The acquisition of Stanley's Hardware and Home Improvement (HHI) division loomed large over Spectrum Brand's first-quarter report, boosting sales to new heights while generating a net-loss on one-time costs.
Spectrum reported record net sales of $870.3 million, including the HHI and FURminator acquisitions, up 2.5% in the first quarter of fiscal 2013, which consisted of two fewer shopping days, versus $848.8 million a year ago. Excluding negative foreign exchange impact, net sales grew 3.2%.
On the bottom line, the company's net loss of $13.4 million was driven by one-time acquisition and integration costs of $20.8 million and interest expense of $28.8 million, primarily from the impact of the HHI acquisition.
Spectrum's brand names include Rayovac, Kwikset, Weiser, Baldwin, National Hardware, Pfister and Remington.
“We delivered record results in the first quarter, again putting us on track to achieve a fourth consecutive record year of financial performance from the legacy business with improvements weighted to the second half of the year,” said Dave Lumley, CEO of Spectrum Brands Holdings. “In the face of holiday and global retail environment softness, negative foreign currency impacts, cautious consumer spending heightened by fiscal cliff worries and fewer shopping days, our businesses performed well and demonstrated again that our Spectrum Value Model is working effectively and resonating with retailers and consumers."
The company said HHI has become its fourth operating segment, bringing "significant, accelerated financial growth in fiscal 2013 and beyond." It's products include residential locksets, residential builders’ hardware and faucets with largely number-one market positions in North America, Spectrum said.
The Hardware & Home Improvement (HHI) business was acquired Dec. 17. In the first quarter, the segment recorded net sales of $34.0 million, a net loss, as adjusted, of $3.5 million, and adjusted EBITDA of $3.2 million.
Adjusted EBITDA was negatively impacted by a $1.6 million accrual adjustment necessary due to a change in contractual terms relative to product returns with a large unnamed retailer.