Completing a Significant Transformation to Create a Meaningfully
Less Leveraged, More Focused Business with Improved Financial Strength
to Drive Long-term Growth
MIDDLETON, Wis.--(BUSINESS WIRE)--Nov. 19, 2018--
Spectrum Brands Holdings, Inc. (NYSE: SPB; “Spectrum” or the “Company”),
a leading global branded consumer products company focused on driving
innovation and providing exceptional customer service, today reported
results from continuing operations for the fourth quarter of fiscal 2018
ended September 30, 2018.
As previously announced, effective July 13, 2018, the Company completed
its merger (the “HRG merger”) with HRG Group, Inc. (“HRG”), its former
majority shareholder. Following the completion of the HRG Merger, HRG
emerged as the surviving legal entity and was renamed Spectrum Brands
Holdings, Inc., with a combined shareholder group of the two former
companies. In addition, this press release includes non-GAAP metrics
such as organic net sales, adjusted diluted earnings per share (EPS),
adjusted EBITDA, adjusted EBITDA margin, organic adjusted EBITDA and
adjusted free cash flow. See “Other Supplemental Information” below for
reconciliation to comparable GAAP metrics. Also see “Classification of
the Company’s Reporting Segments” below for a discussion of the
Company’s reporting segments.
“Fiscal 2018 was a year of significant transformation at Spectrum
Brands, as we advanced our plan to create a more focused company with
improved financial strength and flexibility to drive long-term growth
and value,” said David Maura, Chairman and Chief Executive Officer of
Spectrum Brands Holdings. “During the year, we completed or entered
meaningful transactions and made significant management, operational and
strategic changes and investments that are expected to create a more
focused and financially stronger business that is well positioned for
the future.”
With these transformative actions in fiscal 2018 and following the
divestiture of the Company’s Global Batteries and Lighting business and
the Global Auto Care business, in fiscal 2019 the Company expects to:
-
Have meaningfully less leverage, with total debt to adjusted EBITDA
expected to decline from 5.8x to approximately 3.5x EBITDA;
-
Consist of a narrower portfolio of four business units (Hardware and
Home Improvement, Home & Garden, Pet and Appliances), providing a
greater focus and clarity of purpose to produce innovative and
exciting new products with excellent customer service;
-
Increase investment in its core businesses units, including in the
areas of research and development, innovation, new product
development, digital marketing and brand support to drive sustainable
and profitable growth;
-
Achieve meaningful organic revenue growth from continuing operations
in fiscal 2019 driven by innovation, increased marketing investments,
pricing actions, including tariff-related increases, and market share
gains;
-
Deliver fiscal 2019 adjusted EBITDA from continuing operations in the
$560 to $580 million range after rebasing the Company; and
-
Maintain a strong liquidity position, which at the end of fiscal 2018
was $1.3 billion, including $552 million of cash and $777 million
available under the Company’s cash flow revolver.
Fiscal 2018 Fourth Quarter Highlights from Continuing Operations:
-
Net sales of $787.8 million in the fourth quarter of fiscal 2018 were
unchanged compared to $787.8 million last year. Excluding the impact
of $3.1 million of unfavorable foreign exchange, organic net sales of
$790.9 million increased 0.4 percent versus the prior year.
-
Net loss from continuing operations of $(150.3) million and diluted
loss per share from continuing operations of $(3.00) in the fourth
quarter of fiscal 2018 compared to a net loss from continuing
operations of $(32.5) million and diluted loss per share from
continuing operations of ($1.01) in fiscal 2017 primarily due to the
write-off from impairment of goodwill, HRG merger costs, lower gross
profit and higher distribution costs.
-
Adjusted diluted EPS from continuing operations of $0.79 in the fourth
quarter of fiscal 2018 decreased 7.1 percent versus $0.85 last year
predominantly due to lower gross profit and higher distribution costs.
-
Operating loss of $(78.8) million in the fourth quarter of fiscal 2018
compared to operating income of $45.8 million last year primarily as a
result of the write-off from impairment of goodwill in Global Auto
Care, HRG merger costs, operating inefficiencies, input cost inflation
and higher distribution costs.
-
Adjusted EBITDA of $134.1 million in the fourth quarter of fiscal 2018
decreased 23.1 percent compared to $174.5 million in fiscal 2017.
Excluding the impact of $2.0 million of favorable foreign exchange,
organic adjusted EBITDA of $132.1 million fell 24.3 percent versus the
prior year.
-
Adjusted EBITDA margin of 17.0 percent in the fourth quarter of fiscal
2018 decreased 520 basis points compared to 22.2 percent in fiscal
2017 primarily due to operating inefficiencies, input cost inflation
and higher distribution costs.
While the transformational actions taken are expected to position
Spectrum Brands for growth and success in the future, fourth quarter
results, notably adjusted EBITDA and margins, were disappointing across
the business units, which cumulatively resulted in adjusted EBITDA
coming in below expectations as summarized below:
-
Home & Garden – $12 million driven by lower-than-expected volume,
related unfavorable manufacturing variances as production volumes were
reduced, an early retailer shutdown of the season, the absence of
hurricane-driven demand for insecticides and repellents, lower vendor
rebates, and a legal reserve for an emerging claims issue.
-
Global Pet Supplies – $7 million due to lower-than-expected revenue
and related unfavorable manufacturing variances as production volumes
were reduced.
-
Global Auto Care – $18 million related to low-margin excess and
obsolete inventory liquidation, lower volume related to
greater-than-expected retailer inventory reductions, Dayton plant
inefficiencies, physical inventory adjustments and scrap relating to
the facility consolidation projects, and a cumulative correction of
duty rates on a significant sourced component.
-
Hardware & Home Improvement – $6 million related to lower growth than
forecast.
Adjusted free cash flow of $386 million was also below guidance due to
the adjusted EBITDA shortfall in both the Company’s continuing and
discontinued operations as well as higher year-end inventory levels than
planned.
Fiscal 2018 organic sales growth was encouraging at nearly 2%, driven by
HHI and GAC, the Company’s two Pet acquisitions performed very well, and
the U.S. Pet business stabilized and has returned to growth.
“With a clear focus and approach to careful capital allocation,” Mr.
Maura said, “we expect meaningful reported net sales growth from
continuing operations in fiscal 2019 due to new product introductions,
increased marketing investments, pricing actions, including
tariff-related increases, and market share gains. We also anticipate
modest gross margin rate contraction with input cost inflation and
tariffs being partly offset by pricing and productivity.”
Mr. Maura also said, “As announced last Thursday, subject to the
European Commission’s regulatory review process, we believe that our
Company is on track to close in early January 2019 the sale of our
Global Battery and Lighting business to Energizer Holdings for $2
billion in cash, subject to a potential downward price adjustment of up
to $200 million; as well as the sale to Energizer Holdings of our Global
Auto Care business for $938 million in cash and $312 million in equity.
We expect to use the significant net proceeds we will receive from these
divestitures to primarily reduce debt, increase investment in organic
growth initiatives and repurchase shares.”
Fiscal 2018 Fourth Quarter Consolidated Financial Results from
Continuing Operations
Net sales of $787.8 million in the fourth quarter of fiscal 2018 were
unchanged compared to $787.8 million in fiscal 2017. Excluding the
impact of $3.1 million of unfavorable foreign exchange, organic net
sales increased 0.4 percent.
Gross profit and gross profit margin in the fourth quarter of fiscal
2018 were $289.9 million and 36.8 percent, respectively, compared to
$309.9 million and 39.3 percent, respectively, last year. The gross
profit margin percentage decrease was primarily due to operating
start-up inefficiencies at the HHI Kansas and GAC Dayton facilities,
along with higher input costs and unfavorable mix.
Operating expenses of $368.7 million in the fourth quarter of fiscal
2018 increased compared to $264.1 million in the prior year due
principally to the write-off from the impairment of GAC goodwill and HRG
merger costs. Operating (loss) of $(78.8) million compared to operating
income of $45.8 million last year.
Net loss from continuing operations was $(150.3) million, or $(3.00)
diluted loss per share, in the fourth quarter of fiscal 2018 on average
diluted shares and common stock equivalents outstanding of 50.0 million.
In the fourth quarter of fiscal 2017, net loss from continuing
operations was ($32.5) million, or ($1.01) diluted loss per share, on
average diluted shares and common stock equivalents outstanding of 32.3
million. Weighted average shares have been retroactively adjusted to
reflect the reverse stock split that occurred on July 13, 2018 to
facilitate the HRG merger. The decrease in net results was primarily due
to the write-off from impairment of GAC goodwill, HRG merger transaction
costs, lower gross profit and higher distribution costs. Adjusted
diluted EPS from continuing operations of $0.79 in the fourth quarter of
fiscal 2018 fell 7.1 percent versus $0.85 last year predominantly due to
lower gross profit and higher distribution costs.
As a result of the lower U.S. corporate tax rate due to recently enacted
tax reform, fiscal 2018 adjusted EPS reflects a 24.5 percent blended tax
rate versus 35.0 percent used in previous years.
Adjusted EBITDA of $134.1 million in the fourth quarter of fiscal 2018
decreased 23.1 percent compared to $174.5 million in fiscal 2017.
Excluding the impact of $2.0 million of favorable foreign exchange,
organic adjusted EBITDA of $132.1 million decreased 24.3 percent versus
the fourth quarter of fiscal 2017. Reported adjusted EBITDA margin
declined 520 basis points to 17.0 percent compared to 22.2 percent last
year.
Fiscal 2018 Consolidated Financial Results from Continuing Operations
Net sales of $3.15 billion in fiscal 2018 increased 4.5 percent compared
to $3.01 billion in fiscal 2017. Excluding the favorable impact of $21.7
million of foreign exchange and acquisition sales of $64.5 million,
organic net sales of $3.06 billion in fiscal 2018 increased 1.7 percent
from the prior year.
Operating income of $102.0 million in fiscal 2018 decreased 64.0 percent
from $283.0 million last year, while operating income margin fell to 3.2
percent versus 9.4 percent in 2017 primarily as a result of the
write-off from the impairment of GAC goodwill, HRG Group merger
transaction costs, lower gross margin, incremental restructuring costs,
and higher distribution costs.
Net income from continuing operations was $230.1 million, or $6.21
diluted earnings per share, in fiscal 2018 on average diluted shares and
common stock equivalents outstanding of 37.0 million. In fiscal 2017,
net loss from continuing operations was ($121.1) million, or ($3.75)
diluted loss per share, on average diluted shares and common stock
equivalents outstanding of 32.2 million. The Company generated adjusted
diluted EPS of $3.54 in fiscal 2018, unchanged compared to $3.54 last
year with lower operating income and higher interest expense being
off-set by the lower adjusted income tax rate.
Fiscal 2018 adjusted EBITDA from continuing operations of $561.9 million
compared to fiscal 2017 adjusted EBITDA of $639.2 million. Excluding the
favorable impact of $1.1 million of foreign exchange and acquisition
EBITDA of $22.8 million, organic adjusted EBITDA of $538.0 million
decreased 15.8 percent in fiscal 2018 versus the prior year. The
reported adjusted EBITDA margin of 17.9 percent in fiscal 2018 fell 330
basis points compared to 21.2 percent in fiscal 2017.
Fiscal 2018 Fourth Quarter Segment Level Data Compared to Prior Year
Hardware & Home Improvement (HHI)
|
|
|
|
|
Three Months Ended Sept. 30,
|
|
|
|
Year Ended Sept. 30,
|
|
|
(in millions, except %)
|
|
|
|
2018
|
|
2017
|
|
Variance
|
|
2018
|
|
2017
|
|
Variance
|
Net Sales
|
|
|
|
$
|
360.9
|
|
|
$
|
348.9
|
|
|
$
|
12.0
|
|
|
3.4
|
%
|
|
$
|
1,377.7
|
|
|
$
|
1,276.1
|
|
|
$
|
101.6
|
|
|
8.0
|
%
|
Operating Income
|
|
|
|
|
53.3
|
|
|
|
48.3
|
|
|
|
5.0
|
|
|
10.4
|
%
|
|
|
155.6
|
|
|
|
185.7
|
|
|
|
(30.1
|
)
|
|
(16.2
|
%)
|
Operating Income Margin
|
|
|
|
|
14.8
|
%
|
|
|
13.8
|
%
|
|
|
100
|
|
bps
|
|
|
|
11.3
|
%
|
|
|
14.6
|
%
|
|
|
(330
|
)
|
bps
|
|
Adjusted EBITDA
|
|
|
|
|
75.2
|
|
|
|
76.4
|
|
|
|
(1.2
|
)
|
|
(1.6
|
%)
|
|
|
254.7
|
|
|
|
254.4
|
|
|
|
0.3
|
|
|
0.1
|
%
|
Adjusted EBITDA Margin
|
|
|
|
|
20.8
|
%
|
|
|
21.9
|
%
|
|
|
(110
|
)
|
bps
|
|
|
|
18.5
|
%
|
|
|
19.9
|
%
|
|
|
(140
|
)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Higher fourth quarter net sales were driven by a continuation of solid
demand in residential security, plumbing and builders’ hardware in the
U.S., along with a reduction in the customer order backlog at the Kansas
distribution center. Excluding unfavorable foreign exchange impacts of
$1.6 million, organic net sales increased 3.9 percent.
Improvements in fourth quarter operating income and margin were
primarily a result of higher volumes and lower restructuring costs,
while decreases in adjusted EBITDA and margin were largely due to higher
input costs.
Global Pet Supplies (PET)
|
|
|
|
|
Three Months Ended Sept. 30,
|
|
|
|
Year Ended Sept. 30,
|
|
|
(in millions, except %)
|
|
|
|
2018
|
|
2017
|
|
Variance
|
|
2018
|
|
2017
|
|
Variance
|
Net Sales
|
|
|
|
$
|
212.1
|
|
|
$
|
217.2
|
|
|
$
|
(5.1
|
)
|
|
(2.3
|
%)
|
|
$
|
820.5
|
|
|
$
|
793.2
|
|
|
$
|
27.3
|
|
|
3.4
|
%
|
Operating Income
|
|
|
|
|
(7.9
|
)
|
|
|
(5.3
|
)
|
|
|
(2.6
|
)
|
|
49.1
|
%
|
|
|
34.9
|
|
|
|
29.1
|
|
|
|
5.8
|
|
|
19.9
|
%
|
Operating Income Margin
|
|
|
|
|
(3.7
|
%)
|
|
|
(2.4
|
%)
|
|
|
(130
|
)
|
bps
|
|
|
|
4.3
|
%
|
|
|
3.7
|
%
|
|
|
60
|
|
bps
|
|
Adjusted EBITDA
|
|
|
|
|
32.0
|
|
|
|
44.0
|
|
|
|
(12.0
|
)
|
|
(27.3
|
%)
|
|
|
136.7
|
|
|
|
142.7
|
|
|
|
(6.0
|
)
|
|
(4.2
|
%)
|
Adjusted EBITDA Margin
|
|
|
|
|
15.1
|
%
|
|
|
20.3
|
%
|
|
|
(520
|
)
|
bps
|
|
|
|
16.7
|
%
|
|
|
18.0
|
%
|
|
|
(130
|
)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter net sales decreased primarily as a result of lower
aquatics revenues in the U.S. largely driven from prior-year business
exits at a major retailer and in Europe from a temporary customer order
backlog from the consolidation of European distribution centers which
also negatively impacted branded dog and cat food sales. Also
contributing to the decline was a decrease in European dog and cat food
sales from the planned exit of a pet food customer tolling agreement of
$4.0 million, which negatively affected segment sales by approximately
1.8 percent. Largely offsetting the decline was a strong increase in
U.S. companion animal sales, predominantly dog chews and treats.
Excluding the impact of unfavorable foreign exchange of $0.9 million,
organic net sales decreased 1.9 percent in the fourth quarter.
The operating loss and negative margin were primarily driven by the
write-off from impairment of intangible assets. Adjusted EBITDA and
margin decreased as a result of lower volumes, volume-related
unfavorable manufacturing variances, operating inefficiencies and
unfavorable product mix. Excluding unfavorable foreign exchange impacts
of $0.5 million, organic adjusted EBITDA of $32.5 million fell 26.1
percent.
Home and Garden (H&G)
|
|
|
|
|
Three Months Ended Sept. 30,
|
|
|
|
Year Ended Sept. 30,
|
|
|
(in millions, except %)
|
|
|
|
2018
|
|
2017
|
|
Variance
|
|
2018
|
|
2017
|
|
Variance
|
Net Sales
|
|
|
|
$
|
111.7
|
|
|
$
|
119.1
|
|
|
$
|
(7.4
|
)
|
|
(6.2
|
%)
|
|
$
|
482.2
|
|
|
$
|
493.3
|
|
|
$
|
(11.1
|
)
|
|
(2.3
|
%)
|
Operating Income
|
|
|
|
|
14.6
|
|
|
|
26.0
|
|
|
|
(11.4
|
)
|
|
(43.8
|
%)
|
|
|
88.0
|
|
|
|
114.4
|
|
|
|
(26.4
|
)
|
|
(23.1
|
%)
|
Operating Income Margin
|
|
|
|
|
13.1
|
%
|
|
|
21.8
|
%
|
|
|
(870
|
)
|
bps
|
|
|
|
18.2
|
%
|
|
|
23.2
|
%
|
|
|
(500
|
)
|
bps
|
|
Adjusted EBITDA
|
|
|
|
|
19.8
|
|
|
|
32.2
|
|
|
|
(12.4
|
)
|
|
(38.5
|
%)
|
|
|
107.5
|
|
|
|
133.0
|
|
|
|
(25.5
|
)
|
|
(19.2
|
%)
|
Adjusted EBITDA Margin
|
|
|
|
|
17.7
|
%
|
|
|
27.0
|
%
|
|
|
(930
|
)
|
bps
|
|
|
|
22.3
|
%
|
|
|
27.0
|
%
|
|
|
(470
|
)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reduced fourth quarter net sales were driven by lower-than-expected
volume due to retailer’s early exiting of the category and the lack of
repellent and insecticide demand relating to the timing of hurricanes in
the prior year, unfavorable promotional timing against a strong 2017,
related unfavorable manufacturing variances as production volumes were
reduced, lower vendor rebates, and a reserve for a legal claim,
partially offset by solid growth in household control category sales.
Lower operating income, adjusted EBITDA and margins decreased
predominantly due to lower volumes, unfavorable product mix and higher
input costs.
Global Auto Care (GAC)
|
|
|
|
|
Three Months Ended Sept. 30,
|
|
|
|
Year Ended Sept. 30,
|
|
|
(in millions, except %)
|
|
|
|
2018
|
|
2017
|
|
Variance
|
|
2018
|
|
2017
|
|
Variance
|
Net Sales
|
|
|
|
$
|
103.1
|
|
|
$
|
102.6
|
|
|
$
|
0.5
|
|
|
0.5
|
%
|
|
$
|
465.5
|
|
|
$
|
446.9
|
|
|
$
|
18.6
|
|
|
4.2
|
%
|
Operating Income
|
|
|
|
|
(86.1
|
)
|
|
|
20.7
|
|
|
|
(106.8
|
)
|
|
(515.9
|
%)
|
|
|
(28.8
|
)
|
|
|
100.8
|
|
|
|
(129.6
|
)
|
|
(128.6
|
%)
|
Operating Income Margin
|
|
|
|
|
(83.5
|
%)
|
|
|
20.2
|
%
|
|
|
(10,370
|
)
|
bps
|
|
|
|
(6.2
|
%)
|
|
|
22.6
|
%
|
|
|
(2,880
|
)
|
bps
|
|
Adjusted EBITDA
|
|
|
|
|
14.6
|
|
|
|
32.5
|
|
|
|
(17.9
|
)
|
|
(55.1
|
%)
|
|
|
99.3
|
|
|
|
148.4
|
|
|
|
(49.1
|
)
|
|
(33.1
|
%)
|
Adjusted EBITDA Margin
|
|
|
|
|
14.2
|
%
|
|
|
31.7
|
%
|
|
|
(1,750
|
)
|
bps
|
|
|
|
21.3
|
%
|
|
|
33.2
|
%
|
|
|
(1,190
|
)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Higher fourth quarter sales were driven by increased performance
chemical and refrigerant revenues, partially offset by lower appearance
product sales. Excluding unfavorable foreign exchange impacts of $0.6
million, organic net sales increased 1.1 percent.
The operating loss and negative margin were largely driven by the
write-off from impairment of GAC goodwill as well as operating
inefficiencies at the Dayton facility. Lower adjusted EBITDA and margin
were the result of Dayton operating inefficiencies, higher input costs,
increased distribution costs, excess and obsolete inventory liquidation
mix, a multi-year duty catch-up accrual, and higher marketing
investments.
Classification of the Company’s Reporting Segments
Spectrum Brands announced on January 3, 2018 that it was exploring
strategic options for its Global Batteries & Appliances (GBA) businesses
with the intention to sell the units during calendar 2018. As a result,
effective with the Company’s fiscal 2018 first quarter financial
results, the GBA businesses were reclassified as held for sale and
reported as discontinued operations for the fourth quarter and full year
of fiscal 2018 and the comparable prior-year periods.
Effective with the first quarter of fiscal 2019 ending December 31,
2018, the Company will (i) reclassify its Appliances division,
consisting of Personal Care and Small Appliances businesses, as
continuing operations; and (ii) classify its Global Auto Care business
as discontinued operations. The Company’s Home & Garden segment, Global
Pet Supplies and Hardware & Home Improvement segment continue to be
presented as continuing operations.
Fiscal 2018 Fourth Quarter and Full Year Consolidated Financial
Results from GBA Discontinued Operations
Income from GBA discontinued operations, net of tax, of $32.4 million
and diluted income of $0.65 from discontinued operations in the fourth
quarter of fiscal 2018 decreased compared to 72.3 million and $2.23,
respectively, in fiscal 2017.
Income from GBA discontinued operations, net of tax, of $98.6 million
and diluted EPS of $2.66 from discontinued operations in fiscal 2018
decreased compared to $172.1 million and $5.34, respectively, in fiscal
2017.
Liquidity and Debt
Spectrum Brands completed fiscal 2018 on September 30, 2018 with a solid
liquidity position, including a cash balance of approximately $553
million and more than $777 million available on its $800 million Cash
Flow Revolver.
As of the end of fiscal 2018, the Company had approximately $4,812
million of debt outstanding, consisting of a series of secured Term
Loans in the aggregate amount of $1,264 million, $3,205 million of
senior unsecured notes, and approximately $343 million of capital leases
and other obligations.
Total leverage was approximately 5.8 times at the end of fiscal 2018,
slightly lower than 6.1 times at the end of fiscal 2017, primarily as a
result of the redemption of $864.4 million of 7.875% senior notes in
January 2018.
Fiscal 2019 Outlook
Spectrum Brands expects meaningful reported net sales growth from
continuing operations in fiscal 2019 due to innovation, increased
marketing investments, pricing actions, including tariff-related
increases, and market share gains. The impact from foreign exchange on
net sales is expected to be modestly negative based upon current rates.
Fiscal 2019 adjusted EBITDA from continuing operations is expected to be
between $560 and $580 million.
Auto Business Sale Go-Shop Provision
Auto Business Sale agreement (the “GAC Transaction Agreement”) contains
a “go-shop” provision that allows Spectrum Brands and its subsidiaries
and representatives to solicit, discuss and negotiate alternative
transaction proposals from third parties for the sale of more than 90%
of the revenues, assets, liabilities and equity associated with the
Global Auto Care Business. The “go shop” period lasts from November 15,
2018 to December 20, 2018, although it may be extended for an extra 5
days for a third party that submits a proposal prior to December 20,
2018 that is or is reasonably likely to be superior to the transaction
with Energizer Holdings. Spectrum Brands will only be able to terminate
the GAC Transaction Agreement and enter into an alternative transaction
agreement for a third party proposal if that proposal is, among other
requirements, at least a 5% improvement to Energizer Holdings’ proposal
and composed of at least 75% cash. Energizer Holdings will have the
right to match any third party proposals to avoid termination of the GAC
Transaction Agreement. If Spectrum does terminate the GAC Transaction
Agreement to enter into an alternative transaction agreement, Spectrum
Brands will be required to pay Energizer a fee of $65 million.
There can be no assurance that this “go-shop” provision will result in a
superior proposal, and the Company does not intend to disclose
developments with respect to the solicitation process unless and until
the Company makes a determination requiring further disclosure.
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 6098527.
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 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, 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®, GloFish®, Nature’s Miracle®, Dingo®,
8-in-1®, FURminator®, IAMS® and Eukanuba® (Europe only), Healthy-Hide®,
Digest-eeze™, DreamBone®, SmartBones®, Littermaid®, Spectracide®,
Cutter®, Repel®, Hot Shot®, Black Flag®, Liquid Fence®, Armor All®, STP®
and A/C PRO®. Spectrum Brands’ businesses for consumer batteries,
personal care and small household appliances are currently recognized as
held for sale and a component of discontinued operations. Spectrum
Brands' products are sold in approximately 160 countries. Spectrum
Brands generated net sales from continuing operations of approximately
$3.15 billion in fiscal 2018. 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 is one of the measures used for
determining the Company’s debt covenant. 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
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. The
Company’s management believes that adjusted 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.
Adjusted free cash flow should not be considered in isolation or as a
substitute for pretax income, net income, net cash from 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 adjusted 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 statements under “Fiscal 2019 Outlook” and other statements
regarding the Company’s ability to meet its expectations for its fiscal
2019 (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,” “belief,”
“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 extent of success of the Company’s revised business strategy and
the Company’s ability to execute and realize on the expected benefits of
such strategy; (5) the impact of actions taken by significant
stockholders; (6) 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; (7)
interest rate and exchange rate fluctuations; (8) the loss of
significant reduction in, or dependence upon, sales to any significant
retail customer(s); (9) competitive promotional activity or spending by
competitors, or price reductions by competitors; (10) the introduction
of new product features or technological developments by competitors
and/or the development of new competitors or competitive brands; (11)
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, tariff,
monetary or fiscal policies in the countries where we do business; (12)
changes in consumer spending preferences and demand for our products;
(13) our ability to develop and successfully introduce new products,
protect our intellectual property and avoid infringing the intellectual
property of third parties; (14) our ability to successfully implement,
achieve and sustain manufacturing and distribution cost efficiencies and
improvements, and fully realize anticipated cost savings; (15) the
seasonal nature of sales of certain of our products; (16) the effects of
climate change and unusual weather activity; (17) the cost and effect of
unanticipated legal, tax or regulatory proceedings or new laws or
regulations (including environmental, public health and consumer
protection regulations); (18) 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;
(19) the impact of pending or threatened litigation; (20) the impact of
cybersecurity breaches or our actual or perceived failure to protect
company and personal data; (21) changes in accounting policies
applicable to our business; (22) our ability to utilize net operating
loss carry-forwards to offset tax liabilities from future taxable
income; (23) government regulations; (24) the impact of expenses
resulting from the implementation of new business strategies,
divestitures or current and proposed restructuring activities; (25) our
inability to successfully integrate and operate new acquisitions at the
level of financial performance anticipate; (26) the unanticipated loss
of key members of senior management; (27) the effects of political or
economic conditions, terrorist attacks, acts of war or other unrest in
international markets; (28) the Company’s ability to consummate its
pending divestitures on the expected terms and within the anticipated
time period, or at all, which is dependent on the parties’ ability to
satisfy certain closing conditions, including receipt of regulatory
approvals, and our ability to realize the expected benefits of such
transactions and to successfully separate such businesses; (29) the
Company’s ability to realize the expected benefits from the merger with
HRG; and (30) the other risk factors set forth in the securities filings
of Spectrum Brands Holdings, Inc., including the most recently filed
Annual Report on Form 10-K or Quarterly Report on Form 10-Q.
Spectrum Brands 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 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 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 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.
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|
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|
|
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|
|
|
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|
SPECTRUM BRANDS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Periods Ended
|
|
|
Year Ended
|
(in millions, except per share amounts)
|
|
|
Sept. 30, 2018
|
|
|
Sept. 30, 2017
|
|
|
Sept. 30, 2018
|
|
|
Sept. 30, 2017
|
Net sales
|
|
|
$
|
787.8
|
|
|
$
|
787.8
|
|
|
$
|
3,145.9
|
|
|
$
|
3,009.5
|
Investment income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.1
|
Revenue
|
|
|
|
787.8
|
|
|
|
787.8
|
|
|
|
3,145.9
|
|
|
|
3,010.6
|
Cost of goods sold
|
|
|
|
495.0
|
|
|
|
476.2
|
|
|
|
1,979.5
|
|
|
|
1,815.4
|
Restructuring and related charges
|
|
|
|
2.9
|
|
|
|
1.7
|
|
|
|
12.8
|
|
|
|
18.1
|
Gross profit
|
|
|
|
289.9
|
|
|
|
309.9
|
|
|
|
1,153.6
|
|
|
|
1,177.1
|
Selling
|
|
|
|
128.5
|
|
|
|
119.9
|
|
|
|
492.3
|
|
|
|
473.8
|
General and administrative
|
|
|
|
97.0
|
|
|
|
90.2
|
|
|
|
323.9
|
|
|
|
318.9
|
Research and development
|
|
|
|
7.2
|
|
|
|
6.3
|
|
|
|
28.3
|
|
|
|
27.2
|
Acquisition and integration related charges
|
|
|
|
2.3
|
|
|
|
4.0
|
|
|
|
14.3
|
|
|
|
15.6
|
Restructuring and related charges
|
|
|
|
20.9
|
|
|
|
27.4
|
|
|
|
80.0
|
|
|
|
42.3
|
Write-off from impairment of goodwill
|
|
|
|
92.5
|
|
|
|
—
|
|
|
|
92.5
|
|
|
|
—
|
Write-off from impairment of intangible assets
|
|
|
|
20.3
|
|
|
|
16.3
|
|
|
|
20.3
|
|
|
|
16.3
|
Total operating expenses
|
|
|
|
368.7
|
|
|
|
264.1
|
|
|
|
1,051.6
|
|
|
|
894.1
|
Operating (loss) income
|
|
|
|
(78.8)
|
|
|
|
45.8
|
|
|
|
102.0
|
|
|
|
283.0
|
Interest expense
|
|
|
|
58.0
|
|
|
|
77.5
|
|
|
|
264.6
|
|
|
|
309.9
|
Other non-operating (income) expense, net
|
|
|
|
(1.7)
|
|
|
|
2.5
|
|
|
|
(6.3)
|
|
|
|
4.2
|
Loss from continuing operations before income taxes
|
|
|
|
(135.1)
|
|
|
|
(34.2)
|
|
|
|
(156.3)
|
|
|
|
(31.1)
|
Income tax expense (benefit)
|
|
|
|
16.6
|
|
|
|
(11.0)
|
|
|
|
(460.7)
|
|
|
|
38.1
|
Net income (loss) from continuing operations
|
|
|
|
(151.7)
|
|
|
|
(23.2)
|
|
|
|
304.4
|
|
|
|
(69.2)
|
Income from discontinued operations, net of tax
|
|
|
|
35.5
|
|
|
|
47.2
|
|
|
|
567.6
|
|
|
|
342.4
|
Net (loss) income
|
|
|
|
(116.2)
|
|
|
|
24.0
|
|
|
|
872.0
|
|
|
|
273.2
|
Net (loss) income attributable to non-controlling interest
|
|
|
|
(0.4)
|
|
|
|
50.2
|
|
|
|
103.7
|
|
|
|
167.2
|
Net (loss) income attributable to controlling interest
|
|
|
$
|
(115.8)
|
|
|
$
|
(26.2)
|
|
|
$
|
768.3
|
|
|
$
|
106.0
|
Amounts attributable to controlling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations attributable to
controlling interest
|
|
|
$
|
(150.3)
|
|
|
$
|
(32.5)
|
|
|
$
|
230.1
|
|
|
$
|
(121.1)
|
Net income from discontinued operations attributable to controlling
interest
|
|
|
|
34.5
|
|
|
|
6.3
|
|
|
|
538.2
|
|
|
|
227.1
|
Net income attributable to controlling interest
|
|
|
$
|
(115.8)
|
|
|
$
|
(26.2)
|
|
|
$
|
768.3
|
|
|
$
|
106.0
|
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from continuing operations
|
|
|
$
|
(3.00)
|
|
|
$
|
(1.01)
|
|
|
$
|
6.23
|
|
|
$
|
(3.75)
|
Basic earnings per share from discontinued operations
|
|
|
|
0.69
|
|
|
|
0.20
|
|
|
|
14.56
|
|
|
|
7.04
|
Basic earnings per share
|
|
|
$
|
(2.31)
|
|
|
$
|
(0.81)
|
|
|
$
|
20.79
|
|
|
$
|
3.29
|
Diluted earnings per share from continuing operations
|
|
|
$
|
(3.00)
|
|
|
$
|
(1.01)
|
|
|
$
|
6.21
|
|
|
$
|
(3.75)
|
Diluted earnings per share from discontinued operations
|
|
|
|
0.69
|
|
|
|
0.20
|
|
|
|
14.53
|
|
|
|
7.04
|
Diluted earnings per share
|
|
|
$
|
(2.31)
|
|
|
$
|
(0.81)
|
|
|
$
|
20.74
|
|
|
$
|
3.29
|
Weighted Average Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
50.0
|
|
|
|
32.3
|
|
|
|
36.9
|
|
|
|
32.2
|
Diluted
|
|
|
|
50.0
|
|
|
|
32.3
|
|
|
|
37.0
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
Sept. 30, 2018
|
|
|
Sept. 30, 2017
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
872.0
|
|
|
$
|
273.2
|
Income from discontinued operations, net of tax
|
|
|
|
567.6
|
|
|
|
342.4
|
Net income (loss) from continuing operations
|
|
|
|
304.4
|
|
|
|
(69.2)
|
Adjustments to reconcile net income to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
131.7
|
|
|
|
132.2
|
Share based compensation
|
|
|
|
11.8
|
|
|
|
52.9
|
Write-off from impairment of goodwill
|
|
|
|
92.5
|
|
|
|
—
|
Write-off from impairment of intangible assets
|
|
|
|
20.3
|
|
|
|
16.3
|
Purchase accounting inventory adjustment
|
|
|
|
0.8
|
|
|
|
3.3
|
Pet safety recall inventory write-off
|
|
|
|
4.1
|
|
|
|
15.0
|
Amortization of debt issuance costs and debt discount
|
|
|
|
19.6
|
|
|
|
17.3
|
Write-off of unamortized discount and debt issuance costs
|
|
|
|
—
|
|
|
|
2.5
|
Dividends from subsidiaries classified as discontinued operations
|
|
|
|
3.1
|
|
|
|
12.2
|
Deferred tax (benefit) expense
|
|
|
|
(539.0)
|
|
|
|
21.9
|
Net changes in operating assets and liabilities
|
|
|
|
24.6
|
|
|
|
(49.3)
|
Net cash provided by operating activities from continuing operations
|
|
|
|
73.9
|
|
|
|
155.1
|
Net cash provided by operating activities from discontinued
operations
|
|
|
|
269.2
|
|
|
|
685.0
|
Net cash provided by operating activities
|
|
|
|
343.1
|
|
|
|
840.1
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
|
(64.7)
|
|
|
|
(77.8)
|
Proceeds from sales of property, plant and equipment
|
|
|
|
2.8
|
|
|
|
3.9
|
Business acquisitions, net of cash acquired
|
|
|
|
—
|
|
|
|
(304.7)
|
Proceeds from sale of HRG Insurance Operations
|
|
|
|
1,546.8
|
|
|
|
—
|
Net asset-based loan repayments
|
|
|
|
—
|
|
|
|
30.9
|
Other investing activities, net
|
|
|
|
(0.5)
|
|
|
|
(1.5)
|
Net cash provided (used) by investing activities from continuing
operations
|
|
|
|
1,484.4
|
|
|
|
(349.2)
|
Net cash used by investing activities from discontinued operations
|
|
|
|
(211.6)
|
|
|
|
(1,253.2)
|
Net cash provided (used) by investing activities
|
|
|
|
1,272.8
|
|
|
|
(1,602.4)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
|
19.6
|
|
|
|
315.6
|
Payment of debt
|
|
|
|
(1,066.0)
|
|
|
|
(251.9)
|
Payment of debt issuance costs
|
|
|
|
(0.4)
|
|
|
|
(7.0)
|
Purchase of subsidiary stock, net
|
|
|
|
(288.0)
|
|
|
|
(265.0)
|
Dividends paid to shareholders
|
|
|
|
(22.4)
|
|
|
|
—
|
Dividends paid by subsidiary to non-controlling interest
|
|
|
|
(28.6)
|
|
|
|
(39.9)
|
Share based award tax withholding payments, net of proceeds upon
vesting
|
|
|
|
(24.3)
|
|
|
|
(40.8)
|
Other financing activities, net
|
|
|
|
20.7
|
|
|
|
6.5
|
Net cash used by financing activities from continuing operations
|
|
|
|
(1,389.4)
|
|
|
|
(282.5)
|
Net cash provided by financing activities from discontinued
operations
|
|
|
|
100.6
|
|
|
|
865.5
|
Net cash (used) provided by financing activities
|
|
|
|
(1,288.8)
|
|
|
|
583.0
|
Effect of exchange rate changes on cash and cash equivalents on
Venezuela devaluation
|
|
|
|
—
|
|
|
|
(0.4)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(7.0)
|
|
|
|
3.1
|
Net change in cash and cash equivalents
|
|
|
|
320.1
|
|
|
|
(176.6)
|
Net change in cash and cash equivalents in discontinued operations
|
|
|
|
37.7
|
|
|
|
18.5
|
Net change in cash and cash equivalents in continuing operations
|
|
|
|
282.4
|
|
|
|
(195.1)
|
Cash and cash equivalents, beginning of period
|
|
|
|
270.1
|
|
|
|
465.2
|
Cash and cash equivalents, end of period
|
|
|
$
|
552.5
|
|
|
$
|
270.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
2018
|
|
|
2017
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
552.5
|
|
|
$
|
270.1
|
Trade receivables, net
|
|
|
|
254.2
|
|
|
|
266.0
|
Other receivables
|
|
|
|
35.7
|
|
|
|
19.7
|
Inventories
|
|
|
|
503.4
|
|
|
|
496.3
|
Prepaid expenses and other current assets
|
|
|
|
54.7
|
|
|
|
54.8
|
Current assets of business held for sale
|
|
|
|
1,958.2
|
|
|
|
28,929.2
|
Total current assets
|
|
|
|
3,358.7
|
|
|
|
30,036.1
|
Property, plant and equipment, net
|
|
|
|
494.9
|
|
|
|
503.9
|
Deferred charges and other
|
|
|
|
184.0
|
|
|
|
43.7
|
Goodwill
|
|
|
|
2,178.5
|
|
|
|
2,277.1
|
Intangible assets, net
|
|
|
|
1,531.6
|
|
|
|
1,612.0
|
Noncurrent assets of business held for sale
|
|
|
|
—
|
|
|
|
1,376.9
|
Total assets
|
|
|
$
|
7,747.7
|
|
|
$
|
35,849.7
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
$
|
21.2
|
|
|
$
|
161.4
|
Accounts payable
|
|
|
|
436.1
|
|
|
|
373.1
|
Accrued wages and salaries
|
|
|
|
45.7
|
|
|
|
55.4
|
Accrued interest
|
|
|
|
65.0
|
|
|
|
78.0
|
Other current liabilities
|
|
|
|
125.3
|
|
|
|
125.8
|
Current liabilities of business held for sale
|
|
|
|
656.9
|
|
|
|
26,851.3
|
Total current liabilities
|
|
|
|
1,350.2
|
|
|
|
27,645.0
|
Long-term debt, net of current portion
|
|
|
|
4,651.3
|
|
|
|
5,543.7
|
Deferred income taxes
|
|
|
|
35.0
|
|
|
|
493.2
|
Other long-term liabilities
|
|
|
|
121.6
|
|
|
|
64.8
|
Noncurrent liabilities of business held for sale
|
|
|
|
—
|
|
|
|
156.1
|
Total liabilities
|
|
|
|
6,158.1
|
|
|
|
33,902.8
|
Shareholders' equity
|
|
|
|
1,581.3
|
|
|
|
758.0
|
Noncontrolling interest
|
|
|
|
8.3
|
|
|
|
1,188.9
|
Total equity
|
|
|
|
1,589.6
|
|
|
|
1,946.9
|
Total liabilities and equity
|
|
|
$
|
7,747.7
|
|
|
$
|
35,849.7
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED DILUTED EPS
We define adjusted diluted EPS as reported diluted EPS excluding the
effect of one-time, non-recurring activity and volatility associated
with our income tax expense. The Company believes that adjusted diluted
EPS provides further insight and comparability in operating performance
as it eliminates the effects of certain items that are not comparable
from one period to the next. Adjustments to diluted EPS include the
following:
-
proforma adjustment associated with the per share impact from the HRG
Merger, including the change in weighted average shares from the
incremental shares issued to execute the HRG Merger share exchange
with Spectrum’s non-controlling interest, plus the inclusion of income
attributable to non-controlling interest in Spectrum recognized by HRG
Group, Inc. (“HRG”) prior to the consolidation of the shareholder
groups and recognition of Spectrum as a wholly-owned business after
completion of the HRG Merger;
-
acquisition and integration costs that consist of transaction costs
from nonrecurring acquisition transactions during the period and/or
subsequent integration related project costs directly associated with
the acquired business;
-
restructuring and related costs, which consist of project costs
associated with restructuring initiatives across segments;
-
purchase accounting inventory adjustments recognized in earnings
subsequent to an acquisition;
-
non-cash asset impairments or write-offs of intangible assets,
goodwill, or property plant and equipment realized;
-
estimated costs from a non-recurring voluntary recall of rawhide
product by the PET segment;
-
transaction costs associated with the HRG Merger;
-
non-recurring HRG net operating costs that consist of redundant and
duplicative costs from the legacy HRG corporate operations that are
eliminated post HRG Merger transaction date of July 13, 2018,
including compensation and benefits, directors fees, professional
fees, insurance, public company costs, among others; also including
other non-recurring interest income, a one-time fee for the
termination of the HRG New York corporate home office lease and the
one-time termination fee of HRG legacy pension plan.
-
net operating costs associated with Salus, as it is not reflective of
the continuing operations of the Spectrum commercial product business
and its reporting segments;
-
interest costs associated with HRG-originated debt; and
-
other.
During the three month period and year ended September 30, 2018, other
adjustments consisted of separation costs with key senior executives and
damages attributable to a flood at the Company’s corporate headquarters.
During the three month period and year ended September 30, 2018, other
adjustments consisted of separation costs with a key senior executive
and adjustment for the devaluation of cash and cash equivalents
denominated in Venezuelan currency.
Income tax adjustment to diluted EPS is to exclude the impact of
adjusting the valuation allowance against deferred taxes and other tax
related items in order to reflect a normalized ongoing effective tax
rate, net of adjustments made to diluted EPS. For the three month and
fiscal year ended September 30, 2018, the normalized ongoing effective
tax rate was updated to 24.5% to reflect a lower tax rate from 35% due
to changes in the enacted corporate tax rate in the United States.
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED DILUTED EPS (continued)
The following is a reconciliation of reported diluted EPS to adjusted
diluted EPS for the three month period and year ended September 30, 2018
and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Period Ended Sept. 30, 2018
|
|
|
Three Month Period Ended Sept. 30, 2017
|
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
Diluted earnings per share, as reported
|
|
|
$
|
(3.00)
|
|
|
$
|
0.69
|
|
|
$
|
(2.31)
|
|
|
$
|
(1.01)
|
|
|
$
|
0.20
|
|
|
$
|
(0.81)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HRG Merger share exchange proforma adjustment
|
|
|
|
0.17
|
|
|
|
(0.03)
|
|
|
|
0.14
|
|
|
|
0.58
|
|
|
|
0.45
|
|
|
|
1.03
|
Acquisition and integration related charges
|
|
|
|
0.04
|
|
|
|
0.53
|
|
|
|
0.57
|
|
|
|
0.07
|
|
|
|
0.03
|
|
|
|
0.10
|
Restructuring and related charges
|
|
|
|
0.44
|
|
|
|
—
|
|
|
|
0.44
|
|
|
|
0.52
|
|
|
|
0.01
|
|
|
|
0.53
|
Purchase accounting inventory adjustment
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.04
|
|
|
|
—
|
|
|
|
0.04
|
Pet safety recall
|
|
|
|
0.05
|
|
|
|
—
|
|
|
|
0.05
|
|
|
|
0.19
|
|
|
|
—
|
|
|
|
0.19
|
Write off from impairment of goodwill
|
|
|
|
1.73
|
|
|
|
—
|
|
|
|
1.73
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Write off from impairment of intangible assets
|
|
|
|
0.38
|
|
|
|
—
|
|
|
|
0.38
|
|
|
|
0.29
|
|
|
|
—
|
|
|
|
0.29
|
HRG merger related transaction costs
|
|
|
|
0.44
|
|
|
|
—
|
|
|
|
0.44
|
|
|
|
0.06
|
|
|
|
—
|
|
|
|
0.06
|
Non-recurring HRG net operating costs
|
|
|
|
0.11
|
|
|
|
—
|
|
|
|
0.11
|
|
|
|
0.08
|
|
|
|
—
|
|
|
|
0.08
|
Salus
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.02)
|
|
|
|
—
|
|
|
|
(0.02)
|
Interest cost on HRG debt
|
|
|
|
0.36
|
|
|
|
—
|
|
|
|
0.36
|
|
|
|
0.68
|
|
|
|
—
|
|
|
|
0.68
|
Other
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.01
|
Income tax adjustment
|
|
|
|
0.05
|
|
|
|
(0.08)
|
|
|
|
(0.42)
|
|
|
|
(0.64)
|
|
|
|
(0.44)
|
|
|
|
(1.08)
|
Total Adjustments
|
|
|
|
3.79
|
|
|
|
0.42
|
|
|
|
3.82
|
|
|
|
1.86
|
|
|
|
0.05
|
|
|
|
1.91
|
Diluted earnings per share, as adjusted
|
|
|
$
|
0.79
|
|
|
$
|
1.11
|
|
|
$
|
1.51
|
|
|
$
|
0.85
|
|
|
$
|
0.25
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30, 2018
|
|
|
Year Ended Sept. 30, 2017
|
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
Diluted earnings per share, as reported
|
|
|
$
|
6.21
|
|
|
$
|
14.53
|
|
|
$
|
20.74
|
|
|
$
|
(3.75)
|
|
|
$
|
7.04
|
|
|
$
|
3.29
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HRG Merger share exchange proforma adjustment
|
|
|
|
(0.61)
|
|
|
|
(4.15)
|
|
|
|
(4.76)
|
|
|
|
2.52
|
|
|
|
(1.77)
|
|
|
|
0.75
|
Acquisition and integration related charges
|
|
|
|
0.26
|
|
|
|
1.43
|
|
|
|
1.69
|
|
|
|
0.28
|
|
|
|
0.09
|
|
|
|
0.37
|
Restructuring and related charges
|
|
|
|
1.71
|
|
|
|
0.03
|
|
|
|
1.74
|
|
|
|
1.07
|
|
|
|
0.04
|
|
|
|
1.11
|
Debt refinancing costs
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.15
|
|
|
|
—
|
|
|
|
0.15
|
Purchase accounting inventory adjustment
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
0.06
|
|
|
|
—
|
|
|
|
0.06
|
Pet safety recall
|
|
|
|
0.35
|
|
|
|
—
|
|
|
|
0.35
|
|
|
|
0.63
|
|
|
|
—
|
|
|
|
0.63
|
Write off from impairment of goodwill
|
|
|
|
1.71
|
|
|
|
—
|
|
|
|
1.71
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Write off from impairment of intangible assets
|
|
|
|
0.37
|
|
|
|
—
|
|
|
|
0.37
|
|
|
|
0.29
|
|
|
|
—
|
|
|
|
0.29
|
HRG merger related transaction costs
|
|
|
|
0.85
|
|
|
|
—
|
|
|
|
0.85
|
|
|
|
0.14
|
|
|
|
—
|
|
|
|
0.14
|
Non-recurring HRG net operating costs
|
|
|
|
0.35
|
|
|
|
—
|
|
|
|
0.35
|
|
|
|
0.67
|
|
|
|
—
|
|
|
|
0.67
|
Salus
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
0.07
|
|
|
|
—
|
|
|
|
0.07
|
Interest cost on HRG debt
|
|
|
|
1.88
|
|
|
|
—
|
|
|
|
1.88
|
|
|
|
2.63
|
|
|
|
—
|
|
|
|
2.63
|
Other
|
|
|
|
0.08
|
|
|
|
—
|
|
|
|
0.08
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.01
|
Income tax adjustment
|
|
|
|
(9.66)
|
|
|
|
(2.65)
|
|
|
|
(12.31)
|
|
|
|
(1.23)
|
|
|
|
(0.72)
|
|
|
|
(1.95)
|
Total Adjustments
|
|
|
|
(2.67)
|
|
|
|
(5.34)
|
|
|
|
(8.01)
|
|
|
|
7.29
|
|
|
|
(2.36)
|
|
|
|
4.93
|
Diluted earnings per share, as adjusted
|
|
|
$
|
3.54
|
|
|
$
|
9.19
|
|
|
$
|
12.73
|
|
|
$
|
3.54
|
|
|
$
|
4.68
|
|
|
$
|
8.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average shares and adjusted earnings per share data are
adjusted for all periods to reflect the reverse stock split and share
exchange because of the HRG Merger, which closed on July 13, 2018. For
the three month period and year ended September 30, 2017, the weighted
average shares was adjusted using (i) the 20-trading-day volume-weighted
average price per share of Spectrum common stock ending on July 12,
2018, (ii) the number of shares of Spectrum common stock outstanding,
the number of shares of Spectrum common stock held by HRG and its
subsidiaries and the number of shares of Spectrum common stock
outstanding as of July 12, 2018, (iii) $328.2 million of HRG net
indebtedness and transaction expense at closing, and (iv) a $200.0
million upward adjustment contemplated by the Merger Agreement, each HRG
stockholder receives approximately 0.1613 of a share of the post-Merger
combined company stock for each share of pre-Merger common stock. The
following is a recalculation of the weighted average shares adjusted for
the impact of the reverse stock split and share exchange for the three
month period and year ended September 30, 2018.
|
|
|
|
|
|
|
|
|
(in millions, except per share amounts)
|
|
|
Three Month Period Ended Sept. 30, 2017
|
|
|
Year Ended Sept. 30, 2017
|
Spectrum weighted average shares
|
|
|
|
57.8
|
|
|
|
58.6
|
Spectrum weighted average shares owned by HRG
|
|
|
|
34.3
|
|
|
|
34.3
|
Spectrum weighted average shares owned by third parties (A)
|
|
|
|
23.4
|
|
|
|
24.3
|
HRG weighted average shares
|
|
|
|
200.4
|
|
|
|
200.0
|
HRG share conversion at 1 to 0.1613 (B)
|
|
|
|
32.3
|
|
|
|
32.2
|
Total weighted average shares (A + B)
|
|
|
|
55.8
|
|
|
|
56.6
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED DILUTED EPS (continued)
For the three month period and year ended September 30, 2018, the
weighted average shares was adjusted by reversing the weighted dilutive
impact of the 20.6 million of incremental shares issued through the
share exchange as a result of the HRG Merger on July 13, 2018 to present
the weighted average shares as if they were outstanding at the beginning
of the respective fiscal period. The following is a reconciliation of
the adjusted weighted average shares from the impact of the share
exchange for the three month period and year ended September 30, 2018:
|
|
|
|
|
|
|
|
|
(in millions, except per share amounts)
|
|
|
Three Month Period Ended Sept. 30, 2018
|
|
|
Year Ended Sept. 30, 2017
|
Spectrum weighted average shares
|
|
|
|
50.2
|
|
|
|
37.0
|
Dilutive impact from HRG Merger share exchange
|
|
|
|
3.4
|
|
|
|
17.1
|
Spectrum weighted average shares owned by third parties (A)
|
|
|
|
53.5
|
|
|
|
53.5
|
|
|
|
|
|
|
|
|
|
The following summarizes acquisition and integration related charges for
the three month period and year ended September 30, 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Period Ended Sept. 30, 2018
|
|
|
Three Month Period Ended Sept. 30, 2017
|
(in millions)
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
HHI Business
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
(0.1)
|
|
|
$
|
0.3
|
|
|
$
|
0.2
|
PetMatrix
|
|
|
|
0.4
|
|
|
|
—
|
|
|
|
0.4
|
|
|
|
2.5
|
|
|
|
—
|
|
|
|
2.5
|
Armored AutoGroup
|
|
|
|
0.3
|
|
|
|
—
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
—
|
|
|
|
0.2
|
Glofish
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
0.9
|
|
|
|
—
|
|
|
|
0.9
|
Other
|
|
|
|
1.1
|
|
|
|
28.1
|
|
|
|
29.2
|
|
|
|
0.5
|
|
|
|
1.6
|
|
|
|
2.1
|
Total acquisition and integration related charges
|
|
|
$
|
2.3
|
|
|
$
|
28.1
|
|
|
$
|
30.4
|
|
|
$
|
4.0
|
|
|
$
|
1.9
|
|
|
$
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30, 2018
|
|
|
Year Ended Sept. 30, 2017
|
(in millions)
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
HHI Business
|
|
|
$
|
6.0
|
|
|
$
|
—
|
|
|
$
|
6.0
|
|
|
$
|
5.6
|
|
|
$
|
0.3
|
|
|
$
|
5.9
|
PetMatrix
|
|
|
|
4.9
|
|
|
|
—
|
|
|
|
4.9
|
|
|
|
4.5
|
|
|
|
—
|
|
|
|
4.5
|
Armored AutoGroup
|
|
|
|
0.9
|
|
|
|
—
|
|
|
|
0.9
|
|
|
|
2.3
|
|
|
|
0.9
|
|
|
|
3.2
|
Glofish
|
|
|
|
0.2
|
|
|
|
—
|
|
|
|
0.2
|
|
|
|
1.0
|
|
|
|
—
|
|
|
|
1.0
|
Other
|
|
|
|
2.3
|
|
|
|
77.5
|
|
|
|
79.8
|
|
|
|
2.2
|
|
|
|
4.1
|
|
|
|
6.3
|
Total acquisition and integration related charges
|
|
|
$
|
14.3
|
|
|
$
|
77.5
|
|
|
$
|
91.8
|
|
|
$
|
15.6
|
|
|
$
|
5.3
|
|
|
$
|
20.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes restructuring and related charges for the three
month period and year ended September 30, 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Period Ended Sept. 30, 2018
|
|
|
Three Month Period Ended Sept. 30, 2017
|
(in millions)
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
HHI distribution center consolidation
|
|
|
$
|
11.6
|
|
|
$
|
—
|
|
|
$
|
11.6
|
|
|
$
|
18.4
|
|
|
$
|
—
|
|
|
$
|
18.4
|
GAC business rationalization initiative
|
|
|
|
3.6
|
|
|
|
—
|
|
|
|
3.6
|
|
|
|
4.4
|
|
|
|
—
|
|
|
|
4.4
|
PET rightsizing initiative
|
|
|
|
5.1
|
|
|
|
—
|
|
|
|
5.1
|
|
|
|
5.4
|
|
|
|
—
|
|
|
|
5.4
|
Other restructuring activities
|
|
|
|
3.5
|
|
|
|
0.2
|
|
|
|
3.7
|
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
1.6
|
Total restructuring and related charges
|
|
|
$
|
23.8
|
|
|
$
|
0.2
|
|
|
$
|
24.0
|
|
|
$
|
29.1
|
|
|
$
|
0.7
|
|
|
$
|
29.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30, 2018
|
|
|
Year Ended Sept. 30, 2017
|
(in millions)
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
HHI distribution center consolidation
|
|
|
$
|
52.0
|
|
|
$
|
—
|
|
|
$
|
52.0
|
|
|
$
|
27.4
|
|
|
$
|
—
|
|
|
$
|
27.4
|
GAC business rationalization initiative
|
|
|
|
17.1
|
|
|
|
—
|
|
|
|
17.1
|
|
|
|
24.2
|
|
|
|
—
|
|
|
|
24.2
|
PET rightsizing initiative
|
|
|
|
12.1
|
|
|
|
—
|
|
|
|
12.1
|
|
|
|
8.2
|
|
|
|
—
|
|
|
|
8.2
|
Other restructuring activities
|
|
|
|
11.6
|
|
|
|
1.6
|
|
|
|
13.2
|
|
|
|
0.6
|
|
|
|
2.1
|
|
|
|
2.7
|
Total restructuring and related charges
|
|
|
$
|
92.8
|
|
|
$
|
1.6
|
|
|
$
|
94.4
|
|
|
$
|
60.4
|
|
|
$
|
2.1
|
|
|
$
|
62.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
NET SALES AND ORGANIC NET SALES
The following is a summary of net sales by segment for the three month
and fiscal year ended September 30, 2018 and 2017, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Periods Ended Sept. 30,
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30,
|
|
|
|
|
|
|
|
(in millions, except %)
|
|
|
2018
|
|
|
2017
|
|
|
Variance
|
|
|
2018
|
|
|
2017
|
|
|
Variance
|
HHI
|
|
|
$
|
360.9
|
|
|
$
|
348.9
|
|
|
|
12.0
|
|
|
3.4%
|
|
|
$
|
1,377.7
|
|
|
$
|
1,276.1
|
|
|
|
101.6
|
|
|
8.0%
|
PET
|
|
|
|
212.1
|
|
|
|
217.2
|
|
|
|
(5.1)
|
|
|
(2.3%)
|
|
|
|
820.5
|
|
|
|
793.2
|
|
|
|
27.3
|
|
|
3.4%
|
H&G
|
|
|
|
111.7
|
|
|
|
119.1
|
|
|
|
(7.4)
|
|
|
(6.2%)
|
|
|
|
482.2
|
|
|
|
493.3
|
|
|
|
(11.1)
|
|
|
(2.3%)
|
GAC
|
|
|
|
103.1
|
|
|
|
102.6
|
|
|
|
0.5
|
|
|
0.5%
|
|
|
|
465.5
|
|
|
|
446.9
|
|
|
|
18.6
|
|
|
4.2%
|
Total
|
|
|
$
|
787.8
|
|
|
$
|
787.8
|
|
|
|
0.0
|
|
|
0.0%
|
|
|
$
|
3,145.9
|
|
|
$
|
3,009.5
|
|
|
|
136.4
|
|
|
4.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We define organic net sales as reported net sales excluding the effect
of changes in foreign currency exchange rates and acquisitions. We
believe this non-GAAP measure provides useful information to investors
because it reflects regional and operating segment performance from our
activities without the effect of changes in currency exchange rate
and/or acquisitions. We use organic net sales as one measure to monitor
and evaluate our regional and segment performance. Organic growth is
calculated by comparing organic net sales to reported net sales in the
prior year. The effect of changes in currency exchange rates is
determined by translating the period’s net sales using the currency
exchange rates that were in effect during the prior period. Net sales
are attributed to the geographic regions based on the country of
destination. We exclude net sales from acquired businesses in the
current year for which there are no comparable sales in the prior
period. The following is a reconciliation of reported sales to organic
sales for the three month and fiscal year ended September 30, 2018
compared to reported net sales for the three month and fiscal year ended
September 30, 2017, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept. 30, 2018
|
|
|
|
|
|
|
|
|
Three month periods ended (in millions, except %)
|
|
|
Net Sales
|
|
Effect of Changes in Currency
|
|
Net Sales Excluding Effect of Changes
in Currency
|
|
Effect of Acquisitions
|
|
Organic Net Sales
|
|
Net Sales Sept. 30, 2017
|
|
Variance
|
HHI
|
|
|
$
|
360.9
|
|
$
|
1.6
|
|
$
|
362.5
|
|
$
|
—
|
|
$
|
362.5
|
|
$
|
348.9
|
|
$
|
13.6
|
|
3.9%
|
PET
|
|
|
|
212.1
|
|
|
0.9
|
|
|
213.0
|
|
|
—
|
|
|
213.0
|
|
|
217.2
|
|
|
(4.2)
|
|
(1.9%)
|
H&G
|
|
|
|
111.7
|
|
|
—
|
|
|
111.7
|
|
|
—
|
|
|
111.7
|
|
|
119.1
|
|
|
(7.4)
|
|
(6.2%)
|
GAC
|
|
|
|
103.1
|
|
|
0.6
|
|
|
103.7
|
|
|
—
|
|
|
103.7
|
|
|
102.6
|
|
|
1.1
|
|
1.1%
|
Total
|
|
|
$
|
787.8
|
|
$
|
3.1
|
|
$
|
790.9
|
|
$
|
—
|
|
$
|
790.9
|
|
$
|
787.8
|
|
|
3.1
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept. 30, 2018
|
|
|
|
|
|
|
|
|
Year ended (in millions, except %)
|
|
|
Net Sales
|
|
Effect of Changes in Currency
|
|
Net Sales Excluding Effect of Changes
in Currency
|
|
Effect of Acquisitions
|
|
Organic Net Sales
|
|
Net Sales Sept. 30, 2017
|
|
Variance
|
HHI
|
|
|
$
|
1,377.7
|
|
$
|
(4.3)
|
|
$
|
1,373.4
|
|
$
|
—
|
|
$
|
1,373.4
|
|
$
|
1,276.1
|
|
$
|
97.3
|
|
7.6%
|
PET
|
|
|
|
820.5
|
|
|
(15.4)
|
|
|
805.1
|
|
|
(64.5)
|
|
|
740.6
|
|
|
793.2
|
|
|
(52.6)
|
|
(6.6%)
|
H&G
|
|
|
|
482.2
|
|
|
—
|
|
|
482.2
|
|
|
—
|
|
|
482.2
|
|
|
493.3
|
|
|
(11.1)
|
|
(2.3%)
|
GAC
|
|
|
|
465.5
|
|
|
(2.0)
|
|
|
463.5
|
|
|
—
|
|
|
463.5
|
|
|
446.9
|
|
|
16.6
|
|
3.7%
|
Total
|
|
|
$
|
3,145.9
|
|
$
|
(21.7)
|
|
$
|
3,124.2
|
|
$
|
(64.5)
|
|
$
|
3,059.7
|
|
$
|
3,009.5
|
|
|
50.2
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, AND ORGANIC ADJUSTED EBITDA
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation,
Amortization) is a non-GAAP metric used by management that we believe
provides useful information to investors because it reflects ongoing
operating performance and trends of our segments excluding certain
non-cash based expenses and/or non-recurring items during each of the
comparable periods 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. Further, adjusted EBITDA is a measure used for
determining the Company’s debt covenant. EBITDA is calculated by
excluding the Company’s income tax expense, interest expense,
depreciation expense and amortization expense (from intangible assets)
from net income. Adjusted EBITDA further excludes the following:
-
share based compensation expense as it is a non-cash based
compensation cost, including HRG share based compensation expense from
stock based awards that became fully vested as of the HRG Merger
transaction date of July 13, 2018;
-
acquisition and integration costs that consist of transaction costs
from acquisition transactions during the period, or subsequent
integration related project costs directly associated with the
acquired business as previously summarized;
-
restructuring and related costs, which consist of project costs
associated with restructuring initiatives as previously summarized;
-
non-cash purchase accounting inventory adjustments recognized in
earnings subsequent to an acquisition;
-
non-cash asset impairments or write-offs of intangible assets,
goodwill, or property plant and equipment realized;
-
estimated costs for a non-recurring voluntary recall of rawhide
product by the PET segment;
-
transaction costs associated with the HRG Merger;
-
non-recurring HRG net operating costs that consist of redundant and
duplicative costs from the legacy HRG corporate operations that are
eliminated post HRG Merger transaction date of July 13, 2018,
including compensation and benefits, directors fees, professional
fees, insurance, public company costs, among others; also including
other non-recurring interest income, a one-time fee for the
termination of the HRG New York corporate home office lease and the
one-time termination fee of HRG legacy pension plan;
-
net operating costs associated with Salus, as it is not reflective of
the continuing operations of the Spectrum commercial products business
and its reporting segments;
-
other.
During the fiscal year ended September 30, 2018, other adjustments
consisted of separation costs with key senior executives and damages
attributable to a flood at the Company’s corporate headquarters. During
the fiscal year ended September 30, 2018, other adjustments consisted of
separation costs with a key senior executive and adjustment for the
devaluation of cash and cash equivalents denominated in Venezuelan
currency.
Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage
of reported net sales for the respective period. Organic adjusted EBITDA
is calculated by excluding the effect of changes in currency exchange
rates and adjusted EBITDA contributed from acquired businesses in the
current year.
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, AND ORGANIC ADJUSTED EBITDA
(continued)
The following is a reconciliation of reported net income to adjusted
EBITDA for the three month periods ended September 30, 2018 and 2017,
including the calculation of adjusted EBITDA margin for each of the
respective periods, and organic adjusted EBITDA for the three month
period ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three month period ended Sept. 30, 2018 (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Net income (loss) from continuing operations
|
|
|
$
|
54.1
|
|
|
$
|
(7.6)
|
|
|
$
|
14.5
|
|
|
$
|
(86.3)
|
|
|
$
|
(126.4)
|
|
|
$
|
(151.7)
|
Income tax benefit
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16.6
|
|
|
|
16.6
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58.0
|
|
|
|
58.0
|
Depreciation and amortization
|
|
|
|
8.6
|
|
|
|
10.6
|
|
|
|
4.8
|
|
|
|
4.2
|
|
|
|
4.1
|
|
|
|
32.3
|
EBITDA
|
|
|
|
62.7
|
|
|
|
3.0
|
|
|
|
19.3
|
|
|
|
(82.1)
|
|
|
|
(47.7)
|
|
|
|
(44.8)
|
Share based compensation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5.4
|
|
|
|
5.4
|
Acquisition and integration related charges
|
|
|
|
0.5
|
|
|
|
1.0
|
|
|
|
—
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
2.3
|
Restructuring and related charges
|
|
|
|
12.0
|
|
|
|
5.1
|
|
|
|
0.5
|
|
|
|
3.8
|
|
|
|
2.5
|
|
|
|
23.9
|
Write-off from impairment of intangible assets
|
|
|
|
—
|
|
|
|
20.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20.3
|
Write-off from impairment of goodwill
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
92.5
|
|
|
|
—
|
|
|
|
92.5
|
Pet safety recall
|
|
|
|
—
|
|
|
|
2.6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.6
|
Spectrum merger related transaction charges
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23.8
|
|
|
|
23.8
|
Non-recurring HRG operating costs and interest income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.0
|
|
|
|
7.0
|
Salus
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.1)
|
|
|
|
(0.1)
|
Other
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.2
|
|
|
|
1.2
|
Adjusted EBITDA
|
|
|
$
|
75.2
|
|
|
$
|
32.0
|
|
|
$
|
19.8
|
|
|
$
|
14.6
|
|
|
$
|
(7.5)
|
|
|
$
|
134.1
|
Net Sales
|
|
|
$
|
360.9
|
|
|
$
|
212.1
|
|
|
$
|
111.7
|
|
|
$
|
103.1
|
|
|
$
|
—
|
|
|
$
|
787.8
|
Adjusted EBITDA Margin
|
|
|
|
20.8%
|
|
|
|
15.1%
|
|
|
|
17.7%
|
|
|
|
14.2%
|
|
|
|
—
|
|
|
|
17.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three month period ended Sept. 30, 2017 (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Net income (loss) from continuing operations
|
|
|
$
|
47.3
|
|
|
$
|
(5.3)
|
|
|
$
|
26.0
|
|
|
$
|
20.7
|
|
|
$
|
(111.9)
|
|
|
$
|
(23.2)
|
Income tax expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11.0)
|
|
|
|
(11.0)
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
77.5
|
|
|
|
77.5
|
Depreciation and amortization
|
|
|
|
10.3
|
|
|
|
11.5
|
|
|
|
5.2
|
|
|
|
7.2
|
|
|
|
3.7
|
|
|
|
37.9
|
EBITDA
|
|
|
|
57.6
|
|
|
|
6.2
|
|
|
|
31.2
|
|
|
|
27.9
|
|
|
|
(41.7)
|
|
|
|
81.2
|
Share based compensation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24.4
|
|
|
|
24.4
|
Acquisition and integration related charges
|
|
|
|
(0.1)
|
|
|
|
3.7
|
|
|
|
—
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
4.0
|
Restructuring and related charges
|
|
|
|
18.9
|
|
|
|
5.4
|
|
|
|
—
|
|
|
|
4.4
|
|
|
|
0.4
|
|
|
|
29.1
|
Write-off from impairment of intangible assets
|
|
|
|
—
|
|
|
|
15.3
|
|
|
|
1.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16.3
|
Inventory acquisition step-up
|
|
|
|
—
|
|
|
|
2.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.5
|
Pet safety recall
|
|
|
|
—
|
|
|
|
10.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10.9
|
Venezuela devaluation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.4
|
|
|
|
0.4
|
Spectrum merger related transaction charges
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.4
|
|
|
|
3.4
|
Non-recurring HRG operating costs and interest income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.3
|
|
|
|
3.3
|
Salus
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.0)
|
|
|
|
(1.0)
|
Adjusted EBITDA
|
|
|
$
|
76.4
|
|
|
$
|
44.0
|
|
|
$
|
32.2
|
|
|
$
|
32.5
|
|
|
$
|
(10.6)
|
|
|
$
|
174.5
|
Net Sales
|
|
|
$
|
348.9
|
|
|
$
|
217.2
|
|
|
$
|
119.1
|
|
|
$
|
102.6
|
|
|
$
|
—
|
|
|
$
|
787.8
|
Adjusted EBITDA Margin
|
|
|
|
21.9%
|
|
|
|
20.3%
|
|
|
|
27.0%
|
|
|
|
31.7%
|
|
|
|
—
|
|
|
|
22.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Adjusted EBITDA (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Adjusted EBITDA - three month period ended Sept. 30, 2018
|
|
|
$
|
75.2
|
|
|
$
|
32.0
|
|
|
$
|
19.8
|
|
|
$
|
14.6
|
|
|
$
|
(7.5)
|
|
|
$
|
134.1
|
Effect of change in foreign currency
|
|
|
|
(2.2)
|
|
|
|
0.5
|
|
|
|
(0.1)
|
|
|
|
0.4
|
|
|
|
(0.6)
|
|
|
|
(2.0)
|
Net EBITDA excluding effect of changes in currency
|
|
|
|
73.0
|
|
|
|
32.5
|
|
|
|
19.7
|
|
|
|
15.0
|
|
|
|
(8.1)
|
|
|
|
132.1
|
Effect of acquisitions
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Organic Adjusted EBITDA
|
|
|
|
73.0
|
|
|
|
32.5
|
|
|
|
19.7
|
|
|
|
15.0
|
|
|
|
(8.1)
|
|
|
|
132.1
|
Adjusted EBITDA - three month period ended Sept. 30, 2017
|
|
|
|
76.4
|
|
|
|
44.0
|
|
|
|
32.2
|
|
|
|
32.5
|
|
|
|
(10.6)
|
|
|
|
174.5
|
Increase (Decrease) in Organic Adjusted EBITDA
|
|
|
$
|
(3.4)
|
|
|
$
|
(11.5)
|
|
|
$
|
(12.5)
|
|
|
$
|
(17.5)
|
|
|
$
|
2.5
|
|
|
$
|
(42.4)
|
Increase (Decrease) in Organic Adjusted EBITDA (%)
|
|
|
|
(4.5%)
|
|
|
|
(26.1%)
|
|
|
|
(38.8%)
|
|
|
|
(53.8%)
|
|
|
|
23.6%
|
|
|
|
(24.3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, AND ORGANIC ADJUSTED EBITDA
(continued)
The following is a reconciliation of reported net income to adjusted
EBITDA for the years ended September 30, 2018 and 2017, including the
calculation of adjusted EBITDA margin for each of the respective
periods, and organic adjusted EBITDA for the year ended September 30,
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30, 2018 (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Net income (loss) from continuing operations
|
|
|
$
|
155.9
|
|
|
$
|
35.0
|
|
|
$
|
87.9
|
|
|
$
|
(29.0)
|
|
|
$
|
54.6
|
|
|
$
|
304.4
|
Income tax benefit
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(460.7)
|
|
|
|
(460.7)
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
264.6
|
|
|
|
264.6
|
Depreciation and amortization
|
|
|
|
40.0
|
|
|
|
42.3
|
|
|
|
18.8
|
|
|
|
16.3
|
|
|
|
14.3
|
|
|
|
131.7
|
EBITDA
|
|
|
|
195.9
|
|
|
|
77.3
|
|
|
|
106.7
|
|
|
|
(12.7)
|
|
|
|
(127.2)
|
|
|
|
240.0
|
Share based compensation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11.8
|
|
|
|
11.8
|
Acquisition and integration related charges
|
|
|
|
6.0
|
|
|
|
6.2
|
|
|
|
—
|
|
|
|
1.0
|
|
|
|
1.1
|
|
|
|
14.3
|
Restructuring and related charges
|
|
|
|
52.8
|
|
|
|
13.2
|
|
|
|
0.8
|
|
|
|
18.5
|
|
|
|
7.5
|
|
|
|
92.8
|
Write-off from impairment of intangible assets
|
|
|
|
—
|
|
|
|
20.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20.3
|
Write-off from impairment of goodwill
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
92.5
|
|
|
|
—
|
|
|
|
92.5
|
Inventory acquisition step-up
|
|
|
|
—
|
|
|
|
0.8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.8
|
Pet safety recall
|
|
|
|
—
|
|
|
|
18.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18.9
|
Spectrum merger related transaction charges
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45.9
|
|
|
|
45.9
|
Non-recurring HRG operating costs and interest income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18.9
|
|
|
|
18.9
|
Salus
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.1
|
|
|
|
1.1
|
Other
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4.6
|
|
|
|
4.6
|
Adjusted EBITDA
|
|
|
$
|
254.7
|
|
|
$
|
136.7
|
|
|
$
|
107.5
|
|
|
$
|
99.3
|
|
|
$
|
(36.3)
|
|
|
$
|
561.9
|
Net Sales
|
|
|
$
|
1,377.7
|
|
|
$
|
820.5
|
|
|
$
|
482.2
|
|
|
$
|
465.5
|
|
|
$
|
—
|
|
|
$
|
3,145.9
|
Adjusted EBITDA Margin
|
|
|
|
18.5%
|
|
|
|
16.7%
|
|
|
|
22.3%
|
|
|
|
21.3%
|
|
|
|
—
|
|
|
|
17.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended Sept. 30, 2017 (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Net income (loss) from continuing operations
|
|
|
$
|
184.0
|
|
|
$
|
28.8
|
|
|
$
|
114.4
|
|
|
$
|
100.8
|
|
|
$
|
(497.2)
|
|
|
$
|
(69.2)
|
Income tax expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38.1
|
|
|
|
38.1
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
309.9
|
|
|
|
309.9
|
Depreciation and amortization
|
|
|
|
38.3
|
|
|
|
43.1
|
|
|
|
17.6
|
|
|
|
21.1
|
|
|
|
12.1
|
|
|
|
132.2
|
EBITDA
|
|
|
|
222.3
|
|
|
|
71.9
|
|
|
|
132.0
|
|
|
|
121.9
|
|
|
|
(137.1)
|
|
|
|
411.0
|
Share based compensation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
52.9
|
|
|
|
52.9
|
Acquisition and integration related charges
|
|
|
|
5.5
|
|
|
|
7.3
|
|
|
|
—
|
|
|
|
2.3
|
|
|
|
0.5
|
|
|
|
15.6
|
Restructuring and related charges
|
|
|
|
26.6
|
|
|
|
9.1
|
|
|
|
—
|
|
|
|
24.2
|
|
|
|
0.5
|
|
|
|
60.4
|
Write-off from impairment of intangible assets
|
|
|
|
—
|
|
|
|
15.3
|
|
|
|
1.0
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16.3
|
Inventory acquisition step-up
|
|
|
|
—
|
|
|
|
3.3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.3
|
Pet safety recall
|
|
|
|
—
|
|
|
|
35.8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35.8
|
Venezuela devaluation
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.4
|
|
|
|
0.4
|
Spectrum merger related transaction charges
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.6
|
|
|
|
7.6
|
Non-recurring HRG operating costs and interest income
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31.9
|
|
|
|
31.9
|
Salus
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4.0
|
|
|
|
4.0
|
Adjusted EBITDA
|
|
|
$
|
254.4
|
|
|
$
|
142.7
|
|
|
$
|
133.0
|
|
|
$
|
148.4
|
|
|
$
|
(39.3)
|
|
|
$
|
639.2
|
Net Sales
|
|
|
$
|
1,276.1
|
|
|
$
|
793.2
|
|
|
$
|
493.3
|
|
|
$
|
446.9
|
|
|
$
|
—
|
|
|
$
|
3,009.5
|
Adjusted EBITDA Margin
|
|
|
|
19.9%
|
|
|
|
18.0%
|
|
|
|
27.0%
|
|
|
|
33.2%
|
|
|
|
—
|
|
|
|
21.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic Adjusted EBITDA (in millions, except %)
|
|
|
HHI
|
|
|
PET
|
|
|
H&G
|
|
|
GAC
|
|
|
Corporate
|
|
|
Consolidated
|
Adjusted EBITDA - year ended Sept. 30, 2018
|
|
|
$
|
254.7
|
|
|
$
|
136.7
|
|
|
$
|
107.5
|
|
|
$
|
99.3
|
|
|
$
|
(36.3)
|
|
|
$
|
561.9
|
Effect of change in foreign currency
|
|
|
|
(2.0)
|
|
|
|
—
|
|
|
|
(0.1)
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
(1.1)
|
Net EBITDA excluding effect of changes in currency
|
|
|
|
252.7
|
|
|
|
136.7
|
|
|
|
107.4
|
|
|
|
99.8
|
|
|
|
(35.8)
|
|
|
|
560.8
|
Effect of acquisitions
|
|
|
|
—
|
|
|
|
(22.8)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22.8)
|
Organic Adjusted EBITDA
|
|
|
|
252.7
|
|
|
|
113.9
|
|
|
|
107.4
|
|
|
|
99.8
|
|
|
|
(35.8)
|
|
|
|
538.0
|
Adjusted EBITDA - year ended Sept. 30, 2017
|
|
|
|
254.4
|
|
|
|
142.7
|
|
|
|
133.0
|
|
|
|
148.4
|
|
|
|
(39.3)
|
|
|
|
639.2
|
Increase (Decrease) in Organic Adjusted EBITDA
|
|
|
$
|
(1.7)
|
|
|
$
|
(28.8)
|
|
|
$
|
(25.6)
|
|
|
$
|
(48.6)
|
|
|
$
|
3.5
|
|
|
$
|
(101.2)
|
Increase (Decrease) in Organic Adjusted EBITDA (%)
|
|
|
|
(0.7%)
|
|
|
|
(20.2%)
|
|
|
|
(19.2%)
|
|
|
|
(32.7%)
|
|
|
|
(8.9%)
|
|
|
|
(15.8%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECTRUM BRANDS HOLDINGS, INC.
|
OTHER SUPPLEMENTAL INFORMATION (Unaudited)
|
|
ADJUSTED FREE CASH FLOW
Our definition of adjusted free cash flow, which is a non-GAAP financial
measure, takes into consideration capital investments required to
maintain the operations of our businesses and execute our strategy. We
believe adjusted free cash flow provides useful information to investors
regarding our ability to generate cash from business operations that is
available for acquisitions and other investments, service of debt
principal, dividends and share repurchases and meet its working capital
requirements. Our definition of adjusted free cash flow may be different
from definitions used by other companies. We also use adjusted free cash
flow, as defined, as one measure to monitor and evaluate performance.
The following is a reconciliation of the Company’s adjusted free cash
flow for the fiscal years ending September 30, 2018 and 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept. 30, 2018
|
|
|
Sept. 30, 2017
|
(in millions)
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
|
|
Cont. Ops
|
|
|
Disc. Ops
|
|
|
Total
|
Net cash flow from operating activities
|
|
|
$
|
74
|
|
|
$
|
269
|
|
|
$
|
343
|
|
|
$
|
155
|
|
|
$
|
685
|
|
|
$
|
840
|
Operating cash flow provided by HRG discontinued operations
|
|
|
|
—
|
|
|
|
(97)
|
|
|
|
(97)
|
|
|
|
—
|
|
|
|
(361)
|
|
|
|
(361)
|
Operating cash flow used by HRG corp & other operations
|
|
|
|
138
|
|
|
|
—
|
|
|
|
138
|
|
|
|
186
|
|
|
|
—
|
|
|
|
186
|
GBA divestiture transaction costs
|
|
|
|
—
|
|
|
|
49
|
|
|
|
49
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
HRG merger transaction costs
|
|
|
|
39
|
|
|
|
—
|
|
|
|
39
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
Cash interest charges related to refinancing
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5
|
Stanley settlement payment
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23
|
|
|
|
—
|
|
|
|
23
|
Rawhide recall
|
|
|
|
17
|
|
|
|
—
|
|
|
|
17
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
Purchases of property, plant and equipment
|
|
|
|
(65)
|
|
|
|
(38)
|
|
|
|
(103)
|
|
|
|
(78)
|
|
|
|
(37)
|
|
|
|
(115)
|
Adjusted free cash flow
|
|
|
$
|
203
|
|
|
$
|
183
|
|
|
$
|
386
|
|
|
$
|
300
|
|
|
$
|
287
|
|
|
$
|
587
|

View source version on businesswire.com: https://www.businesswire.com/news/home/20181119005232/en/
Source: Spectrum Brands Holdings, Inc.
Investor/Media Contact:
Dave Prichard, 608-278-6141