Tuesday August 6th, 2013 - 9:40AM
Spectrum Brands Holdings, Inc. today reported net sales of $1.09 billion, including its acquisition of Stanley Black & Decker’s Hardware & Home Improvement Group (HHI), increased 32.1% for the company’s fiscal third quarter, compared to sales of $824.8 million a year ago. Including HHI in last year's fiscal third quarter on a pro forma basis, net sales increased 1.1%.
"We're pleased to report record net sales and adjusted EBITDA for the third quarter," said Dave Lumley, CEO of Spectrum Brands Holdings. "HHI, our new acquisition, posted another quarter of double-digit net sales growth at 13%. Our third quarter adjusted EBITDA of $188.5 million, including HHI, increased 2%, or 3% on a constant currency basis, with an adjusted EBITDA margin at a solid 17.3%."
The company reported a net income decline to $36.1 million in third quarter of fiscal 2013 versus net income of $58.7 million in the third quarter of fiscal 2012, primarily due to increased interest expense attributable to the HHI acquisition, a $20 million swing to a tax expense from a tax benefit, higher non-cash stock compensation expense and higher restructuring and related charges.
The company reaffirmed its outlook for a fourth consecutive year of record profitability for its legacy business, including expectations for net sales and profit growth in the fourth quarter of fiscal 2013. Spectrum Brands estimated higher fiscal 2013 total company net sales of $4,060 million to $4,100 million and adjusted EBITDA of $640 million to $650 million versus the comparable prior year period.
"Of particular note is our 11th consecutive quarter of year-over-year adjusted EBITDA growth for legacy Spectrum Brands, a record that dates to the first quarter of fiscal 2011," Lumley said. "Focused spending, strong control of variable costs, increased savings from continuous improvement programs across all divisions globally, and growth in Europe helped the legacy business offset negative foreign currency impacts and difficult macro-economic conditions to deliver a 2.3% increase in adjusted EBITDA, and 3.9% on a constant currency basis. Legacy Spectrum Brands' adjusted EBITDA margin in the third quarter also grew to a record quarterly level of 16.8%."
Separately, the company announced plans to refinance its $950 million of 9.5% senior secured notes due 2018, which is expected to result in a lower cost of capital and reduced cash interest expense. The company also announced the approval by its Board of Directors for a new $200 million common stock repurchase program, effective for 24 months. The company also said it had completed $100 million of term debt reduction to date and reaffirmed its program to significantly reduce debt and delever its balance sheet.