Spectrum Brands Holdings, Inc. · NYSE:SPB
Spectrum Brands — Debt Investor Presentation (August 2013)
49 slides from Spectrum Brands's debt investor presentation, Aug 7, 2013
Slide 1: Lenders Presentation August 7, 2013
Lenders Presentation August 7, 2013
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 ou
Slide 3: Non-GAAP financial measures
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 fluctuations may provide additional meaningful re
Slide 4: Today's Agenda
Today’s Agenda * Ali Mehdi Managing Director, Credit Suisse Dave Lumley Chief Executive Officer, Spectrum Brands Company Overview 2 Dave Lumley Chief Executive Officer, Spectrum Brands Key Credit Highlights 3 Tony Genito Chief Financial Officer, Spectrum Brands Recent Financial Performance and Full
Slide 5: 1. Transaction Summary
Spectrum Brands 1. Transaction Summary
Slide 6: Executive Summary
Executive Summary Spectrum Brands Holdings (the “Company” or “NYSE: SPB”) is a global and diversified consumer products company with four primary divisions Global Batteries & Appliances (e.g. Rayovac, Varta, Remington and Black & Decker Home) Global Pet Supplies (e.g. Tetra, Nature’s Miracle and FUR
Slide 7: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization * Sources & Uses Pro Forma Capitalization (1) Spectrum Brand’s cash and cash equivalents include $47 million at Spectrum as of 7/28/13 and $44 million at HHI as of 6/30/13. (2) Includes Canadian tranche at par to USD. (3) Market capitalization based on sha
Slide 8: 2. Company Overview
Spectrum Brands 2. Company Overview
Slide 9: Spectrum Brands – Providing Quality and Value to Retailers and Consumers Worldwide
Spectrum Brands – Providing Quality and Value to Retailers and Consumers Worldwide PF YTD FY2013 net sales and adjusted EBITDA of $3,140 million and $492 million, respectively (1) Spectrum Brands Value Model drives success of strong, well-recognized and extendable brand names Top 3 global market pos
Slide 10: Spectrum Value Model
Focused Investment Invest in product performance, R&D and cost improvement Control Costs Cost reductions via shared services, global NPD and common platform products Product Performance Match or exceed competitor product performance Point of Sale Focus Win at point-of-sale, not through brand adverti
Slide 11: Attractive Segment Profile and Diverse Portfolio of Unrivaled Brands
Attractive Segment Profile and Diverse Portfolio of Unrivaled Brands * Spectrum Brands’ portfolio includes widely used, non-discretionary, replacement consumer brands Note: As of fiscal year to date June 30, 2013. Segment adjusted EBITDA excludes $14 million of corporate / unallocated expenses. (1)
Slide 12: Global Batteries & Appliances (GBA) Segment
Global Batteries & Appliances (GBA) Segment *
Slide 13: Global Batteries & Appliances Segment (GBA)
Global Batteries & Appliances Segment (GBA) Adjusted EBITDA Performance - GBA ($ in millions) Operating results driven by Spectrum Value Model Same quality/performance at a lower price Global battery business is increasing its retailer presence Battery industry is stable and expected to continue mod
Slide 14: Global Pet Supplies Segment
Global Pet Supplies Segment *
Slide 15: Global Pet Supplies Segment
Another record year expected in FY13 Attractive industry trends (e.g., increasing pet ownership / spending per pet, low seasonality) North American aquatics business showing continued improvement / positive POS Strong new product pipeline in FY13 in both aquatics and companion animals $10-$15 millio
Slide 16: Home and Garden Segment (United Industries)
* Home and Garden Segment (United Industries) Industry-Leading Value Brands
Slide 17: Home and Garden Segment Delivering Robust Growth
Committed to value model of providing same performance at less price Aiming for another record year in FY13 Strong financial results Attractive margins Low CapEx requirements Attractive industry trends Outdoor living explosion Strong underlying demographic patterns Unique competitive environment Few
Slide 18: Hardware & Home Improvement Segment (HHI)
Hardware & Home Improvement Segment (HHI) *
Slide 19: HHI Overview
HHI Overview Business Description Product Overview HHI is a leading provider of residential locksets, builders’ hardware, and faucets #1 U.S. lockset and #1 Canadian lockset, #1 U.S. luxury hardware, #1 U.S. builders’ hardware, # 4 U.S. faucets Largest global tubular lock manufacturer (~50 million u
Slide 20: Key Credit Highlights
Spectrum Brands a; Key Credit Highlights
Slide 21: Key Credit Highlights
Key Credit Highlights * Leading Market Share and Competitive Brands Experienced and Proven Management Team Successful Track Record of Deleveraging Following Acquisitions Strong Financial Performance Despite a Challenged Consumer Robust Business with Solid Cash Flow Generation Drive Free Cash Flow Th
Slide 22: Leading Market Share and Competitive Brands
Category Select Key Brands Market Position Consumer Batteries #3 (North America) #2 (Europe) #1 (Latin America) Electric shaving and grooming #2 (North America, UK, Australia) #2 / #3 (Continental Europe) Electrical personal care products #1 (Australia) #2 (Europe) #3 (North America) Portable lighti
Slide 23: Drive Free Cash Flow Through Synergistic Bolt-on Acquisitions
* Drive Free Cash Flow Through Synergistic Bolt-on Acquisitions Spectrum Brands continually evaluates synergistic, bolt-on acquisitions to expand its product line, extend market penetration and grow its geographic footprint Key acquisition priorities Global Pet Supplies Home and Garden Large and ric
Slide 24: Strong Financial Performance Despite a Challenged Consumer
Strong Financial Performance Despite a Challenged Consumer Spectrum Brands has generated robust sales and adjusted EBITDA growth, both organically and by acquisitions Adjusted EBITDA / Margin Performance Net Sales Performance (1) Reflects pro forma as if Russell Hobbs merger completed at beginning o
Slide 25: Successful Track Record of Deleveraging Following Acquisitions
Spectrum Brands’ strong FCF & commitment to reduce debt have provided enhanced the equity cushion 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®, Blac
Slide 26: Robust Business with Solid Cash Flow Generation
Robust Business with Solid Cash Flow Generation * For fiscal 2013 management expects free cash flow, net of HHI acquisition costs, of approximately $240 million FY13E CapEx of approximately $70-$80 million – predominantly for cost reduction and new product development Normal annual run rate of cash
Slide 27: Experienced and Proven Management Team
Experienced and Proven Management Team * Spectrum Brands Management Spectrum Brands Management Spectrum Brands Management Name / Position Years with Company Background David R. Lumley CEO & President 7 CEO since April 2010 Served as Co-COO and President, Global Batteries, Personal Care and Home and
Slide 28: 4. Recent Financial and Full Year Outlook
4. Recent Financial and Full Year Outlook
Slide 29: Spectrum Brands FY13 Q3 Review
Spectrum Brands FY13 Q3 Review * Q3 net sales increased 32% and adjusted EBITDA improved 42% on a reported basis Including HHI on a pro forma basis, Q3 net sales grew 1% and adjusted EBITDA was up 2%, and 3% on constant currency basis with solid margin of 17.3% 11th consecutive quarter of year-over-
Slide 30: FY13 Q3 Division Performance
FY13 Q3 Division Performance * Global Batteries Global batteries delivering adjusted EBITDA growth in very aggressive market Strong EBITDA producing, cash flow generator with steady performance European growth continued in Q3 from expansion into new channels Rayovac® North American market share incr
Slide 31: FY13 Q3 Division Performance (continued)
FY13 Q3 Division Performance (continued) * HHI delivered strong Q3 results, following solid Q2 Sales grew 13% primarily from strength in U.S. residential security and faucets Adjusted EBITDA margin approached 19% HHI on track to deliver an even stronger second half of calendar 2013, especially the D
Slide 32: FY13 Q4 Outlook
FY13 Q4 Outlook * Q4 should be record finish to FY13, with momentum carrying into higher FY14 results Higher sales and adjusted EBITDA expected in Q4 from legacy business and total company, including HHI, versus comparable prior year period Legacy business sales should grow up to 2% with adjusted EB
Slide 33: Spectrum Brands brand portfolio
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Slide 34: 5. Syndication Considerations
5. Syndication Considerations
Slide 35: Indicative Terms
Indicative Terms EEEIEITRENNNIII Spectrum Brands, nc. he “Borrower Credit Suisse and Deutsche Bank, together as Joint Lead Arrangers; Deutsche Bank, as Administrative Agent admin. agent fFecites: ik Amortizing Term Loan $400mm Term Loan C [CE ¢ years 6 years [indicative pricing: ea L + 300 bps LIBOR
Slide 36: Transaction Timeline
Transaction Timeline * Federal holidays Key dates
Slide 37: Questions
TURATS S e ees Te eT. RSA Pere yin ee ee eee Spectrum Questions
Slide 38: Appendix
Spectrum Appendix
Slide 39: Summary Consolidated Financial Information
* Summary Consolidated Financial Information (1) Combined twelve months ended 09/30/2009 refers to the sum of the predecessor period of 10/01/2008 to 08/30/2009 and the successor period of 08/30/2009 to 09/30/2009. (2) Balance sheet dates prior to the Merger with Russell Hobbs on 6/16/2010 have not
Slide 40: Supplemental Financial Information
* Supplemental Financial Information (1) Combined 12 months ended 09/30/2009 refers to the sum of the predecessor period of 10/01/2008 to 08/30/2009 and the successor period of 08/30/2009 to 09/30/2009. (2) Reflects Russell Hobbs net sales as if the merger was consummated 10/01/2008.
Slide 41: Reconciliation of Adjusted EBITDA
* Reconciliation of Adjusted EBITDA (1) Combined 12 months ended 09/30/2009 refers to the sum of the predecessor period of 10/01/2008 to 08/30/2009 and the successor period of 08/30/2009 to 09/30/2009. (2) During FY 2011, we recorded accelerated amortization of unamortized discounts and unamortized
Slide 42: Reconciliation of Adjusted EBITDA by Segment
* Reconciliation of Adjusted EBITDA by Segment (1) It is our policy to record income tax expense and interest expense on a consolidated basis. Accordingly, such amounts are not reflected in the operating results of the operating segments. (2) Excludes amortization of debt issuance costs.
Slide 43: Condensed Consolidated Statements of Operations
‘SPECTRUM BRANDS HOLDINGS, INC. Condensed Consolidated Statements of Operations For the three and nine months ended June 20, 2013 and July 4, 2012 (Unausites) (S in mations, except per share amounts) REE MONTHS NINE MONTHS. % Not sales S$ 10008 $ ams s21% $ 2078 $ 24109 218% Cost of goods sola 706.4
Slide 44: Supplemental Financial Data
" SPECTRUM BRANDS HOLDINGS, INC. ‘Supplomental Financial Data ‘As of and for the throe and nine months ended June 20, 2019 and July 4, 2012 (Unavcited) (in mitons) “Supplemental Financial Data F203 £204 ‘Cash ond cash aqunatonts s 90 $ oa ‘rade reconNabies, not sass saa Days Sales Outstanding (2) 20
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Slide 48: Pro Forma Net Sales Comparison
Table 5 ‘SPECTRUM BRANDS HOLDINGS, INC. Pro Forma Net Sales Comparison For the three and nine months ended June 30, 2013 and July 4, 2012 (Unaudited) (ln milions) THREE MONTHS NINE MONTHS F203 ——~F2012 F203 ——~F2012 INC % INC % ‘Spectrum Brands Holdings, inc. Net sales -as reported $1,0898 $ 8248 32
Slide 49: Reconciliation of Forecasted Net Income to Forecasted Adjusted EBITDA
Table7 SPECTRUM BRANDS HOLDINGS, INC. ion of Forecasted Net Income to Forecasted Adjusted EBITDA For the twelve months ended September 30, 2013 (Unaudited) (S in millions) Forecasted: Net income S$ 125-140 Income tax expense al Interest expense 230 Acquisition and integration related charges 12 Rest
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