MIDDLETON, Wis.--(BUSINESS WIRE)--Spectrum Brands Holdings, Inc. (NYSE: SPB; “Spectrum Brands” or the “Company”), a leading global branded consumer products and home essentials company focused on driving innovation and providing exceptional customer service, today reported results from continuing operations for the first quarter of fiscal 2025 ended December 29, 2024.
"We are pleased with the start of the year. The brand-focused investments we started making in 2024, and are continuing to make in 2025, are driving innovation in our products and consumer demand. Our investments in e-commerce are helping us win in what is the fastest growing channel for most of our products. The momentum we built last year is carrying over into this year. Our Home and Personal Care business had a solid holiday season, and our Home and Garden business had one of its best first quarters in recent history. Global Pet Care's quarterly sales were negatively impacted by the acceleration of retailer purchases into last quarter ahead of the business' go-live on S/4Hana. GAAP net income and diluted earnings per share both increased, and our adjusted EBITDA was 26.9% higher than last year's adjusted EBITDA excluding investment income. Gross margins are also up 140 basis points over the first quarter of fiscal 24. Our operations are continuing to deliver cost improvements and we are staying lean," said David Maura, Chairman and Chief Executive Officer of Spectrum Brands.
Mr. Maura continued, "Our operations and commercial teams are activating plans to minimize and mitigate the impact of the recent tariff actions, accelerating our plans to pivot our production out of China where practical and working with our suppliers and retailers to offset tariff headwinds. We are encouraged by the start of our year and intend to continue this momentum as the year progresses."
Fiscal 2025 First Quarter Highlights
| (in millions, except per share and %) | December 29, 2024 | December 31, 2023 | Variance | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 700.2 | $ | 692.2 | 8.0 | 1.2 | % | ||||||||
| Gross profit | 257.8 | 244.9 | 12.9 | 5.3 | % | ||||||||||
| Operating income | 44.7 | 25.0 | 19.7 | % | |||||||||||
- Net sales increased 1.2% with an increase in organic net sales of 1.9%, excluding the impact of $5.1 million of unfavorable foreign exchange rates. Net sales also increased due to an extended fall season and accelerated pre-season sales in H&G and strong e-commerce sales in HPC partially offset by a sales decline in GPC primarily due to a strategic acceleration of orders into the prior year related to the S/4Hana ERP implementation.
- Gross profit and margin increased from higher sales, cost improvement actions and favorable foreign currency partially offset by ocean freight inflation and higher tariffs due to the expiration of tariff exemptions for certain product lines.
- Operating income increased due to improved gross profit and cost savings initiatives offset by higher marketing and advertising spend.
- Net income from continuing operations and diluted earnings per share increased from the increase in operating income, lower interest costs, and lower share count partially offset by lower investment income.
- Adjusted EBITDA decreased 7.7% and adjusted EBITDA margin decreased 110 basis points attributable to lower investment income and increased brand-building investments partially offset by increased gross profit.
- Adjusted diluted EPS increased to $1.02 due to lower interest expense and a reduction in outstanding shares partially offset by lower adjusted EBITDA.
Fiscal 2025 First Quarter Segment Level Data
Global Pet Care (GPC)
| (in millions, except %) | December 29, 2024 | December 31, 2023 | Variance | ||||||||||||
| Net sales | $ | 260.0 | $ | 276.9 | (16.9) | (6.1) | % | ||||||||
| Adjusted EBITDA | $ | 51.5 | % | $ | 52.7 | (1.2) | (2.3) | % | |||||||
Net sales decreased 6.1%, with a decrease in organic net sales of 6.4%. North American sales were impacted by the pullforward of approximately $10 million of sales from the quarter into Q4 FY24 in advance of the S/4Hana ERP implementation. EMEA Companion Animal sales increased mid-single digits from the continued expansion of the Good Boy brand throughout Europe and strong demand in Dog and Cat Food. Category softness in global Aquatics negatively impacted sales in each region.
Adjusted EBITDA decreased due to lower sales volume, inflation, and increased brand-focused investments, offset by cost improvements and other favorable variances.
Home & Garden (H&G)
| (in millions, except %) | December 29, 2024 | December 31, 2023 | Variance | ||||||||||||
| Net sales | $ | 92.1 | $ | 72.0 | 20.1 | 27.9 | % | ||||||||
Net sales for H&G increased 27.9% due to the timing of seasonal inventory build at certain retailers and an extended fall selling season due to warmer weather conditions. Adjusted EBITDA increased due to higher sales volume, cost improvements, and favorable trade variances, offset by inflation and increased brand-focused investments in the period.
Home & Personal Care (HPC)
| (in millions, except %) | December 29, 2024 | December 31, 2023 | Variance | ||||||||||||
| Net sales | $ | 348.1 | $ | 343.3 | 4.8 | 1.4 | % | ||||||||
Net sales increased 1.4%. Excluding unfavorable foreign currency impacts of $5.9 million, organic net sales increased 3.1%. Organic sales growth in Personal Care was offset by declines in Home Appliances. Growth in e-commerce sales outpaced traditional retail sales growth globally. Personal Care sales grew in each region, while Home Appliance sales growth in EMEA was offset by declines in North America and other regions.
Adjusted EBITDA was flat to last year, with higher sales volumes and the benefit of cost improvements offset by inflation, higher tariffs from the expiration of exclusions on certain product lines, and increased brand-focused investments.
Liquidity and Debt
As of the end of the quarter, the Company had a cash balance of $180 million and total liquidity of $670.7 million, including undrawn capacity on its cash flow revolver of $490.8 million. The Company also had $575.1 million of debt outstanding, consisting of $496.1 million of senior unsecured notes and $79.0 million of finance leases, and ended the quarter with net debt of approximately $395.2 million.
Fiscal 2025 Earnings Framework
Spectrum Brands continues to expect low single-digit growth in reported net sales in fiscal 2025. Fiscal 2025 adjusted EBITDA is expected to increase by mid to high single-digits. Adjusted free cash flow is expected to be approximately 50% of adjusted EBITDA.
The Company continues to target a long-term net leverage ratio of 2.0 - 2.5 times.
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, February 6, 2025. The 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. Participants may register here. Instructions will be provided to ensure the necessary audio applications are downloaded and installed. Users can obtain these at no charge.
A replay of the live broadcast will be accessible through the Event Calendar page in the Investor Relations section of the Company’s website.
About Spectrum Brands Holdings, Inc.
Spectrum Brands Holdings is a home-essentials company with a mission to make living better at home. We focus on delivering innovative products and solutions to consumers for use in and around the home through our trusted brands. We are a leading supplier of specialty pet supplies, lawn and garden and home pest control products, personal insect repellents, shaving and grooming products, personal care products, and small household appliances. Helping to meet the needs of consumers worldwide, we offer a broad portfolio of market-leading, well-known and widely trusted brands including Tetra®, DreamBone®, SmartBones®, Nature’s Miracle®, 8-in-1®, FURminator®, Healthy-Hide®, Good Boy®, Meowee!®, OmegaOne®, Spectracide®, Cutter®, Repel®, Hot Shot®, Rejuvenate®, Black Flag®, Liquid Fence®, Remington®, George Foreman®, Russell Hobbs®, Black + Decker®, PowerXL®, Emeril Lagasse®, and Copper Chef®. For more information, please visit www.spectrumbrands.com.Spectrum Brands – A Home Essentials Company™
Non-GAAP Measurements
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 ongoing 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.