.1 million in the prior year’s quarter primarily as a
result of distribution gains at several major customers. European
battery sales for the quarter improved 14.3 percent to $88.9 million
compared with $77.8 million during the same period last year, driven by
customer gains, increased placement with retailers and regional
expansion into Eastern Europe coupled with a $6.7 million favorable
foreign exchange impact. In Latin America, battery sales were $46.7
million for the fourth quarter of fiscal 2011, a decrease of 26.9
percent versus $63.9 million in the year-earlier period. The net sales
decline in Latin America was primarily attributable to lower volume and
pricing in Brazil resulting from unusual competitive pressures. Foreign
exchange positively impacted Latin American battery sales by $1.3
million.
Reflecting growth across all geographic regions, net sales for the
global personal care product category rose 10.6 percent to $121.5
million in the fourth quarter of fiscal 2011 versus $110.9 million for
the same period last year. The net sales growth was driven by a
combination of new product introductions, line extensions, increased
online sales and expanded in-store promotions. Foreign exchange
positively impacted these results by $4.9 million.
The small electrical appliances products of the Global Batteries &
Appliances segment reported net sales in the fourth quarter of fiscal
2011 of $211.0 million, a 7.8 percent increase compared with $195.6
million in the previous year’s quarter. The increase was driven by
higher North American revenues in beverage, cooking and food preparation
appliances, distribution gains and promotional increases at existing
retailers, partially offset by reduced sales in Europe due to a
strategic decision to exit low-margin, local secondary brands in France
and Germany. Foreign exchange positively impacted the small electrical
appliances product net sales by $5.5 million.
With segment net income of $24.8 million, the Global Batteries &
Appliances segment recorded adjusted EBITDA of $76.5 million for the
fourth quarter of fiscal 2011, an increase of 8.7 percent versus
adjusted EBITDA of $70.4 million in the year-earlier quarter, when
segment net income was $35.5 million. Foreign exchange positively
impacted adjusted EBITDA in the fourth quarter of fiscal 2011 by $13.7
million.
Global Pet Supplies
The Global Pet Supplies Business segment reported net sales of $153.8
million for the fourth quarter of fiscal 2011, an increase of 6.0
percent compared with $145.1 million in the comparable year-ago period.
The higher revenues reflected increased sales of aquatic products in
both North America and Europe and, to a lesser extent, improvement in
companion animal sales around the world. Sales of aquatic products
benefited from a range of promotional activities with key retailers in
North America and favorable foreign exchange in Europe. Foreign exchange
positively impacted these results by $3.6 million.
Net income for the segment was $6.3 million for the fourth
quarter of fiscal 2011 versus $15.7 million in the prior year’s
fourth quarter. Adjusted EBITDA of $28.3 million in the fourth quarter
increased 9.6 percent from $25.8 million in the same period last year
due to higher revenues and a favorable foreign exchange impact of $1.0
million.
Home and Garden Business
The Home and Garden Business segment recorded net sales of $80.6 million
for the fourth quarter of fiscal 2011, an increase of 5.5 percent from
$76.3 million for the same period last year. The increase was primarily
attributable to distribution gains at retail customers.
The business segment recorded fourth-quarter net income of $12.9
million, a 43.3 percent improvement compared with net income of $9.0
million in fiscal 2010’s fourth quarter. Driven by manufacturing cost
improvement initiatives and operating expense management, the Home and
Garden Business increased its adjusted EBITDA by 29.9 percent to $17.3
million in the fourth quarter of fiscal 2011 from $13.3 million in the
same period last year.
Liquidity and Debt Reduction
The Company completed its fiscal year on September 30, 2011 with a solid
liquidity position, including a cash balance of approximately $142
million and zero cash drawn on its ABL Facility.
At the end of fiscal 2011, in addition to its $245 million of 12% Senior
Subordinated Notes, the Company had approximately $1,275 million
outstanding under its senior credit facilities consisting of a Term Loan
of approximately $525 million and Senior Secured Notes of $750 million.
In addition, the Company had approximately $33 million of letters of
credit outstanding under its ABL.
As a result of solid earnings and strong working capital management, the
Company generated free cash flow of $191 million in fiscal 2011,
significantly exceeding its target of $155-$165 million.
During fiscal 2011, the Company made total net payments on debt of
approximately $219 million, including $225 million of payments to reduce
its original $750 million Term Loan to approximately $525 million, and
reached a year-end leverage ratio (total debt to adjusted EBITDA) of 3.4
times, exceeding its target leverage ratio of 3.5 times.
Subsequent Events
On October 18, 2011, the Company announced that its Board of Directors
had approved a new $30 million common stock repurchase program. The
authorization is effective for 12 months. Purchases under the program
may be made in the open market or in privately negotiated transactions
from time to time at management’s discretion. The Company will base its
decisions on the amounts and timing of purchases of shares on such
factors as market conditions, the price of the Company’s common stock,
and general economic conditions, as well as on management’s assessment
of liquidity and cash flow requirements. The repurchase program may be
suspended or discontinued at any time.
The Company announced on November 1, 2011 that it had acquired the
assets of the Black Flag® and TAT® brands from The Homax Group, Inc., a
portfolio company of Olympus Partners. Financial terms of the all-cash
transaction were not disclosed. The accretive acquisition is expected to
immediately strengthen the household insecticide portfolio of the
Company’s Home and Garden Business, and provide significant
opportunities for growth and operational synergies.
Spectrum Brands, Inc. (“Spectrum Brands”), a subsidiary of Spectrum
Brands Holdings, Inc., announced in early November 2011 the terms of its
offering of additional 9.50% Senior Secured Notes due 2018 as additional
notes to the already outstanding $750 million aggregate principal amount
of existing notes. Spectrum Brands sold $200 million aggregate principal
amount of Notes at a price of 108.50% of the par value, representing a
yield to worst of 7.29%. The Notes are guaranteed by Spectrum Brands’
parent company, SB/RH Holdings, LLC, as well as by existing and future
domestic restricted subsidiaries and secured by liens on substantially
all of the assets of Spectrum Brands and the guarantors. The Notes will
vote together with the existing notes. The proceeds from the issuance of
the Notes are intended to be used for general corporate purposes, which
may include, among other things, working capital needs, the refinancing
of existing indebtedness, the expansion of Spectrum Brands’ business and
possible future acquisitions.
Fiscal 2012 Outlook
The Company expects fiscal 2012 net sales to increase at or above the
rate of GDP, with a higher increase in adjusted EBITDA, and a free cash
flow goal of at least $200 million. Capital expenditures are projected
to approximate $40 million in fiscal 2012.
Conference Call/Webcast Scheduled for 9:00 AM Eastern Time Today
The Company will host an earnings conference call and webcast at 9:00
a.m. Eastern Time today, November 16, 2011. To access the live
conference call, U.S. participants may call 877-556-5260 and
international participants may call 973-532-4903. The conference ID
number is 20515596. A telephone replay of the conference call will be
available through Wednesday, November 30, 2011. To access this replay,
participants may call 855-859-2056 and use the same conference ID number.
The live audio webcast and replay are available by visiting the Investor
Relations home page on the Company’s website at www.spectrumbrands.com.
About Spectrum Brands Holdings, Inc. and
Spectrum Brands, Inc.Spectrum Brands Holdings, Inc., a member of the Russell 2000 Index,
is a diversified, global consumer products company and a leading
supplier of batteries, shaving and grooming products, personal care
products, small household appliances, specialty pet supplies, lawn &
garden and home pest control products, personal insect repellents and
portable lighting. Helping to meet the needs of consumers worldwide, the
Company offers a broad portfolio of market-leading, well-known and
widely trusted brands including Rayovac®, Remington®, Varta®, George
Foreman®, Black & Decker®, Farberware®, Toastmaster®, Tetra®,
Marineland®, Nature’s Miracle®, Dingo®, 8-in-1®, Littermaid®,
Spectracide®, Cutter®, Repel®, and Hot Shot®.Spectrum Brands
Holdings’ products are sold by the world’s top 25 retailers and are
available in more than one million stores in more than 120 countries
around the world. With approximately 6,200 employees in 43 countries,
Spectrum Brands Holdings reported fiscal 2011 net sales of approximately
$3.2 billion.Spectrum Brands, Inc. is a wholly owned subsidiary
of Spectrum Brands Holdings, Inc. For more information, visit www.spectrumbrands.com.Non-GAAP MeasurementsManagement believes that certain non-GAAP financial measures may be
useful in certain instances to provide additional meaningful comparisons
between current results and results in prior operating periods.For
example, excluding the impact of currency exchange rate fluctuations may
provide additional meaningful reflection of underlying business trends.In addition, within this release, including the tables attached
hereto, reference is made to adjusted diluted earnings per share and
adjusted earnings before interest, taxes, depreciation and amortization
(EBITDA).See attached Table 3, “Reconciliation of GAAP to
Adjusted Diluted Earnings Per Share,” for a complete reconciliation of
diluted income (loss) per share on a GAAP basis to adjusted diluted
earnings per share and see attached Table 4, “Reconciliation of GAAP Net
Income (Loss) to Adjusted EBITDA,” for a reconciliation of GAAP Net
Income (Loss) to adjusted EBITDA for the three months and twelve months
ended September 30, 2011 versus the three months and twelve months ended
September 30, 2010 on a consolidated basis and for each of the Company’s
business segments. Adjusted EBITDA is a metric used by management and
frequently used by the financial community which provides insight into
an organization’s operating trends and facilitates comparisons between
peer companies, since interest, taxes, depreciation and amortization can
differ greatly between organizations as a result of differing capital
structures and tax strategies. Adjusted EBITDA can also be a useful
measure of a company’s ability to service debt and is one of the
measures used for determining the Company’s debt covenant compliance.
Adjusted EBITDA excludes certain items that are unusual in nature or not
comparable from period to period.In addition, the Company’s
management uses adjusted diluted earnings per share as one means of
analyzing the Company’s current and future financial performance and
identifying trends in its financial condition and results of operations.Management believes that adjusted diluted earnings per share is a
useful measure for providing further insight into our operating
performance because it eliminates the effects of certain items that are
not comparable from one period to the next.The Company’s
management believes that free cash flow is useful to both management and
investors in their analysis of the Company’s ability to service and
repay its debt and meet its working capital requirements.Free
cash flow should not be considered in isolation or as a substitute for
pretax income (loss), net income (loss), cash provided by (used in)
operating activities or other statement of operations or cash flow
statement data prepared in accordance with GAAP or as a measure of
profitability or liquidity.In addition, the calculation of free
cash flow does not reflect cash used to service debt and therefore, does
not reflect funds available for investment or discretionary uses.The
Company provides this information to investors to assist in comparisons
of past, present and future operating results and to assist in
highlighting the results of on-going operations.While the
Company’s management believes that non-GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace the Company’s GAAP financial results and should be read in
conjunction with those GAAP results.Forward-Looking StatementsCertain matters discussed in this news release and other oral and
written statements by representatives of the Company regarding matters
such as the Company’s ability to meet its expectations for its fiscal
2012 (including its ability to increase its net sales, adjusted EBITDA
and free cash flow and reduce its cumulative debt), may be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. We have tried, whenever possible, to
identify these statements by using words like “future,” “anticipate”,
“intend,” “plan,” “estimate,” “believe,” “expect,” “project,”
“forecast,” “could,” “would,” “should,” “will,” “may,” and similar
expressions of future intent or the negative of such terms. These
statements are subject to a number of risks and uncertainties that could
cause results to differ materially from those anticipated as of the date
of this release.Actual results may differ materially as a result
of (1) Spectrum Brands Holdings’ ability to manage and otherwise comply
with its covenants with respect to its significant outstanding
indebtedness, (2) our ability to integrate, and to realize synergies
from, the combined businesses of Spectrum Brands and Russell Hobbs, (3)
risks that changes and developments in external competitive market
factors, such as introduction of new product features or technological
developments, development of new competitors or competitive brands or
competitive promotional activity or spending, (4) changes in consumer
demand for the various types of products Spectrum Brands Holdings
offers, (5) unfavorable developments in the global credit markets, (6)
the impact of overall economic conditions on consumer spending, (7)
fluctuations in commodities prices, the costs or availability of raw
materials or terms and conditions available from suppliers, (8) changes
in the general economic conditions in countries and regions where
Spectrum Brands Holdings does business, such as stock market prices,
interest rates, currency exchange rates, inflation and consumer
spending, (9) Spectrum Brands Holdings’ ability to successfully
implement manufacturing, distribution and other cost efficiencies and to
continue to benefit from its cost-cutting initiatives, (10) Spectrum
Brands Holdings’ ability to identify, develop and retain key employees,
(11) unfavorable weather conditions and various other risks and
uncertainties, including those discussed herein and those set forth in
the securities filings of each of Spectrum Brands Holdings, Inc. and
Spectrum Brands, Inc., including each of their most recently filed
Annual Report on Form 10-K or Quarterly Reports on Form 10-Q.Spectrum Brands Holdings also cautions the reader that its estimates
of trends, market share, retail consumption of its products and reasons
for changes in such consumption are based solely on limited data
available to Spectrum Brands Holdings and management’s reasonable
assumptions about market conditions, and consequently may be inaccurate,
or may not reflect significant segments of the retail market.Spectrum
Brands Holdings also cautions the reader that undue reliance should not
be placed on any forward-looking statements, which speak only as of the
date of this release.Spectrum Brands Holdings undertakes no duty
or responsibility to update any of these forward-looking statements to
reflect events or circumstances after the date of this report or to
reflect actual outcomes.
Table 1SPECTRUM BRANDS HOLDINGS, INC.Condensed Consolidated Statements of Operations
For the three and twelve months ended September 30, 2011 and
September 30, 2010
(Unaudited)
(In millions, except per share amounts)
Three Months Ended September 30,
Twelve Months Ended September 30,
F2011
F2010
INC(DEC)
F2011
F2010
INC(DEC)
%
%
Net sales
$
827.3
$
789.0
4.9
%
$
3,186.9
$
2,567.0
24.1
%
Cost of goods sold
543.9
512.9
2,050.2
1,638.5
Restructuring and related charges
2.9
1.6
7.8
7.2
Gross profit
280.5
274.5
2.2
%
1,128.9
921.3
22.5
%
Selling
132.8
139.0
536.5
466.8
General and administrative
62.0
59.4
241.7
199.4
Research and development
7.3
9.7
32.9
31.0
Acquisition and integration related charges
5.1
16.0
36.6
38.4
Restructuring and related charges
8.0
5.8
20.8
17.0
Intangibles impairment
32.5
-
32.5
-
Total operating expenses
247.7
229.9
901.0
752.6
Operating income
32.8
44.6
227.9
168.7
Interest expense
42.4
46.9
208.3
277.0
Other expense, net
1.1
3.8
2.5
12.3
(Loss) income from continuing operations before reorganization items
and income tax expense
(10.7
)
(6.1
)
17.1
(120.6
)
Reorganization items, net
-
-
-
3.6
(Loss) gain from continuing operations before income taxes
(10.7
)
(6.1
)
17.1
(124.2
)
Income tax expense
23.1
18.2
92.3
63.2
Loss from continuing operations
(33.8
)
(24.3
)
(75.2
)
(187.4
)
Loss from discontinued operations, net of tax (a)
-
-
-
(2.7
)
Net loss
$
(33.8
)
$
(24.3
)
$
(75.2
)
$
(190.1
)
Average shares outstanding (b)
51.9
50.4
51.1
36.0
Loss from continuing operations
$
(0.65
)
$
(0.48
)
$
(1.47
)
$
(5.20
)
Loss from discontinued operations
-
-
-
(0.08
)
Basic loss per share
$
(0.65
)
$
(0.48
)
$
(1.47
)
$
(5.28
)
Average shares and common stock equivalents outstanding (b) (c)
51.9
50.4
51.1
36.0
Loss from continuing operations
$
(0.65
)
$
(0.48
)
$
(1.47
)
$
(5.20
)
Loss from discontinued operations
-
-
-
(0.08
)
Diluted loss per share
$
(0.65
)
$
(0.48
)
$
(1.47
)
$
(5.28
)
Note: The merger with
Russell Hobbs consummated on June 16, 2010. The financial results
of Russell Hobbs are reported in the consolidated results since
June 16, 2010.
(a) Reflects the loss from discontinued operations, net of tax, of
the growing products portion of the Home and Garden Business. The
shutdown of the growing products portion of the Home and Garden
Business was completed during the second quarter of Fiscal 2009.
(b) Per share figures calculated prior to rounding.
(c) For the three and twelve months ended September 30, 2011 and
September 30, 2010, we have not assumed the exercise of common stock
equivalents as the impact would be antidilutive.
Table 2SPECTRUM BRANDS HOLDINGS, INC.Supplemental Financial Data
For the three and twelve months ended September 30, 2011 and
September 30, 2010
(Unaudited)
($ in millions)
Supplemental Financial Data
F2011
F2010
Cash and cash equivalents
$
142.4
$
170.6
Trade receivables, net
$
356.6
$
365.0
Days Sales Outstanding (a)
33
41
Inventory, net
$
434.6
$
530.3
Inventory Turnover (b)
3.8
3.0
Total Debt
$
1,551.6
$
1,743.8
Three Months Ended September 30,
Twelve Months Ended September 30,
Supplemental Cash Flow Data
F2011
F2010
F2011
F2010
Depreciation and amortization, excluding amortization of debt
issuance costs
$
34.5
$
33.9
$
135.1
$
117.4
Capital expenditures
$
8.7
$
22.9
$
36.2
$
40.3
Three Months Ended September 30,
Twelve Months Ended September 30,
Supplemental Segment Sales & Profitability
F2011
F2010
F2011
F2010
Net Sales
Global Batteries & Appliances
$
592.9
$
567.6
$
2,254.1
$
1,658.1
Global Pet Supplies
153.8
145.1
578.9
566.3
Home and Garden
80.6
76.3
353.9
342.6
Total net sales
$827.3
$789.0
$3,186.9
$2,567.0
Segment Profit
Global Batteries & Appliances
$
58.4
$
52.8
$
238.9
$
171.3
Global Pet Supplies
21.7
19.3
75.6
57.7
Home and Garden
14.2
9.7
65.2
51.2
Total segment profit
94.3
81.8
379.7
280.2
Corporate
13.0
13.8
54.1
48.9
Restructuring and related charges
10.9
7.4
28.6
24.2
Acquisition and integration related charges
5.1
16.0
36.6
38.4
Intangibles impairment
32.5
-
32.5
-
Interest expense
42.4
46.9
208.3
277.0
Other expense, net
1.1
3.8
2.5
12.3
(Loss) income from continuing operations before reorganization items
and income tax expense
$(10.7)
$(6.1)
$17.1
$(120.6)
Note: The merger with
Russell Hobbs consummated on June 16, 2010. The financial results
of Russell Hobbs are reported within the Global Batteries &
Appliances segment since June 16, 2010.
(a) Reflects actual days sales outstanding at end of period.
(b) Reflects cost of sales (excluding restructuring and related
charges) during the last twelve months divided by inventory as of
the end of the period.
Table 3SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of GAAP to Adjusted Diluted Earnings Per Share
For the three and twelve months ended September 30, 2011 and
September 30, 2010
(Unaudited)
THREE MONTHS
TWELVE MONTHS
F2011
F2010
F2011
F2010
Diluted loss per share, as reported
$
(0.65
)
$
(0.48
)
$
(1.47
)
$
(5.28
)
Adjustments, net of tax:
Preacquisition earnings
-
-
-
0.49
(a)
Acquisition and integration related charges
0.06
(b)
0.20
(b)
0.47
(b)
0.49
(b)
Restructuring and related charges
0.14
(c)
0.10
(d)
0.36
(e)
0.31
(f)
Intangible asset impairment
0.41
(g)
-
0.41
(g)
-
Debt refinancing costs
-
-
0.37
(h)
1.04
(h)
Discontinued operations
-
-
-
0.05
(i)
Fresh-start reporting inventory fair value adjustment
-
-
-
0.44
(j)
Reorganization items, net
-
-
-
0.05
(k)
Russell Hobbs inventory fair value adjustment
-
0.03
(l)
-
0.03
(l)
Income taxes
0.51
(m)
0.40
(n)
1.69
(m)
2.09
(n)
Share dilution
-
-
-
1.56
(o)
Other adjustments
-
-
-
(0.06
)
(p)
1.12
0.73
3.30
6.49
Diluted earnings per share, as adjusted
$0.47
$0.25
$1.83
$1.21
(a) For the twelve months ended September 30, 2010, the net of tax
adjustment of $25.1 million reflects the adjusted earnings of the
Russell Hobbs’ business from the beginning of the period through
June 15, 2010, the date prior to the Merger.
(b) For the three and twelve months ended September 30, 2011,
reflects $3.3 million, net of tax, and $23.8 million, net of tax,
respectively, of acquisition and integration primarily related
charges in connection with the Merger with Russell Hobbs. The costs
were primarily costs incurred to integrate the businesses. For the
three and twelve months ended September 30, 2010, reflects $10.4
million, net of tax, and $25.0 million, net of tax, respectively, of
acquisition and integration related charges related to the Merger
with Russell Hobbs. The costs were primarily legal and professional
fees and employee termination costs.
(c) For the three months ended September 30, 2011, reflects $7.1
million, net of tax, of restructuring and related charges related to
the Global Cost Reduction Initiatives announced in Fiscal 2009.
(d) For the three months ended September 30, 2010, reflects $4.8
million, net of tax, of restructuring and related charges as
follows: (i) $2.7 million for the Global Cost Reduction Initiatives
announced in 2009; (ii) $1.6 million for the Global Realignment
Initiatives announced in 2007; and (iii) $0.5 million for the Ningbo
Exit Plan.
(e) For the twelve months ended September 30, 2011, reflects $18.6
million, net of tax, of restructuring and related charges as
follows: (i) $16.6 million for the Global Cost Reduction Initiatives
announced in Fiscal 2009 and (ii) $2.0 million for the Global
Realignment Initiatives announced in Fiscal 2007.
(f) For the twelve months ended September 30, 2010, reflects $15.7
million, net of tax, of restructuring and related charges as
follows: (i) $12.0 million for the Global Cost Reduction Initiatives
announced in 2009; (ii) $2.3 million for the Global Realignment
Initiatives announced in 2007; and (iii) $1.4 million for the Ningbo
Exit Plan.
(g) For the three and twelve months ended September 30, 2011,
reflects an impairment charge of $21.1 million, net of tax, of trade
names as follows: (i) $15.1 million related to Global Batteries &
Appliances; (ii) $5.6 million related to Global Pet Supplies; and
(iii) $0.4 million related to the Home and Garden Business. The
impairment evaluation was done in accordance with ASC 350,
“Intangibles-Goodwill and Other.”
(h) For the twelve months ended September 30, 2011, reflects $19.1
million, net of tax, related to the write off of unamortized debt
financing costs and original issue discount in connection with the
refinancing of the Company’s Term Loan during Company’s second
quarter of Fiscal 2011. For the twelve months ended September 30,
2010, reflects $53.4 million, net of tax, related to the write-off
of unamortized debt issuance costs and the write off of unamortized
discounts and premiums related to extinguishment of debt that was
refinanced in conjunction with the Merger of Russell Hobbs.
(i) Reflects a loss from discontinued operations, net of tax, of
$2.7 million related to the Company’s shutdown of the growing
products portion of the Home and Garden Business. The shutdown was
completed during the Company’s second quarter of Fiscal 2009.
(j) Reflects $22.3 million, net of tax, related to an inventory
write up in conjunction with the valuation of the Company as a
result of fresh-start reporting upon the Company’s emergence from
bankruptcy in the fourth quarter of Fiscal 2009.
(k) Reflects $2.4 million, net of tax, related to professional fees
in connection with the Company’s voluntary filing of, and subsequent
emergence from, Chapter 11 bankruptcy.
(l) Reflects $1.4 million, net of tax, related to an inventory write
up in conjunction with the Merger with Russell Hobbs in accordance
with ASC 805, Business Combinations.
(m) For the three and twelve months ended September 30, 2011,
reflects adjustments to income tax expense of $26.9 million and
$86.3 million, respectively, to exclude the impact of the valuation
allowance against deferred taxes and other tax related items in
order to reflect a normalized effective tax rate.
(n) For the three and twelve months ended September 30, 2010,
reflects adjustments to income tax expense of $20.3 million and
$106.7 million, respectively, to exclude the impact of the valuation
allowance against deferred taxes and other tax related items in
order to reflect a normalized effective tax rate.
(o) Adjustment to reflect the full dilution of shares and restricted
stock outstanding, post merger, assuming shares were issued and
outstanding for all periods presented.
(p) For the twelve months ended September 30, 2010, general and
administrative expenses include $3.1 million, net of tax,
respectively, related to expiring taxes and related estimated
penalties, associated with the Company’s provision for presumed
credits applied to the Brazilian excise tax on manufactured
products, for which the examination period expired.
Table 4SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of GAAP Loss from Continuing Operations to
Adjusted EBITDAfor the three months ended September 30, 2011
(Unaudited)
($ millions)
Global Batteries & Appliances
Global Pet Supplies
Home & Garden
Corporate
Unallocated Items (a)
Consolidated Spectrum Brands Holdings, Inc.
Net income (loss)
$
24.8
$
6.3
$
12.9
$
(12.2
)
$
(65.5
)
$
(33.8
)
Income tax expense
-
-
-
-
23.1
23.1
Interest expense
-
-
-
-
42.4
42.4
Restructuring and related charges
4.6
6.8
0.6
(1.3
)
-
10.9
Acquisition and integration related charges
6.7
-
-
(1.6
)
-
5.1
Intangible asset impairment
23.2
8.6
0.7
-
-
32.5
Adjusted EBIT
$
59.3
$
21.7
$
14.2
$
(15.1
)
$
-
$
80.0
Depreciation and amortization (b)
17.2
6.7
3.1
7.6
-
34.5
EBITDA
$
76.5
$
28.3
$
17.3
$
(7.5
)
$
-
$
114.5
Note: Amounts calculated prior to rounding
(a) It is the Company’s policy to record Income tax expense
(benefit) and interest expense on a consolidated basis. Accordingly,
such amounts are not reflected in the operating results of the
operating segments.
(b) Included within depreciation and amortization is amortization of
unearned restricted stock compensation.
Table 4SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of GAAP Loss from Continuing Operations to
Adjusted EBITDAfor the twelve months ended September 30, 2011
(Unaudited)
($ millions)
Global Batteries & Appliances
Global Pet Supplies
Home & Garden
Corporate
Unallocated Items (a)
Consolidated Spectrum Brands Holdings, Inc.
Net income (loss)
$
179.6
$
49.1
$
61.8
$
(65.2
)
$
(300.6
)
$
(75.1
)
-
Income tax expense
-
-
-
-
92.3
92.3
Interest expense
-
-
-
-
184.0
184.0
Write-off unamortized discounts and financing fees (b)
-
-
-
-
24.3
24.3
Restructuring and related charges
6.1
16.7
2.7
3.1
-
28.6
Acquisition and integration related charges
30.9
0.4
-
5.3
-
36.6
Intangible asset impairment
23.2
8.6
0.7
32.5
Add back accelerated depreciation ( c)
(1.0
)
-
-
-
-
(1.0
)
Adjusted EBIT
$
238.8
$
74.8
$
65.2
$
(56.8
)
$
-
$
322.0
Depreciation and amortization (d)
68.1
24.3
12.4
30.4
-
135.1
EBITDA
$
306.9
$
99.1
$
77.6
$
(26.4
)
$
-
$
457.1
Note: Amounts calculated prior to rounding
(a) It is the Company’s policy to record Income tax expense and
interest expense on a consolidated basis. Accordingly, such amounts
are not reflected in the operating results of the operating segments.
(b) Adjustment reflects $24.3 million write off of unamortized
deferred financing fees and discounts associated with the
refinancing of the Company’s Term Loan facility.
(c) Adjustment reflects accelerated depreciation associated with
certain restructuring initiatives. Inasmuch as this amount is
included within Restructuring and related charges, this adjustment
negates the impact of reflecting the add back of depreciation.
(d) Included within depreciation and amortization is amortization of
unearned restricted stock compensation.
Table 4SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of GAAP Net Income (loss) to Adjusted EBITDAfor the three months ended September 30, 2010
(Unaudited)
($ millions)
Global Batteries & Appliances
Global Pet Supplies
Home & Garden
Corporate
Unallocated Items (a)
Consolidated Spectrum Brands Holdings, Inc.
Net Income (loss)
$
35.5
$
15.7
$
9.0
$
(19.4
)
$
(65.0
)
$
(24.3
)
Income tax expense
-
-
-
-
18.2
18.2
Interest expense
-
-
-
-
46.9
46.9
Restructuring and related charges
1.0
3.2
0.8
2.4
-
7.4
Acquisition and integration related charges
12.8
-
-
3.1
-
16.0
Accelerated depreciation and amortization (b)
-
-
(0.6
)
-
-
(0.6
)
Russell Hobbs inventory fair value adjustment
2.2
-
-
-
-
2.2
Adjusted EBIT
51.6
18.9
9.2
(13.9
)
-
65.8
Depreciation and amortization (c)
18.8
6.9
4.1
4.1
-
33.9
Adjusted EBITDA
$
70.4
$
25.8
$
13.3
$
(9.8
)
$
-
$
99.7
Note: Amounts calculated prior to rounding
(a) It is the Company’s policy to record Income tax expense and
Interest expense on a consolidated basis. Accordingly, such amounts
are not reflected in the operating results of the operating segments.
(b) Adjustment reflects restricted stock amortization and
accelerated depreciation associated with certain restructuring
initiatives. Inasmuch as this amount is included within
Restructuring and related charges, this adjustment negates the
impact of reflecting the add back of depreciation and amortization.
(c) Included within depreciation and amortization is amortization of
unearned restricted stock compensation.
Table 4SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of GAAP Net Income (loss) to Adjusted EBITDAfor the twelve months ended September 30, 2010
(Unaudited)
($ millions)
Global Batteries & Appliances
Global Pet Supplies
Home & Garden
Corporate
Unallocated Items (a)
Consolidated Spectrum Brands Holdings, Inc.
Net Income (loss)
$
142.8
$
51.5
$
40.0
$
(84.1
)
$
(340.2
)
$
(190.1
)
Loss from discontinued operations, net of tax
-
-
2.7
-
-
2.7
Income tax expense
-
-
-
-
63.2
63.2
Interest expense
-
-
-
-
194.9
194.9
Write-off unamortized discounts and financing fees (b)
-
-
-
-
82.1
82.1
Pre-acquisition earnings
61.4
3.7
1.2
-
-
66.3
Restructuring and related charges
3.5
6.8
8.5
5.5
-
24.2
Acquisition and integration related charges
14.3
-
-
24.1
-
38.4
Reorganization items, net
-
-
-
3.6
-
3.6
Accelerated depreciation and amortization (c)
-
-
(0.8
)
(2.1
)
-
(3.0
)
Fresh-Start inventory fair value adjustment
18.6
13.7
2.2
-
-
34.5
Russell Hobbs inventory fair value adjustment
2.5
-
-
-
-
2.5
Brazilian IPI credit/other
(4.8
)
(0.1
)
-
-
-
(4.9
)
Adjusted EBIT
238.3
75.5
53.7
(53.3
)
-
314.3
Depreciation and amortization (d)
57.9
28.3
14.4
16.9
-
117.4
Adjusted EBITDA
$
296.2
$
103.8
$
68.1
$
(36.4
)
$
-
$
431.8
Note: Amounts calculated prior to rounding
(a) It is the Company’s policy to record Income tax expense and
interest expense on a consolidated basis. Accordingly, such amounts
are not reflected in the operating results of the operating segments.
(b) Adjustment reflects $61.4 million write off of unamortized
deferred financing fees and discounts associated with the Company’s
refinanced capital structure on June 16, 2010; $4.2 million charge
related to pre-payment premiums associated with the paydown of the
ABL and FILO extinguished on June 16, 2010 and $16.5 million related
to the termination of interest swaps and commitment fees.
(c) Adjustment reflects restricted stock amortization and
accelerated depreciation associated with certain restructuring
initiatives. Inasmuch as this amount is included within
Restructuring and related charges, this adjustment negates the
impact of reflecting the add back of depreciation and amortization.
(d) Included within depreciation and amortization is amortization of
unearned restricted stock compensation.
Table 5SPECTRUM BRANDS HOLDINGS, INC.Pro Forma Net Sales Comparison
For the twelve months ended September 30, 2011 and September 30, 2010
(Unaudited)
(In millions)
TWELVE MONTHS
F2011
F2010
INC(DEC)
%
Spectrum Brands Holdings, Inc.
$
3,186.9
$
2,567.0
24.1
%
Russell Hobbs (a)
-
544.0
Pro Forma Net Sales
$3,186.9
$3,111.0
2.4
%
(a) Reflects net sales for Russell Hobbs for the period from the
beginning of the applicable period through June 15, 2010, the day
prior to the acquisition. This adjustment results in reporting net
sales for the period as if the acquisition had occurred at the
beginning of all periods presented.
Table 6SPECTRUM BRANDS HOLDINGS, INC.Reconciliation of Forecasted Cash Flow from Operating Activities
to Forecasted Free Cash Flowfor the twelve months ended September 30, 2012
(Unaudited)
