Spectrum Brands Holdings Reports Fiscal 2024 Second Quarter Results
-
Net Sales Decreased 1.5% Driven by Lower Consumer Demand in Home Appliances, Aquatics Particularly in
North America and the Impact of SKU Rationalizations, Offset by Strong POS in Controls Due to Favorable Weather Trends -
Net Income From Continuing Operations of
$49.9 Million and Adjusted EBITDA of$112.3 Million Improved by$124.9 million and$61.3 million , Respectively -
Excluding Investment Income of
$17.0 million , Adjusted EBITDA was$95.3 million -
Repurchased 1.2 million Shares in Q2 for
$98 million -
Repurchased 12.1 Million Shares Since the Close of HHI Through Today for
$920 Million - Entered into New Long-Term Black & Decker License Agreement
-
Updating Fiscal 2024 Earnings Framework and Now Expect
Net Sales to be Relatively Flat Compared to Prior Year and, Excluding Investment Income, Adjusted EBITDA to Grow Low Double-Digits
“We are pleased to report a strong second quarter of fiscal 24, building off the operating momentum we drove in our first quarter. Our sales performance improved sequentially and our operations produced a gross margin of 38.1%, an 870 basis point improvement over last year. Our net income increased
Fiscal 2024 Second Quarter Highlights |
|||||||||||||||
|
Three Month Periods Ended |
|
|
|
|
||||||||||
(in millions, except per share and %) |
|
|
|
|
|
Variance |
|||||||||
Net sales |
|
$ |
718.5 |
|
|
$ |
729.2 |
|
|
$ |
(10.7 |
) |
(1.5 |
)% |
|
Gross profit |
|
|
273.4 |
|
|
|
214.5 |
|
|
|
58.9 |
|
27.5 |
% |
|
Gross profit margin |
|
|
38.1 |
% |
|
|
29.4 |
% |
|
|
870 |
|
bps |
||
Operating income (loss) |
|
$ |
75.9 |
|
|
$ |
(77.0 |
) |
|
$ |
152.9 |
|
n/m |
|
|
Net income (loss) from continuing operations |
|
|
49.9 |
|
|
|
(75.0 |
) |
|
|
124.9 |
|
n/m |
|
|
Net income (loss) from continuing operations margin |
|
|
6.9 |
% |
|
|
(10.3 |
)% |
|
|
1,720 |
|
bps |
||
Diluted earnings per share from continuing operations |
|
$ |
1.65 |
|
|
$ |
(1.83 |
) |
|
$ |
3.48 |
|
n/m |
|
|
Non-GAAP Operating Metrics |
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA from continuing operations |
|
$ |
112.3 |
|
|
$ |
51.0 |
|
|
$ |
61.3 |
|
120.2 |
% |
|
Adjusted EBITDA margin |
|
|
15.6 |
% |
|
|
7.0 |
% |
|
|
860 |
|
bps |
||
Adjusted EPS from continuing operations |
|
$ |
1.62 |
|
|
$ |
(0.14 |
) |
|
$ |
1.76 |
|
n/m |
|
|
n/m = not meaningful |
|
|
|
|
|
|
|
-
Net sales decreased 1.5% with a decrease in organic net sales of 1.6%, excluding the impact of
$1.2 million of favorable foreign exchange rates. Net sales declined due to lower sales in home appliances, volume declines in Aquatics inNorth America , and the impact of SKU rationalizations, offset by stronger Controls sales. - Gross profit and gross profit margin increased from the sale of lower cost inventory, lower inventory-related expenses, favorable mix and cost improvements.
-
Operating income increased due to the recognition of a
$65 million gain from representation and warranty insurance proceeds, reduced intangible asset impairments, distribution cost favorability, reduced spend on restructuring, optimization and strategic transaction activities and lower factoring charges, offset by increased investments in advertising and marketing. - Net income from continuing operations and diluted earnings per share increased from the increase in operating income, higher investment income, lower interest costs, and lower share count.
- Adjusted EBITDA increased 120.2% and adjusted EBITDA margin increased 860 basis points attributable to higher gross margins, lower operating expenses and higher investment income, partially offset by the reduction in sales volume.
-
Adjusted diluted EPS increased to
$1.62 due to higher Adjusted EBITDA and a reduction in outstanding shares.
Fiscal 2024 Second Quarter Segment Level Data |
|||||||||||||||
Global Pet Care (GPC) |
|||||||||||||||
|
Three Month Periods Ended |
|
|
|
|
||||||||||
(in millions, except %) |
|
|
|
|
|
Variance |
|||||||||
Net sales |
|
$ |
289.9 |
|
|
$ |
296.7 |
|
|
$ |
(6.8 |
) |
(2.3 |
)% |
|
Segment net income |
|
|
53.0 |
|
|
|
30.2 |
|
|
|
22.8 |
|
75.5 |
% |
|
Segment net income margin |
|
|
18.3 |
% |
|
|
10.2 |
% |
|
|
810 |
|
bps |
||
Adjusted EBITDA |
|
$ |
62.3 |
|
|
$ |
46.3 |
|
|
$ |
16.0 |
|
34.6 |
% |
|
Adjusted EBITDA margin |
|
|
21.5 |
% |
|
|
15.6 |
% |
|
|
590 |
|
bps |
Net sales decreased 2.3%, with a decrease in organic net sales of 3.0%, excluding favorable foreign currency impacts of
The decrease in net sales was driven by the exit of non-strategic and lower-profit SKUs, as well as demand softness in the aquatics category in
Segment net income, Adjusted EBITDA and margins increased due to lower cost inventory compared to the prior year, favorable product and channel mix, and savings from operational productivity investments. This was partially offset by lower volumes, increased investments in advertising and programming, and FX.
Home & Garden (H&G) |
||||||||||||||
|
Three Month Periods Ended |
|
|
|
|
|||||||||
(in millions, except %) |
|
|
|
|
|
Variance |
||||||||
Net sales |
|
$ |
160.7 |
|
|
$ |
153.3 |
|
|
$ |
7.4 |
4.8 |
% |
|
Segment net loss |
|
|
(14.6 |
) |
|
|
(39.8 |
) |
|
|
25.2 |
(63.3 |
)% |
|
Segment net loss margin |
|
|
(9.1 |
)% |
|
|
(26.0 |
)% |
|
|
1,690 |
bps |
||
Adjusted EBITDA |
|
$ |
29.2 |
|
|
$ |
15.1 |
|
|
$ |
14.1 |
93.4 |
% |
|
Adjusted EBITDA margin |
|
|
18.2 |
% |
|
|
9.8 |
% |
|
|
840 |
bps |
Net sales and organic net sales increased 4.8%. The net sales increase was primarily driven by higher sales in the Controls business, where favorable weather trends in key regions drove higher retail POS and acceleration of purchases by retailers, offset by declines in Household Insect Controls and Repellents. Sales in the Cleaning category also declined, as consumer demand for certain product lines within this category remain soft compared to COVID demand levels.
The improved segment net income, Adjusted EBITDA, and margins were driven by higher sales, manufacturing efficiencies, operational cost reductions from cost improvement initiatives, and favorable mix, offset by increased investments in innovation and advertising. Segment net income was also impacted by lower year-over-year impairment charges.
Home & Personal Care (HPC) |
|||||||||||||||
|
Three Month Periods Ended |
|
|
|
|
||||||||||
(in millions, except %) |
|
|
|
|
|
Variance |
|||||||||
Net sales |
|
$ |
267.9 |
|
|
$ |
279.2 |
|
|
$ |
(11.3 |
) |
(4.0 |
)% |
|
Segment net income (loss) |
|
|
69.3 |
|
|
|
(37.7 |
) |
|
|
107.0 |
|
n/m |
|
|
Segment net income (loss) margin |
|
|
25.9 |
% |
|
|
(13.5 |
)% |
|
|
3,940 |
|
bps |
||
Adjusted EBITDA |
|
$ |
17.8 |
|
|
$ |
(1.9 |
) |
|
$ |
19.7 |
|
n/m |
|
|
Adjusted EBITDA margin |
|
|
6.6 |
% |
|
|
(0.7 |
)% |
|
|
730 |
|
bps |
||
n/m = not meaningful |
|
|
|
|
|
|
|
Net sales decreased 4.0%, with a decrease in organic net sales of 3.7%, excluding unfavorable foreign currency impact of
The increase in segment net income, Adjusted EBITDA and margins were driven by lower cost inventory compared to the prior year, lower inventory related expenses and cost improvement initiatives, including reduction of operating expenses initiated in the prior year, and pricing, offset by lower volumes, increased investments and negative mix. Segment net income was increased by a
Liquidity and Debt
As of the end of the quarter, the Company had a cash balance of
Fiscal 2024 Earnings Framework
The Company continues to target a long-term net leverage ratio of 2.0 - 2.5 times after full deployment of HHI sale proceeds.
Conference Call/Webcast Scheduled for
A replay of the live broadcast will be accessible through the Event Calendar page in the Investor Relations section of the Company’s website.
About
Non-GAAP 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. Within this document, including the tables that follow, reference is made to organic net sales, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA margin, and adjusted earnings per share (EPS). Management believes that organic net sales provide for a more complete understanding of underlying business trends of regional and segment performance by excluding the impact of foreign currency exchange fluctuations and the impact of acquisitions (when applicable) when there is no comparable sales in the prior period. Organic sales growth is calculated by comparing organic net sales to net sales in the prior comparative period. The effect of changes in foreign currency exchange rates is determined by translating the period’s net sales using the foreign currency exchange rates that were in effect during the prior comparative period. Adjusted EBITDA is a metric used by management to evaluate segment performance and frequently used by the financial community, which provides insight into an organization’s operating trends and facilitates comparisons between peer companies, because interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure for determining the Company's debt covenant compliance. Adjusted EBITDA excludes certain items that are unusual in nature or not comparable from period to period. Adjusted EBITDA margin reflects adjusted EBITDA as a percentage of net sales. Management uses adjusted diluted EPS as a useful measure for providing further insight into our operating performance because it eliminates the effects of certain items that are not comparable from one period to the next. An income tax adjustment is included in adjusted diluted EPS to exclude the impact of the valuation allowance against deferred taxes and other tax-related items in order to reflect a normalized ongoing effective tax rate of 25.0%. The Company provides this information to investors to assist in comparisons of past, present and future operating results and to assist in highlighting the results of on-going operations. While the Company's management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company's GAAP financial results and should be read in conjunction with those GAAP results. Supplemental tables have been provided within the Appendix to this document to demonstrate reconciliation of non-GAAP measurements to the most comparable GAAP measure.
Forward-Looking Statements
We have made or implied certain forward-looking statements in this document and may make additional oral forward-looking statements from time to time. All statements, other than statements of historical facts included or incorporated by reference in this document, including, without limitation, statements or expectations regarding our business strategy, future operations, financial condition, estimated revenues, projected costs, inventory management, earnings power, projected synergies, prospects, plans and objectives of management, outcome of any litigation and information concerning expected actions of third parties are forward-looking statements. When used in this document, the words future, anticipate, pro forma, seek, intend, plan, envision, estimate, believe, belief, expect, project, forecast, outlook, earnings framework, goal, target, could, would, will, can, should, may and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Since these forward-looking statements are based upon our current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control and some of which may change rapidly, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation: (1) the economic, social and political conditions or civil unrest, terrorist attacks, acts of war, natural disasters, other public health concerns or unrest in
Some of the above-mentioned factors are described in further detail in the sections entitled Risk Factors in our annual and quarterly reports, as applicable. You should assume the information appearing in this document is accurate only as of the end of the period covered by this document, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
||||||||||||||||
|
Three Month Periods Ended |
|
Six Month Periods Ended |
|||||||||||||
(in millions, except per share amounts) |
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
718.5 |
|
|
$ |
729.2 |
|
|
$ |
1,410.7 |
|
|
$ |
1,442.5 |
|
Cost of goods sold |
|
|
445.1 |
|
|
|
514.7 |
|
|
|
892.3 |
|
|
|
1,026.1 |
|
Gross profit |
|
|
273.4 |
|
|
|
214.5 |
|
|
|
518.4 |
|
|
|
416.4 |
|
Selling, general & administrative |
|
|
223.5 |
|
|
|
224.5 |
|
|
|
439.4 |
|
|
|
448.1 |
|
Impairment of intangible assets |
|
|
39.0 |
|
|
|
67.0 |
|
|
|
43.0 |
|
|
|
67 |
|
Representation and warranty insurance proceeds |
|
|
(65.0 |
) |
|
|
— |
|
|
|
(65.0 |
) |
|
|
— |
|
Gain from remeasurement of contingent consideration liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.5 |
) |
Total operating expenses |
|
|
197.5 |
|
|
|
291.5 |
|
|
|
417.4 |
|
|
|
513.6 |
|
Operating income (loss) |
|
|
75.9 |
|
|
|
(77.0 |
) |
|
|
101.0 |
|
|
|
(97.2 |
) |
Interest expense |
|
|
16.9 |
|
|
|
31.6 |
|
|
|
36.1 |
|
|
|
65.0 |
|
Interest income |
|
|
(17.5 |
) |
|
|
(0.2 |
) |
|
|
(40.9 |
) |
|
|
(0.4 |
) |
Gain from debt repurchase |
|
|
— |
|
|
|
— |
|
|
|
(4.7 |
) |
|
|
— |
|
Other non-operating expense, net |
|
|
1.1 |
|
|
|
1.4 |
|
|
|
5.2 |
|
|
|
0.1 |
|
Income (loss) from continuing operations before income taxes |
|
|
75.4 |
|
|
|
(109.8 |
) |
|
|
105.3 |
|
|
|
(161.9 |
) |
Income tax expense (benefit) |
|
|
25.5 |
|
|
|
(34.8 |
) |
|
|
37.9 |
|
|
|
(46.9 |
) |
Net income (loss) from continuing operations |
|
|
49.9 |
|
|
|
(75.0 |
) |
|
|
67.4 |
|
|
|
(115.0 |
) |
Income from discontinued operations, net of tax |
|
|
11.0 |
|
|
|
21.4 |
|
|
|
22.7 |
|
|
|
40.9 |
|
Net income (loss) |
|
|
60.9 |
|
|
|
(53.6 |
) |
|
|
90.1 |
|
|
|
(74.1 |
) |
Net (loss) income from continuing operations attributable to non-controlling interest |
|
|
(0.2 |
) |
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
0.3 |
|
Income from discontinued operations attributable to non-controlling interest, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
Net income (loss) attributable to controlling interest |
|
$ |
61.1 |
|
|
$ |
(53.7 |
) |
|
$ |
90.2 |
|
|
$ |
(74.6 |
) |
Amounts attributable to controlling interest |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations attributable to controlling interest |
|
$ |
50.1 |
|
|
$ |
(75.1 |
) |
|
$ |
67.5 |
|
|
$ |
(115.3 |
) |
Income from discontinued operations attributable to controlling interest, net of tax |
|
|
11.0 |
|
|
|
21.4 |
|
|
|
22.7 |
|
|
|
40.7 |
|
Net income (loss) attributable to controlling interest |
|
$ |
61.1 |
|
|
$ |
(53.7 |
) |
|
$ |
90.2 |
|
|
$ |
(74.6 |
) |
Earnings Per Share |
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share from continuing operations |
|
$ |
1.66 |
|
|
$ |
(1.83 |
) |
|
$ |
2.10 |
|
|
$ |
(2.82 |
) |
Basic earnings per share from discontinued operations |
|
|
0.37 |
|
|
|
0.52 |
|
|
|
0.71 |
|
|
|
1.00 |
|
Basic earnings per share |
|
$ |
2.03 |
|
|
$ |
(1.31 |
) |
|
$ |
2.81 |
|
|
$ |
(1.82 |
) |
Diluted earnings per share from continuing operations |
|
$ |
1.65 |
|
|
$ |
(1.83 |
) |
|
$ |
2.09 |
|
|
$ |
(2.82 |
) |
Diluted earnings per share from discontinued operations |
|
|
0.36 |
|
|
|
0.52 |
|
|
|
0.71 |
|
|
|
1.00 |
|
Diluted earnings per share |
|
$ |
2.01 |
|
|
$ |
(1.31 |
) |
|
$ |
2.80 |
|
|
$ |
(1.82 |
) |
Weighted Average Shares Outstanding |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
30.2 |
|
|
|
41.0 |
|
|
|
32.1 |
|
|
|
40.9 |
|
Diluted |
|
|
30.4 |
|
|
|
41.0 |
|
|
|
32.2 |
|
|
|
40.9 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) |
||||||||
|
Six Month Periods Ended |
|||||||
(in millions) |
|
|
|
|
||||
Cash flows from operating activities |
|
|
|
|
||||
Net cash provided by operating activities from continuing operations |
|
$ |
80.7 |
|
|
$ |
148.6 |
|
Net cash (used) provided by operating activities from discontinued operations |
|
|
(81.5 |
) |
|
|
29.0 |
|
Net cash (used) provided by operating activities |
|
|
(0.8 |
) |
|
|
177.6 |
|
Cash flows from investing activities |
|
|
|
|
||||
Purchases of property, plant and equipment |
|
|
(20.9 |
) |
|
|
(25.9 |
) |
Purchases of short term investments |
|
|
(700.0 |
) |
|
|
— |
|
Proceeds from sale of short term investments |
|
|
1,292.0 |
|
|
|
— |
|
Purchase price settlement from sale of HHI |
|
|
(26.9 |
) |
|
|
— |
|
Other investing activity |
|
|
(0.1 |
) |
|
|
— |
|
Net cash provided (used) by investing activities from continuing operations |
|
|
544.1 |
|
|
|
(25.9 |
) |
Net cash used by investing activities from discontinued operations |
|
|
— |
|
|
|
(7.9 |
) |
Net cash provided (used) by investing activities |
|
|
544.1 |
|
|
|
(33.8 |
) |
Cash flows from financing activities |
|
|
|
|
||||
Payment of debt |
|
|
(177.9 |
) |
|
|
(21.7 |
) |
Payment of debt issuance costs |
|
|
(3.2 |
) |
|
|
(2.3 |
) |
|
|
|
(340.5 |
) |
|
|
— |
|
Dividends paid to shareholders |
|
|
(26.8 |
) |
|
|
(34.4 |
) |
Share based award tax withholding payments, net of proceeds upon vesting |
|
|
(5.4 |
) |
|
|
(10.5 |
) |
Net cash used by financing activities from continuing operations |
|
|
(553.8 |
) |
|
|
(68.9 |
) |
Net cash used by financing activities from discontinued operations |
|
|
— |
|
|
|
(0.7 |
) |
Net cash used by financing activities |
|
|
(553.8 |
) |
|
|
(69.6 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
2.3 |
|
|
|
9.7 |
|
Net change in cash, cash equivalents and restricted cash in continuing operations |
|
|
(8.2 |
) |
|
|
83.9 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
753.9 |
|
|
|
243.9 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
745.7 |
|
|
$ |
327.8 |
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) |
||||||
(in millions) |
|
|
|
|
||
Assets |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
745.7 |
|
$ |
753.9 |
Short term investments |
|
|
500.0 |
|
|
1,103.3 |
Trade receivables, net |
|
|
601.3 |
|
|
477.1 |
Other receivables |
|
|
113.5 |
|
|
84.5 |
Inventories |
|
|
454.3 |
|
|
462.8 |
Prepaid expenses and other current assets |
|
|
45.9 |
|
|
44.3 |
Total current assets |
|
|
2,460.7 |
|
|
2,925.9 |
Property, plant and equipment, net |
|
|
269.5 |
|
|
275.1 |
Operating lease assets |
|
|
119.2 |
|
|
110.8 |
Deferred charges and other |
|
|
46.6 |
|
|
31.8 |
|
|
|
858.3 |
|
|
854.7 |
Intangible assets, net |
|
|
1,002.3 |
|
|
1,060.1 |
Total assets |
|
$ |
4,756.6 |
|
$ |
5,258.4 |
Liabilities and Shareholders' Equity |
|
|
|
|
||
Current portion of long-term debt |
|
$ |
9.0 |
|
$ |
8.6 |
Accounts payable |
|
|
375.5 |
|
|
396.6 |
Accrued wages and salaries |
|
|
48.1 |
|
|
46.1 |
Accrued interest |
|
|
19.0 |
|
|
20.6 |
Income tax payable |
|
|
33.3 |
|
|
114.5 |
Other current liabilities |
|
|
174.0 |
|
|
178.4 |
Total current liabilities |
|
|
658.9 |
|
|
764.8 |
Long-term debt, net of current portion |
|
|
1,374.4 |
|
|
1,546.9 |
Long-term operating lease liabilities |
|
|
101.3 |
|
|
95.6 |
Deferred income taxes |
|
|
189.6 |
|
|
174.8 |
Other long-term liabilities |
|
|
174.9 |
|
|
158.0 |
Total liabilities |
|
|
2,499.1 |
|
|
2,740.1 |
Shareholders' equity |
|
|
2,256.9 |
|
|
2,517.6 |
Non-controlling interest |
|
|
0.6 |
|
|
0.7 |
Total equity |
|
|
2,257.5 |
|
|
2,518.3 |
Total liabilities and equity |
|
$ |
4,756.6 |
|
$ |
5,258.4 |
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||||||||||||
NET SALES AND ORGANIC |
||||||||||||||||||||||||||
The following is a summary of net sales by segment for the three and six month periods ended |
||||||||||||||||||||||||||
(in millions, except %) |
|
Three Month Periods Ended |
|
|
|
|
|
Six Month Periods Ended |
|
|
|
|
||||||||||||||
|
|
|
|
|
Variance |
|
|
|
|
|
Variance |
|||||||||||||||
GPC |
|
$ |
289.9 |
|
$ |
296.7 |
|
$ |
(6.8 |
) |
|
(2.3 |
)% |
|
$ |
566.8 |
|
$ |
574.3 |
|
$ |
(7.5 |
) |
(1.3 |
)% |
|
H&G |
|
|
160.7 |
|
|
153.3 |
|
|
7.4 |
|
|
4.8 |
% |
|
|
232.7 |
|
|
224.6 |
|
|
8.1 |
|
3.6 |
% |
|
HPC |
|
|
267.9 |
|
|
279.2 |
|
|
(11.3 |
) |
|
(4.0 |
)% |
|
|
611.2 |
|
|
643.6 |
|
|
(32.4 |
) |
(5.0 |
)% |
|
|
|
$ |
718.5 |
|
$ |
729.2 |
|
|
(10.7 |
) |
|
(1.5 |
)% |
|
$ |
1,410.7 |
|
$ |
1,442.5 |
|
|
(31.8 |
) |
(2.2 |
)% |
We define organic net sales as reported net sales excluding the effect of changes in foreign currency exchange rates and acquisitions. We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rate and acquisitions. We use organic net sales as one measure to monitor and evaluate our regional and segment performance. Organic growth is calculated by comparing organic net sales to reported net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior period. Net sales are attributed to the geographic regions based on the country of destination. We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior period. The following is a reconciliation of reported sales to organic sales for the three and six month period ended
|
|
|
|
|
|
|
|
|||||||||||||
Three Month Periods Ended (in millions, except %) |
|
|
|
Effect of Changes in Currency |
|
Organic Net Sales |
|
April 2, 2023 |
|
Variance |
||||||||||
GPC |
|
$ |
289.9 |
|
$ |
(2.2 |
) |
|
$ |
287.7 |
|
$ |
296.7 |
|
$ |
(9.0 |
) |
(3.0 |
)% |
|
H&G |
|
|
160.7 |
|
|
— |
|
|
|
160.7 |
|
|
153.3 |
|
|
7.4 |
|
4.8 |
% |
|
HPC |
|
|
267.9 |
|
|
1.0 |
|
|
|
268.9 |
|
|
279.2 |
|
|
(10.3 |
) |
(3.7 |
)% |
|
Total |
|
$ |
718.5 |
|
$ |
(1.2 |
) |
|
$ |
717.3 |
|
$ |
729.2 |
|
|
(11.9 |
) |
(1.6 |
)% |
|
|
|
|
|
|
|
|
|||||||||||||
Six Month Periods Ended (in millions, except %) |
|
|
|
Effect of Changes in Currency |
|
Organic Net Sales |
|
April 2, 2023 |
|
Variance |
||||||||||
GPC |
|
$ |
566.8 |
|
$ |
(7.2 |
) |
|
$ |
559.6 |
|
$ |
574.3 |
|
$ |
(14.7 |
) |
(2.6 |
)% |
|
H&G |
|
|
232.7 |
|
|
— |
|
|
|
232.7 |
|
|
224.6 |
|
|
8.1 |
|
3.6 |
% |
|
HPC |
|
|
611.2 |
|
|
(5.7 |
) |
|
|
605.5 |
|
|
643.6 |
|
|
(38.1 |
) |
(5.9 |
)% |
|
Total |
|
$ |
1,410.7 |
|
$ |
(12.9 |
) |
|
$ |
1,397.8 |
|
$ |
1,442.5 |
|
|
(44.7 |
) |
(3.1 |
)% |
|
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) is a non-GAAP metric used by management that we believe provides useful information to investors because it reflects ongoing operating performance and trends of our segments excluding certain non-cash based expenses and non-recurring items during each of the comparable periods and facilitates comparisons between peer companies since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Further, adjusted EBITDA is a measure used for determining the Company’s debt covenant. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense from intangible assets from net income. Adjusted EBITDA further excludes the following:
- Share based compensation costs consist of costs associated with long-term incentive compensation arrangements that generally consist of non-cash, stock-based compensation;
- Incremental project costs associated with strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;
-
Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others During the three and six month periods ended
March 31, 2024 andApril 2, 2023 , the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent; -
Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets, when applicable. During the three and six month period ended
March 31, 2024 , the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with an impairment charge on a right of use operating lease asset associated with an HPC facility that was exited prior to end of its term. During the three and six month period endedApril 2, 2023 , the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term; - Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition;
-
Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent. During the three and six month periods ended
March 31, 2024 , such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition; -
Non-cash gain realized from the repurchase of debt obligations at a discount, net deferred financing costs, during the three and six month periods ended
March 31, 2024 ; -
Incremental costs associated with the recognition of product recall costs incurred by the HPC segment in collaboration with the CPSC, initiated at the end of the year ended
September 30 2022 and during the year endingSeptember 30, 2023 , resulting in the accrual and recognition of incremental costs for the recall, product returns from customers, write-off of inventory on hand, and other costs such as notification, shipping and handling, rework and destruction of affected products, and consumer refunds, as needed. Such costs are not recurring and directly attributable to the recall event, excluding all other costs associated with product warranty and returns. During the three and six month period endedMarch 31, 2024 , the Company was required by the CPSC to reissue a previously issued recall to provide a cash refund to customers, resulting in the recognition of incremental costs and reserves; -
Unallocated shared costs reflect the costs associated with certain shared and center-led administrative functions such as information technology, human resources, finance and accounting, supply chain and commercial operations, supporting the HHI business during the period the Company owned and operated the business through the close of the HHI divestiture on
June 20, 2023 . Such costs are excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations in accordance of US GAAP, but reflected as part of income from continuing operations for all periods presented, and requiring retroactive adjustment for all periods presented. HHI was previously a segment of the consolidated group and was excluded from the consolidated Adjusted EBITDA since being recognized as discontinued operations. As a result, for all periods in which HHI was owned and operated by the Company, including comparable periods requiring retroactive adjustment, the adjustment is recognized to reconcile net income from continuing operations to Adjusted EBITDA of the remaining segments of the consolidated group. With the close of the HHI divestiture onJune 20, 2023 , there is no adjustment recognized as such shared costs are mitigated through income from TSAs during the transition period post-separation, with subsequent restructuring initiatives to rightsize extraneous costs; -
Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the six month period ended
April 2, 2023 ; -
For the three and six month periods ended
April 2, 2023 , the impact from the early settlement of foreign currency cash flow hedges during the year endedSeptember 30, 2022 , resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in excluded gains intended to mitigate costs during the year endingSeptember 30, 2023 ; and - Other adjustments are attributable to: (1) key executive severance and other one-time compensatory costs; and (2) non-recurring unusual insurable losses, including any the receipt of insurance proceeds or recovery realized.
Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of reported net sales for the respective periods.
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (continued) |
||||||||||||||||||||
The following is a reconciliation of reported net income (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA margin for the three month period ended |
||||||||||||||||||||
(in millions, except %) |
|
GPC |
|
H&G |
|
HPC |
|
Corporate |
|
Consolidated |
||||||||||
Net income (loss) from continuing operations |
|
$ |
53.0 |
|
|
$ |
(14.6 |
) |
|
$ |
69.3 |
|
|
$ |
(57.8 |
) |
|
$ |
49.9 |
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25.5 |
|
|
|
25.5 |
|
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16.9 |
|
|
|
16.9 |
|
Depreciation |
|
|
3.5 |
|
|
|
2.0 |
|
|
|
2.7 |
|
|
|
6.1 |
|
|
|
14.3 |
|
Amortization |
|
|
5.6 |
|
|
|
2.9 |
|
|
|
2.6 |
|
|
|
— |
|
|
|
11.1 |
|
EBITDA |
|
|
62.1 |
|
|
|
(9.7 |
) |
|
|
74.6 |
|
|
|
(9.3 |
) |
|
|
117.7 |
|
Share based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.5 |
|
|
|
4.5 |
|
HHI separation costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
0.8 |
|
HPC separation initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.8 |
|
|
|
2.8 |
|
Fiscal 2023 and 2022 restructuring |
|
|
0.1 |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.4 |
|
Global ERP transformation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.9 |
|
|
|
3.9 |
|
Other project costs |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
0.3 |
|
|
|
0.1 |
|
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
Impairment of operating lease asset |
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
39.0 |
|
|
|
— |
|
|
|
— |
|
|
|
39.0 |
|
Representation and warranty insurance proceeds |
|
|
— |
|
|
|
— |
|
|
|
(65.0 |
) |
|
|
— |
|
|
|
(65.0 |
) |
Legal and environmental |
|
|
— |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.3 |
|
HPC product recall |
|
|
— |
|
|
|
— |
|
|
|
6.7 |
|
|
|
— |
|
|
|
6.7 |
|
Other |
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Adjusted EBITDA |
|
$ |
62.3 |
|
|
$ |
29.2 |
|
|
$ |
17.8 |
|
|
$ |
3.0 |
|
|
$ |
112.3 |
|
Net sales |
|
$ |
289.9 |
|
|
$ |
160.7 |
|
|
$ |
267.9 |
|
|
$ |
— |
|
|
$ |
718.5 |
|
Net income (loss) from continuing operations margin |
|
|
18.3 |
% |
|
|
(9.1 |
)% |
|
|
25.9 |
% |
|
|
— |
% |
|
|
6.9 |
% |
Adjusted EBITDA margin |
|
|
21.5 |
% |
|
|
18.2 |
% |
|
|
6.6 |
% |
|
|
— |
% |
|
|
15.6 |
% |
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (continued) |
||||||||||||||||||||
The following is a reconciliation of reported net income (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA margin for the three month period ended |
||||||||||||||||||||
(in millions, except %) |
|
GPC |
|
H&G |
|
HPC |
|
Corporate |
|
Consolidated |
||||||||||
Net income (loss) from continuing operations |
|
$ |
30.2 |
|
|
$ |
(39.8 |
) |
|
$ |
(37.7 |
) |
|
$ |
(27.7 |
) |
|
$ |
(75.0 |
) |
Income tax benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34.8 |
) |
|
|
(34.8 |
) |
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31.6 |
|
|
|
31.6 |
|
Depreciation |
|
|
3.8 |
|
|
|
1.9 |
|
|
|
2.9 |
|
|
|
3.3 |
|
|
|
11.9 |
|
Amortization |
|
|
5.5 |
|
|
|
2.9 |
|
|
|
2.1 |
|
|
|
— |
|
|
|
10.5 |
|
EBITDA |
|
|
39.5 |
|
|
|
(35.0 |
) |
|
|
(32.7 |
) |
|
|
(27.6 |
) |
|
|
(55.8 |
) |
Share based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.5 |
|
|
|
4.5 |
|
Tristar integration |
|
|
— |
|
|
|
— |
|
|
|
4.0 |
|
|
|
— |
|
|
|
4.0 |
|
HHI divestiture and separation costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.4 |
|
|
|
1.4 |
|
HPC separation initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
|
|
1.1 |
|
Fiscal 2023 and 2022 restructuring |
|
|
2.1 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
0.1 |
|
|
|
4.6 |
|
Global ERP transformation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.3 |
|
|
|
3.3 |
|
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
Other project costs |
|
|
1.6 |
|
|
|
2.1 |
|
|
|
0.6 |
|
|
|
2.2 |
|
|
|
6.5 |
|
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
Impairment of equipment and operating lease assets |
|
|
2.7 |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
|
|
4.2 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
48.0 |
|
|
|
19.0 |
|
|
|
— |
|
|
|
67.0 |
|
Unallocated shared costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.3 |
|
|
|
6.3 |
|
Early settlement of foreign currency cash flow hedges |
|
|
— |
|
|
|
— |
|
|
|
1.3 |
|
|
|
— |
|
|
|
1.3 |
|
HPC product recall |
|
|
— |
|
|
|
— |
|
|
|
1.6 |
|
|
|
— |
|
|
|
1.6 |
|
Other |
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.6 |
|
Adjusted EBITDA |
|
$ |
46.3 |
|
|
$ |
15.1 |
|
|
$ |
(1.9 |
) |
|
$ |
(8.5 |
) |
|
$ |
51.0 |
|
Net sales |
|
$ |
296.7 |
|
|
$ |
153.3 |
|
|
$ |
279.2 |
|
|
$ |
— |
|
|
$ |
729.2 |
|
Net income (loss) from continuing operations margin |
|
|
10.2 |
% |
|
|
(26.0 |
)% |
|
|
(13.5 |
)% |
|
|
— |
% |
|
|
(10.3 |
)% |
Adjusted EBITDA margin |
|
|
15.6 |
% |
|
|
9.8 |
% |
|
|
(0.7 |
)% |
|
|
— |
% |
|
|
7.0 |
% |
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (continued) |
||||||||||||||||||||
The following is a reconciliation of reported net income (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA margin for the six month period ended |
||||||||||||||||||||
(in millions, except %) |
|
GPC |
|
H&G |
|
HPC |
|
Corporate |
|
Consolidated |
||||||||||
Net income (loss) from continuing operations |
|
$ |
96.6 |
|
|
$ |
(20.2 |
) |
|
$ |
85.2 |
|
|
$ |
(94.2 |
) |
|
$ |
67.4 |
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37.9 |
|
|
|
37.9 |
|
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
36.1 |
|
|
|
36.1 |
|
Depreciation |
|
|
7.1 |
|
|
|
4.0 |
|
|
|
5.4 |
|
|
|
12.3 |
|
|
|
28.8 |
|
Amortization |
|
|
11.2 |
|
|
|
5.7 |
|
|
|
5.3 |
|
|
|
— |
|
|
|
22.2 |
|
EBITDA |
|
|
114.9 |
|
|
|
(10.5 |
) |
|
|
95.9 |
|
|
|
(7.9 |
) |
|
|
192.4 |
|
Share based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8.4 |
|
|
|
8.4 |
|
HHI separation costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.1 |
|
|
|
2.1 |
|
HPC separation initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.1 |
|
|
|
3.1 |
|
Fiscal 2023 and 2022 restructuring |
|
|
0.2 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
0.9 |
|
Global ERP transformation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.9 |
|
|
|
6.9 |
|
Other project costs |
|
|
(0.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.1 |
|
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
|
|
0.9 |
|
Impairment of operating lease asset |
|
|
— |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.5 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
39.0 |
|
|
|
4.0 |
|
|
|
— |
|
|
|
43.0 |
|
Representation and warranty insurance proceeds |
|
|
— |
|
|
|
— |
|
|
|
(65.0 |
) |
|
|
— |
|
|
|
(65.0 |
) |
Legal and environmental |
|
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
|
|
1.5 |
|
Gain from debt repurchase |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4.7 |
) |
|
|
(4.7 |
) |
HPC product recall |
|
|
— |
|
|
|
— |
|
|
|
6.0 |
|
|
|
— |
|
|
|
6.0 |
|
Other |
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
0.5 |
|
Adjusted EBITDA |
|
$ |
115.1 |
|
|
$ |
28.5 |
|
|
$ |
44.5 |
|
|
$ |
8.5 |
|
|
$ |
196.6 |
|
Net sales |
|
$ |
566.8 |
|
|
$ |
232.7 |
|
|
$ |
611.2 |
|
|
$ |
— |
|
|
$ |
1,410.7 |
|
Net income (loss) from continuing operations margin |
|
|
17.0 |
% |
|
|
(8.7 |
)% |
|
|
13.9 |
% |
|
|
— |
% |
|
|
4.8 |
% |
Adjusted EBITDA margin |
|
|
20.3 |
% |
|
|
12.2 |
% |
|
|
7.3 |
% |
|
|
— |
% |
|
|
13.9 |
% |
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (continued) |
||||||||||||||||||||
The following is a reconciliation of reported net income (loss) from continuing operations to adjusted EBITDA and adjusted EBITDA margin for the six month period ended |
||||||||||||||||||||
(in millions, except %) |
|
GPC |
|
H&G |
|
HPC |
|
Corporate |
|
Consolidated |
||||||||||
Net income (loss) from continuing operations |
|
$ |
53.3 |
|
|
$ |
(47.0 |
) |
|
$ |
(41.8 |
) |
|
$ |
(79.5 |
) |
|
$ |
(115.0 |
) |
Income tax benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(46.9 |
) |
|
|
(46.9 |
) |
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
65.0 |
|
|
|
65.0 |
|
Depreciation |
|
|
7.5 |
|
|
|
3.7 |
|
|
|
6.1 |
|
|
|
6.8 |
|
|
|
24.1 |
|
Amortization |
|
|
11.0 |
|
|
|
5.7 |
|
|
|
4.2 |
|
|
|
— |
|
|
|
20.9 |
|
EBITDA |
|
|
71.8 |
|
|
|
(37.6 |
) |
|
|
(31.5 |
) |
|
|
(54.6 |
) |
|
|
(51.9 |
) |
Share based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7.7 |
|
|
|
7.7 |
|
Tristar integration |
|
|
— |
|
|
|
— |
|
|
|
9.7 |
|
|
|
— |
|
|
|
9.7 |
|
HHI divestiture and separation costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.9 |
|
|
|
2.9 |
|
HPC separation initiatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.5 |
|
|
|
3.5 |
|
Fiscal 2023 and 2022 restructuring |
|
|
2.1 |
|
|
|
0.2 |
|
|
|
2.4 |
|
|
|
0.4 |
|
|
|
5.1 |
|
Global ERP transformation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.9 |
|
|
|
4.9 |
|
|
|
|
— |
|
|
|
— |
|
|
|
2.8 |
|
|
|
— |
|
|
|
2.8 |
|
Other project costs |
|
|
3.6 |
|
|
|
2.1 |
|
|
|
1.6 |
|
|
|
4.6 |
|
|
|
11.9 |
|
Non-cash purchase accounting adjustments |
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
|
|
0.9 |
|
Impairment of equipment and operating lease assets |
|
|
2.7 |
|
|
|
— |
|
|
|
1.8 |
|
|
|
— |
|
|
|
4.5 |
|
Impairment of intangible assets |
|
|
— |
|
|
|
48.0 |
|
|
|
19.0 |
|
|
|
— |
|
|
|
67.0 |
|
Unallocated shared costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12.5 |
|
|
|
12.5 |
|
Early settlement of foreign currency cash flow hedges |
|
|
— |
|
|
|
— |
|
|
|
3.9 |
|
|
|
— |
|
|
|
3.9 |
|
Gain from remeasurement of contingent consideration liability |
|
|
— |
|
|
|
— |
|
|
|
(1.5 |
) |
|
|
— |
|
|
|
(1.5 |
) |
HPC product recall |
|
|
— |
|
|
|
— |
|
|
|
1.9 |
|
|
|
— |
|
|
|
1.9 |
|
Other |
|
|
3.3 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
1.3 |
|
|
|
5.0 |
|
Adjusted EBITDA |
|
$ |
83.5 |
|
|
$ |
12.8 |
|
|
$ |
11.3 |
|
|
$ |
(16.8 |
) |
|
$ |
90.8 |
|
Net sales |
|
$ |
574.3 |
|
|
$ |
224.6 |
|
|
$ |
643.6 |
|
|
$ |
— |
|
|
$ |
1,442.5 |
|
Net income (loss) from continuing operations margin |
|
|
9.3 |
% |
|
|
(20.9 |
)% |
|
|
(6.5 |
)% |
|
|
— |
% |
|
|
(8.0 |
)% |
Adjusted EBITDA margin |
|
|
14.5 |
% |
|
|
5.7 |
% |
|
|
1.8 |
% |
|
|
— |
% |
|
|
6.3 |
% |
ADJUSTED DILUTED EPS
We define adjusted diluted earnings per share (EPS) as reported diluted EPS excluding the effect of one-time, non-recurring activity and volatility associated with our income tax expense. The Company believes that adjusted diluted EPS provides further insight and comparability in operating performance as it eliminates the effects of certain items that are not comparable from one period to the next. Adjustments to diluted EPS include the following:
- Incremental project costs associated with strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;
-
Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others During the three and six month periods ended
March 31, 2024 andApril 2, 2023 , the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent; -
Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets, when applicable. During the three and six month period ended
March 31, 2024 , the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with an impairment charge on a right of use operating lease asset associated with an HPC facility that was exited prior to end of its term. During the three and six month period endedApril 2, 2023 , the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term; - Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition;
-
Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent. During the three and six month periods ended
March 31, 2024 , such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition; -
Non-cash gain realized from the repurchase of debt obligations at a discount, net deferred financing costs, during the three and six month periods ended
March 31, 2024 ; -
Incremental costs associated with the recognition of product recall costs incurred by the HPC segment in collaboration with the CPSC, initiated at the end of the year ended
September 30 2022 and during the year endingSeptember 30, 2023 , resulting in the accrual and recognition of incremental costs for the recall, product returns from customers, write-off of inventory on hand, and other costs such as notification, shipping and handling, rework and destruction of affected products, and consumer refunds, as needed. Such costs are not recurring and directly attributable to the recall event, excluding all other costs associated with product warranty and returns. During the three and six month period endedMarch 31, 2024 , the Company was required by the CPSC to reissue a previously issued recall to provide a cash refund to customers, resulting in the recognition of incremental costs and reserves; -
Unallocated shared costs reflect the costs associated with certain shared and center-led administrative functions such as information technology, human resources, finance and accounting, supply chain and commercial operations, supporting the HHI business during the period the Company owned and operated the business through the close of the HHI divestiture on
June 20, 2023 . Such costs are excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations in accordance of US GAAP, but reflected as part of income from continuing operations for all periods presented, and requiring retroactive adjustment for all periods presented. HHI was previously a segment of the consolidated group and was excluded from the consolidated Adjusted EBITDA since being recognized as discontinued operations. As a result, for all periods in which HHI was owned and operated by the Company, including comparable periods requiring retroactive adjustment, the adjustment is recognized to reconcile net income from continuing operations to Adjusted EBITDA of the remaining segments of the consolidated group. With the close of the HHI divestiture onJune 20, 2023 , there is no adjustment recognized as such shared costs are mitigated through income from TSAs during the transition period post-separation, with subsequent restructuring initiatives to rightsize extraneous costs; -
Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the six month period ended
April 2, 2023 ; -
For the three and six month periods ended
April 2, 2023 , the impact from the early settlement of foreign currency cash flow hedges during the year endedSeptember 30, 2022 , resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in excluded gains intended to mitigate costs during the year endingSeptember 30, 2023 ; - Other adjustments are attributable to: (1) key executive severance and other one-time compensatory costs; and (2) non-recurring unusual insurable losses, including any the receipt of insurance proceeds or recovery realized; and
-
Income tax adjustment to diluted EPS is to exclude the impact of adjusting the valuation allowance against deferred taxes and other tax related items in order to reflect a normalized ongoing effective tax rate of 25.0% for the three and six month periods ended
March 31, 2024 andApril 2, 2023 based upon enacted corporate tax rate inthe United States .
OTHER SUPPLEMENTAL INFORMATION (Unaudited) |
||||||||||||||||
ADJUSTED DILUTED EPS (continued) |
||||||||||||||||
The following is a reconciliation of reported diluted EPS from continuing operations to adjusted diluted EPS from continuing operations for the three and six month periods ended |
||||||||||||||||
|
Three Month Periods Ended |
|
Six Month Periods Ended |
|||||||||||||
(amounts per share) |
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations, as reported |
|
$ |
1.65 |
|
|
$ |
(1.83 |
) |
|
$ |
2.09 |
|
|
$ |
(2.82 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
||||||||
HHI divestiture and separation costs |
|
|
0.03 |
|
|
|
0.03 |
|
|
|
0.07 |
|
|
|
0.07 |
|
HPC separation initiatives |
|
|
0.09 |
|
|
|
0.03 |
|
|
|
0.10 |
|
|
|
0.09 |
|
Tristar integration |
|
|
— |
|
|
|
0.10 |
|
|
|
— |
|
|
|
0.24 |
|
Fiscal 2023 and 2022 restructuring |
|
|
0.01 |
|
|
|
0.11 |
|
|
|
0.03 |
|
|
|
0.13 |
|
Global ERP transformation |
|
|
0.13 |
|
|
|
0.08 |
|
|
|
0.21 |
|
|
|
0.12 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.07 |
|
Other project costs |
|
|
— |
|
|
|
0.15 |
|
|
|
— |
|
|
|
0.30 |
|
Non-cash purchase accounting adjustments |
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.02 |
|
Impairment on equipment and operating leases |
|
|
0.02 |
|
|
|
0.10 |
|
|
|
0.02 |
|
|
|
0.11 |
|
Impairment on intangible assets |
|
|
1.29 |
|
|
|
1.63 |
|
|
|
1.33 |
|
|
|
1.64 |
|
Representation and warranty insurance proceeds
|
|
|
(2.14 |
) |
|
|
— |
|
|
|
(2.02 |
) |
|
|
— |
|
Legal and environmental |
|
|
0.01 |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
Gain on debt repurchase |
|
|
— |
|
|
|
— |
|
|
|
(0.15 |
) |
|
|
— |
|
HPC product recalls |
|
|
0.22 |
|
|
|
0.04 |
|
|
|
0.19 |
|
|
|
0.05 |
|
Unallocated shared costs |
|
|
— |
|
|
|
0.15 |
|
|
|
— |
|
|
|
0.31 |
|
Early settlement of foreign currency cash flow hedges |
|
|
— |
|
|
|
0.03 |
|
|
|
— |
|
|
|
0.10 |
|
Gain from remeasurement contingent consideration liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.04 |
) |
Debt amendment costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.06 |
|
Other |
|
|
— |
|
|
|
0.03 |
|
|
|
0.02 |
|
|
|
0.12 |
|
Pre-tax adjustments |
|
$ |
(0.32 |
) |
|
$ |
2.49 |
|
|
$ |
(0.13 |
) |
|
$ |
3.39 |
|
Income tax adjustment |
|
|
0.29 |
|
|
|
(0.80 |
) |
|
|
0.40 |
|
|
|
(1.04 |
) |
Total adjustments |
|
$ |
(0.03 |
) |
|
$ |
1.69 |
|
|
$ |
0.27 |
|
|
$ |
2.35 |
|
Diluted EPS from continuing operations, as adjusted |
|
$ |
1.62 |
|
|
$ |
(0.14 |
) |
|
$ |
2.36 |
|
|
$ |
(0.47 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508537488/en/
Investor/Media Contact:
Source: