Spectrum Brands Holdings Reports Fiscal 2019 Second Quarter Results from Continuing Operations and Reiterates Full-Year Guidance

• Reported and Organic Sales Growth of 3% and 5%
• Repurchased 8.6% of Common Shares Outstanding
• Significant Deleveraging from Debt Reduction Totaling $2.4 Billion

MIDDLETON, Wis.–(BUSINESS WIRE)–Spectrum Brands Holdings, Inc. (NYSE: SPB), a leading global branded
consumer products company focused on driving innovation and providing
exceptional customer service, today reported results from continuing
operations for the second quarter of fiscal 2019 ended March 31, 2019.

“Our Q2 results, highlighted by strong and broad-based top-line growth,
met our expectations, and we remain on track to deliver full-year
adjusted EBITDA within our guidance range of $560-$580 million,” said
David Maura, Chairman and Chief Executive Officer of Spectrum Brands
Holdings.

• Net sales growth was led by a 14% increase in Home & Garden and strong
  growth in Hardware & Home Improvement. Organic net sales increased
  4.9%, excluding $19.3 million of unfavorable foreign exchange, with
  all four divisions delivering organic sales growth.
• Gross profit margin decreased 100 basis points primarily due to input
  cost inflation and unfavorable product mix, partially offset by
  pricing.
• Operating income increased as a result of lower acquisition,
  integration and restructuring charges. Operating margin expanded 100
  basis points.
• Increased net loss and diluted loss per share were driven by one-time
  interest charges related to early debt extinguishment and foreign
  exchange losses associated with multi-currency divestiture loans,
  partially offset by lower restructuring and acquisition and
  integration expense and a larger income tax benefit.
• Lower adjusted diluted EPS was attributable to higher operating
  expenses driven by a year-over-year change in stock-based compensation
  and higher interest costs from assumed HRG debt.
• Adjusted EBITDA of $115.6 million was essentially unchanged. Growth in
  Home & Garden and Hardware & Home Improvement, as well as lower
  corporate expenses and investment income, was offset by decreases in
  Home & Personal Care and Global Pet Supplies.
• Adjusted EBITDA margin fell 40 basis points driven primarily by
  increased distribution costs and unfavorable mix.
• Income from discontinued operations, net of tax, was $783.6 million as
  a result of the completion of the Global Battery & Lighting and Global
  Auto Care divestitures in January of 2019.

“Significant, value-creating actions were completed in the second
quarter,” Mr. Maura said, “that accelerate Spectrum Brands’
transformation in 2019 into a meaningfully stronger and more focused
consumer products company poised to resume profitable growth in 2020 and
drive long-term value creation.

“We quickly used $2.9 billion in asset sale proceeds to reduce debt by
$2.4 billion and materially delever our balance sheet, while ending the
quarter with strong liquidity of more than $800 million,” he said. “We
also returned $250 million to shareholders through an aggressive
repurchase of nearly 9 percent of our shares, leaving up to $750 million
available on our existing 3-year buyback authorization.

“We are currently conducting a detailed analysis of our global operating
model to identify opportunities for significant performance improvement
and operating efficiencies across our businesses as we seek to position
the new Spectrum Brands as a more focused and streamlined company,” Mr.
Maura said. “At the same time, we continue to refine our organizational
structure with new leadership in key roles, expand our innovation
pipeline across all four businesses, and meaningfully step up investment
spending behind our strongest brands.”

Increased net sales were driven by growth in U.S. residential security,
plumbing and builders’ hardware along with significant improvements in
shipping performance at the Kansas distribution center. Excluding
unfavorable foreign exchange impacts of $2.3 million, organic net sales
grew 4.7%.

Improved operating income and margin were driven largely by reduced
restructuring costs. Higher adjusted EBITDA and margin were primarily a
result of increased volumes, productivity improvements and strong
expense controls.

Reduced net sales were driven primarily by lower personal care revenues,
partly offset by improved small appliances revenues. Personal care sales
fell in the U.S. predominantly as a result of prior-year hair care
distribution losses in mass and food/drug channels and in Europe
primarily from e-commerce and U.K. food/drug channel softness. Net sales
for small appliances increased primarily from growth in the U.S. mass
channel in coffeemakers and garment care, partially offset in Europe by
foreign exchange and Brexit-related consumer softness in the U.K.
Excluding unfavorable foreign exchange impacts of $11.8 million, organic
net sales increased 1.0%.

The operating loss compared to last year was partly attributable to the
absence of depreciation and amortization charges in the prior year due
to the segment being classified as held for sale. In addition, the
decline in operating income and operating income margin, as well as
adjusted EBITDA and adjusted EBITDA margin, was impacted by increased
marketing investments, reduced personal care volumes, unfavorable
product mix, transaction foreign exchange, and higher input costs.

Increased net sales were attributable to strong growth in U.S. companion
animal revenues, predominantly dog chews and treats, partly offset by
lower U.S. aquatics sales and European pet food revenues. Excluding
unfavorable foreign exchange impacts of $5.2 million, organic net sales
grew 4.2%.

Improved operating income and margin were largely driven by the absence
of rawhide recall-related costs compared to last year and lower
restructuring expense this year, partially offset by increased
manufacturing and distribution costs. Reduced adjusted EBITDA and margin
were primarily a result of increased manufacturing and distribution
costs.

Significantly higher net sales, primarily from a double-digit increase
in outdoor control category revenues, were driven by generally improved
weather, distribution wins and strong early season home center orders.

Increased operating income, adjusted EBITDA and margins were
predominantly a result of improved manufacturing efficiencies from
higher volumes and pricing actions.

Liquidity and Debt

Spectrum Brands completed the second quarter of fiscal 2019 with a
strong liquidity position, including a cash balance of approximately
$176 million and more than $652 million available on its $800 million
Cash Flow Revolver.

As of the end of the second quarter of fiscal 2019, the Company had
approximately $2,392 million of debt outstanding, consisting of $126
million drawn on its Cash Flow Revolver, $2,012 million of senior
unsecured notes, and approximately $254 million of capital leases and
other obligations.

During the second quarter, the Company repurchased 4.6 million shares of
its common stock for $250.0 million, or $54.22 per share.

Fiscal 2019 Outlook for Continuing Operations

Spectrum Brands expects reported net sales growth driven by innovation,
increased marketing investments, pricing actions and market share gains.
The impact from foreign exchange on net sales is now expected to have a
negative impact of approximately 130 basis points based upon current
rates.

Adjusted EBITDA is expected to be between $560-$580 million, and capital
expenditures are expected to be between $70-$75 million.

Conference Call/Webcast Scheduled for 9:00 A.M. Eastern Time Today

Spectrum Brands will host an earnings conference call and webcast at
9:00 a.m. Eastern Time today, May 8. To access the live conference call,
U.S. participants may call 877-556-5260 and international participants
may call 973-532-4903. The conference ID number is 9293064. A live
webcast and related presentation slides will be available by visiting
the Event Calendar page in the Investor Relations section of Spectrum
Brands’ website at www.spectrumbrands.com.

A replay of the live webcast also will be accessible through the Event
Calendar page in the Investor Relations section of the Company’s
website. A telephone replay of the conference call will be available
through May 22. To access this replay, participants may call
855-859-2056 and use the same conference ID number.

About Spectrum Brands Holdings, Inc.

Spectrum Brands Holdings, a member of the Russell 1000 Index, is a
global and diversified consumer products company and a leading supplier
of residential locksets, residential builders’ hardware, plumbing,
shaving and grooming products, personal care products, small household
appliances, specialty pet supplies, lawn and garden and home pest
control products, and personal insect repellents. Helping to meet the
needs of consumers worldwide, our Company offers a broad portfolio of
market-leading, well-known and widely trusted brands including Kwikset®,
Weiser®, Baldwin®, National Hardware®, Pfister®, Remington®, Black +
Decker®, George Foreman®, Russell Hobbs®, Tetra®, Marineland®, GloFish®,
Nature’s Miracle®, Dingo®, 8-in-1®, FURminator®, IAMS® and Eukanuba®
(Europe only), Healthy-Hide®, Digest-eeze™, DreamBone®, SmartBones®,
Littermaid®, Spectracide®, Cutter®, Repel®, Hot Shot®, Black Flag® and
Liquid Fence®. For more information, visit www.spectrumbrands.com.

Non-GAAP Measurements

Management believes that certain non-GAAP financial measures may be
useful in certain instances to provide additional meaningful comparisons
between current results and results in prior operating periods. Management
believes that organic net sales provide for a more complete
understanding of underlying business trends of regional and segment
performance by excluding the impact of currency exchange rate
fluctuations and the impact of acquisitions. In addition, within
this release, including the supplemental information attached hereto,
reference is made to adjusted diluted EPS, adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), and adjusted
EBITDA margin. Adjusted EBITDA is a metric used by management to
evaluate segment performance and frequently used by the financial
community which provides insight into an organization’s operating trends
and facilitates comparisons between peer companies, since interest,
taxes, depreciation and amortization can differ greatly between
organizations as a result of differing capital structures and tax
strategies. Adjusted EBITDA also is one of the measures used for
determining compliance with the Company’s debt covenants. Adjusted
EBITDA excludes certain items that are unusual in nature or not
comparable from period to period. Adjusted EBITDA margin reflects
adjusted EBITDA as a percentage of net sales of the Company. The
Company’s management uses adjusted diluted EPS as one means of analyzing
the Company’s current and future financial performance and identifying
trends in its financial condition and results of operations. Management
believes that adjusted diluted EPS is a useful measure for providing
further insight into our operating performance because it eliminates the
effects of certain items that are not comparable from one period to the
next. An income tax adjustment is included in adjusted diluted
EPS to exclude the impact of the valuation allowance against deferred
taxes and other tax-related items in order to reflect a normalized
ongoing effective tax rate. The Company provides this information
to investors to assist in comparisons of past, present and future
operating results and to assist in highlighting the results of on-going
operations. While the Company’s management believes that non-GAAP
measurements are useful supplemental information, such adjusted results
are not intended to replace the Company’s GAAP financial results and
should be read in conjunction with those GAAP results. Other
Supplemental Information has been provided to demonstrate reconciliation
of non-GAAP measurements discussed above to most relevant GAAP financial
measurements.

Forward-Looking Statements

This document contains, and certain oral and written statements made
by our representatives from time to time may contain, forward-looking
statements, including, without limitation, statements made under “Fiscal
2019 Outlook for Continuing Operations”, other statements regarding the
Company’s ability to meet its expectations for its fiscal 2019 and 2020
and the Company’s share repurchase program, for which the manner of
purchase, the number of shares to be purchased and the timing of
purchases will be based on a number of factor including the price of the
Company’s common stock, general business and market conditions and
applicable legal requirements, and is subject to the discretion of the
Company’s management and may be discontinued at any time. We have tried,
whenever possible, to identify these statements by using words like
“future,” “anticipate”, “intend,” “plan,” “estimate,” “believe,”
“belief,” “expect,” “project,” “forecast,” “could,” “would,” “should,”
“will,” “may,” and similar expressions of future intent or the negative
of such terms. These statements are subject to a number of risks and
uncertainties that could cause results to differ materially from those
anticipated as of the date of this release. Actual results may
differ materially as a result of (1) the impact of our
indebtedness on our business, financial condition and results of
operations; (2) the impact of restrictions in our debt instruments on
our ability to operate our business, finance our capital needs or pursue
or expand business strategies; (3) any failure to comply with financial
covenants and other provisions and restrictions of our debt instruments;
(4) the impact of actions taken by significant stockholders; (5) the
impact of fluctuations in commodity prices, costs or availability of raw
materials or terms and conditions available from suppliers, including
suppliers’ willingness to advance credit; (6) interest rate and exchange
rate fluctuations; (7) the loss of significant reduction in, or
dependence upon, sales to any significant retail customer(s); (8)
competitive promotional activity or spending by competitors, or price
reductions by competitors; (9) the introduction of new product features
or technological developments by competitors and/or the development of
new competitors or competitive brands; (10) the effects of general
economic conditions, including inflation, recession or fears of a
recession, depression or fears of a depression, labor costs and stock
market volatility or changes in trade, tariff, monetary or fiscal
policies in the countries where we do business; (11) changes in consumer
spending preferences and demand for our products; (12) our ability to
develop and successfully introduce new products, protect our
intellectual property and avoid infringing the intellectual property of
third parties; (13) our ability to successfully implement, achieve and
sustain manufacturing and distribution cost efficiencies and
improvements, and fully realize anticipated cost savings; (14) the
seasonal nature of sales of certain of our products; (15) the effects of
climate change and unusual weather activity; (16) the cost and effect of
unanticipated legal, tax or regulatory proceedings or new laws or
regulations (including environmental, public health and consumer
protection regulations); (17) public perception regarding the safety of
products that we manufacture and sell, including the potential for
environmental liabilities, product liability claims, litigation and
other claims related to products manufactured by us and third parties;
(18) the impact of pending or threatened litigation; (19) the impact of
cybersecurity breaches or our actual or perceived failure to protect
company and personal data; (20) changes in accounting policies
applicable to our business; (21) our ability to utilize net operating
loss carry-forwards to offset tax liabilities from future taxable
income; (22) government regulations; (23) the impact of expenses
resulting from the implementation of new business strategies,
divestitures or current and proposed restructuring activities; (24) our
inability to successfully integrate and operate new acquisitions at the
level of financial performance anticipated; (25) the unanticipated loss
of key members of senior management; (26) the effects of political or
economic conditions, terrorist attacks, acts of war or other unrest in
international markets; and (27) the other risk factors set forth in the
securities filings of Spectrum Brands Holdings, Inc., including the most
recently filed Annual Report on Form 10-K or Quarterly Report on Form
10-Q.

Spectrum Brands also cautions the reader that its estimates of
trends, market share, retail consumption of its products and reasons for
changes in such consumption are based solely on limited data available
to Spectrum Brands and management’s reasonable assumptions about market
conditions, and consequently may be inaccurate, or may not reflect
significant segments of the retail market. Spectrum Brands also
cautions the reader that undue reliance should not be placed on any
forward-looking statements, which speak only as of the date of this
release. Spectrum Brands undertakes no duty or responsibility to
update any of these forward-looking statements to reflect events or
circumstances after the date of this report or to reflect actual
outcomes.

Contacts

Investor/Media Contact:
Dave Prichard
608-278-6141

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