Spectrum Brands Holdings Reports Record Fiscal 2015 Results

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  • 5.9% reported sales growth and reported EPS of $2.66, including
    acquisition and refinancing costs of $82.7 million
  • 2.1% organic sales growth, 6.2% adjusted EPS increase, 10.3%
    organic adjusted EBITDA growth and solid margin expansion
  • Adjusted net cash provided from operating activities after
    purchases of property, plant and equipment (adjusted free cash flow)
    reaches record $454 million in fiscal 2015 versus $359 million in
    fiscal 2014
  • Planning 7th consecutive year of record
    performance in fiscal 2016, including free cash flow of approximately
    $505-$515 million

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
record performance for fiscal 2015 ended September 30, 2015.

During fiscal 2015, Spectrum Brands completed the acquisitions of
Armored AutoGroup Parent Inc. (Armored AutoGroup), the European IAMS and
Eukanuba pet food business, Salix Animal Health and Tell Manufacturing.
The Company also strengthened its balance sheet and improved liquidity
through significant capital structure activity.

Fiscal 2015 Highlights:

  • Net sales of $4.69 billion in fiscal 2015 increased 5.9 percent
    compared to $4.43 billion last year. Excluding the negative impact of
    $229.8 million of foreign exchange and acquisition sales of $400.0
    million, organic sales increased 2.1 percent from the prior year.
  • Net income of $148.9 million and diluted earnings per share of
    $2.66 in fiscal 2015 compared to net income of $214.1 million and
    diluted earnings per share of $4.02 in fiscal 2014.
  • Adjusted diluted earnings per share, a non-GAAP measure, of $4.31
    in fiscal 2015 increased 6.2 percent from $4.06 last year
    predominantly due to the impact of improved mix and acquisitions. See
    Table 4 for a reconciliation to GAAP earnings per share.
  • Adjusted diluted earnings per share in the fourth quarter of fiscal
    2015 increased 15.3 percent to $1.13 compared to $0.98 a year earlier.
    See Table 4 for a reconciliation to GAAP earnings per share.
  • Adjusted EBITDA, a non-GAAP measure, of $800.6 million in fiscal
    2015 increased 10.5 percent compared to $724.3 million in fiscal 2014.

    See Table 5 for a reconciliation to GAAP net income.
  • Adjusted EBITDA of $229.3 million in the fourth quarter of fiscal
    2015 grew 22.8 percent from $186.8 million last year. See Table 5 for
    a reconciliation to GAAP net income.
  • Adjusted EBITDA margin, a non-GAAP measure, of 17.1 percent in
    fiscal 2015 increased from 16.4 percent in fiscal 2014, which
    represented the eighth consecutive year of adjusted EBITDA margin
    improvement. The increase was primarily due to improved mix, operating
    expense leverage and acquisitions. See Table 5 for a reconciliation to
    GAAP net income.
  • Leverage (total debt to adjusted EBITDA, pro forma for acquisitions
    in fiscal 2015) was approximately 4.4 times at the end of fiscal 2015.
  • Fiscal 2015 adjusted net cash provided from operating activities
    after purchases of property, plant and equipment (adjusted free cash
    flow, a non-GAAP measure) was a record $454 million compared to $359
    million in fiscal 2014 and $254 million in fiscal 2013. See Table 6
    for a reconciliation to GAAP Cash Flow from Operating Activities.

“Fiscal 2015 was our 6th consecutive year of record financial
performance, including a solid fourth quarter,” said Andreas Rouvé,
Chief Executive Officer of Spectrum Brands Holdings. “Highlights
included record Home and Garden and HHI results, strong performances
from our personal care and small appliances businesses, and, regionally,
another excellent year in Europe. Even excluding acquisitions, we were
able to grow adjusted EBITDA in the fourth quarter, overcoming $22
million of negative foreign exchange.

“Fiscal 2015 was a year of important strategic and accretive
acquisitions that will accelerate our growth, enhance our margin and
brand profile, and extend our product and category breadth,” he said.
“We quickly completed the integrations of Tell Manufacturing, Salix
Animal Health and the European IAMS and Eukanuba pet food business and
are moving to do the same with our new Global Auto Care division. Our
focus now is on sales growth and margin expansion initiatives for each
acquisition.

“We exited several unprofitable geographic product categories in the HHI
business, significantly reduced ineffective promotional programs in the
Battery and Pet businesses, stepped up the pace of new product
introductions, delivered strong cost improvement savings, and leveraged
expenses across the business,” Mr. Rouvé said.

“Looking to fiscal 2016, we expect healthy top and bottom-line growth
again from a mix of new products, new customers, distribution and market
share gains, increased cross-selling, geographic expansion and
continuous improvement savings along with strong expense controls,” he
said. “At current spot rates, we face continuing negative foreign
currency headwinds, primarily in the first half of the year. We have
plans in place to offset these headwinds as in fiscal 2015.

“Our focus is to fully leverage the capabilities of each of our global
divisions by taking advantage of our strong regional sales presence to
ensure Spectrum Brands is the preferred partner of our retail
customers,” Mr. Rouvé said. “We are sharpening the pursuit of our ‘more,
more, more’ organic growth strategy to enter more countries, serve more
channels, and launch more categories by leveraging our strong retailer
relationships.”

Fiscal 2015 Consolidated Financial Results

Consolidated net sales of $4.69 billion in fiscal 2015 increased 5.9
percent compared to $4.43 billion in fiscal 2014. Excluding the negative
impact of $229.8 million of foreign exchange, as well as acquisition
sales of $400.0 million, organic sales increased 2.1 percent.

Gross profit and gross profit margin for fiscal 2015 were $1.67 billion
and 35.6 percent compared to $1.57 billion and 35.4 percent,
respectively, in fiscal 2014. The gross profit margin percentage
increase was primarily due to improved mix and acquisitions, partially
offset by the negative impact of foreign exchange.

Operating expenses of $1.20 billion in fiscal 2015 compared to $1.09
billion in the prior year. The increase was predominantly due to higher
acquisition, integration and restructuring charges primarily related to
acquisitions.

The Company reported GAAP net income of $148.9 million, or $2.66 diluted
income per share, in fiscal 2015 on average diluted shares and common
stock equivalents outstanding of 55.9 million. In fiscal 2014, the
Company reported GAAP net income of $214.1 million, or $4.02 diluted
income per share, on average diluted shares and common stock equivalents
outstanding of 53.3 million. Adjusted for certain items in both fiscal
years, which are presented in Table 4 of this press release and which
management believes are not indicative of the Company’s ongoing
normalized operations, the Company generated adjusted diluted earnings
per share, a non-GAAP measure, of $4.31 in fiscal 2015, a 6.2 percent
increase compared to $4.06 in fiscal 2014. The improvement was
predominantly due to the impact of acquisitions and improved mix,
partially offset by the negative impact of foreign exchange.

Adjusted EBITDA, a non-GAAP measure, of $800.6 in fiscal 2015 increased
10.5 percent compared to $724.3 million in fiscal 2014. HHI and Home and
Garden delivered record adjusted EBITDA year-over-year while personal
care and small appliances increased on a constant currency basis.
Excluding the negative impact of $74.1 million of foreign exchange, as
well as acquisition-related EBITDA of $75.5 million, organic adjusted
EBITDA of $799.2 increased 10.3 percent versus fiscal 2014. Reported
adjusted EBITDA margin expanded to 17.1 percent compared to 16.4 percent
last year, which represented the eighth consecutive year of adjusted
EBITDA margin growth. The improvement was primarily due to improved mix,
operating expense leverage and acquisitions. Adjusted EBITDA is a
non-GAAP measurement of profitability which the Company believes is a
useful indicator of the operating health of the business and its trends.
See Table 5 for a reconciliation to GAAP net income.

Fiscal 2015 Fourth Quarter Consolidated Financial Results

Net sales of $1.31 billion in the fourth quarter of fiscal 2015
increased 11.0 percent compared to $1.18 billion in fiscal 2014.
Excluding the negative impact of $73.6 million of foreign exchange, as
well as acquisition sales of $178.0 million, organic sales increased 2.2
percent.

Gross profit and gross profit margin in the fourth quarter of fiscal
2015 were $467.4 million and 35.7 percent, respectively, compared to
$411.0 million and 34.9 percent, respectively, last year. The gross
profit margin percentage increase was primarily due to acquisitions and
improved mix, partially offset by the negative impact of foreign
exchange.

Operating expenses of $333.0 million in the fourth quarter of fiscal
2015 compared to $295.4 million in the prior year. The increase was
predominantly due to higher acquisition, integration and restructuring
charges primarily related to acquisitions.

The Company reported GAAP net income of $26.5 million, or $0.44 diluted
income per share, in the fourth quarter of fiscal 2015 on average
diluted shares and common stock equivalents outstanding of 59.8 million.
In fiscal 2014, GAAP net income was $47.9 million, or $0.90 diluted
income per share, on average diluted shares and common stock equivalents
outstanding of 53.4 million. Adjusted for certain items in both fiscal
years, which are presented in Table 4 of this press release and which
management believes are not indicative of the Company’s ongoing
normalized operations, the Company generated adjusted diluted earnings
per share, a non-GAAP measure, of $1.13 in fiscal 2015, an increase of
15.3 percent compared to $0.98 in fiscal 2014.

Adjusted EBITDA, a non-GAAP measure, of $229.3 million in the fourth
quarter of fiscal 2015 increased 22.8 percent compared to $186.8 million
in fiscal 2014. The Home and Garden, HHI and personal care businesses
delivered higher reported adjusted EBITDA quarter-over-quarter.
Excluding the negative impact of $22.1 million of foreign exchange, as
well as acquisition-related EBITDA of $38.3 million, organic adjusted
EBITDA of $213.1 increased 14.1 percent versus the fourth quarter of
2014. Reported adjusted EBITDA margin of 17.5 percent increased from
15.9 percent last year. See Table 5 for a reconciliation to GAAP net
income.

Fiscal 2015 Fourth Quarter Segment Level Data

Global Batteries & Appliances

The Global Batteries & Appliances segment reported fiscal 2015 fourth
quarter net sales of $553.0 million versus $595.7 million in the
year-ago quarter. Excluding the negative impact of $57.9 million of
foreign exchange, fiscal 2015 fourth quarter net sales increased 2.5
percent. On a constant currency basis, higher net sales for the personal
care and small appliances product categories more than offset lower
battery revenues.

Global battery net sales of $229.2 million in the fourth quarter of
fiscal 2015 compared to $268.7 million in the fourth quarter of fiscal
2014. Excluding negative foreign exchange impacts of $28.1 million,
fiscal 2015 fourth quarter net sales decreased 4.2 percent. North
American battery net sales decreased primarily due to lower distribution
space at a key retail customer, holiday shipment timing and reduction of
promotional activity. In Europe, VARTA® battery net sales growth on a
constant currency basis was attributable to new retail customers and the
launch of innovative promotional products. Latin American battery
revenues declined on a constant currency basis due to a reduction of
trade inventory and the implemented price increases.

Net sales for the global personal care product category of $125.8
million in the fourth quarter of fiscal 2015 compared to $129.4 million
last year. Excluding negative foreign exchange impacts of $13.9 million,
fiscal 2015 fourth quarter net sales increased 7.9 percent. The
improvement was driven by new products and distribution gains in North
American shaving and grooming and by promotions and new customers in
hair care, hair removal and grooming in Europe.

Net sales of $197.9 million in the global small appliances product
category in the fourth quarter of fiscal 2015 compared to $197.6 million
in the year-ago quarter. Excluding negative foreign exchange impacts of
$15.9 million, fiscal 2015 fourth quarter net sales increased 8.2
percent. The improvement was attributable to double-digit growth in
North American sales primarily from new products, and strong increases
on a constant currency basis in Europe and Latin America from new retail
customers, new products and distribution gains.

Global Batteries & Appliances reported segment net income, as adjusted,
was $52.8 million versus $61.4 million in the prior year. Reported
adjusted EBITDA of $77.6 million in the fourth quarter of fiscal 2015
compared to $84.2 million in the year-ago quarter. Excluding negative
foreign exchange impacts of $20.9 million, adjusted EBITDA in the fourth
quarter of fiscal 2015 grew 16.9 percent versus the prior year. See
Table 5 for a reconciliation to GAAP net income.

Hardware & Home Improvement

Hardware & Home Improvement (HHI) segment net sales of $331.4 million in
the fourth quarter of fiscal 2015 increased 5.6 percent compared to
$313.8 million in the prior year’s quarter. The increase was driven by
growth in the U.S. residential security and plumbing categories, along
with sales of $10.4 million from the Tell acquisition in fiscal 2015.
The planned exit of unprofitable businesses and expiration of a customer
tolling agreement adversely impacted sales growth by 2.8 percent.
Excluding the negative impact of foreign exchange of $7.7 million, net
sales increased 8.1 percent in the fourth quarter of fiscal 2015.

Segment reported net income, as adjusted, of $50.9 million in the fourth
quarter of fiscal 2015 compared to $41.2 million in the prior year’s
fourth quarter. Adjusted EBITDA of $65.2 million, a record quarterly
level, increased 17.9 percent versus $55.3 million last year. Reported
adjusted EBITDA margin improved 210 basis points to 19.7 percent. See
Table 5 for a reconciliation to GAAP net income.

Global Pet Supplies

The Global Pet Supplies segment reported net sales of $219.3 million in
the fourth quarter of fiscal 2015 compared to $159.8 million last year.
The increase was due to acquisition-related revenues of $71.4 million.
Excluding the negative impact of foreign exchange of $7.9 million, as
well as the acquisition revenues, fiscal 2015 fourth quarter net sales
were $155.8 million. The decrease was due to the timing of holiday
shipments and exit of low-margin promotions in North America, partially
offset by companion animal growth in Europe.

Segment reported net income, as adjusted, was $24.4 million in the
fourth quarter of fiscal 2015 versus $24.5 million in the fourth quarter
of fiscal 2014. Fourth quarter adjusted EBITDA of $42.2 million
increased 25.6 percent from $33.6 million in fiscal 2014 due to
acquisitions. Reported adjusted EBITDA margin decreased 180 basis points
to 19.2%. See Table 5 for a reconciliation to GAAP net income.

Home and Garden

The Home and Garden segment reported fourth quarter net sales of $108.3
million compared to $109.0 million in last year’s fourth quarter. Higher
sales in the lawn and garden controls category essentially offset lower
repellents category revenues due to lower retailer reorder levels.

Segment fourth quarter reported net income, as adjusted, was $19.6
million versus $18.8 million a year ago. Record fourth quarter adjusted
EBITDA of $24.4 million increased 9.4 percent versus $22.3 million a
year ago. The adjusted EBITDA margin of 22.5 percent, also a fourth
quarter record level, grew 200 basis points from 20.5 percent last year.
See Table 5 for a reconciliation to GAAP net income.

Global Auto Care

Global Auto Care (GAC) is the Company’s newest reporting segment as of
its acquisition on May 21, 2015. GAC reported net sales of $96.1
million, adjusted net income of $6.0 million and adjusted EBITDA of
$28.0 million in the fourth quarter of fiscal 2015. Armor All® and STP®
continued to experience solid POS at key U.S. customers, while lower
retailer replenishment levels impacted A/C PRO® results. Reported
adjusted EBITDA margin was 29.1 percent. See Table 5 for a
reconciliation to GAAP net income.

Liquidity and Debt

Spectrum Brands completed fiscal 2015 on September 30, 2015 with a solid
liquidity position, including a cash balance of approximately $248
million and more than $460 million available on its $500 million Cash
Flow Revolver.

As of the end of fiscal 2015, the Company had approximately $3,978
million of debt outstanding, consisting of a series of secured Term
Loans in the aggregate amount of $1,539 million, $520 million of 6.375%
senior unsecured notes, $570 million of 6.625% senior unsecured notes,
$250 million of 6.125% senior unsecured notes, $1 billion of 5.75%
senior unsecured notes and approximately $99 million of capital leases
and other obligations.

As a result of solid earnings and strong working capital management, the
Company generated record adjusted free cash flow in fiscal 2015 of $454
million, surpassing its goal of $440 million, fiscal 2014 free cash flow
of $359 million and fiscal 2013 adjusted free cash flow of $254 million.

Leverage (total debt to adjusted EBITDA, pro forma for acquisitions
during fiscal 2015) was approximately 4.4 times at the end of fiscal
2015, consistent with previous guidance.

Fiscal 2016 Outlook

Spectrum Brands expects fiscal 2016 net sales, as reported, to increase
in the high-single digit range compared to fiscal 2015 reported net
sales of $4.69 billion, including the positive impacts of the
acquisitions of the European pet food business on December 31, 2014,
Salix Animal Health on January 16, 2015 and Armored Auto Group on May
21, 2015, along with an anticipated negative impact from foreign
exchange of approximately 200 to 220 basis points based on current spot
rates.

Fiscal 2016 free cash flow is projected to be approximately $505-$515
million compared to $454 million in fiscal 2015. See Tables 6 and 7 for
reconciliations to GAAP Cash Flow from Operating Activities. Capital
expenditures, which were $89.1 million in fiscal 2015, are expected to
be in the range of $110 million to $120 million. These incremental
investments include the impact of full-year expenditures supporting
recent acquisitions, a major aerosol capacity expansion, and support of
technology and innovation.

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, November 19. 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
57297614. 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, December 3. 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 2000 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®, Farberware®, 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 by the world’s top 25 retailers and are
available in more than one million stores in approximately 160
countries. Spectrum Brands Holdings generated net sales of approximately
$4.69 billion in fiscal 2015. 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.
Excluding the impact of currency exchange rate fluctuations may provide
additional meaningful information about 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 4, “Reconciliation of GAAP Diluted Income Per
Share to Adjusted Diluted Earnings Per Share,” for a complete
reconciliation of diluted earnings per share on a GAAP basis to adjusted
diluted earnings per share, and see attached Table 5, “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, 2015 versus the three months and twelve
months ended September 30, 2014. See attached Table 6, “Reconciliation
of Cash Flow from Operating Activities to Adjusted Free Cash Flow,” for
a reconciliation of Net Cash provided from Operating Activities for the
twelve months ended September 30, 2015, September 30, 2014 and September
30, 2013.
See attached Table 7, “Reconciliation of Forecasted
Cash Flow from Operating Activities to Forecasted Free Cash Flow for the
twelve months ending September 30, 2016.
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 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.
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.

Contacts

Investor/Media Contact:
Spectrum Brands Holdings, Inc.
Dave
Prichard, 608-278-6141

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