Spectrum Brands posted a loss for the first quarter while projecting the strong growth potential of its pending acquisition of Tristar Products’ small appliance and cookware business.
Spectrum reported it agreed to acquire Tristar, known for informercial-supported small appliance and cookware brands such as PowerXL, Emeril Lagasse and Copper Chef, for $325 million in cash plus subsequent milestone payments of $125 million. Tristar small appliances and cookware generated sales of $546 million in 2021, and it has registered sales growth of more than 85% in the last three years, according to Spectrum.
Spectrum said the Tristar deal is a key step in a plan to spin off a separate global appliance business that includes such legacy Spectrum brands as Remington, Black & Decker, George Foreman and Russell Hobbs.
Spectrum, citing supply chain disruption, cost inflation and restructuring costs, reported a net loss from continuing operations of $30.2 million, or 73 cents per diluted share, in the first quarter. The company posted net income from continuing operations of $15.7 million, or 34 cents per diluted share, in the year-before period.
Adjusted for one-time events, diluted loss per share from continuing operations was six cents versus diluted earnings per share of 83 cents from continuing operations in the quarter a year previous, the company stated.
Net sales were $757.2 million versus $736.2 million in the year-prior period, Spectrum maintained. Operating loss was $23.8 million versus operating income of $25.8 million in the year-earlier period.
“The Tristar acquisition announced this morning will be transformational for our Home and Personal Care segment,” said David Maura, Spectrum chairman and CEO in announcing the financial results. “The ability to leverage the studio content creation, DRTV and direct-to-consumer business model of Tristar’s talented team should enhance some of our legacy brands and help us drive continued market share gains for our combined slate of new product offerings. The increased scale and profitability of the combined HPC and Tristar businesses will now enable us to create an independent global appliances business poised for faster growth and expanding margins and positioned for potential further acquisitions in that space. We firmly believe in this value creation opportunity and look forward to providing an update on the nature of the separation as the year progresses.”
Tristar is one initiative among several the company has undertaken, and Maura characterized the present period as “exciting times” for Spectrum as the company has started an “evolution into a faster-growing, higher-margin pure play Global Pet Care and Home & Garden company. We believe we can create meaningful shareholder value with this transformation. Our first quarter went largely as expected, with continued top-line growth, while margins contracted as input cost inflation exceeded price increases. We have additional pricing actions in place, and more targeted, to offset the unprecedented inflation we are currently experiencing. We continue to expect to achieve our earnings framework for the year of mid to high single-digit net sales growth and low single-digit adjusted EBITDA growth. Consumer demand and retailer interest in our categories remain positive overall. We continue to work towards closing the sale of our Hardware and Home Improvement segment to Assa Abloy for $4.3 billion. We remain confident that the transaction will close this year, and are pleased to say that strong demand persists in HHI’s end markets.”
Keith Mirchandani, Founder and Chief Executive Officer of Tristar Products,, said, “I am thrilled to have the Tristar Business join a global organization like Spectrum Brands, which can provide the reach and resources for this business to drive significantly higher levels of growth… This partnership also allows the Tristar business to continue to deliver the most innovative, value-added and recognizable products. I am a big believer in the future prospects of this business under Spectrum Brands’ ownership, and I am excited to have the deal structured to allow me to participate in the future financial performance of the business.”
