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?
Acquiring Tristar Products in the appliance and cookware segment (HPC) for $325m + earnouts
Financials & Valuation
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.
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 $PG
Link to SPB model
Spectrum Brands ($SPB) — Initiation (10/9/21)