MADISON, Wis.--(BUSINESS WIRE)--Dec. 17, 2012--
Spectrum Brands Holdings, Inc. (NYSE: SPB), a global consumer products
company with market-leading brands, announced today that it has
completed the acquisition of the Hardware & Home Improvement Group (HHI)
of Stanley Black & Decker, Inc. (NYSE: SWK) for $1.4 billion in cash. A
definitive agreement to acquire HHI was announced on October 9.
HHI is a major manufacturer and supplier of residential locksets,
residential builders’ hardware and faucets with #1 positions in key
North American markets and a portfolio of renowned brands, including
Kwikset, Weiser, Baldwin, National Hardware, Stanley, FANAL, Pfister and
EZSET. HHI is a leader in its key markets with #1 positions in U.S.
residential locksets (Kwikset), Canada residential locksets (Weiser),
U.S. luxury locksets (Baldwin), and U.S. builders’ hardware
(Stanley/National Hardware), and a top 5 position in U.S. faucets
(Pfister).
“We are pleased to have closed on our HHI acquisition, and with
attractive debt financing, before the end of 2012, as we had originally
anticipated,” said Dave Lumley, Chief Executive Officer of Spectrum
Brands Holdings. “We welcome HHI to the Spectrum Brands family as a
fourth operating segment that will enhance our top-line growth, margins
and free cash flow profile. HHI brings us scale and greater product
diversity, more balance in our sales profile, stronger relationships
with core retail partners, attractive cross-selling opportunities in all
channels, and a new platform for significant future global growth using
Spectrum Brands’ existing international infrastructure, most notably in
Europe.”
“HHI has compelling growth opportunities here and abroad,” Mr. Lumley
said. “The business is well positioned, from a cost, product line and
market share standpoint, to benefit from the U.S. housing market
recovery as well as the emerging home automation markets and the
showroom and hospitality markets from its significant investments in
game-changing, patented innovations such as its Smart Key re-keyable
lockset technology and Smart Code Home Connect products that have
already delivered market share growth. In addition, by leveraging
Spectrum Brands’ large U.S. merchandising team capabilities, HHI will be
able to increase its in-store presence with customers. We believe HHI
has a bright future as part of Spectrum Brands, and look forward to
supporting its product development and growth initiatives to fully
realize HHI’s potential.”
HHI generated net sales of approximately $985 million and adjusted
EBITDA of $188 million for the 12 months ended June 30, 2012.1
Approximately 85 percent of HHI’s annual revenues are generated in North
America, with more than 40 percent coming through U.S. home improvement
centers.
The HHI acquisition is expected to increase Spectrum Brands’ top-line
growth and margins, and to be immediately accretive to EPS, EBITDA and
free cash flow before synergies. EPS accretion pro forma for a full year
of results is expected to be between $0.75 to $0.80 per share in fiscal
2013 and EPS accretion in fiscal 2014 is expected to exceed $1.00 per
share, excluding one-time transaction and integration costs and
including synergies. The acquisition also is expected to add more than
an incremental $90 million of free cash flow in the first two years
after closing.
The acquisition of HHI also includes certain assets of Tong Lung Metal
Industry Co. Ltd. (“Tong Lung”), a Taiwanese manufacturer of residential
and commercial locksets with facilities in Taiwan and the Philippines.
The Tong Lung manufacturing assets will provide expanded sales platform
capabilities, allowing for accelerated expansion in international
markets. The acquisition of the Tong Lung assets is expected to occur
during Spectrum Brands’ second quarter of fiscal 2013 ending March 31,
2013. $100 million of the $1.4 billion cash purchase price, which was
adjusted for net debt and working capital, has been held in escrow until
the subsequent closing of the Tong Lung portion of the HHI acquisition.
HHI will operate as a separate reporting segment within Spectrum Brands
and be managed by Greg Gluchowski, President of HHI. He reports to
Spectrum Brands CEO David Lumley and continues to oversee a highly
experienced HHI management team with an average of 20-plus years of
experience and a proven track record of innovation, operational
excellence and profitable growth.
About Spectrum Brands Holdings, Inc.
Spectrum Brands Holdings, Inc., a member of the Russell 2000
Index, is a global and diversified consumer products company and a
leading supplier of batteries, shaving and grooming products, personal
care products, small household appliances, specialty pet supplies, lawn
& garden and home pest control products, personal insect repellents and
portable lighting. Helping to meet the needs of consumers worldwide, the
Company offers a broad portfolio of market-leading, well-known and
widely trusted brands including Rayovac®, Remington®, Varta®, George
Foreman®, Black & Decker®, Toastmaster®, Farberware®, Tetra®,
Marineland®, Nature’s Miracle®, Dingo®, 8-in-1®, FURminator®, Littermaid®,
Spectracide®, Cutter®, Repel®, Hot Shot® and Black Flag®. Spectrum
Brands Holdings' products are sold by the world's top 25 retailers and
are available in more than one million stores in approximately 140
countries. Spectrum Brands Holdings generated net sales of approximately
$3.25 billion in fiscal 2012. For more information, visit www.spectrumbrands.com.
Forward-Looking Statements
Certain matters discussed in this news release and other oral and
written statements by representatives of the Company regarding the HHI
acquisition and matters such as expected sales, adjusted EBITDA, other
measures of financial performance, and the financial impact of other
acquisitions may be forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.
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) Spectrum Brands Holdings' ability to manage and otherwise
comply with its covenants with respect to its significant outstanding
indebtedness, (2) our ability to integrate, and to realize synergies
from, the combined businesses of Spectrum Brands and HHI, and from our
purchase of 56 percent of the equity of Shaser, Inc., and from other
bolt-on acquisitions, (3) risks related to changes and developments in
external competitive market factors, such as introduction of new product
features or technological developments, development of new competitors
or competitive brands or competitive promotional activity or spending,
(4) changes in consumer demand for the various types of products
Spectrum Brands Holdings offers, (5) unfavorable developments in the
global credit markets, (6) the impact of overall economic conditions on
consumer spending, (7) fluctuations in commodities prices, the costs or
availability of raw materials or terms and conditions available from
suppliers, (8) changes in the general economic conditions in countries
and regions where Spectrum Brands Holdings does business, such as stock
market prices, interest rates, currency exchange rates, inflation and
consumer spending, (9) Spectrum Brands Holdings' ability to successfully
implement manufacturing, distribution and other cost efficiencies and to
continue to benefit from its cost-cutting initiatives, (10) Spectrum
Brands Holdings' ability to identify, develop and retain key employees,
(11) unfavorable weather conditions and various other risks and
uncertainties, including those discussed herein and those set forth in
Spectrum Brands Holdings' and Spectrum Brands' securities filings,
including the most recently filed Annual Report on Form 10-K for
Spectrum Brands, Inc. or Quarterly Reports on Form 10-Q. Spectrum Brands
Holdings also cautions the reader that its estimates of trends, market
share, retail consumption of its products and reasons for changes in
such consumption are based solely on limited data available to Spectrum
Brands Holdings and management's reasonable assumptions about market
conditions, and consequently may be inaccurate, or may not reflect
significant segments of the retail market.
Spectrum Brands Holdings also cautions the reader that undue reliance
should not be placed on any forward-looking statements, which speak only
as of the date of this release. Spectrum Brands Holdings undertakes no
duty or responsibility to update any of these forward-looking statements
to reflect events or circumstances after the date of this report or to
reflect actual outcomes.
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 for the Company, current results for HHI, and
current results on a pro-forma basis of the combined operations of the
Company and HHI. Within this release, including the tables attached
hereto, reference is made to adjusted earnings before interest, taxes,
depreciation and amortization (Adjusted EBITDA). See attached Table A,
“Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA,” for a
reconciliation of GAAP Net Income (Loss) to adjusted EBITDA. 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. 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.
Table A: Reconciliation of GAAP Net Income (Loss) to
Adjusted EBITDA
|
|
|
|
LTM June 30,
2012
|
|
YE Dec. 31, 2011
|
|
LTM June 30,
2012
|
|
|
|
|
HHI (excl. Tong
Lung)
|
|
Tong Lung
|
|
HHI (inc. Tong
Lung)
|
|
Net Income (loss)
|
|
|
41
|
|
$
|
5
|
|
|
$
|
45
|
|
|
Income tax expense
|
|
|
14
|
|
|
1
|
|
|
|
15
|
|
|
Interest expense
|
|
|
37
|
|
|
-
|
|
|
|
37
|
|
|
Restructuring and related charges
|
|
|
24
|
|
|
-
|
|
|
|
24
|
|
|
Acquisition and integration related charges
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
Intangible asset impairment
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
Other
|
|
|
22
|
|
|
(1
|
)
|
|
|
21
|
|
Adjusted EBIT
|
|
$
|
139
|
|
$
|
5
|
|
|
$
|
143
|
|
|
Depreciation and amortization
|
|
|
42
|
|
|
2
|
|
|
|
44
|
|
Adjusted EBITDA
|
|
|
181
|
|
$
|
7
|
|
|
$
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$
|
939
|
|
$
|
46
|
|
|
$
|
985
|
1 Includes results of Tong Lung Metal Industry Co. Ltd. for
the 12-months ended 12/31/2011.
Note: Figures calculated prior to rounding.
Source: Spectrum Brands Holdings, Inc.
Investor/Media Contact:
Spectrum Brands, Inc.
Dave
Prichard, 608.278.6141
