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Spectrum Brands Reports Record Net Sales For Fiscal 2013 First Quarter

Thursday February 7th, 2013 - 10:27AM

Spectrum Brands Holdings, Inc. reported record net sales of $870.3 million for the first quarter of fiscal 2013 compared to net sales of $848.8 million for the comparable year-earlier period. The company reported higher revenues for the Home and Garden and Global Pet Supplies segments, including net sales from the Black Flag/TAT brands and FURminator acquisitions, and revenues from the HHI acquisition.

The company said those gains more than offset lower net sales for the Global Batteries & Appliances segment, which was primarily due to the planned exit from certain low-margin North American small appliances promotional businesses. Excluding the negative foreign exchange impact of $6 million, fiscal 2013 first quarter net sales improved 3.2%.

The company reported gross profit and gross profit margin for the first quarter of fiscal 2013 of $288.2 million and 33.1%, respectively, compared to $284.0 million and 33.5% last year. The decrease in gross profit margin was driven by increased cost of goods sold due to the sale of inventory, which was revalued in connection with the HHI acquisition. That more than offset gross profit improvement resulting from the planned and previously announced exit of low-margin products in the small appliances category of nearly $20 million. Excluding HHI, the gross profit margin in the first quarter of fiscal 2013 was 34% for Spectrum Brands' legacy business.

Spectrum Brands reported a net loss of $13.4 million for the first quarter of fiscal 2013 on average shares and common stock equivalents outstanding of 51.8 million. The loss was driven by $20.8 million of acquisition and integration costs and $28.8 million of interest expense primarily related to the HHI acquisition. In the first quarter of fiscal 2012, the company reported net income of $13.1 million on average shares and common stock equivalents outstanding of 52.6 million.

For the fourth consecutive year, the company delivered record first quarter consolidated adjusted EBITDA, a non-GAAP measure, which, in fiscal 2013, was $130.7 million, up 4.5% versus consolidated adjusted EBITDA of $125.1 million in the prior-year period. This year's adjusted EBITDA included $3.2 million from HHI and $3 million from the FURminator acquisition completed on December 22, 2011. 

"We delivered record results in the first quarter, again putting us on track to achieve a fourth consecutive record year of financial performance from the legacy business with improvements weighted to the second half of the year," said Dave Lumley, CEO of Spectrum Brands Holdings. "In the face of holiday and global retail environment softness, negative foreign currency impacts, cautious consumer spending heightened by fiscal cliff worries and fewer shopping days, our businesses performed well and demonstrated again that our Spectrum Value Model is working effectively and resonating with retailers and consumers."

The small appliances product category reported first quarter net sales of $220.1 million, a decrease of 9.5% compared to $243.1 million in the first quarter of fiscal 2012. Higher net sales in Europe, driven in part by growth in the United Kingdom and regional expansion in Western and Eastern Europe, were more than offset by lower revenues in North America, which were largely due to the planned and continued elimination of low-margin promotions. The elimination of low-margin holiday promotions contributed significantly to a more than 300 basis point improvement in North American small appliance gross margins quarter-over-quarter. Foreign exchange favorably impacted net sales by $1.3 million.