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Spectrum Brands’ Revenue Rises, Income Falls in Fiscal 4Q15

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Price movement of Spectrum Brands

Spectrum Brands Holdings (SPB) has a market capitalization of $5.7 billion. Spectrum’s YTD (year-to-date) price movement was a mix of rises and falls in fiscal 2015.

After its fiscal 4Q15 earnings report, SPB rose by 2.9% to close at $95.12 per share as of November 19, 2015. The stock’s price movements on a weekly, monthly, and YTD basis are 4.3%, 2.5%, and 0.45%, respectively.

Technically, Spectrum’s stock has sometimes broken the support of its 20-day, 50-day, 200-day moving averages in fiscal 2015. Currently, SPB is trading 1.4% above its 20-day moving average, 0.97% above its 50-day moving average, and 0.16% below its 200-day moving average.

The PowerShares DWA Consumer Staples Momentum ETF (PSL) invests 1.8% of its holdings in Spectrum Brands. The ETF tracks an index of US consumer cyclical companies selected and weighted by price momentum. Its YTD price movement is 12.2% as of November 18, 2015.

Spectrum Brands’ competitors and their market capitalizations are:

  • Whirlpool (WHR) — $12.5 billion
  • Jarden (JAH) — $9.9 billion
  • Masco (MAS) — $10.1 billion
  • Scotts Miracle-Gro Company (SMG) — $4.2 billion
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Performance in fiscal 4Q15 and fiscal 2015

Spectrum Brands reported fiscal 4Q15 net sales of $1,308.1 million, a rise of 11.0% when compared to net sales of $1,178.3 million in fiscal 4Q14. Sales in its Global Batteries & Appliances and Home and Garden segments fell by 7.2% and 0.64%, respectively, and sales in its Hardware & Home Improvement and Global Pet Supplies segments rose by 5.6% and 37.2%, respectively, in fiscal 4Q15 as compared to the prior year’s period.

The company’s cost of goods sold as a percentage of sales fell by 1.5%, and its operating income rose by 16.3% in fiscal 4Q15 as compared to the prior year’s period.

Its net income and EPS (earnings per share) fell to $26.5 million and $0.44, respectively, in fiscal 4Q15, as compared to net income and EPS of $47.9 million and $0.90, respectively, in 4Q14. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $229.3 million in fiscal 4Q15, a rise of 22.8% as compared to the prior year’s period.

Phil Szuba was appointed as senior vice president and general manager of Spectrum Brands and will lead the Hardware & Home Improvement division.

Spectrum declared a new three-year, $300 million common stock repurchase program and a quarterly dividend of $0.33 per share on its common stock.

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Fiscal 2015 results

In fiscal 2015, the company reported net sales of $4,690.4 million, a rise of 5.9% YoY (year-over-year). Sales in the Global Batteries & Appliances segment fell by 6.2% and sales in the Hardware & Home Improvement, Global Pet Supplies, and Home and Garden segments rose by 3.4%, 26.3%, and 9.7%, respectively, in fiscal 2015.

The company’s gross profit rose by 6.5% over the same period. Its net income and EPS fell to $148.9 million and $2.66, respectively, in fiscal 2015, as compared to net income and EPS of $214.1 million and $4.02, respectively, in fiscal 2014. Its adjusted EBITDA and free cash flow rose to $800.6 million and $454.0 million, respectively, in fiscal 2015, a rise of 10.5% and 26.5% YoY.

Meanwhile, Spectrum Brands’ cash and cash equivalents and inventories rose by 27.4% and 25.0%, respectively, in fiscal 2015.

The company has projected the below figures for fiscal 2016:

  • Rise in net sales in the high–single-digit range compared to fiscal 2015 net sales of $4.7 billion, including the positive impacts of the acquisitions of Procter & Gamble’s European Pet Food business on December 31, 2014, Salix Animal Health on January 16, 2015, and Armored AutoGroup on May 21, 2015, along with an anticipated negative impact from foreign exchange of ~200–220 basis points based on current spot rates.
  • Free cash flow in the range of ~$505–$515 million compared to $454 million in fiscal 2015.

According to Spectrum Brands Holdings’ chief executive officer Andreas Rouvé, “For fiscal 2016, we expect healthy top and bottom-line growth again from a mix of new products, new customers, distribution and market share gains, increased cross-selling, geographic expansion and continuous improvement savings along with strong expense controls. At current spot rates, we face continuing negative foreign currency headwinds, primarily in the first half of the year. We have plans in place to offset these headwinds as in fiscal 2015.”

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