Spectrum Brands

Ticker
$SPB
Industry
Consumer Products
Type
Divestiture
Rating
Covered
Category
General
Target Price
$115.00
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Notes

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)
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?

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

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