Spectrum Brands

Ticker

$SPB

Industry

Consumer Products

Type

Divestiture

Rating

Covered

Notes

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Update as of September 2021 — major divestiture of hardware business unit

Sold HHI (hardware / lockset) business for $4.3bn vs. ~$3.95bn market cap.
Net proceeds of $3.5bn
Net cash position close to ~$1bn post close
RemainCo EBITDA at $385m
Historically have had lots of charges for restructuring and transaction costs ($350m+ over 3.75 years)

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Calendar 2022 is seeing a big impact from supply chain and inflation pressure

Despite higher pressures, management is still calling for LSD EBITDA growth on continuing operations — may be tough to achieve?

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Acquiring Tristar Products in the appliance and cookware segment (HPC) for $325m + earnouts

Spectrum Brands to Acquire Tristar Products’ Appliance and Cookware Business and Combine It With Its Home and Personal Care Segment.pdf55.3KB

Financials & Valuation

1️⃣

There are 41m shares outstanding x $93 share price = $3.8bn market cap. Net debt will change following the sale of the HHI business. Pro-forma for that divestiture, SPB should have net cash of $740m [$2.76bn net debt less $3.5bn net proceeds] for an enterprise value of ~$3.1bn.

2️⃣

2021 EBITDA was $392m and management thinks they can grow from there in FY2022 — 8x EBITDA multiple or lower.

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Competitors trade at 10x to 14x EBITDA vs. SPB at 8x or lower — $ENR $NWL $KMB $PG

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Link to SPB model

SPB 2021 updates

Last modified by Value Don't Lie 8 months ago

docs.google.com

Resources

Spectrum Brands ($SPB) — Initiation (10/9/21)