Spectrum Brands Holdings (NYSE:SPB)

Second Quarter 2012 Results

• Spectrum Brands Holdings reported consolidated net sales of $746.3 million for the second quarter of fiscal 2012, an increase of 7.6 percent compared with $693.9 million in the prior year.
• Adjusted for certain items in both year’s second quarters, which are presented in Table 3 of this press release and which management believes are not indicative of the Company’s ongoing normalized operations, the Company reported adjusted diluted earnings per share of $0.34, a non-GAAP measure, for the second quarter of fiscal 2012, an increase of 47.8 percent compared with $0.23 last year.

With the improved second-quarter results reported today, we remain on target to deliver another year of growth and shareholder value creation in fiscal 2012,” said Dave Lumley, Chief Executive Officer of Spectrum Brands Holdings. “Each of our three segments contributed to our solid performance globally, which was driven by a combination of volume growth, retail distribution gains, new products, select pricing initiatives, continued stringent cost and expense control programs, and successful execution on a number of cost reduction programs.

“Our accretive, bolt-on acquisitions of the Black Flag®/TAT® brands and the FURminator® pet grooming business completed in late 2011 both contributed to our higher second-quarter performance,” Mr. Lumley said. “We are excited about the compelling synergies they bring and their prospects for accelerating our sales and EBITDA growth for the rest of this year and beyond.

“During the second quarter, we strengthened our balance sheet, lowered our cost of capital and increased our strategic and financial flexibility to create greater shareholder value with the replacement of our 12% PIK notes with 6.75% senior unsecured notes,” Mr. Lumley said. “This is a significant step forward in the further improvement and refinement of our capital structure.

“Our Spectrum Value Model continues to work effectively and resonate more and more with retailers and consumers worldwide in this prolonged and challenging environment of sluggish retail activity, tighter retail inventories, inflationary pressures, and rising commodity and Asian supply chain costs,” he said. “We believe global consumers are embracing our ‘same performance for less price’ value brand proposition and are increasingly open to trial and brand conversion. As a result, we are generally outperforming our competition and categories, as significant distribution gains across all of our divisions are driving organic growth and share increases.

“In short, our Spectrum Value Model is a game changer, delivering genuine value to the consumer with products that work as well as, or better than, our competitors for a lower cost,” Mr. Lumley said. “It also provides higher margins and lower acquisition costs to our retail customers, along with excellent category management. Importantly, most of our products are non-discretionary, non-premium-priced, replacement products that provide value, quality and performance to consumers in their daily lives.

“As we have pointed out for a number of quarters, major and ongoing commodity and Asian supply chain cost increases are a headwind, especially in our appliances business,” he said. “However, we are offsetting most of these cost pressures with our global new product development and continuous improvement processes, restructuring and integration cost synergy programs, retail distribution and share gains, select pricing actions, and maintenance of stringent expense control programs.

“As we look to an even stronger second half of the year, we continue to expect higher net sales, a swing to net income from a net loss, and improved adjusted EBITDA and free cash flow in fiscal 2012 from organic growth, our recent acquisitions, and cost savings and expense control initiatives,” said Mr. Lumley. “We remain excited about Spectrum Brands' outlook for building an even stronger platform for sustained growth and value creation.”

Fiscal 2012 Outlook

The Company continues to expect fiscal 2012 net sales to increase at or above the rate of GDP. The Company further expects to report net income for fiscal 2012 versus a net loss in fiscal 2011, with fiscal 2012 adjusted EBITDA expected to grow at a higher percentage rate than net sales. The Company also reaffirms its fiscal 2012 goal of at least $200 million of free cash flow. Capital expenditures are projected to approximate $45 million in fiscal 2012.

First Quarter 2012 Results

• Net sales of $848.8 million for the first quarter of fiscal 2012, a decrease of 1.4 percent compared with $861.1 million for the same period in fiscal 2011.
• Adjusted diluted earnings per share of $0.69, a non-GAAP measure, for the first quarter of fiscal 2012, an increase of 46.8 percent compared with $0.47 in fiscal 2011’s first quarter.

With our solid first quarter reported today, we believe we are on target to deliver yet another year of measured growth and additional value creation in fiscal 2012,” said Dave Lumley, Chief Executive Officer of Spectrum Brands Holdings. “We posted strong EPS in the quarter versus a loss per share in 2011, and, perhaps most importantly, achieved a third consecutive first-quarter record for adjusted EBITDA of $125 million, a 2 percent improvement.

“Spectrum Brands is truly on the move, and these are exciting times for our Company,” Mr. Lumley said. “We expect higher net sales, a swing to net income from a net loss, and improved adjusted EBITDA and free cash flow in fiscal 2012 from organic growth and bolt-on acquisitions, along with a continued emphasis on debt paydown and balance sheet deleveraging. Spectrum Brands’ time is truly now.”

Fiscal 2012 Outlook

The Company expects fiscal 2012 net sales to increase at or above the rate of GDP. The Company further expects net income in fiscal 2012 versus a net loss in fiscal 2011, with fiscal 2012 adjusted EBITDA expected to grow at a higher percentage increase than net sales. The Company also reaffirms its fiscal 2012 goal of at least $200 million of net cash provided from operating activities after purchases of property, plant and equipment, or free cash flow. Capital expenditures are projected to approximate $45 million in fiscal 2012.

Common Stock Repurchase Program

In October 2011, the Company’s Board of Directors approved a new $30 million common stock repurchase program. The authorization is effective for 12 months. The repurchase program may be suspended or discontinued at any time.

During the first quarter of fiscal 2012, the Company repurchased 491,297 shares of its common stock at an average price of $26.41 per share, for a total cost of $13.0 million.

MADISON, Wis.--(BUSINESS WIRE)--Spectrum Brands Holdings, Inc. (NYSE: SPB), a global consumer products company with market-leading brands, today reiterated its fiscal 2011 expectations to deliver an increase in adjusted EBITDA to between $455 million and $465 million with free cash flow improving to between $155 million and $165 million. The Company said it remained on track to deliver a cumulative debt reduction on its original $750 million Senior Secured Term Loan of at least $200 million by the end of fiscal 2011, with $90 million of voluntary prepayments already made to date for a current Term Loan balance of $658 million. The Company said it now expects fiscal 2011 net sales growth in the range of 1.5 to 2.5 percent. The revised net sales forecast is primarily due to challenges in the retail marketplace.

“This is truly a new beginning for Spectrum Brands, signifying the positive momentum of our company as we move forward on solid footing with a strong, global portfolio of brands,” said Kent Hussey, CEO of Spectrum Brands. “As a result of the successful implementation of operational and financial restructuring initiatives in recent years as well as cost savings and market share gains in some of our key product segments, we have achieved improved profitability and positive cash flow. Now, as we look forward to adding the Russell Hobbs’ portfolio of well-known brands to our offerings later this year, I believe we are well positioned to deliver increased value to our shareholders.”

Source: Business Wire (March 15, 2010)