Highlights:
* Confident and Committed to Closing the Sale of HHI to ASSA ABLOY for $4.3 Billion and Continued Work to Complete the Transaction
* Completed the Internal Separation of its Home & Personal Appliances Business for a Potential Spin or Other Transaction
Financial Results:
Net Sales Increased 10.0% and Organic Net Sales Increased 4.4% Despite Customer Ordering Unpredictability and Consumer Demand Softening
Realized Net Income from Continuing Operations of $3.0 Million and Adjusted EBITDA Declined to $80.1 Million, Attributable to Lower Volume, Unfavorable Impact of Foreign Exchange and Higher Transaction and Restructuring Costs as Increased Supply Chain Cost was Partially Offset by Cost Reduction Actions
In Light of Shifting Consumer Dynamics and Related Retailer Order Patterns:
Pivoted the Company's Operating Strategy to Reduce Inventory Levels and Run Operations to Maximize Cash Flow
Implemented Pricing Actions to Offset the Majority of Currently Projected Inflationary Increases of $290-$310 Million
Reduced Short-Term Spending, and Eliminated 17% of Global Salaried Positions Saving Over $30 Million Annually
Changing Its Fiscal 2022 Earnings Framework to Mid-Single Digit Top Line Growth With Mid-Twenties EBITDA Decline Over the Prior Year
Continues to Believe that the Company has an Earnings Power of Over $400 Million of Adjusted EBITDA for Continuing Operations
MIDDLETON, Wis.--(BUSINESS WIRE)--Aug. 12, 2022-- Spectrum Brands Holdings, Inc. (NYSE: SPB; 'Spectrum Brands' or the 'Company'), a leading global branded consumer products and home essentials company focused on driving innovation and providing exceptional customer service, today reported results from continuing operations for the third quarter of fiscal 2022 ended July 3, 2022.
'On the strategic side, we continue to execute on our objective to close the $4.3 billion sale of our HHI business to ASSA ABLOY as both parties remain confident and committed to closing this transaction. We have also accelerated integration of Tristar into our Home and Personal Care Appliances business, renamed that business 'Empower Brands' and recently completed the carve out work necessary to separate this business. These actions further our strategic objectives of recasting our company into a pure play Global Pet Care and Home and Garden company. On the operations side, we delivered top-line growth this quarter despite some challenging customer dynamics. We entered the third quarter with optimism after implementing the necessary pricing actions to restore our margin structure. However, during the quarter our retail partners experienced rapidly changing consumer behavior as well as reduced foot traffic in home center channels while their inventory levels were 30-40 percent higher than a year ago levels. Additionally, we continued to experience challenging weather conditions in our Home & Garden business, which negatively impacted consumer demand and retailer replenishment. The unprecedented negative demand shocks and the unfavorable weather conditions materially reduced our planned sales for the quarter and led to our own inventory levels being higher than expected. This in turn led to higher demurrage, detention and storage costs in the short-term that further pressured our margins in the quarter,' said David Maura, Chairman and Chief Executive Officer of Spectrum Brands.
'Given these drastic changes in the operating environment, we pivoted our operating strategy to reduce our own inventory levels and run the operations to maximize cash flow over earnings, despite the negative impact it has on margins in the short term. We have also taken swift actions to eliminate 17% of our global salaried positions during the quarter that will drive over $30 million in annualized savings. Given our third quarter results and our short term focus on maximizing cash flow over earnings, we are updating our 2022 earnings framework. We are now expecting mid-single digits sales growth with mid-twenties EBITDA decline for the full year of fiscal 22. Despite these near-term HEADWINDS, our businesses remain competitively positioned and we continue to believe that the Company has an earnings power of over $400 million of Adjusted EBITDA for our continuing operations,' said Mr. Maura.
Fiscal 2022 Third Quarter Highlights: See full results at:
https://investor.spectrumbrands.com/news-releases/news-release-details/spectrum-brands-holdings-reports-fiscal-2022-third-quarter
SPECTRUM BRANDS HOLDINGS, INC. 
