Core Insights - Spectrum Brands Holdings Inc. (SPB) is focusing on brand equity, digital channels, and innovations to ensure long-term success and demand resilience, particularly in pet care, home & garden, and grooming categories [1][3] Investment Strategy - The company is increasing brand-focused investments across its businesses, with a $3 million year-over-year increase in Q2 fiscal 2025 [3][10] - Certain marketing and advertising expenditures for the Home & Personal Care appliance business have been temporarily paused during the transition period [2][10] - SPB is actively seeking alternative supply sources outside of China to manage disruptions [2][10] Product Development and Innovation - Management emphasizes that innovation remains a strategic priority, with sustained investment in product development [3][4] - The company is targeting growth in a more sustainable, consumable pet category [3] Financial Performance - SPB's shares have decreased by 35.7% year to date, compared to a 9.5% drop in the industry [5] - The forward price-to-earnings ratio for SPB is 11.84X, slightly below the industry average of 11.87X [6] - The Zacks Consensus Estimate indicates an 8.4% year-over-year drop in fiscal 2025 earnings, while fiscal 2026 EPS is expected to grow by 29.5% [7]

Group 1 - Spectrum Brands Holdings (NYSE: SPB) was viewed positively around June 2024, indicating potential for growth and value [1] - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow generation as a key factor for value and growth prospects [1] Group 2 - Subscribers of Crude Value Insights have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas industry [3]

Core Viewpoint - Spectrum Brands Holdings Inc. (SPB) reported disappointing second-quarter fiscal 2025 results, with both revenue and earnings falling short of expectations and declining year over year due to a challenging macroeconomic environment and global trade pressures [1][3][14] Financial Performance - Adjusted earnings were 68 cents per share, missing the Zacks Consensus Estimate of $1.35 per share, and down 51.4% from $1.40 per share in the prior year [3] - Net sales decreased by 6% year over year to $675.7 million, missing the Zacks Consensus Estimate of $695 million, with organic sales down 4.6% [3] - Gross profit fell 7.3% year over year to $253.4 million, with a gross margin contraction of 60 basis points to 37.5% [4] - Adjusted EBITDA from continuing operations decreased 36.5% year over year to $71.3 million, with the adjusted EBITDA margin contracting 500 basis points to 10.6% [5] Segment Performance - Home & Personal Care segment sales declined 5.1% year over year to $254.2 million, with adjusted EBITDA down to $7.3 million and a margin contraction of 370 basis points to 2.9% [6][7] - Global Pet Care segment sales fell 7.1% year over year, with adjusted EBITDA dropping 19.7% to $50 million and a margin contraction of 290 basis points to 18.6% [8][9] - Home & Garden segment sales decreased 5.2% year over year to $152.3 million, with adjusted EBITDA falling to $26.7 million and a margin contraction of 70 basis points to 17.5% [10][11] Financial Position - As of March 30, 2025, the company had a cash balance of $96 million and outstanding debt of $656.9 million, resulting in a net debt of approximately $560.9 million [12] - The company repurchased 2 million shares for $159.9 million during the quarter, totaling $1.28 billion in repurchases since the close of HHI [13] Outlook - Spectrum Brands has suspended its fiscal 2025 earnings framework due to increased uncertainty from global trade conditions and softening consumer demand, while maintaining a long-term financial strategy targeting a net leverage ratio of 2.0 to 2.5 times [14]

Core Insights - Spectrum Brands (SPB) reported revenue of $675.7 million for the quarter ended March 2025, reflecting a year-over-year decline of 6% and an EPS of $0.68 compared to $1.62 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $694.91 million, resulting in a surprise of -2.76%, while the EPS surprise was -49.63% against a consensus estimate of $1.35 [1] Financial Performance Metrics - Net Sales in Home & Personal Care (HPC) were $254.20 million, below the average estimate of $261.20 million, marking a -5.1% year-over-year change [4] - Net Sales in Home & Garden (H&G) reached $152.30 million, compared to an estimated $156.85 million, representing a -5.2% change year-over-year [4] - Net Sales in Global Pet Care (GPC) totaled $269.20 million, falling short of the $277.60 million estimate, indicating a -7.1% year-over-year decline [4] - Adjusted EBITDA for Global Pet Care (GPC) was $50 million, below the average estimate of $58.95 million [4] - Adjusted EBITDA for Home & Personal Care (HPC) was $7.30 million, significantly lower than the estimated $17.30 million [4] - Adjusted EBITDA for Home & Garden (H&G) was $26.70 million, compared to the average estimate of $29.15 million [4] Stock Performance - Spectrum's shares have returned -3.2% over the past month, contrasting with the Zacks S&P 500 composite's +11.3% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), suggesting potential underperformance relative to the broader market in the near term [3]

[PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including statements of financial position, income, and cash flows, along with detailed notes on accounting policies [Condensed Consolidated Statements of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets decreased to $3,537.0 million, primarily due to reduced cash and increased treasury stock, while total equity declined to $1,885.3 million Condensed Consolidated Statements of Financial Position (in millions) | Account | March 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $96.0 | $368.9 | | Inventories | $542.6 | $462.1 | | Total current assets | $1,342.8 | $1,578.6 | | Goodwill | $860.7 | $864.9 | | Total assets | **$3,537.0** | **$3,842.3** | | **Liabilities and Equity** | | | | Total current liabilities | $573.1 | $687.1 | | Long-term debt, net | $632.0 | $551.4 | | Total liabilities | $1,651.7 | $1,700.6 | | Total equity | $1,885.3 | $2,141.7 | | Total liabilities and equity | **$3,537.0** | **$3,842.3** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net sales decreased to $675.7 million, with net income from continuing operations sharply falling to $1.8 million due to lower sales, an impairment, and the absence of a prior-year gain Condensed Consolidated Statements of Income (in millions, except per share) | Metric | Three Months Ended Mar 30, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 30, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $675.7 | $718.5 | $1,375.9 | $1,410.7 | | Gross profit | $253.4 | $273.4 | $511.2 | $518.4 | | Operating income | $19.5 | $75.9 | $64.2 | $101.0 | | Net income from continuing operations | $1.8 | $49.9 | $26.4 | $67.4 | | Net income | $1.2 | $60.9 | $25.0 | $90.1 | | Diluted EPS from continuing operations | $0.06 | $1.65 | $0.95 | $2.09 | - The significant drop in operating and net income for the three-month period is partially attributable to a **$65.0 million gain** from representation and warranty insurance proceeds that was recognized in the prior-year period (Q2 2024) and was absent in the current period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used by operating activities significantly increased to $49.3 million, while investing activities shifted to a net use, and financing activities primarily funded treasury stock repurchases Condensed Consolidated Statements of Cash Flows (in millions) | Activity | Six Months Ended Mar 30, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash (used) provided by operating activities | $(49.3) | $(0.8) | | Net cash (used) provided by investing activities | $(15.2) | $544.1 | | Net cash used by financing activities | $(195.0) | $(553.8) | | **Net change in cash, cash equivalents and restricted cash** | **$(272.3)** | **$(8.2)** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies and financial items, including restructuring, revenue recognition, customer concentration, asset impairment, debt, and share repurchases - The company initiated restructuring in its HPC and GPC segments, incurring **$4.0 million** in exit and disposal costs during the six months ended March 30, 2025, with an additional **$6 million** forecasted[32](index=32&type=chunk)[33](index=33&type=chunk) - Two large retail customers account for a significant concentration of risk, representing **34.8% of net sales** for the three months ended March 30, 2025, and **43.1% of net trade receivables**[39](index=39&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk) - An impairment charge of **$15.7 million** was recognized on the PowerXL® tradename during the quarter due to declining sales expectations and a change in direct-to-consumer strategy[49](index=49&type=chunk) - The company repurchased **2.8 million shares** for **$232.8 million** in the six months ended March 30, 2025, through open market purchases, including under Rule 10b5-1 plans[70](index=70&type=chunk) - In the prior year (Q2 2024), the company recognized a **$65.0 million gain** from insurance proceeds related to the Tristar Business acquisition, which significantly impacts year-over-year comparisons[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a challenging quarter with declining net sales and adjusted EBITDA, driven by lower volumes and prior-year comparisons, while addressing new U.S. tariffs and maintaining strong liquidity Consolidated Results Summary (in millions) | Metric | Three Months Ended Mar 30, 2025 | Three Months Ended Mar 31, 2024 | Variance | Variance % | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $675.7 | $718.5 | $(42.8) | (6.0)% | | Gross Profit | $253.4 | $273.4 | $(20.0) | (7.3)% | | Net Income from Continuing Operations | $1.8 | $49.9 | $(48.1) | (96.4)% | | Adjusted EBITDA | $71.3 | $112.3 | $(41.0) | (36.5)% | - New U.S. tariffs on Chinese imports are expected to significantly impact operations by increasing costs. The company has temporarily paused finished goods imports from China and is actively pursuing sourcing alternatives, particularly for the HPC segment[105](index=105&type=chunk) [Segment Financial Data](index=28&type=section&id=Segment%20Financial%20Data) All three segments, Global Pet Care, Home & Garden, and Home and Personal Care, reported lower net sales and adjusted EBITDA for the quarter Q2 Net Sales by Segment (in millions) | Segment | Q2 2025 Net Sales | Q2 2024 Net Sales | Variance | Variance % | | :--- | :--- | :--- | :--- | :--- | | Global Pet Care (GPC) | $269.2 | $289.9 | $(20.7) | (7.1)% | | Home & Garden (H&G) | $152.3 | $160.7 | $(8.4) | (5.2)% | | Home and Personal Care (HPC) | $254.2 | $267.9 | $(13.7) | (5.1)% | Q2 Adjusted EBITDA by Segment (in millions) | Segment | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | Variance | Variance % | | :--- | :--- | :--- | :--- | :--- | | Global Pet Care (GPC) | $50.0 | $62.3 | $(12.3) | (19.7)% | | Home & Garden (H&G) | $26.7 | $29.2 | $(2.5) | (8.6)% | | Home and Personal Care (HPC) | $7.3 | $17.8 | $(10.5) | (59.0)% | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity of $504.6 million, despite a significant decrease in cash flow from operations, and expects sufficient resources for future needs - As of March 30, 2025, the company had total liquidity of **$504.6 million**, comprising **$96.0 million** in cash and cash equivalents and **$408.6 million** available under its credit facility[137](index=137&type=chunk) - Cash used by operating activities for the six-month period was **$48.6 million**, compared to providing **$80.7 million** in the prior year period, a decrease of **$129.3 million**[133](index=133&type=chunk)[134](index=134&type=chunk) - The company paid cash dividends of **$25.3 million** (**$0.47 per share**) during the six months ended March 30, 2025[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the company's market risk factors occurred during the six-month period ended March 30, 2025 - No material change in the Company's market risk has occurred during the six-month period ended March 30, 2025[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with internal control changes due to the ongoing implementation of a new global ERP system - Management concluded that disclosure controls and procedures are effective as of the end of the reporting period[152](index=152&type=chunk) - The company is undergoing a multi-year implementation of a new global ERP system. During the period, the system was implemented for the GPC and H&G businesses in North America, leading to modifications of internal controls[153](index=153&type=chunk) [PART II OTHER INFORMATION](index=32&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and other required disclosures [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course litigation matters, none of which are expected to materially affect its financial condition - The Company is involved in various litigation matters arising from the ordinary course of business and does not expect them to have a material adverse effect on its operations or financial condition[156](index=156&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) A key risk factor is the company's international supply chain exposure to unfavorable trade policies, particularly increased U.S. tariffs on Chinese imports, which could materially affect results - A significant risk factor is the company's exposure to international supply chains and unfavorable trade policies, such as increased U.S. tariffs on goods from China. These tariffs have required price increases or resulted in lower gross margins and could have a material adverse effect on the business[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not issue unregistered equity securities but continued its common stock repurchase program, buying back 2.0 million shares for $162.3 million Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Dec 30, 2024 - Jan 26, 2025 | 799,204 | $84.64 | | Jan 27, 2025 - Feb 23, 2025 | 854,911 | $81.65 | | Feb 24, 2025 - Mar 30, 2025 | 304,894 | $73.89 | - The repurchases were made under a **$500 million** common stock repurchase program authorized by the Board of Directors on May 20, 2024[160](index=160&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No company officers or directors adopted, modified, or terminated Rule 10b5-1 trading plans during the second quarter of fiscal 2025 - No officers or directors adopted, modified, or terminated any Rule 10b5-1(c) trading plans during the three-month period ended March 30, 2025[161](index=161&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes a list of guarantor subsidiaries (Exhibit 22.1), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and XBRL data files (Exhibits 101 and 104)[162](index=162&type=chunk)[166](index=166&type=chunk)

Spectrum Brands (SPB) Q2 2025 Earnings Call May 08, 2025 09:00 AM ET Company Participants Joanne Chomiak - Director of Investor RelationsDavid Maura - Executive Chairman & CEOJeremy Smeltser - Executive VP & CFOPeter Lukas - DirectorOlivia Tong - Managing Director Conference Call Participants Peter Grom - Equity Research Analyst Operator Good day, and thank you for standing by. Welcome to the Q2 twenty twenty five Spectrum Brands Holding Earnings Conference Call. At this time, all participants are in a list ...

Spectrum Brands (SPB) Q2 2025 Earnings Call May 08, 2025 09:00 AM ET Speaker0 Good day, and thank you for standing by. Welcome to the Q2 twenty twenty five Spectrum Brands Holding Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw ...

Core Viewpoint - Spectrum Brands reported quarterly earnings of $0.68 per share, significantly missing the Zacks Consensus Estimate of $1.35 per share, representing a -49.63% earnings surprise [1] - The company also reported revenues of $675.7 million for the quarter, falling short of the Zacks Consensus Estimate by 2.76% and down from $718.5 million a year ago [2] Earnings Performance - Over the last four quarters, Spectrum has only surpassed consensus EPS estimates once [2] - The company had a previous quarter earnings expectation of $0.91 per share but reported $1.02, resulting in a positive surprise of 12.09% [1] Stock Performance - Spectrum shares have declined approximately 26.8% since the beginning of the year, compared to a -4.3% decline in the S&P 500 [3] - The current Zacks Rank for Spectrum is 5 (Strong Sell), indicating expected underperformance in the near future [6] Future Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.53 on revenues of $792.4 million, and for the current fiscal year, it is $4.70 on revenues of $2.94 billion [7] - The trend of estimate revisions for Spectrum has been unfavorable leading up to the earnings release [6] Industry Context - The Consumer Products - Discretionary industry, to which Spectrum belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, suggesting potential challenges ahead [8]

[Executive Summary & Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Outlook) Spectrum Brands reported a challenging Q2 FY2025 with declining sales and profitability, leading to a strategic pivot focused on cash flow, supply chain shifts, and pet category acquisitions - Net sales decreased **6.0%** and organic sales decreased **4.6%**, driven by soft demand in Global Pet Care and North American Appliances, and timing of retailer inventory purchases in Home & Garden[3](index=3&type=chunk) - The company repurchased **2.0 million** shares in Q2 for **$159.9 million**, totaling **16.3 million** shares for **$1.28 billion** since the HHI divestiture[3](index=3&type=chunk) - In response to tariff pressures and weakening demand, the company has pivoted its strategy to maximize cash, expecting to generate approximately **$160 million** of free cash flow in FY2025 and suspending its earnings framework[3](index=3&type=chunk)[9](index=9&type=chunk) - The company is accelerating efforts to move its supply base out of China for the U.S. market, with a primary focus on the Home & Personal Care (HPC) business[3](index=3&type=chunk)[8](index=8&type=chunk) - The company aims to strengthen its portfolio with acquisitions, particularly in the pet categories, with a vision to at least double the size of its pet asset organically and through M&A[7](index=7&type=chunk) [Consolidated Financial Performance](index=3&type=section&id=Consolidated%20Financial%20Performance) Consolidated Q2 FY2025 net sales decreased 6.0% to $675.7 million, with net income and Adjusted EBITDA also significantly declining due to lower volumes and tariffs Q2 FY2025 Financial Highlights (vs. Q2 FY2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales ($ millions) | $675.7 | $718.5 | (6.0)% | | Gross Profit ($ millions) | $253.4 | $273.4 | (7.3)% | | Gross Profit Margin | 37.5% | 38.1% | (60) bps | | Net Income from Continuing Operations ($ millions) | $1.8 | $49.9 | (96.4)% | | Diluted EPS from Continuing Operations | $0.06 | $1.65 | (96.4)% | | Adjusted EBITDA ($ millions) | $71.3 | $112.3 | (36.5)% | | Adjusted EBITDA Margin | 10.6% | 15.6% | (500) bps | | Adjusted EPS from Continuing Operations | $0.68 | $1.40 | (51.4)% | - The decrease in net sales was primarily due to category softness in North American markets for Global Pet Care and Home & Personal Care, along with the timing of retailer inventory builds in Home & Garden[11](index=11&type=chunk) - Gross margin decreased due to lower volume, higher trade promotions, unfavorable mix, inflation, and higher tariffs, partially offset by cost improvement actions[11](index=11&type=chunk) [Segment Performance](index=4&type=section&id=Segment%20Performance) All three segments experienced declines in Q2 FY2025 net sales and Adjusted EBITDA, driven by North American market softness, retailer inventory timing, and lower category demand [Global Pet Care (GPC)](index=4&type=section&id=Global%20Pet%20Care%20(GPC)) Global Pet Care net sales decreased 7.1% to $269.2 million, with Adjusted EBITDA falling 19.7% due to North American softness and increased investments GPC Q2 FY2025 Performance (vs. Q2 FY2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales ($ millions) | $269.2 | $289.9 | (7.1)% | | Adjusted EBITDA ($ millions) | $50.0 | $62.3 | (19.7)% | | Adjusted EBITDA Margin | 18.6% | 21.5% | (290) bps | - Companion Animal sales declined mid-single digits, driven by low double-digit declines in North America, while EMEA organic sales grew mid-single digits. Global Aquatics sales declined due to continued category softness[12](index=12&type=chunk) [Home & Garden (H&G)](index=4&type=section&id=Home%20%26%20Garden%20(H%26G)) Home & Garden net sales decreased 5.2% to $152.3 million, with Adjusted EBITDA down 8.6%, primarily due to the timing of retailer inventory builds H&G Q2 FY2025 Performance (vs. Q2 FY2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales ($ millions) | $152.3 | $160.7 | (5.2)% | | Adjusted EBITDA ($ millions) | $26.7 | $29.2 | (8.6)% | | Adjusted EBITDA Margin | 17.5% | 18.2% | (70) bps | - The sales decrease was due to the phasing of seasonal inventory builds at retailers, which pulled sales forward into Q1[14](index=14&type=chunk) [Home & Personal Care (HPC)](index=4&type=section&id=Home%20%26%20Personal%20Care%20(HPC)) Home & Personal Care net sales fell 5.1% to $254.2 million, with Adjusted EBITDA significantly declining 59.0% due to lower North American demand and tariffs HPC Q2 FY2025 Performance (vs. Q2 FY2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales ($ millions) | $254.2 | $267.9 | (5.1)% | | Adjusted EBITDA ($ millions) | $7.3 | $17.8 | (59.0)% | | Adjusted EBITDA Margin | 2.9% | 6.6% | (370) bps | - North American sales declined high single digits, while LATAM organic sales increased low double-digits. EMEA organic net sales were relatively flat[16](index=16&type=chunk) - Adjusted EBITDA margin declined sharply to **2.9%** from **6.6%** last year, driven by lower volumes, higher trade spend, unfavorable mix, and incremental tariffs[17](index=17&type=chunk) [Liquidity and Debt](index=5&type=section&id=Liquidity%20and%20Debt) As of March 30, 2025, the company reported total liquidity of $504.6 million and net debt of approximately $560.9 million Liquidity and Debt Position (as of March 30, 2025) | Item | Amount (in millions) | | :--- | :--- | | Cash Balance | $96.0 | | Total Liquidity | $504.6 | | Total Debt Outstanding | $656.9 | | Net Debt | $560.9 | [Fiscal 2025 Outlook](index=5&type=section&id=Fiscal%202025%20Outlook) The company suspended its Fiscal 2025 earnings framework due to global trade uncertainties and softening consumer demand, while maintaining its long-term net leverage target - The company suspended its Fiscal 2025 earnings framework due to uncertainty caused by global trade conditions, tariffs, and softening global consumer demand[19](index=19&type=chunk)[9](index=9&type=chunk) - The company continues to target a long-term net leverage ratio of **2.0 - 2.5 times**[19](index=19&type=chunk) [Appendix: Financial Statements](index=11&type=section&id=Appendix%3A%20Financial%20Statements) This appendix presents the unaudited condensed consolidated financial statements, including Statements of Income, Cash Flow, and Financial Position, for the specified periods [Condensed Consolidated Statements of Income](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended March 30, 2025, net sales were $675.7 million, with net income from continuing operations significantly decreasing to $1.8 million Condensed Consolidated Statements of Income (Three Months Ended) | (in millions) | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net sales | $675.7 | $718.5 | | Gross profit | $253.4 | $273.4 | | Operating income | $19.5 | $75.9 | | Net income from continuing operations | $1.8 | $49.9 | [Condensed Consolidated Statements of Cash Flow](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) For the six months ended March 30, 2025, net cash used by operating activities from continuing operations was $48.6 million, a reversal from the prior year Condensed Consolidated Statements of Cash Flow (Six Months Ended) | (in millions) | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net cash (used) provided by operating activities from continuing operations | $(48.6) | $80.7 | | Net cash used by financing activities | $(195.0) | $(553.8) | | Net change in cash, cash equivalents and restricted cash | $(272.3) | $(8.2) | [Condensed Consolidated Statements of Financial Position](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) As of March 30, 2025, total assets were $3,537.0 million and total liabilities were $1,651.7 million, with cash and equivalents at $96.0 million Condensed Consolidated Statements of Financial Position | (in millions) | March 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total current assets | $1,342.8 | $1,578.6 | | Total assets | $3,537.0 | $3,842.3 | | Total current liabilities | $573.1 | $687.1 | | Total liabilities | $1,651.7 | $1,700.6 | | Total equity | $1,885.3 | $2,141.7 | [Appendix: Non-GAAP Reconciliations](index=14&type=section&id=Appendix%3A%20Non-GAAP%20Reconciliations) This appendix provides definitions and reconciliations for key non-GAAP financial measures, including Organic Net Sales, Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Free Cash Flow [Net Sales and Organic Net Sales Reconciliation](index=14&type=section&id=Net%20Sales%20and%20Organic%20Net%20Sales%20Reconciliation) For Q2 FY2025, reported net sales were $675.7 million, with organic net sales of $685.8 million after adjusting for foreign currency impact Reconciliation of Reported Net Sales to Organic Net Sales (Q2 FY2025) | (in millions) | Net Sales | Effect of FX | Organic Net Sales | Organic Change (%) | | :--- | :--- | :--- | :--- | :--- | | GPC | $269.2 | $2.4 | $271.6 | (6.3)% | | H&G | $152.3 | $0.0 | $152.3 | (5.2)% | | HPC | $254.2 | $7.7 | $261.9 | (2.2)% | | **Total** | **$675.7** | **$10.1** | **$685.8** | **(4.6)%** | [Adjusted EBITDA Reconciliation](index=15&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 FY2025 was $71.3 million, reconciled from net income of $1.8 million, with key adjustments including non-cash impairment charges Reconciliation of Net Income to Adjusted EBITDA (Q2) | (in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income from continuing operations | $1.8 | $49.9 | | Income tax expense | $9.6 | $25.5 | | Interest expense | $7.5 | $16.9 | | Depreciation & Amortization | $24.5 | $25.4 | | Non-cash impairment charges | $15.7 | $39.5 | | Representation and warranty insurance proceeds | — | $(65.0) | | Other Adjustments | $12.2 | $19.9 | | **Adjusted EBITDA** | **$71.3** | **$112.3** | [Adjusted Diluted EPS Reconciliation](index=16&type=section&id=Adjusted%20Diluted%20EPS%20Reconciliation) Adjusted diluted EPS from continuing operations for Q2 FY2025 was $0.68, reconciled from a reported diluted EPS of $0.06, primarily due to non-cash impairment charges Reconciliation of Diluted EPS to Adjusted Diluted EPS (Q2) | (per share amounts) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted EPS from continuing operations | $0.06 | $1.65 | | Pre-tax adjustments | $0.87 | $(0.32) | | Tax impact of adjustments | $(0.25) | $0.07 | | **Adjusted Diluted EPS** | **$0.68** | **$1.40** | [Adjusted Free Cash Flow Reconciliation](index=17&type=section&id=Adjusted%20Free%20Cash%20Flow%20Reconciliation) For the six months ended March 30, 2025, adjusted free cash flow was a use of $58.4 million, reconciled from net cash used by operating activities Reconciliation to Adjusted Free Cash Flow (Six Months Ended) | (in millions) | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities from continuing operations | $(48.6) | $80.7 | | Purchases of property, plant and equipment | $(15.1) | $(20.9) | | Free cash flow | $(63.7) | $59.8 | | Adjustments | $5.3 | $(44.9) | | **Adjusted free cash flow** | **$(58.4)** | **$14.9** | [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements and details numerous risks, including economic conditions, geopolitical conflicts, supply chain disruptions, and tariffs, that could impact future results - The report contains forward-looking statements regarding business strategy, future free cash flows, tariffs, and supply chain efforts, which are subject to numerous risks and uncertainties[30](index=30&type=chunk)[31](index=31&type=chunk) - Key risk factors include economic conditions, tariffs and trade policies, supply chain disruptions (including relocation efforts), inflation, recession fears, changes in consumer spending preferences, and geopolitical instability such as the Russia-Ukraine and Israel-Hamas wars[32](index=32&type=chunk)[33](index=33&type=chunk)

Fiscal 2025 Second Quarter Earnings Call May 8, 2025 We have made or implied certain forward-looking statements in this document. Statements or expectations regarding our business strategy, future free cash flows, tariffs, tariff impact and tariff mitigation efforts, future operations and operating model, financial condition, estimated revenues, projected costs, inventory management, supply chain and supply chain relocation efforts, earnings power, project synergies, prospects, plans and strategic objective ...