Group 1 - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market within a 30-day timeframe, assigning ratings from A to F based on value, growth, and momentum characteristics [2][9] - The Value Style Score identifies attractive and discounted stocks using financial ratios such as P/E, PEG, and Price/Sales, appealing to value investors [3] - The Growth Style Score focuses on a company's future prospects and financial health, analyzing projected and historical earnings, sales, and cash flow to identify sustainable growth stocks [4] - The Momentum Style Score assists investors in capitalizing on price trends by evaluating short-term price changes and earnings estimate shifts [5] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors who utilize multiple investment strategies [6] Group 2 - The Zacks Rank is a proprietary stock-rating model that simplifies portfolio building by utilizing earnings estimate revisions [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 that also have Style Scores of A or B, ensuring a higher probability of success [9][10] Group 3 - Spectrum Brands Holdings, Inc. is a global consumer products company with a diverse portfolio, including residential locksets, grooming products, and pet supplies [11] - Spectrum Brands holds a Zacks Rank of 3 (Hold) and has a VGM Score of A, indicating solid performance potential [11] - The company has a Value Style Score of A, supported by a forward P/E ratio of 12.04, making it attractive to value investors [12] - For fiscal 2025, the Zacks Consensus Estimate for Spectrum Brands' earnings has increased to $5.06 per share, with an average earnings surprise of 52.5% [12]

Core Viewpoint - Spectrum Brands Holdings Inc. (SPB) has experienced a significant decline in its stock price, dropping 17.1% over the past three months, underperforming both the industry and broader market indices [1][14]. Performance Overview - The stock closed at $69.81, nearing its 52-week low of $68.74 reached on March 21 [1]. - The company's stock performance has lagged behind the Zacks Consumer Discretionary sector, which rose by 3.6%, and the S&P 500, which dipped by 3.8% [1]. Factors Affecting Performance - Spectrum Brands is investing heavily in brand improvement, online sales, and supply chain enhancements, which is currently straining its finances [4]. - Increased costs from new trade tariffs, particularly affecting the Home & Personal Care (HPC) segment, are expected to hurt profits until cost-cutting measures are implemented [5]. - The company is restructuring its HPC business by divesting certain parts, but delays or unfavorable outcomes could hinder financial expectations [6]. - A strong U.S. dollar is negatively impacting international sales, particularly in Europe, despite the company's strategies to mitigate currency effects [7]. Growth Strategies - Despite challenges, Spectrum Brands' growth initiatives, particularly in e-commerce, are anticipated to improve stock performance [8]. - E-commerce sales contributed over 30% to global HPC revenues and mid-20% to Global Pet Care (GPC) revenues in the first quarter of fiscal 2025 [8]. - The company is expanding inventory, improving fill rates, and launching new products to sustain e-commerce growth [10]. Financial Performance - In the first quarter of fiscal 2025, gross profit increased by 5.3% year over year, supported by higher sales and cost-saving measures [12]. - Gross margin expanded by 140 basis points to 36.8%, indicating improved profitability [12]. - The company expects a slight increase in net sales and mid-to-high single-digit growth in adjusted EBITDA for fiscal 2025, driven by sales growth and cost improvements [13]. Outlook - Spectrum Brands is facing short-term challenges from rising costs and financial pressures due to significant investments in brand-building and e-commerce [14]. - Management remains optimistic about modest sales and EBITDA growth in fiscal 2025 as growth initiatives take effect [15].

Core Viewpoint - Spectrum Brands Holdings Inc. (SPB) is currently facing significant technical resistance, trading below key moving averages, indicating a bearish trend and potential sustained downward movement in stock price [1][2]. Stock Performance - SPB shares have declined by 22.7% over the past three months, significantly underperforming the industry decline of 4.7% and the broader Consumer Discretionary sector's drop of 4.2% [3][4]. Current Pressures - The company is experiencing financial challenges due to heavy investments in brand-building, e-commerce, and supply chain improvements, which are currently straining finances [5]. - New trade tariffs, particularly affecting the Home & Personal Care (HPC) segment, are expected to increase costs and reduce profits, especially as many products are sourced from China [6]. - Spectrum Brands is also facing foreign exchange issues due to a strong U.S. dollar, complicating sales growth in international markets [8]. Strategic Initiatives - Despite challenges, SPB's growth initiatives, particularly in e-commerce, are expected to play a crucial role in reversing stock performance, with online sales contributing over 30% to global HPC revenues [9]. - The company is benefiting from higher prices, cost savings, and a better product mix, which have helped improve profit margins [10]. - Looking ahead, SPB anticipates a small increase in net sales and a mid-to-high single-digit rise in adjusted EBITDA for fiscal 2025, driven by sales growth and cost improvements [11]. Revised Estimates - The Zacks Consensus Estimate for SPB's fiscal 2025 sales and EPS indicates year-over-year growth of 0.4% and 24.6%, respectively, with further growth expected in fiscal 2026 [12]. Final Assessment - SPB is currently under pressure from rising costs, tariffs, and financial constraints due to heavy investments, while also trading below key moving averages [13]. However, e-commerce momentum and cost-saving initiatives are supporting margin expansion, with management expecting modest growth in fiscal 2025 [13].

Core Viewpoint - Spectrum Brands Inc. has shown a 2.8% increase in stock price since reporting its first-quarter fiscal 2025 results, outperforming its industry peers and the broader market despite mixed investor sentiments following the earnings release [1][2]. Financial Performance - In the first quarter of fiscal 2025, Spectrum Brands exceeded the Zacks Consensus Estimate for earnings per share (EPS), with a year-over-year revenue increase of 1.2% and a significant EPS growth of 61.9% [2][6]. - Organic revenues improved by 1.9% during the reported quarter, indicating a positive trend in sales performance [2]. Growth Drivers - The company's revenue growth is attributed to brand-focused investments and e-commerce expansion, with the Home and Personal Care (HPC) division experiencing one of its best first quarters in recent history due to a strong holiday season [3][4]. - E-commerce sales contributed over 30% to global HPC revenues, with expectations for continued growth in digital sales outpacing brick-and-mortar sales throughout fiscal 2025 [4][6]. Cost Management and Pricing Strategy - Spectrum Brands is benefiting from pricing actions, cost efficiencies, and a favorable product mix, which have supported margin growth [5]. - The company has implemented cost-cutting measures, including workforce reductions and lower advertising spending, while managing new U.S. tariffs on imports from China [5][10]. Future Outlook - For fiscal 2025, Spectrum Brands anticipates low-single-digit net sales growth and a mid to high-single-digit rise in adjusted EBITDA, supported by ongoing cost improvements and strategic investments [6][13]. - The Zacks Consensus Estimate for fiscal 2025 implies a 0.5% growth in sales and a 24.6% increase in EPS year-over-year [13]. Stock Performance and Valuation - Despite recent gains, Spectrum Brands' stock has underperformed over the past year, losing 8.7% compared to industry gains of 15.1% and S&P 500 growth of 21.3% [7][9]. - Currently priced at $78.53, the stock is trading at an 18.8% discount from its 52-week high of $96.74 and below its 50-day and 200-day moving averages, indicating bearish sentiment [9][16]. - The stock's forward 12-month P/E ratio of 14.98X is below its five-year median of 17.82X and the S&P 500's average of 22.45X, suggesting potential for upside [16].

Core Viewpoint - Spectrum Brands Holdings Inc. reported a mixed performance in Q1 fiscal 2025, with revenue growth year over year but missing consensus estimates, while earnings exceeded expectations and showed significant year-over-year improvement [1][5]. Financial Performance - Adjusted earnings per share were $1.02, surpassing the Zacks Consensus Estimate of 91 cents, and increased by 61.9% from $0.63 in the same quarter last year [5]. - Net sales grew by 1.2% year over year to $700.2 million, missing the consensus estimate of $702 million, driven by a 1.9% increase in organic net sales [6]. - Gross profit increased by 5.3% year over year to $257.8 million, with a gross margin expansion of 140 basis points to 36.8% [7]. Segment Performance - Home & Personal Care segment sales rose by 1.4% year over year to $348.1 million, with organic sales growth of 3.1% [9]. - Global Pet Care segment sales declined by 6.1% year over year to $260 million, impacted by a strategic pull-forward of $10 million in sales [11]. - Home & Garden segment sales surged by 27.9% year over year to $92.1 million, supported by seasonal inventory builds and an extended fall selling season [13]. Adjusted EBITDA - Adjusted EBITDA from continuing operations decreased by 7.7% year over year to $77.8 million, with a margin contraction of 110 basis points to 11.1% [8]. - Home & Personal Care segment's adjusted EBITDA was flat at $26.7 million, while the adjusted EBITDA margin declined by 10 basis points to 7.7% [10]. - Global Pet Care segment's adjusted EBITDA dropped by 2.3% to $51.5 million, but the adjusted EBITDA margin expanded by 80 basis points to 19.8% [12]. - Home & Garden segment's adjusted EBITDA improved to $9.3 million from a loss of $0.7 million, with a margin expansion of 1110 basis points to 10.1% [14]. Other Financials - As of December 29, 2024, the company had a cash balance of $179.9 million and outstanding debt of $575.1 million, resulting in a net debt of approximately $395.2 million [15]. - In Q1 fiscal 2025, the company repurchased 0.8 million shares for $72.9 million, totaling $1.2 billion in repurchases to date [16]. Future Outlook - For fiscal 2025, the company anticipates low single-digit growth in reported net sales and mid to high single-digit growth in adjusted EBITDA, with adjusted free cash flow expected to be roughly 50% of adjusted EBITDA [17].

Company Overview - Spectrum Brands Holdings, Inc. (NYSE: SPB) is a diversified consumer goods company that has a presence in many households through its products [1]. Business Focus - The company operates in three broad categories, although specific categories are not detailed in the provided text [1]. Research Principles - Grassroots Trading emphasizes providing objective, unbiased, and balanced research, focusing on small- to mid-cap companies while also identifying opportunities in larger companies [1].

Fiscal 2025 First Quarter Earnings Call February 6, 2025 Forward-looking Statements 3 Adjusted EBITDA and Adjusted EBITDA Margin - Adjusted EBITDA and adjusted EBITDA Margin are non-GAAP metrics used by management, which we believe are useful to investors to measure the operational strength and performance of our business. These metrics provide investors additional information about our operating profitability for certain non-cash items, non-routine items we do not expect to continue at the same level in th ...

Financial Data and Key Metrics Changes - Net sales increased by 1.2%, with organic net sales up 1.9% excluding unfavorable foreign exchange impacts [12][40] - Adjusted EBITDA was $77.8 million, a decrease of 7.7% or $6.5 million driven by prior year investment income [43] - Gross profit increased by $12.9 million, with gross margins at 36.8%, up 140 basis points [41] - Operating income improved by $19.7 million to $44.7 million, driven by gross margin improvement and lower operating expenses [42] Business Line Data and Key Metrics Changes - **Global Pet Care (GPC)**: Reported net sales decreased by 6.1%, with organic sales down 6.4% due to a prior quarter's sales pull forward [49][50] - **Home and Garden (H&G)**: Net sales increased by 27.9%, driven by seasonal inventory builds by retailers [62] - **Home and Personal Care (HPC)**: Reported net sales increased by 1.4%, with organic net sales up 3.1% [75] Market Data and Key Metrics Changes - E-commerce sales accounted for over 30% of HPC's quarterly global sales, significantly outpacing brick-and-mortar sales [76] - GPC's e-commerce sales were relatively flat, impacted by a major retailer's capacity issues [55] - Sales in North America for GPC declined low double digits, while EMEA saw mid-single-digit growth [52][78] Company Strategy and Development Direction - The company is focusing on brand-driven investments to drive long-term growth, with increased spending on advertising, marketing, and R&D [19][20] - Strategic investments are being made in e-commerce capabilities to enhance sales growth [20] - The company is moving production out of China to mitigate tariff impacts, with plans to source 35% to 40% of U.S.-bound appliance products outside of China by the end of the fiscal year [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operational performance and the potential for growth despite a dynamic environment influenced by tariffs and foreign exchange headwinds [90][91] - The company expects cautious consumer behavior and is prepared for potential impacts on pricing and inflation [91] - Future sales growth is anticipated to be low single digits, driven by brand-building investments [85] Other Important Information - The company repurchased approximately 800,000 shares during the first quarter, with a total of 2.1 million shares repurchased year-to-date [31][32] - The company maintains a strong balance sheet with net leverage under 1.1 turns, allowing for continued investments and shareholder returns [18][35] Q&A Session Summary Question: How committed are retailers to the garden category this year? - Management noted that retailers show a similar level of commitment as last year, with some incremental off-shelf seasonal space coming to their categories [105][106] Question: Could the delay in the HPC segment be a blessing in disguise? - Management acknowledged the delay but emphasized the importance of improving fundamentals and the potential for higher multiples in the future [116][120] Question: What is the growth rate of the e-commerce business in GPC? - Management indicated that online sales continue to grow double digits, despite some capacity issues with a major retailer [125][126] Question: What are the current thoughts on M&A? - Management is cautious about M&A, focusing on acquiring higher-growing assets while maintaining discipline and patience [145] Question: What actions are being taken to reduce tariff exposure? - Management highlighted that the home and garden business is less impacted by tariffs due to domestic sourcing, while efforts are ongoing to dual-source products in the pet segment [149]

For the quarter ended December 2024, Spectrum Brands (SPB) reported revenue of $700.2 million, up 1.2% over the same period last year. EPS came in at $1.02, compared to $0.78 in the year-ago quarter.The reported revenue represents a surprise of -0.19% over the Zacks Consensus Estimate of $701.54 million. With the consensus EPS estimate being $0.91, the EPS surprise was +12.09%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determi ...

Financial Performance - Net sales for the three-month period ended December 29, 2024, increased to $700.2 million, up from $692.2 million in the same period last year, representing a growth of 1.5%[15] - Gross profit rose to $257.8 million, compared to $244.9 million in the prior year, reflecting an increase of 5.5%[15] - Operating income significantly improved to $44.7 million, up from $25.0 million, marking an increase of 78.8%[15] - Net income from continuing operations was $24.6 million, compared to $17.5 million, which is a year-over-year increase of 40.0%[15] - Basic earnings per share from continuing operations increased to $0.87, up from $0.51, representing a growth of 70.6%[15] - Net income for the three-month period ended December 29, 2024, was $23.8 million, a decrease of 18.5% compared to $29.2 million for the same period in 2023[18] - Comprehensive loss for the three-month period ended December 29, 2024, was $(25.6) million, a significant decline from a comprehensive income of $45.5 million in the same period of 2023[18] - Total segment adjusted EBITDA increased to $87.5 million for the three months ended December 29, 2024, compared to $78.7 million for the same period in 2023, representing an increase of 10.9%[81] - Net income from continuing operations attributable to controlling interest was $24.3 million for the three months ended December 29, 2024, up from $17.4 million in the prior year, reflecting a growth of 39.7%[84] Assets and Liabilities - Total assets decreased to $3,614.6 million as of December 29, 2024, down from $3,842.3 million at the end of the previous quarter[13] - Total liabilities decreased to $1,586.0 million from $1,700.6 million, indicating a reduction of 6.7%[13] - The company’s total shareholders' equity as of December 29, 2024, was $2,028.5 million, a decrease from $2,300.8 million as of December 31, 2023[20] - Total debt as of December 29, 2024, is $575.1 million, a decrease from $577.7 million on September 30, 2024[44] Cash Flow - Cash flows from operating activities from continuing operations showed a net cash used of $(71.9) million for the three-month period ended December 29, 2024, compared to a net cash provided of $18.1 million in the same period of 2023[24] - Total cash, cash equivalents, and restricted cash at the end of the period was $182.0 million, down from $445.4 million at the end of the same period in 2023[24] - The company reported a net cash used by financing activities of $(97.3) million for the three-month period ended December 29, 2024, compared to $(439.8) million in the same period of 2023[24] - Cash flows from operating activities decreased by $90.0 million to $(71.9) million, primarily due to increased working capital needs[116] - Cash flows from investing activities dropped by $139.5 million, attributed to reduced short-term investment activity[117] - Cash flows from financing activities increased by $342.5 million, mainly due to lower debt repayment and share repurchase activity[118] Inventory and Expenses - Inventories increased to $507.4 million from $462.1 million, reflecting a rise of 9.8%[13] - Selling, general & administrative expenses decreased to $213.1 million, representing 30.4% of net sales, down from 31.8% in the prior year[105] - The company reported depreciation expenses of $14.0 million for the three-month period ended December 29, 2024, slightly down from $14.4 million in the same period of 2023[24] - The Company incurred total costs of $4.8 million related to strategic transactions and restructuring initiatives for both December 29, 2024, and December 31, 2023[95] - Exit and disposal costs for the three months ended December 29, 2024, were $0.5 million, primarily related to severance and contract termination[96] Segment Performance - The GPC segment reported net sales of $260.0 million, down from $276.9 million, indicating a decline of about 6.3% year-over-year[76] - The H&G segment experienced a significant increase in net sales, rising to $92.1 million from $72.0 million, reflecting a growth of approximately 27.9%[76] - The HPC segment's net sales remained relatively stable, increasing slightly to $348.1 million from $343.3 million, a growth of about 1.4%[76] - The GPC segment reported adjusted EBITDA of $51.5 million for the three months ended December 29, 2024, slightly down from $52.7 million in the prior year[81] - The H&G segment showed a significant improvement with adjusted EBITDA of $9.3 million for the three months ended December 29, 2024, compared to a loss of $0.7 million in the same period of 2023[81] - The HPC segment maintained adjusted EBITDA at $26.7 million for both periods, indicating stable performance[81] Shareholder Returns - The company declared a dividend of $0.47 per share, an increase from $0.42 per share in the previous year[15] - The company made cash dividend payments of $13.2 million, or $0.47 per share, down from $14.1 million, or $0.42 per share, in the prior year[118] Other Financial Metrics - The effective tax rate for the three-month period ended December 29, 2024, was 32.5%, a decrease from 41.6% for the same period in 2023[67] - Interest expense significantly decreased by 67.7% to $6.2 million from $19.2 million due to reduced debt borrowings[100] - Adjusted EBITDA decreased to $77.8 million for the three months ended December 29, 2024, from $84.3 million in the same period of 2023, a decline of 7.7%[92] - Adjusted EBITDA margin was 11.1% for the three months ended December 29, 2024, down from 12.2% in the prior year[92] Legal and Regulatory Matters - The company is currently evaluating the impact of recently issued accounting standards on its consolidated financial statements, including ASU 2023-07 and ASU 2023-09, which will be effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively[29][31] - The company continues to assess the impact of the OECD's Pillar Two framework, which introduces a global minimum corporate income tax of 15%[68] - The company is actively engaged in litigation related to the Tristar Business acquisition, which has resulted in significant operational challenges and increased costs[72]