Rayovac 2012 Annual Report Download - page 6

top-line growth, margins and free cash flow profile. With its
impressive portfolio of residential locksets, residential builders’
hardware and faucets, HHI also brings scale and product
diversity, stronger relationships with core retail partners,
attractive cross-selling opportunities, and a
new platform for significant future global
growth using Spectrum Brands’ existing
international infrastructure. As a fourth
operating segment, HHI has compelling
growth opportunities in North America
and abroad, and is well-positioned –
from a cost, product line and market
share standpoint – to benefit from
the U.S. housing market recovery
as well as the emerging home
automation markets and the showroom
and hospitality markets from major
investments in game-changing, patented
innovations such as its Smart Key re-keyable
lockset technology. In short, HHI is a catalyst to
“unlocking” new dimensions for growth and increased
profitability in concert with our personal care, home appliances,
pet supplies, home and garden, and battery businesses.
As we integrate and expand HHI
and grow our other divisions, we
remain committed to a strong
balance sheet. HHI’s solid
operating margins and relatively
low capital intensity will contribute
to our Company’s free cash flow
generation profile, helping us to
rapidly repay debt and return to our long-term objective of
achieving a total leverage ratio between 2.5 and 3.5 times.
Your Board of Directors and senior management team
maintain a focus on accountability to our shareholders with
management incentive compensation programs based on
specific performance metrics strongly aligned with investors’
priorities. A balance of long-term and short-term compensation
programs for our top leadership team provides appropriate
rewards for performance against specific metrics, primarily
adjusted EBITDA and free cash flow targets.
I want to extend thanks and appreciation to our Board
of Directors for their valuable guidance and continuing
commitment to building an even more prosperous Spectrum
Brands. We also salute our 6,000 dedicated and talented
employees around the world, whose enthusiasm,
productivity and creativity have generated significant
value creation. Finally, we welcome the
employees of HHI to the Spectrum
Brands family and look forward to the
contributions they will make to our
Company’s success.
With a track record in place and as the
global value proposition leader in our
space, Spectrum Brands looks ahead
confidently with a road map for more
growth and expansion. Our vision and
strategy are sound, our opportunities
and resources are many, our brands are
powerful and enduring, and our commitment to greater
value creation has never been stronger. Thank you for your
support and enthusiasm as we execute on our plan and drive
for an even more rewarding future for our stakeholder family.
Sincerely,
David R. Lumley
Chief Executive Officer
January 15, 2013
Spectrum Brands has transformed itself into a financially
disciplined company focused on delivering long-term
value to its shareholders. The Company has shown a
consistent ability to generate strong cash flow and grow the
business profitably, strengthened its balance sheet with a lower
cost of capital, and has been adept at quickly and effectively
integrating acquisitions. I am proud of Spectrum Brands’ many
achievements, its steady record of
growth and the leadership of the
management team. I join CEO Dave
Lumley in thanking our family of
stakeholders – employees, retailers,
customers, suppliers, shareholders
and creditors – for their support and
hard work. We will stay focused on
growing sales, EPS and EBITDA,
generating even higher free cash flow per share, and creating
greater shareholder value. I am highly confident in Spectrum
Brands’ strategic direction and excited about the Company’s
future. I believe Spectrum Brands’ best days are still ahead.
Sincerely,
David M. Maura
Chairman of the Board
January 15, 2013