Spectrum Brands Holdings, Inc. (SPB) recently declared the retirement of its Chief Executive Officer (CEO) and President, David R. Lumley.
Management stated that Lumley plans to retire from his current role by fiscal 2015-end, in line with a planned succession program. The company formed an active succession plan, which includes a lookout for the company’s new CEO and President. This search will be open for candidates both outside and inside the company.
While the search for Lumley’s successor will be on, he will continue working as CEO till Sep 30, which marks the end of fiscal 2015, as part of a transition services employment agreement. This is primarily to ensure a seamless and systematic transition to Lumley’s replacement.
Though Lumley will retire as soon as his successor is found, he will continue to be a Board of Director in order to support an easy transition and to ensure that his successor takes the company forward in a planned way.
Lumley has been working with Spectrum Brands for nine years now, though he assumed this role in 2010. During his tenure, the company delivered five straight years of record results and is well placed for this year too. Management is highly impressed with his able leadership and guidance which have helped to drive the company’s success, growth and boost shareholder value.
The fact that the company has been performing well under Lumley is evident from Spectrum Brands’ recently reported fiscal 2014 results, wherein earnings soared 36.2% from last year to $4.06 per share, though it came in below the Zacks Consensus Estimate of $4.23 per share. Moreover, net sales for fiscal 2014 escalated 8.4% to $4,429.1 million and cruised ahead of the Zacks Consensus Estimate of $4406 million.
Further, Spectrum Brands remains committed to sustain its free cash flow, augment its adjusted EBITDA and maintain a healthy balance sheet. During fiscal 2014, the company generated record free cash flow of $359 million, beating its own target of at least $350 million and also coming way ahead of its year-ago free cash flow of $254 million. Also, as forecasted, the company reduced its term loan by over $250 million by the end of the fiscal.
Spectrum Brands’ cash and cash equivalents stood at $194.6 million and it incurred $73 million as capital expenditures during the year. Additionally, the company’s regular dividend payments underscore its robust financial status.
We believe that this Zacks Rank #3 (Hold) company is most likely to be successful in tapping all growth opportunities with its solid financial structure and able leadership.
A better-ranked stock in the same industry is FTD Companies, Inc. (FTD), with a Zacks Rank #1 (Strong Buy). Other better-ranked stocks in the broader consumer discretionary sector include G-III Apparel Group, Ltd. (GIII) and Brown Shoe Co. Inc. (BWS), each sporting a Zacks Rank #1.
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