St. Louis Business Journal
November 24, 2010
By E.B. Solomont
The insects that wreaked havoc on your summer garden have created a boom industry for a St. Louis pesticide maker. Buoyed by strong sales, United Industries Corp., a subsidiary of Spectrum Brands and the manufacturer of Hot Shot, Spectracide, Repel and Cutter brand products, is investing a total of $8 million into its two St. Louis sites. Net sales for the first three quarters of fiscal 2010 for United Industries were $266 million, up 7.3 percent from $248 million a year earlier. The company reported net sales of $322 million in fiscal 2009.
To accommodate the growth, the company is bringing 40 employees to St. Louis, mostly new hires and some relocated from Spectrum Brands' Atlanta offices. United Industries is sinking $7 million into its 300,000-square-foot manufacturing plant in Vinita Park, according to Randy Lewis, vice president of marketing and operations. In January, United Industries plans to move its operations facility -- which houses the research and development, finance and marketing departments -- to the old Medicine Shoppe building at 1 Rider Trail Plaza in Earth City. United Industries is spending $1 million to renovate the 56,000 square foot space. "We're excited about where this business is going," Lewis said.
Year over year revenue was up 10.5 percent for the third quarter, typically the company's most profitable quarter, according to Lewis. United Industries is projecting 20 percent year over year growth in its earnings before interest, taxes, depreciation and amortization (EBITDA).
Lewis said United Industries' marketing plan, which focuses on its low-cost products, has fueled growth. Instead of putting dollars into national advertising, the company has offered promotions through stores and partnered with retailers to drive consumer traffic. This year, United Industries rolled out a bedbug-fighting product at the suggestion of retailers, who felt it would sell. Next year, it will launch a line of cleaning products.
"We have grown despite the economy," said Lewis, who pointed out that United Industries products cost less than other national brands. Consumers also are attracted to United Industries products as they perform home and garden tasks without professional help. And, the products fall into a recession-proof category. "There aren't many people who have ants in their homes who aren't going to do anything about it," said John Pailthrop, United Industries' division vice president of marketing.
United Industries is one of four businesses under parent company Spectrum Brands, based in Madison, Wis. Spectrum Brands also includes a global batteries and personal care line, including the Remington and Rayovac brands; global pet supplies, including Nature's Miracle and Perfect Coat; and small appliances, including George Foreman and Black & Decker. United Industries is the company's home and garden business line, and has 500 employees, two-thirds of whom work in St. Louis.
According to Lewis, the recent success of United Industries comes after Spectrum Brands emerged, in August 2009, from Chapter 11. Spectrum Brands reported $3.1 billion in annual revenue in fiscal 2009.
According to Hamed Khorsand, an analyst with BWS Financial Inc., a key to Spectrum Brands' restructuring was cutting overhead costs and focusing on its brands. The home and garden business represents 25 percent of the company's overall revenue, and Khorsand said he expects it to report strong annual revenue. "They are coming off a period where they were focused on product development," he said.
According to Lewis, in the last 12 months, United Industries spent $4 million to upgrade technology at its Vinita Park manufacturing plant, where 70 percent of products are made. It plans to spend another $3 million to $4 million at the plant in 2011 to expand packaging lines. United Industries produced 150 million consumer units in fiscal 2010, up 20 percent over fiscal 2009.