Spectrum Brands (SPB 48.96, -10.39, -17.51%) tracked lower by 8.4%
pre-market and added to its losses following the open after the company reported disappointing results for the fourth
The owner of such consumer products brands as Rayovac, Remington, Black & Decker, George Foreman, Farberware, Kwikset, Tetra, and STP, among others, reported below-consensus fourth quarter earnings of $0.79 per share on below-consensus revenue of $787.8 mln, which was little changed year/year.
Chairman and CEO David Maura said that the company expects meaningful net sales growth from continuing operations for fiscal 2019, but the company's guidance for adjusted EBITDA from continuing operations between $560 mln and $580 mln is below market expectations.
Adjusted EBITDA margin for the fourth quarter of 2018 declined to 17.0% from 22.2% reported one year ago. Responsible for the decline were operating inefficiencies, input cost inflation, and higher distribution costs. The company noted that fourth quarter adjusted EBITDA was impacted negatively in all segments due to actions taken to reorganize the company.
Hardware & Home Improvement net sales grew 3.4% to $360.9 mln due to solid demand in residential security, plumbing, and builders' hardware in the U.S. Operating income increased 10.4% to $53.3 mln; meanwhile, adjusted EBITDA declined 1.6% to $75.2 mln as higher input costs outweighed higher volumes and lower restructuring costs.
Global Pet Supplies revenue fell 2.3% year/year to $212.1 mln due to lower aquatics revenue in the U.S. driven by lower revenue from major retailers. Lower sales of dog and cat food in Europe also contributed to the decline. Operating loss in the segment totaled $7.9 mln while adjusted EBITDA declined 27.3% year/year to $32.0 mln due to lower volumes, unfavorable manufacturing variances, operating inefficiencies, and unfavorable product mix.
Home and Garden revenue fell 6.2% year/year to $111.7 mln due to a retailer's early exit from the category, a lack of demand for repellent and insecticide, and unfavorable promotional timing. Operating income fell 43.8% year/year to $14.6 mln while adjusted EBITDA declined 38.5% to $19.8 mln. The declines were driven by lower volumes, unfavorable product mix, and higher input costs.
Global Auto care revenue ticked up 0.5% year/year to $103.1 mln. The segment reported an operating loss of $86.1 mln, down from an operating income of $20.7 mln one year ago. The drop was due to the write-off from impairment of GAC goodwill and inefficiencies at a production facility in Dayton. Adjusted EBITDA fell 55.1% to $14.6 mln due to higher input costs, higher distribution costs, excess and obsolete inventory liquidation mix, and higher marketing investment.
- OUR VIEW
- LEARNING CENTER