MIDDLETON, Wis.--(BUSINESS WIRE)--Spectrum Brands Holdings, Inc. (NYSE: SPB), a global and diversified consumer products company with market-leading brands, has reported record fiscal 2014 third quarter results for the period ended June 29, 2014, and reconfirmed its outlook for a fifth consecutive year of record performance.
The Company’s record third quarter was highlighted by continued growth from its home and garden, HHI and battery businesses; growth in GAAP earnings per share, adjusted diluted earnings per share and adjusted EBITDA; strong margin expansion; and a record fiscal third quarter level of cost savings from continuous improvement programs across all divisions.
Spectrum Brands said it had completed $125 million of term debt reduction to date and reaffirmed plans to reduce term debt by a total of approximately $250 million by the end of fiscal 2014.
The Company also reiterated expectations for free cash flow to increase to at least $350 million in fiscal 2014, a significant improvement from a record $254 million in fiscal 2013 and $208 million in fiscal 2012.
Fiscal 2014 Third Quarter Highlights:
- Net sales of $1.13 billion in the third quarter of fiscal 2014 increased 3.6 percent versus $1.09 billion a year ago.
- Net income of $78.0 million and diluted income per share of $1.47 in the third quarter of fiscal 2014 more than doubled compared to net income of $36.1 million and diluted income per share of $0.69 in the prior year quarter.
- Adjusted diluted earnings per share, a non-GAAP measure, of $1.30 in the third quarter of fiscal 2014 increased 44.4 percent compared to $0.90 last year. See Table 3 for a reconciliation to GAAP earnings per share.
- Adjusted EBITDA, a non-GAAP measure, of $202.3 million in the third quarter of fiscal 2014 grew 7.3 percent versus $188.5 million in fiscal 2013, representing the 15thconsecutive quarter of year-over-year adjusted EBITDA growth. See Table 4 for a reconciliation to GAAP net income.
- Adjusted EBITDA margin, a non-GAAP measure, in the third quarter of fiscal 2014 increased to 17.9 percent compared to 17.3 percent in the year-ago quarter. See Table 4 for a reconciliation to GAAP net income.
- Term debt reduced by $125 million to date and Company reiterates plan for total cumulative term debt paydown of approximately $250 million by the end of fiscal 2014 to delever the balance sheet.
- Fiscal 2014 net cash provided from operating activities after purchases of property, plant and equipment (free cash flow, a non-GAAP measure) expected to be at least $350 million compared to $254 million in fiscal 2013 and $208 million in fiscal 2012. See Table 6 for a reconciliation to projected GAAP Cash Flow from Operating Activities.
“Our record third quarter performance, which followed record results in the first two quarters, maintains the momentum we have to deliver a fifth consecutive year of record financial performance and growth in fiscal 2014,” said Dave Lumley, Chief Executive Officer of Spectrum Brands Holdings.
“We have delivered solid, consistent sales growth every quarter this year of about 3.5 percent in what we believe remains a challenging global environment with very sluggish consumer POS and retail store traffic, especially in North America, along with tight retailer inventory levels and reorder rates,” he said. “Our adjusted EBITDA grew at about twice the rate of sales in the third quarter, and we are pleased with the strong expansion of our gross margin and adjusted EBITDA margin. We are on track to deliver a seventh consecutive year of adjusted EBITDA margin growth.
“The resilience and reliability of our businesses in today’s difficult global environment is a testament to our operating model, go-to-market strategies, brand strength and diversity, and strong retailer relationships,” Mr. Lumley said. “Our Spectrum Value Model works effectively and resonates well with retailers and consumers. ‘Same or better performance/less price,’ value-branded Spectrum Brands products are winning in the marketplace with today’s smart shoppers who are focusing more and more on value. Importantly, our brands are largely non-discretionary, non-premium priced, home-related, replacement packaged goods used daily by consumers.
“Given consumers’ growing preference for on-line shopping and product ratings and price comparisons, we are increasing our investment and resources to partner closely with our retail customers’ e-commerce platforms to help them increase overall sales,” he added. “Our e-commerce sales are showing solid growth so far this year, especially in our personal care, small appliance and pet businesses.
“Similar to the first two quarters, we achieved a record level of continuous improvement savings for a fiscal third quarter,” Mr. Lumley said. “This reinforces our ongoing focus to reduce our cost structure, more than offset higher product costs and continue to invest in new products, many of which are launching now and throughout fiscal 2015.
“We are focused on delivering another year of steady, measured financial improvement, including a strong increase in free cash flow, in fiscal 2014,” Mr. Lumley said. “Our commitment remains to create greater shareholder value, with a focus on growing our adjusted EBITDA, reducing debt and deleveraging, and maximizing sustainable free cash flow.”