Spectrum Brands Holdings, Inc. · NYSE:SPB

Spectrum Brands — Investor Presentation (December 2014)

59 slides from Spectrum Brands's investor presentation, December 2014

  1. Slide 1: December 2014 Investor Presentation

    December 2014 Investor Presentation

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements Certain matters discussed in this presentation, with the exception of historical matters, may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding our

  3. Slide 3: Reconciliation of Non-GAAP Financial Measurements

    Reconciliation of Non-GAAP Financial 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. Excluding the impact of current exchange rate

  4. Slide 4: Spectrum Brands Evolution

    Spectrum Brands Evolution Feb 2005 United May 2005 Industries Dec 2012 Rayovac Changes Acquisition Hardware & Home Name to (United Pet Group Improvement (HHI) and Home and Spectrum Brands Acquisition Garden businesses) Aug 1999 Sept 2003 Nov 2011 Rayovac Oct 2014 Reacquires Tell Manufacturing Majori

  5. Slide 5: Attractive Segment Profile and Diverse Portfolio of Unrivaled Brands

    Attractive Segment Profile and Diverse Portfolio of Unrivaled Brands Hardware & Global Batteries & Appliances Global Pet Supplies Home and Garden Home Improvement FY14 Net Sales $2,231M; FY14 Net Sales $600M; FY14 Net Sales $432M; FY14 Net Sales $1,166M; Adj. EBITDA $327M Adj. EBITDA $113M Adj. EBIT

  6. Slide 6: Spectrum Brands

    Spectrum Brands Providing Quality and Value to Retailers and Consumers Worldwide Diverse Portfolio Across Attractive Categories  FY14 net sales and adjusted EBITDA of Home & Garden $4,429 million and $724 million, 10% respectively Global Pet Supplies 14%  Spectrum Brands Value Model drives Global

  7. Slide 7: Strong Financial Performance Despite a Challenged Consumer

    Strong Financial Performance Despite a Challenged Consumer  Quarter-over-quarter net sales and adjusted Net Sales Performance EBITDA growth with few exceptions since FY09 ($ in millions) $4,277 $4,429  HHI and Global Batteries & Appliances led the $4,226 adjusted EBITDA improvement in FY14 $3,187

  8. Slide 8: Spectrum Brands Vision

    Spectrum Brands Vision VISION Be the leader in retailer metrics with superior value consumer products for everyday use GOAL Create shareholder value through adjusted EBITDA and free cash flow growth 8

  9. Slide 9: Spectrum Value Model: Same Performance, Less Price / Better Value

    Spectrum Value Model: “Same Performance, Less Price / Better Value” Market Positioning Value to Retailers Focus on #2 brands in markets Best retailer margin; with high barriers to entry category mgmt; merchandising Product Performance Point of Sale Focus Match or exceed Win at point-of-sale, competi

  10. Slide 10: Leading Market Share and Competitive Brands

    Leading Market Share and Competitive Brands Category Select Key Brands Market Position #3 (North America) Consumer batteries #2 (Europe) #1 (Latin America) Electric shaving and grooming #3 (North America, Europe) #3 (North America) Electrical personal care products #2 (Europe) #2 (North America, Eur

  11. Slide 11: Diverse and Loyal Customer Base

    Diverse and Loyal Customer Base  Spectrum Brands’ largest customer in FY14 accounted for ~16% of sales, with the remainder of its top 10 customers accounting for ~27%  The Company maintains long-term relationships of more than 20 years with many key customers, including Walmart, Lowe’s and Boots 

  12. Slide 12: Drive Free Cash Flow Through Synergistic Bolt-on Acquisitions

    Drive Free Cash Flow Through Synergistic Bolt-on Acquisitions Key acquisition priorities  Large and rich list of targets identified for bolt-on acquisitions  Primary focus in companion animals (e.g., FURminator® in Q1FY12) Global  Potential acquisition categories include dog and cat treats, dog a

  13. Slide 13: Successful Track Record of Acquisition Integration/Delevering

    Successful Track Record of Acquisition Integration/Delevering  Track record of using strong free cash flow generation to reduce debt  Proven integrator – successfully integrated Russell Hobbs, exceeding synergy goals, as well as more recent add-ons FURminator, Black Flag/TAT, HHI, Tong Lung, and L

  14. Slide 14: Robust Business with Solid Cash Flow Generation

    Robust Business with Solid Cash Flow Generation  FY13 free cash flow was a record $254 million, or about $5 per share, which was eclipsed by FY14 free cash flow of $359 million, or nearly $7 per share • Cash taxes of $81 million (primarily driven by timing of payments and income tax audits from 200

  15. Slide 15: Global Batteries & Appliances (GBA) Segment

    Global Batteries & Appliances (GBA) Segment 15

  16. Slide 16: Global Batteries & Appliances Segment

    Global Batteries & Appliances Segment  Operating results driven by Spectrum Value Model Adjusted EBITDA Performance - GBA • Same quality/performance at a lower price ($ in millions) $327 • Global battery business is increasing its $275 $297 $307 $308 $304 retailer presence/launching new products •

  17. Slide 17: Global Appliances Industry with a Large Footprint

    Global Appliances Industry with a Large Footprint  Stable, recession resistant • Replacement nature/everyday use products  Strong portfolio of flagship brands • Remington, Black + Decker, George Foreman, Russell Hobbs, Farberware • Leading market positions in served categories globally Global Indu

  18. Slide 18: Hardware & Home Improvement Segment (HHI)

    Hardware & Home Improvement Segment (HHI) 18

  19. Slide 19: HHI Segment Overview

    HHI Segment Overview Business Description Revenue by Segment (FY14)  Seven consecutive quarters of YOY net sales and adjusted Faucets 18% EBITDA increases since December 17, 2012 acquisition  Integration progressing smoothly • Additional synergy savings identified in next few years  HHI is a lead

  20. Slide 20: HHI Has Global Growth Opportunities and Expansion in Residential/Light Commercial

    HHI Has Global Growth Opportunities and Expansion in the Residential/Light Commercial Businesses and Home Automation/Security  HHI has a diversified existing product portfolio that is complemented by outstanding new product innovation and execution complemented by its October 1, 2014 acquisition of

  21. Slide 21: HHI Game-Changing Technology

    HHI Game-Changing Technology THE KEY EVOLVED. Touch to What Makes SmartKey Open Better? Your Smartphone • Drill Resistance is Now Your Key • ANSI Grading • BumpGuard • Mobile App Convenience • Superior Pick-Resistance • Share eKeys via Smartphone Re-Key as Easy as 1-2-3 • No Smartphone? No Problem.

  22. Slide 22: Global Pet Supplies Segment

    Global Pet Supplies Segment 22

  23. Slide 23: Attractive Global Pet Industry

    Attractive Global Pet Industry  Global pet food/supplies industry estimated at $75 billion in 2012  Consistent annual growth of 3-5%  United Pet Group (UPG) addresses a $21 billion market segment with attractive growth characteristics, high fragmentation and low seasonality Industry Growth Market

  24. Slide 24: Global Pet Supplies Segment

    Global Pet Supplies Segment Sole Player with Global Platform and Presence  Attractive industry trends (e.g., increasing pet Adjusted EBITDA Performance ownership/ spending per pet, low seasonality) ($ in millions)  Global market leader in aquatics category with a broad $120 and innovative product

  25. Slide 25: Home and Garden Segment (United Industries)

    Home and Garden Segment (United Industries) Industry-Leading Value Brands 25

  26. Slide 26: Strong #2 Share in the Industry

    Strong #2 Share in the Industry U.S. Retail Home and Garden Pest Control Market $3 Billion Retail Category (2013 Estimate) Vendor Market Share Estimate United Industries Share United All Other Industries Controls 19% 23% 23% $1,489M UI Share Household 32% $757M UI Share Bayer 5% Repellents 28% Centr

  27. Slide 27: Home and Garden Segment

    Home and Garden Segment Delivering Robust Growth  Another record year in FY14 Adjusted EBITDA Performance(a) ($ in millions)  Completed accretive Liquid Fence bolt-on $102 acquisition in Q1FY14 $87 $90 $78  Strong financial results $68 $53 $56 • Highest margin Spectrum Brands division $41 • Low C

  28. Slide 28: Spectrum Brands

    Spectrum Brands REMINGTON J & Russell Hobbs Qos oonne united Fore S nent MVARTA PUG INDUSTRIES spectracide "PFO REPEL Kwikset ay60e Tnstant (Ocean Ea GREE PROSENSE MM? BALDWIN GES) WET2.... PfisteR EZSET LirreRMAD Je 8) JF PROUNE Breadman Sy Soom FORTIS @ Toastmaster FARBERWARE §=[ZUUN9 Juiceman (Ge

  29. Slide 29: Fiscal 2015 Outlook

    Fiscal 2015 Outlook  Company plans for a 6th consecutive year of record performance in FY15 and for sales to increase in the low to mid-single digit range despite some new and significant pressures in the business  More challenging operating landscape in FY15, including meaningful FX headwinds at

  30. Slide 30: Quarterly Dividend Started in 2013, Increased 20% in 2014

    Quarterly Dividend Started in 2013, Increased 20% in 2014  Four quarterly common stock dividends of $0.25 per share paid in March, June, September and December of 2013  Dividend increased by 20% to $0.30 per share from $0.25, effective with quarterly payment in March 2014 • Higher rate reaffirms t

  31. Slide 31: NYSE: SPB

    NYSE: SPB www.spectrumbrands.com investorrelations@spectrumbrands.com david.prichard@spectrumbrands.com

  32. Slide 32: Appendix

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  33. Slide 33: Experienced and Proven Management Team

    Experienced and Proven Management Team Name / Position Years with Company Background  CEO since April 2010 David R. Lumley  Served as Co-COO and President, Global Batteries, Personal Care and Home and Garden segments since 8 January 2007 Chief Executive Officer & President  Previously served as P

  34. Slide 34: HHI Group Formation

    HHI Group Formation Tong Lung 2005 Stanley National Hardware group 2000 formed under Stanley’s Mechanical HHI Group is formed Access Solutions under SBD’s Stanley 2010 2012 Division Security Solutions Division and adds Stanley National Hardware to its Portfolio 1989 2003 Hardware & Home Improvement

  35. Slide 35: HHI Group Overview

    HHI Group Overview Est. 1910 Est. Est.1946 1946 Est. Est.1904 1904 Est. Est.1946 1946 Est. Est.1843 1843 Est. 1901 Est. 1901 Est. 1947 Est. 1947 Est. Est.1910 1910 Est. 194 Revenue by Segment (LTM 6/30) Financial Highlights (LTM 6/30) Revenue by Geography (LTM 6/30) Tong Lung RoW 5% 7% Residential L

  36. Slide 36: Recognized and Established Brands

    Recognized and Established Brands Residential Locksets Builders’ Hardware Plumbing Brand Established 1946 1904 1946 1843 / 1901 1947 1910 #1 in U.S. #4 U.S. in Faucets #1 in U.S. #1 in Canada #1 in U.S. Luxury #2 in Mexico Market Position Builders’ (#3 in U.S. Retail Locksets Locksets Locksets Hardw

  37. Slide 37: Leading Market Position

    Leading Market Position HHI Market Shares  Largest tubular lock manufacturer globally U.S. Residential Lockset Market Canada Residential Lockset Market  #1 U.S. lockset  #1 Canadian lockset HHI HHI Other Other 45% 46% 54% 55%  #1 U.S. luxury hardware  #1 U.S. builders’ hardware  #4 U.S. faucet

  38. Slide 38: Strong Distribution and Channel Penetration

    Strong Distribution and Channel Penetration Brands  Large installed base Est. 1910 Est. 1946 Est. 1904 Est. 1946 Est. 1843 Est. 1901 Est. 1947 Est. 1910 Est. 1946 Est. 1904 Est. 1946  Strong builder relations Home Centers Builders, Co-Op and 2-Step Distributors, Showrooms  Strong big box retail p

  39. Slide 39: HHI Enjoys Strong Customer Relationships

    HHI Enjoys Strong Customer Relationships Dedicated national sales force with robust customer relationships across all distribution channels Customer Description of Relationship Value Proposition  Won Home Depot Vendor of the Year in 2011  Install base  Supply chain and fill rate management  Bran

  40. Slide 40: Evolution of Global Batteries

    Evolution of Global Batteries French Battery Company Formed in Rayovac Madison WI Acquires Later Renamed VARTA Rayovac 1906 1999 2002 2004 Rayovac Rayovac Reacquires Reacquires Brand in Brazil Majority of Brand in Latin America 40

  41. Slide 41: Batteries is an Attractive Segment Given Market Share Gains

    Batteries is an Attractive Segment for SPB Given Market Share Gains & Estimated Organic Growth (Alkaline at 3.5% per Year) Global Battery Market: Revenue by Battery Type (World), 2010-2016 10000 9000 8000 Revenues ($ Million) 7000 6000 Primary Lithium 5000 Alkaline 4000 Carbon Zinc 3000 2000 1000 0

  42. Slide 42: Evolution of Global Appliances

    Evolution of Global Appliances Russell Hobbs merges with Spectrum Harbinger Applica acquires Brands completes Applica/Salton Black & Decker acquisition of renamed Russell Household Applica Hobbs Products Group 1998 2003 2006 2007 2009 2010 2011 Spectrum Brands Acquires acquires Farberware Remington

  43. Slide 43: Global Appliances – Diversified Product Line-up

    Global Appliances – Diversified Product Line-up Kitchen Products Home Products Personal Care Representative Brands  Kettles  Deep fryers  Hand-held irons  Straighteners, stylers, curling irons  Storage and  Food choppers  Vacuum cleaners organization  Men’s and women’s  Food  Air purifiers

  44. Slide 44: UPG Historical Review: Acquisitions and Integration

    UPG Historical Review: Acquisitions and Integration  United Pet Group (UPG) was formed in 1998 by TA Associates and between 1999-2006 successfully executed an acquisition/integration strategy within the U.S. pet supplies industry  Acquired by Spectrum in 2005 with subsequent acquisitions of Tetra

  45. Slide 45: UPG: An Impressive Portfolio of Leading Brands

    UPG: An Impressive Portfolio of Leading Brands Companion Aquatics Animal Product Product Brand Categories Brand Categories 7 2 5 7 3 3 2 4 2 1 3 3 45

  46. Slide 46: UPG is the Only Global Platform in the Industry

    Acquisition: UPG is the Only Global Platform in the Industry  Dedicated sales, marketing and operations teams in 3 primary geographies: North America, Europe, Pacific Rim • Represents 90% of the total pet supply market  Competitors lack similar infrastructure  Ideal to execute a global roll-up st

  47. Slide 47: Long-Standing Global Customer Relationships

    Long-Standing Global Customer Relationships Length of Category Manager/ Retailer Relationship Advisor Roles Aquatics 20 Years Small Animal / Domestic Bird Dog Containment Aquatics > 15 Years Dog & Cat Health and Beauty Aids Rawhide Stain & Odor Control Products Aquatics > 15 Years Dog & Cat Health a

  48. Slide 48: Highly Recognized and Respected Value Brands

    Highly Recognized and Respected Value Brands  Weed & Grass Killers Controls  Outdoor Insect Control  Ant, Roach and Wasp Killers Household  Indoor Insect Control  Personal and Area Mosquito Repellents Repellents  Yard Treatment Products Rodenticide  Mouse / Rat Baits and Traps & Other  Plant

  49. Slide 49: Highlights of Pet and Home and Garden Acquisitions in Late 2011

    Highlights of Pet and Home and Garden Acquisitions in Late 2011 Black Flag/TAT Brands Acquisition – November 2011 FURminator Acquisition – December 2011  Black Flag/TAT produces and distributes a line of insecticide  FURminator is a leading global provider of branded, products, including liquids,

  50. Slide 50: Liquid Fence Accretive, Tuck-in Acquisition

    Liquid Fence Accretive, Tuck-in Acquisition  Liquid Fence is the U.S. leader in the fast-growing consumer animal repellents market • Broad and expanding product line, proprietary formulations and solid retailer relationships • Flagship product, Liquid Fence Deer & Rabbit Repellent, is the number-on

  51. Slide 51: Financial Snapshot

    Financial Snapshot Pro forma net sales Adjusted EBITDA ($ in millions) ($ in millions) $724 $4,277 $4,429 $4,226 $668 $677 16.4% $3,111 $3,187 $3,006 15.8% $432 $457 15.8% $2,333 $2,427 $391 $297 14.3% $272 13.9% 13.0% 11.7% 12.2% (a) (a) (b) (b) (a) (a) (b) (b) FY '07 FY '08 FY '09 FY '10 FY '11 FY

  52. Slide 52: Reconciliation of Adjusted EBITDA

    Reconciliation of Adjusted EBITDA 9/30 FY2009 9/30 FY2010 9/30 FY2011 9/30 FY2012 PF9/30 FY2012 PF9/30 FY2013 9/30 FY2014 Net income (loss) $943 ($190) ($75) $49 $49 ($55) $215 Income tax expense 74 63 92 60 60 27 59 Interest expense 190 277 208 192 192 376 202 Depreciation and amortization 67 118 1

  53. Slide 53: Reconciliation of Adjusted EBITDA by Segment

    Reconciliation of Adjusted EBITDA by Segment FY 2014 Global Batteries & Global Pet Home & Garden Hardware & Home Corporate / Consolidated Appliances Supplies Business Improvement Unallocated Items (1) Spectrum ($ in millions) Net Income (Loss), as adjusted $235 $79 $88 $157 ($344) $215 Interest expe

  54. Slide 54: Condensed Consolidated Statements of Operations

    Table 1 SPECTRUM BRANDS HOLDINGS, INC. Condensed Consolidated Statements of Operations For the three and twelve months ended September 30, 2014 and September 30, 2013 (Unaudited) (Sin millions, except per share amounts) THREE MONTHS TWELVE MONTHS F2014 F2013 INC % F2014 F2013 INC % Net sales $ 11783

  55. Slide 55: Supplemental Financial Data

    Table 2 SPECTRUM BRANDS HOLDINGS, INC. Supplemental Financial Data As of and for the three and twelve months ended September 30, 2014 and September 30, 2013 (Unaudited) (Sin millions) Supplemental Financial Data F2014 F2013 Cash and cash equivalents $ 194.6 $ 207.3 Trade receivables, net $ 439.0 $ 4

  56. Slide 56: Reconciliation of GAAP Diluted EPS to Adjusted Diluted EPS

    Table 3 SPECTRUM BRANDS HOLDINGS, INC. Reconciliation of GAAP Diluted Income (Loss) Per Share to Adjusted Diluted Earnings Per Share For the three and twelve months ended September 30, 2014 and September 30, 2013 (Unaudited) THREE MONTHS TWELVE MONTHS 2014 2013 2014 2013 Diluted income (loss) per sh

  57. Slide 57: Reconciliation of GAAP Net Income to Adjusted EBITDA (Q4 2014)

    Table 4 ‘SPECTRUM BRANDS HOLDINGS, INC. Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA For the three months ended September 30, 2014 (Unaudited) (Sin millions) Corporate / Consolidated Global Batteries & Global Pet Hardware &Home —Unallocateditems Spectrum Brands Appliances ‘Supplies Ho

  58. Slide 58: Reconciliation of GAAP Net Income to Adjusted EBITDA (Q4 2013)

    Table 4 SPECTRUM BRANDS HOLDINGS, INC. Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA For the three months ended September 30, 2013 (Unaudited) (Sin millions) Corporate / Consolidated Global Batteries & Global Pet Hardware &Home Unallocated items Spectrum Brands Appliances Supplies Home

  59. Slide 59: Pro Forma Net Sales Comparison

    Table 5 SPECTRUM BRANDS HOLDINGS, INC. Pro Forma Net Sales Comparison For the three and twelve months ended September 30, 2014 and September 30, 2013 (Unaudited) (in millions) THREE MONTHS TWELVE MONTHS F2014 F2013 INC % F2014 F2013 INC % Spectrum Brands Holdings, Inc. Net sales - as reported $ 1178

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