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Spectrum Brands Reports
First Quarter 2009 Financial Results

Rayovac parent company reports net loss of $2.19 per share for latest quarter

Spectrum Brands Press Release (excerpted)

FlashlightNews.org - 2/12/2009
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Rayovac Batteries

Rayovac Batteries

ATLANTA, Ga. - With strong top-line growth in its largest and most profitable business segment, Spectrum Brands (the "Company") announced today consolidated net sales of $564.2 million for the quarter ended December 28, 2008 as compared to $604.7 million for the first quarter of fiscal year 2008 after excluding the Canadian division of the Home and Garden business, which the Company sold in November 2007. Sales, excluding $34.8 million of unfavorable foreign exchange losses, were down less than 1 percent from sales in the same quarter last year.

Consolidated adjusted EBITDA, a non-GAAP measurement which the Company believes is a useful indicator of the operating health of the business and its trajectory, benefited from the eighth consecutive quarter of adjusted EBITDA growth in the Global Batteries and Personal Care segment and was $53.7 million for the quarter. This amount included a negative impact of foreign exchange of $12.7 million. In comparison, consolidated adjusted EBITDA for the first quarter of fiscal year 2008 was $57.0 million. The results from both periods exclude the results from the Company's growing products portion of the Home and Garden business.

The Company reported a net loss of $2.19 per share for the quarter. Excluding certain items which management believes are not indicative of the Company's on-going normalized operations, the Company generated an adjusted loss per share of $0.18, a non-GAAP number. These excluded items, net of tax, include:

* Restructuring and related charges of $52.7 million, or $1.03 per share, primarily associated with the Company's strategy to exit the growing products portion of its Home and Garden business, its decision to exit Ningbo Baowang ("Ningbo"), a battery manufacturing facility in China, and Company-wide cost reduction and integration initiatives;
* Net tax adjustments of $48.5 million, or $0.94 per share, to exclude the effect of certain adjustments made to the valuation allowance against net deferred taxes and other tax related items;
* A loss of $5.0 million, or $0.10 per share, from the growing products portion of the Home and Garden business, which is consistent with results in prior comparable periods which reflects the seasonality of this business; and
* Other items that net to a benefit of $2.9 million, or $0.06 per share.

During the first quarter of fiscal year 2008, the Company reported a net loss per fully diluted share of $0.85. Excluding net tax adjustments of $0.50, a loss of $0.10 from the growing products portion of the Home and Garden business, $0.03 for discontinued operations representing the Company's sale of the Canadian portion of the Home and Garden business, restructuring and related charges of $0.06, and other items that net to a benefit of $0.10, the first quarter 2008 adjusted loss per fully diluted share was $0.26.

Gross profit and gross margin for the quarter were $145.0 million and 25.7 percent, respectively, versus $217.7 million and 36.0 percent for the same period in fiscal year 2008. Within cost of sales the Company incurred restructuring related charges of approximately $55.2 million, negatively impacting this quarter's margin by 978 basis points, primarily related to the Company's decision to exit the growing products portion of the Home and Garden business. During the first quarter of 2008, cost of sales included $0.1 million of restructuring and related charges.

First Quarter Segment Results

Despite negative foreign exchange pressure and relatively poor holiday results for the majority of retailers, the Global Batteries and Personal Care segment reported a solid first quarter. Key placement and distribution wins for the holiday season were a major contributor, driving year-over-year improvement in adjusted EBITDA and strong share growth in many of its product categories. Consumers appear to be embracing the Rayovac value proposition, a trend the Company believes should continue. Net sales for the segment for the first quarter were $389.3 million compared with $418.0 million for the same period last fiscal year, a difference of $28.7 million, of which $33.2 million represents the impact of negative foreign exchange.

Adjusted EBITDA was $53.2 million for the quarter. Excluding $13.2 million of negative foreign exchange impact, adjusted EBITDA was up 27.1 percent compared to last year. Segment profitability for this segment was $53.3 million for the quarter, up 13.0 percent over last year's level. The profit improvement was primarily due to the cost savings generated from more efficient operation of the Company's manufacturing facilities and cost reduction initiatives.

North America led the way in global battery sales with 21.8 percent growth in total batteries sales and 28.8 percent growth in alkaline batteries. Rayovac® was the only major battery brand during the quarter to grow in both dollar share and dollar sales growth in all three major battery segments as defined by Nielsen: alkaline, heavy duty and rechargeable.

As the Company continued its exit of unprofitable SKUs, including the shutdown of its Ningbo facility in China, which produced batteries sold into the European markets. European battery sales for the quarter were $94.8 million, as compared with $109.9 million last year. Foreign exchange losses negatively impacted European sales by $11.3 million.

Latin American battery sales for the quarter were $38.0 million, down from $60.0 million last year, as the impact of foreign exchange and a dramatic slowdown in the economies of several countries, including Brazil, depressed sales.

About Spectrum Brands, Inc.

Spectrum Brands is a global consumer products company and a leading supplier of consumer Batteries, specialty pet supplies, shaving and grooming products, household and lawn insect and pest control products, personal care products and portable lighting. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in more than 120 countries around the world. Headquartered in Atlanta, Georgia, Spectrum Brands generated fiscal year 2008 net sales of $2.7 billion.

For more information, or to read the complete press release, visit the company's website at: spectrumbrands.com.

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