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Spectrum posts big loss on special items as sales jump 10.5%

Jeff Richgels  —  8/21/2008 9:28 am

Spectrum Brands Inc., which has its Remington and Rayovac units based in Madison, on Thursday reported a huge loss it blamed on special items "management believes are not indicative of the company's ongoing normalized operations," while sales jumped 10.5 percent.

Atlanta-based Spectrum reported a net loss of $283.9 million, or $5.58 a share, for three months ended June 30 compared with a net loss of $7.5 million, or 15 cents a share, in the same period a year ago.

Sales rose 10.5 percent to $729.6 million, after excluding the Canadian division of the Home & Garden Business, which Spectrum sold in November 2007. Favorable foreign currency exchanges contributed $29.6 million.

The company said in a news release that its results included a $253.7 million goodwill and trade names impairment charge primarily related to the company's Home & Garden and Global Pet Supply businesses; $19 million in net tax adjustments; $14.3 million in restructuring and related charges to exit the Ningbo Baowang battery manufacturing facility in China and company-wide cost reduction initiatives; and $2.9 million in professional fees from the company's failed attempt to sell its United Pet Group business.

Excluding those items, Spectrum said it generated adjusted diluted earnings per share of 6 cents.

"I'm pleased with our strong sales growth for the quarter, which I believe reflects the strength of our new product offerings and marketing programs as well as a consumer shift towards value brands during this tough economic time," CEO Kent Hussey said in a statement.

Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $81.2 million as compared with $87.7 million in the prior year, a 7.4 percent decline driven by "unprecedented" cost increases in the company's fertilizer operations within its Home & Garden Business segment.

Gross profit and gross margin for the quarter were $261.4 million and 35.8 percent, respectively, versus $253.9 million and 38.5 percent for the same period last year.

The Madison-based Global Batteries and Personal Care segment reported net sales of $344.4 million compared with $307.0 million for the same period last year. Global battery sales, which benefited from favorable foreign exchange, were up 12.4 percent, primarily due to improved performance in North America for both alkaline and specialty batteries.

Jeff Richgels  —  8/21/2008 9:28 am