Spectrum Brands Holdings, Inc. · NYSE:SPB
Spectrum Brands — Q2 2023 Earnings Presentation
27 slides from Spectrum Brands's earnings presentation, May 12, 2023
Slide 1: Fiscal 2023 Second Quarter Earnings Call
Fiscal 2023 Second Quarter Earnings Call May 12, 2023
Slide 2: Agenda
2 • Introduction – Faisal Qadir VP, Strategic Finance & Enterprise Reporting • CEO Overview and Outlook – David Maura Chairman and Chief Executive Officer Agenda • Financial & Business Review – Jeremy Smeltser Chief Financial Officer • Q&A – David Maura and Jeremy Smeltser
Slide 3: Forward-looking Statements
Forward-looking Statements 3 We have made or implied certain forward-looking statements in this document. All statements, other than statements of historical facts included or incorporated by reference in this document, including the statements under Management’s Discussion and Analysis of Financial
Slide 4: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 4 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. Within this document, including the tables that
Slide 5: CEO Overview and Outlook
CEO Overview and Outlook David Maura
Slide 6: Q2 FY23 Headlines and Outlook
Q2 FY23 Headlines and Outlook 6 Summary Agreed to settle the DOJ lawsuit – expecting to close HHI sale to ASSA BLOY no later than end of June 2023 for $4.3 billion and excepting approximately $3.5 billion of net proceeds Achieved inventory reduction of $170M in the quarter resulting in positive free
Slide 7: FY23 Earnings Framework
FY23 Earnings Framework 7 NET ADJUSTED SALES EBITDA Mid single-digit decline Low to mid single-digits to prior year decline to prior year H&G and HPC sales pressure from Retailer inventory reduction in H&G retailer inventory reduction, and HPC, foreign exchange headwinds pricing and cost actions to
Slide 8: Financial and Business Review
Financial and Business Review Jeremy Smeltser
Slide 9: Second Quarter 2023 - Continuing Operations Only
Second Quarter 2023 - Continuing Operations Only 9 KEY TAKEAWAYS Net Sales Adj. EBITDA • Decline in the organic sales driven by -9.7% -35.4% demand decrease in hard good/semi durables and retailer inventory reduction for HPC and H&G • Q2 adjusted EBITDA decrease driven by: $808M $79M - Volume $729M
Slide 10: Q2 FY23 Financial Review
Q2 FY23 Financial Review 10 Interest Expense +$6.9M vs. LY $3.2B 6.3x $32M Proforma net Debt outstanding $25M leverage ratio(1) Q2 FY22 Q2 FY23 $328M Cash balance Cash strategic transactions, restructuring, and other unusual non-recurring items -$6.2M vs. LY Revolver usage(2) $29M $22M $738 M $362 M
Slide 11: Second Quarter 2023 Global Pet Care
Second Quarter 2023 Global Pet Care 11 Net Sales Adj. EBITDA KEY TAKEAWAYS 0.5% 14.0% • Organic net sales increase driven by growth in companion animal consumables category, partially offset by other hard goods and aquatics environment $295M $297M $46M $41M • EBITDA increase was driven by volume gro
Slide 12: Second Quarter 2023 Home & Garden
Second Quarter 2023 Home & Garden 12 Net Sales Adj. EBITDA KEY TAKEAWAYS -22.0% -59.9% • Net sales declined due to reduction in retailer inventory compared to typical seasonal build $38M $197M $153M • The EBITDA decline was driven by lower volume, partially offset by fixed cost reduction actions $15
Slide 13: Second Quarter 2023 Home & Personal Care
Second Quarter 2023 Home & Personal Care 13 Net Sales Adj. EBITDA KEY TAKEAWAYS -11.7% n/m(1) • Organic Net sales decline driven by retailers’ continued focus on inventory reduction and reduced consumer demand particularly in Kitchen $11M Appliances category $316M • Lower EBITDA was driven by volume
Slide 14: FY23 Earnings Framework
FY23 Earnings Framework 14 NET ADJUSTED SALES EBITDA Mid single-digit decline Low to mid single-digits to prior year decline to prior year H&G and HPC sales pressure from Retailer inventory reduction in H&G retailer inventory reduction, and HPC, foreign exchange headwinds pricing and cost actions to
Slide 15: FY23 – Full Year Expectations
FY23 – Full Year Expectations 15 Interest Cash transactions CAPEX D&A $120M - $125M $65M - $70M $55M - $65M $105M - $115M Cash payments of Capital expenditures Depreciation and Interest Expense Restructuring, optimization Amortization and strategic initiatives
Slide 16: CEO Takeaways
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Slide 17: CEO Key Takeaways
CEO Key Takeaways 17 STRATEGIC PIVOT • Reached settlement with DOJ paving the way for HHI sale to complete no later than June 30, 2023 1 • Strengthen balance sheet, return capital to shareholders and refocus the team on long-term growth for the remaining businesses FY23 EARNINGS FRAMEWORK UPDATE • H
Slide 18: Appendix
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Slide 19: Condensed Consolidated Statements of Income
19 SPECTRUM BRANDS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Month Periods Ended Six Month Periods Ended (in millions, except per share amounts) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022 Net sales $ 729.2 $ 807.8 $ 1,442.5 $ 1,565.0 Cost of goods sold
Slide 20: Condensed Consolidated Statements of Cash Flow
20 SPECTRUM BRANDS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Six Month Periods Ended (in millions) April 2, 2023 April 3, 2022 Cash flows from operating activities Net cash provided (used) by operating activities from continuing operations $ 148.6 $ (212.2) Net cash p
Slide 21: Condensed Consolidated Statements of Financial Position
21 SPECTRUM BRANDS HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (in millions) April 2, 2023 September 30, 2022 Assets Cash and cash equivalents $ 327.8 $ 243.7 Trade receivables, net 305.5 247.4 Other receivables 101.3 95.7 Inventories 585.6 780.6 Prepaid expens
Slide 22: Net Sales Summary and Organic Net Sales Reconciliation
22 SPECTRUM BRANDS HOLDINGS, INC. NET SALES SUMMARY (Unaudited) Three Month Periods Ended Six Month Periods Ended (in millions, except %) April 2, 2023 April 3, 2022 Variance April 2, 2023 April 3, 2022 Variance HPC $ 279.2 $ 316.1 $ (36.9) (11.7)% $ 643.6 $ 695.8 $ (52.2) (7.5)% GPC 296.7 295.1 1.6
Slide 23: Reconciliation of GAAP Net Income to Adjusted EBITDA - Q2 2023
23 SPECTRUM BRANDS HOLDINGS, INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Unaudited) Three Month Period Ended April 2, 2023 (in millions, except %) HPC GPC H&G Corporate Consolidated Net (loss) income from continuing operations $ (37.7) $ 30.2 $ (39.8) $ (27.
Slide 24: Reconciliation of GAAP Net Income to Adjusted EBITDA - Q2 2022
24 SPECTRUM BRANDS HOLDINGS, INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Unaudited) Three Month Period Ended April 3, 2022 (in millions, except %) HPC GPC H&G Corporate Consolidated Net (loss) income from continuing operations $ (19.1) $ 19.0 $ 30.4 $ (55.4)
Slide 25: Reconciliation of GAAP Net Income to Adjusted EBITDA - Six Months 2023
25 SPECTRUM BRANDS HOLDINGS, INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Unaudited) Six Month Period Ended April 2, 2023 (in millions, except %) HPC GPC H&G Corporate Consolidated Net (loss) income from continuing operations $ (41.8) $ 53.3 $ (47.0) $ (79.5)
Slide 26: Reconciliation of GAAP Net Income to Adjusted EBITDA - Six Months 2022
26 SPECTRUM BRANDS HOLDINGS, INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Unaudited) Six Month Period Ended April 3, 2022 (in millions, except % HPC GPC H&G Corporate Consolidated Net income (loss) from continuing operations $ — $ 30.6 $ 14.6 $ (100.5) $ (55.
Slide 27: Reconciliation of GAAP Diluted EPS to Adjusted Diluted EPS
27 SPECTRUM BRANDS HOLDINGS, INC. RECONCILIATION OF GAAP DILUTED EARNINGS PER SHARE TO ADJUSTED DILUTED EARNINGS PER SHARE (Unaudited) Three Month Periods Ended Six Month Periods Ended April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022 Diluted EPS from continuing operations, as reported $ (1.83
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