Domingo 22 de Octubre 2017

Spectrum Brands Holdings Reports Fiscal 2017 First Quarter Results, Reaffirms Outlook for 8th Consecutive Year of Record Financial Performance

MIDDLETON, Wis.–(BUSINESS WIRE)–Spectrum Brands Holdings, Inc. (NYSE: SPB), a global consumer products
company offering an expanding portfolio of leading brands providing
superior value to consumers and customers every day, today reported
solid profit growth for the first quarter of fiscal 2017 ended January
1, 2017 and reiterated expectations for an eighth consecutive year of
record results for fiscal 2017.

Fiscal 2017 First Quarter Highlights:

  • Net sales of $1.21 billion in the first quarter of fiscal 2017
    decreased 0.6 percent compared to $1.22 billion last year. Excluding
    the negative impact of $18.8 million of foreign exchange, organic net
    sales, a non-GAAP measure, increased 1.0 percent from the prior year.
    See Other Supplemental Information for reconciliation to GAAP net
    sales.
  • Net income of $65.2 million and diluted EPS of $1.10 in the first
    quarter of fiscal 2017 decreased compared to net income of $73.6
    million and diluted EPS of $1.24 in fiscal 2016 primarily due to a
    higher effective tax rate.
  • Adjusted diluted EPS, a non-GAAP measure, of $1.21 in the first
    quarter of fiscal 2017 increased 19.8 percent compared to $1.01 last
    year predominantly due to volume, improved mix, operating efficiencies
    and lower interest costs. See Other Supplemental Information for
    reconciliation to GAAP EPS.
  • Adjusted EBITDA, a non-GAAP measure, of $214.2 million in the first
    quarter of fiscal 2017 increased 3.4 percent compared to $207.1
    million in fiscal 2016. Excluding the negative impact of foreign
    exchange of $6.6 million, organic adjusted EBITDA, a non-GAAP measure,
    of $220.8 million increased 6.6 percent versus the prior year. See
    Other Supplemental Information for reconciliation to GAAP net income.
  • Adjusted EBITDA margin, a non-GAAP measure, of 17.7 percent in the
    first quarter of fiscal 2017 improved from 17.0 percent in fiscal 2016
    primarily due to improved mix and productivity, partially offset by
    revenue-generating investments. See Other Supplemental Information for
    reconciliation to GAAP net income.
  • In January 2017 the Board of Directors of Spectrum Brands approved
    a 10.5 percent increase in the quarterly common stock dividend rate to
    $0.42, effective with the March 2017 payment.
  • Free cash flow, a non-GAAP measure, is expected to grow to
    approximately $575-$590 million versus $535 million in fiscal 2016 and
    $454 million in fiscal 2015, based on expected net cash provided from
    operating activities of $695-$710 million after expected purchases of
    property, plant and equipment of $110-$120 million. See Other
    Supplemental Information for reconciliation to Forecasted GAAP Cash
    Flow from Operating Activities.

“We delivered solid first quarter adjusted EBITDA and adjusted earnings
per share growth with strong margin expansion despite a continuation of
foreign currency headwinds,” said Andreas Rouvé, Chief Executive Officer
of Spectrum Brands Holdings. “These results maintain the momentum from
our record fiscal 2016 and provide a good start to achieving an 8th
consecutive year of record financial performance in fiscal 2017.

“Hardware and Home Improvement delivered record results, the performance
of global batteries and small appliances was excellent and, regionally,
Europe, Latin America, Canada and Asia-Pacific reported solid organic
adjusted EBITDA growth,” Mr. Rouvé said.

“As expected, our sales performance was challenged by a difficult
comparison to our large quarterly organic revenue increase last year in
the first quarter of 6.3%,” he said. “Our flat 2017 first quarter
reported sales and organic growth of 1% were impacted by planned exits
of unprofitable businesses of approximately $8 million and two fewer
shipping days of approximately $20-$25 million which combined had an
approximately 2.5% adverse effect on our top line. The
shipping days impact will largely benefit the fourth quarter.

“We are seeing the operating leverage benefits of our global
infrastructure and shared services platform, as well as our continuous
improvement of processes and strong cost reduction results in our plants
and supply chains,” Mr. Rouvé said. “The positive impact of the exit of
unprofitable businesses and the launch of innovative products is helping
to improve profitability, margins and free cash flow.

“We continue to expect top-line growth above category rates, strong
bottom-line growth and a free cash flow increase of up to 10 percent in
fiscal 2017, driven by the continuous launch of innovation and further
leveraging of our global platform to expand distribution of our
products,” Mr. Rouvé said.

Fiscal 2017 First Quarter Consolidated Financial Results

Net sales of $1.21 billion in the first quarter of fiscal 2017 decreased
0.6 percent compared to $1.22 billion in fiscal 2016. Excluding the
negative impact of $18.8 million of foreign exchange, organic net sales
increased 1.0 percent.

Gross profit and gross profit margin in the first quarter of fiscal 2017
were $450.0 million and 37.1 percent, respectively, compared to $440.7
million and 36.2 percent, respectively, last year. The gross profit
margin percentage increase was primarily due to strong productivity and
improved mix, partially offset by the negative impact of foreign
exchange.

Operating expenses of $299.0 million in the first quarter of fiscal 2017
were essentially unchanged compared to $298.2 million in the prior year.

The Company reported net income of $65.2 million, or $1.10 diluted EPS,
in the first quarter of fiscal 2017 on average diluted shares and common
stock equivalents outstanding of 59.5 million. In the first quarter of
fiscal 2016, net income was $73.6 million, or $1.24 diluted EPS, on
average diluted shares and common stock equivalents outstanding of 59.2
million. The Company generated adjusted diluted EPS, a non-GAAP measure,
of $1.21 in the first quarter of fiscal 2017, an increase of 19.8
percent compared to $1.01 primarily as a result of favorable mix,
operating efficiencies and lower interest costs, partially offset by the
negative impact of foreign exchange.

Adjusted EBITDA of $214.2 million in the first quarter of fiscal 2017
increased 3.4 percent compared to $207.1 million in fiscal 2016. HHI
delivered record adjusted EBITDA, and Global Batteries & Appliances,
Global Pet Supplies and Global Auto Care reported increased EBITDA.
Excluding the negative impact of $6.6 million of foreign exchange,
organic adjusted EBITDA of $220.8 increased 6.6 percent versus the first
quarter of fiscal 2016. Reported adjusted EBITDA margin expanded to 17.7
percent compared to 17.0 percent last year. The improvement was
primarily due to improved operating expense leverage.

Fiscal 2017 First Quarter Segment Level Data

Global Batteries & Appliances (GBA)

       
Three Month Period Ended
(in millions, except %) January 1, 2017 January 3, 2016 Variance
Net Sales $ 609.5 $ 611.3 $ (1.8 ) (0.3 %)
Operating Income 88.7 89.9 (1.2 ) (1.3 %)
Operating Income Margin 14.6 % 14.7 % (10 ) bps
Adjusted EBITDA 109.0 105.5 3.5 3.3 %
Adjusted EBITDA Margin 17.9 % 17.3 % 60 bps

The GBA segment reported fiscal 2017 first quarter net sales of $609.5
million were essentially unchanged versus $611.3 million in the year-ago
quarter. Excluding the negative impact of foreign exchange of $15.7
million, organic net sales increased 2.3 percent as consumer batteries
and small appliances increases more than offset lower personal care net
sales.

Global battery net sales of $260.5 million in the first quarter of
fiscal 2017 increased 3.1 percent compared to $252.6 million in the
first quarter of fiscal 2016. Excluding negative foreign exchange
impacts of $4.5 million, organic net sales improved 4.9 percent. Solid
growth on a currency neutral basis in Europe, primarily from new
customers, organic increases and effective promotions, as well as in
Latin America and Asia-Pacific drove the improvement. North America
delivered strong growth in alkaline batteries.

Net sales for the global personal care product category of $162.6
million in the first quarter of fiscal 2017 fell 3.7 percent compared to
$168.8 million last year. Excluding negative foreign exchange impacts of
$3.7 million, organic net sales declined 1.5 percent. Growth in constant
currency in Europe, primarily in hair care appliances and hair removal,
and in Latin America and Asia-Pacific was more than offset by lower
North American revenues. The North American decline was primarily due to
fewer promotions and distribution adjustments at key retailers.

Net sales of $186.4 million in the global small appliances product
category in the first quarter of fiscal 2017 declined 1.8 percent
compared to $189.9 million in the year-ago quarter. Excluding negative
foreign exchange impacts of $7.5 million, organic net sales increased
2.1 percent. The improvement was attributable to strong growth in North
America from a combination of distribution gains, incremental listings,
effective promotions and e-commerce growth, as well as a modest increase
on a currency neutral basis in Europe.

Operating income decreased 1.3 percent to $88.7 million in the first
quarter compared to $89.9 million in the prior year. Adjusted EBITDA of
$109.0 million increased 3.3 percent compared to $105.5 million in the
year-ago quarter. Excluding negative foreign exchange impacts of $9.6
million, organic adjusted EBITDA of $118.6 million grew 12.4 percent.
Adjusted EBITDA margin of 17.9 percent expanded 60 basis points compared
to 17.3 percent last year.

Hardware & Home Improvement (HHI)

  Three Month Period Ended      
(in millions, except %) January 1, 2017   January 3, 2016 Variance
Net Sales $ 288.8 $ 282.7 $ 6.1 2.2 %
Operating Income 46.8 41.2 5.6 13.6 %
Operating Income Margin 16.2 % 14.6 % 160 bps
Adjusted EBITDA 59.2 53.7 5.5 10.2 %
Adjusted EBITDA Margin 20.5 % 19.0 % 150 bps

The HHI segment delivered record first quarter results. Net sales of
$288.8 million in the first quarter of fiscal 2017 increased 2.2 percent
compared to $282.7 million in the prior year. The improvement was driven
by growth in the core North American residential security category. The
planned exit of unprofitable businesses in Mexico adversely impacted
sales growth by approximately 1.5 percent.

Operating income increased 13.6 percent to $46.8 million compared to
$41.2 million last year. Adjusted EBITDA of $59.2 million increased 10.2
percent versus $53.7 million last year. Excluding positive foreign
exchange impacts of $3.3 million, organic adjusted EBITDA of $55.9
million grew 4.1%. Adjusted EBITDA margin of 20.5 percent improved 150
basis points compared to 19.0 percent last year.

Global Pet Supplies (PET)

       
Three Month Period Ended
(in millions, except %) January 1, 2017 January 3, 2016 Variance
Net Sales $ 194.2 $ 203.4 $ (9.2 ) (4.5 %)
Operating Income 19.5 16.3 3.2 19.6 %
Operating Income Margin 10.0 % 8.0 % 200 bps
Adjusted EBITDA 30.7 29.2 1.5 5.1 %
Adjusted EBITDA Margin 15.8 % 14.4 % 140 bps

The Global Pet Supplies segment reported net sales of $194.2 million in
the first quarter of fiscal 2017 compared to $203.4 million last year.
Excluding the unfavorable impact of foreign exchange of $2.8 million,
organic net sales decreased 3.1 percent. Higher aquatics revenues,
primarily double-digit growth in Europe, were more than offset by lower
North American companion animal and European pet food revenues. Reduced
North American companion animal sales were largely due to the negative
impact of the planned exits of low-margin private label rawhide and
chicken jerky business last year.

Operating income of $19.5 million increased 19.6 percent compared to
$16.3 million in the prior year due to favorable product and customer
mix. First quarter adjusted EBITDA of $30.7 million increased 5.1
percent compared to $29.2 million in fiscal 2016. Excluding negative
foreign exchange impacts of $1.7 million, organic adjusted EBITDA of
$32.4 million grew 11.0 percent due to favorable product and customer
mix. Adjusted EBITDA margin expanded 140 basis points to 15.8 percent
compared to 14.4 percent in the prior year.

Home and Garden (H&G)

  Three Month Period Ended    
(in millions, except %) January 1, 2017   January 3, 2016 Variance
Net Sales $ 49.8 $ 47.7 $ 2.1 4.4 %
Operating Income 1.7 3.3 (1.6 ) (48.5 %)
Operating Income Margin 3.4 % 6.9 % (350 ) bps
Adjusted EBITDA 5.7 7.1 (1.4 ) (19.7 %)
Adjusted EBITDA Margin 11.4 % 14.9 % (350 ) bps

The Home and Garden segment reported record first quarter revenues.
Fiscal 2017 first quarter net sales of $49.8 million increased 4.4
percent compared to $47.7 million last year driven by double-digit
growth in the household insect controls category.

Operating income of $1.7 million decreased 48.5 percent from $3.3
million last year. First quarter adjusted EBITDA of $5.7 million
declined 19.7 percent versus $7.1 million a year ago. The operating
income and adjusted EBITDA decreases are due to unfavorable
manufacturing variances caused by improved manufacturing scheduling and
the new aerosol line start-up which will both benefit later quarters as
well as investments in marketing expenses to support innovation and new
distribution. Adjusted EBITDA margin of 11.4 percent fell 350 basis
points from 14.9 percent last year.

Global Auto Care (GAC)

  Three Month Period Ended  
(in millions, except %) January 1, 2017   January 3, 2016 Variance
Net Sales $ 69.5 $ 73.7 $ (4.2 ) (5.7 %)
Operating Income 13.1 9.6 3.5 36.5 %
Operating Income Margin 18.8 % 13.0 % 580 bps
Adjusted EBITDA 19.8 19.2 0.6 3.1 %
Adjusted EBITDA Margin 28.5 % 26.1 % 240 bps

The GAC segment reported net sales of $69.5 million in the first quarter
of fiscal 2017, a decrease of 5.7 percent compared to $73.7 million in
the prior year. Solid U.S. growth in refrigerants, especially A/C PRO®,
was more than offset by lower appearance and performance chemicals
revenues due primarily to the timing of shipments ahead of GAC’s North
American SAP conversion in early January 2016 and U.S. retailer
inventory adjustments. Lower European revenues were from distributors
due to order shipment timing.

Operating income increased 36.5 percent to $13.1 million compared to
$9.6 million last year. First quarter adjusted EBITDA of $19.8 million
grew 3.1 percent compared to $19.2 million in fiscal 2016. Excluding
positive foreign exchange impacts of $1.3 million, organic adjusted
EBITDA of $18.5 million decreased 3.6 percent. Adjusted EBITDA margin of
28.5 percent expanded 240 basis points from 26.1 percent last year.

Liquidity and Debt

Spectrum Brands completed its fiscal 2017 first quarter with a solid
liquidity position, including a cash balance of approximately $143
million and more than $301 million available on its $500 million Cash
Flow Revolver.

As of the end of the first quarter, the Company had approximately $3,714
million of debt outstanding, consisting of approximately $165 million
outstanding on its Cash Flow Revolver, a series of secured Term Loans in
the aggregate amount of $1,115 million, $2,266 million of senior
unsecured notes, and approximately $168 million of capital leases and
other obligations.

During the first quarter, the Company repurchased 802,281 shares of
common stock for $97.0 million or $120.97 per share on average.

Fiscal 2017 Outlook

Spectrum Brands expects fiscal 2017 reported net sales to grow above
category rates, along with an anticipated negative impact from foreign
exchange of approximately 100 to 150 basis points.

Fiscal 2017 free cash flow is projected to be approximately $575-$590
million compared to $535 million in fiscal 2016. Capital expenditures
are expected to be in the range of $110 million to $120 million,
including rollover spending from fiscal 2016. These incremental
investments will support footprint optimization, vertical integration
improvements, technology and innovation and are expected to enhance the
Company’s margin structure and organic net sales growth rate.

Conference Call/Webcast Scheduled for 9:00 A.M. Eastern Time Today

Spectrum Brands will host an earnings conference call and webcast at
9:00 a.m. Eastern Time today, January 26. 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
46061187. A live webcast and related presentation slides will be
available by visiting the Event Calendar page in the Investor Relations
section of Spectrum Brands’ website at www.spectrumbrands.com.

A replay of the live webcast also will be accessible through the Event
Calendar page in the Investor Relations section of the Company’s
website. A telephone replay of the conference call will be available
through Thursday, February 9. To access this replay, participants may
call 855-859-2056 and use the same conference ID number.

About Spectrum Brands Holdings, Inc.

Spectrum Brands Holdings, a member of the Russell 1000 Index, is a
global and diversified consumer products company and a leading supplier
of consumer batteries, residential locksets, residential builders’
hardware, plumbing, shaving and grooming products, personal care
products, small household appliances, specialty pet supplies, lawn and
garden and home pest control products, personal insect repellents, and
auto care products. Helping to meet the needs of consumers worldwide,
our Company offers a broad portfolio of market-leading, well-known and
widely trusted brands including Rayovac®, VARTA®, Kwikset®, Weiser®,
Baldwin®, National Hardware®, Pfister®, Remington®, George Foreman®,
Black + Decker®, Tetra®, Marineland®, Nature’s Miracle®, Dingo®,
8-in-1®, FURminator®, IAMS®, Eukanuba®, Healthy-Hide®, Digest-eeze™,
Littermaid®, Spectracide®, Cutter®, Repel®, Hot Shot®, Black Flag®,
Liquid Fence®, Armor All®, STP® and A/C PRO®. Spectrum Brands’ products
are sold in approximately 160 countries. Spectrum Brands Holdings
generated net sales of approximately $5.04 billion in fiscal 2016. For
more information, visit
www.spectrumbrands.com.

Non-GAAP Measurements

Management 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.
Management believes that organic net sales provide for a more complete
understanding of underlying business trends of regional and segment
performance by excluding the impact of currency exchange rate
fluctuations and the impact of acquisitions.
In addition, within
this release, including the supplemental information attached hereto,
reference is made to adjusted diluted EPS, adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), and adjusted
EBITDA margin.
Adjusted EBITDA is a metric used by management to
evaluate segment performance 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 also can 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. Adjusted EBITDA margin reflects adjusted EBITDA as a
percentage of net sales of the Company.
Organic adjusted EBITDA
excludes the impact of currency exchange rate fluctuations and the
impact of acquisitions. The Company’s management uses adjusted diluted
EPS 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
EPS 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.
An income tax
adjustment is included in adjusted diluted EPS to exclude the impact of
the valuation allowance against deferred taxes and other tax-related
items in order to reflect a normalized ongoing effective tax rate of 35%.

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, net income, cash provided by (used in)
operating activities or other statement of income 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.
Other Supplemental Information has been provided to
demonstrate reconciliation of non-GAAP measurements discussed above to
most relevant GAAP financial measurements.

Forward-Looking Statements

Certain 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
2017 (including expectations regarding capital expenditures and its
ability to increase its net sales, free cash flow and adjusted EBITDA)
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) the impact of our indebtedness on our business,
financial condition and results of operations; (2) the impact of
restrictions in our debt instruments on our ability to operate our
business, finance our capital needs or pursue or expand business
strategies; (3) any failure to comply with financial covenants and other
provisions and restrictions of our debt instruments; (4) the impact of
actions taken by significant stockholders; (5) the impact of expenses
resulting from the implementation of new business strategies,
divestitures or current and proposed restructuring activities; (6) our
inability to successfully integrate and operate new acquisitions at the
level of financial performance anticipated; (7) the unanticipated loss
of key members of senior management; (8) the impact of fluctuations in
commodity prices, costs or availability of raw materials or terms and
conditions available from suppliers, including suppliers’ willingness to
advance credit; (9) interest rate and exchange rate fluctuations; (10)
our ability to utilize our net operating loss carry-forwards to offset
tax liabilities from future taxable income; (11) the loss of,
significant reduction in, or dependence upon, sales to any significant
retail customer(s); (12) competitive promotional activity or spending by
competitors, or price reductions by competitors; (13) the introduction
of new product features or technological developments by competitors
and/or the development of new competitors or competitive brands; (14)
the effects of general economic conditions, including inflation,
recession or fears of a recession, depression or fears of a depression,
labor costs and stock market volatility or changes in trade, monetary or
fiscal policies in the countries where we do business; (15) changes in
consumer spending preferences and demand for our products; (16) our
ability to develop and successfully introduce new products, protect our
intellectual property and avoid infringing the intellectual property of
third parties; (17) our ability to successfully implement, achieve and
sustain manufacturing and distribution cost efficiencies and
improvements, and fully realize anticipated cost savings; (18) the cost
and effect of unanticipated legal, tax or regulatory proceedings or new
laws or regulations (including environmental, public health and consumer
protection regulations); (19) public perception regarding the safety of
products that we manufacture and sell, including the potential for
environmental liabilities, product liability claims, litigation and
other claims related to products manufactured by us and third parties;
(20) the impact of pending or threatened litigation; (21) the impact of
cybersecurity breaches or our actual or perceived failure to protect
company and personal data; (22) changes in accounting policies
applicable to our business; (23) government regulations; (24) the
seasonal nature of sales of certain of our products; (25) the effects of
climate change and unusual weather activity; and (26) the effects of
political or economic conditions, terrorist attacks, acts of war or
other unrest in international markets, including those discussed herein
and those set forth in the combined securities filing of Spectrum Brands
Holdings, Inc.

Contacts

Spectrum Brands Holdings, Inc.
Investor/Media Contact:
Dave
Prichard

608-278-6141

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