[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Q3 FY2025 net sales declined 10.2% due to tariffs and soft demand, with increased net income and reaffirmed free cash flow - The company's Q3 results were significantly impacted by a **145% tariff** on Chinese imports, which led to a temporary halt in purchases from China and stop shipments to retailers during price negotiations[3](index=3&type=chunk) - Management has taken corrective actions, including diversifying the supply base, implementing initial pricing adjustments to counter tariffs, and achieving over **$50 million** in cost reductions in fiscal 2025[3](index=3&type=chunk)[5](index=5&type=chunk) Q3 FY2025 Key Performance Indicators (in millions) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $699.6 | -10.2% | | Organic Net Sales | - | -11.1% | | Net Income from Continuing Operations | $20.5 | +$1.4 | | Adjusted EBITDA | $76.6 | -$29.7 | | Free Cash Flow Guidance (FY25) | ~$160 | Reaffirmed | | Shares Repurchased (Q3) | 0.9M shares ($54.4) | - | - The company repurchased **17.1 million** shares for **$1.3 billion** since the HHI divestiture, reducing shares outstanding to **24.2 million**[4](index=4&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Q3 FY2025 consolidated net sales declined 10.2% and Adjusted EBITDA fell 27.9%, with net income from continuing operations increasing Q3 FY2025 Consolidated Financial Results (vs. Q3 FY2024) (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $699.6 | $779.4 | ($79.8) | (10.2)% | | Gross Profit | $264.1 | $302.8 | ($38.7) | (12.8)% | | Gross Margin | 37.8% | 38.9% | (110) bps | - | | Operating Income | $31.3 | $47.7 | ($16.4) | (34.4)% | | Net Income (Continuing Ops) | $20.5 | $19.1 | $1.4 | 7.3% | | Adjusted EBITDA | $76.6 | $106.3 | ($29.7) | (27.9)% | | Adjusted EBITDA Margin | 10.9% | 13.6% | (270) bps | - | | Adjusted EPS (Continuing Ops) | $1.24 | $1.13 | $0.11 | 9.7% | - The net sales decline was primarily attributed to stop shipments during price negotiations, tariff-related supply constraints, and category softness in Global Pet Care and Home & Personal Care[7](index=7&type=chunk) - Adjusted diluted EPS increased to **$1.24**, driven by lower income tax, reduced interest expense, and a reduction in outstanding shares, which offset the impact of lower adjusted EBITDA[12](index=12&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) All three segments saw Q3 FY2025 net sales decline, with GPC and HPC impacted by supply issues and H&G by weather [Global Pet Care (GPC)](index=3&type=section&id=Global%20Pet%20Care%20%28GPC%29) GPC Q3 FY2025 Performance (vs. Q3 FY2024) (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $255.2 | $282.2 | (9.6)% | | Organic Net Sales | - | - | (11.4)% | | Adjusted EBITDA | $44.0 | $56.7 | (22.4)% | | Adjusted EBITDA Margin | 17.2% | 20.1% | (290) bps | - The sales decline was driven by low double-digit drops in both Companion Animal and Aquatics categories. North American sales were hurt by stop shipments, supply constraints from pausing Chinese purchases, and overall category weakness[8](index=8&type=chunk) [Home & Garden (H&G)](index=3&type=section&id=Home%20%26%20Garden%20%28H%26G%29) H&G Q3 FY2025 Performance (vs. Q3 FY2024) (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $189.2 | $211.0 | (10.3)% | | Adjusted EBITDA | $38.6 | $43.3 | (10.9)% | | Adjusted EBITDA Margin | 20.4% | 20.5% | (10) bps | - The 10.3% net sales decrease was primarily caused by unfavorable seasonal weather compared to the prior year, which delayed replenishment orders[10](index=10&type=chunk) [Home & Personal Care (HPC)](index=4&type=section&id=Home%20%26%20Personal%20Care%20%28HPC%29) HPC Q3 FY2025 Performance (vs. Q3 FY2024) (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $255.2 | $286.2 | (10.8)% | | Organic Net Sales | - | - | (11.4)% | | Adjusted EBITDA | $7.0 | $11.8 | (40.7)% | | Adjusted EBITDA Margin | 2.7% | 4.1% | (140) bps | - Sales were negatively impacted by weak consumer sentiment in the US and EMEA, stop shipments during tariff negotiations, and supply constraints. However, LATAM organic net sales grew by low double-digits[13](index=13&type=chunk) [Financial Position and Outlook](index=4&type=section&id=Liquidity%20and%20Debt) Spectrum Brands maintained $510.5 million liquidity and $559.1 million net debt, reaffirmed FY2025 free cash flow, but suspended earnings framework Liquidity and Debt Position (as of June 29, 2025) | Item | Amount (in millions) | | :--- | :--- | | Cash Balance | $122.0 | | Revolver Capacity (undrawn) | $388.5 | | **Total Liquidity** | **$510.5** | | Total Debt Outstanding | $681.1 | | **Net Debt** | **$559.1** | - The company reaffirmed its expectation to generate approximately **$160 million** of free cash flow in Fiscal 2025[16](index=16&type=chunk) - Due to uncertainty from global trade conditions, tariffs, and soft consumer demand, the company is not providing a Fiscal 2025 earnings framework[16](index=16&type=chunk) - The company continues to target a long-term net leverage ratio of **2.0 - 2.5 times**[16](index=16&type=chunk) [Financial Statements](index=11&type=section&id=Financial%20Statements) Unaudited financial statements show lower Q3 revenue and operating income but higher net income from continuing operations, with reduced cash from operations and lower total assets [Condensed Consolidated Statements of Income](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Income Statement Summary - Three Months Ended | (in millions) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net sales | $699.6 | $779.4 | | Gross profit | $264.1 | $302.8 | | Operating income | $31.3 | $47.7 | | Net income from continuing operations | $20.5 | $19.1 | | Net income | $19.7 | $6.0 | [Condensed Consolidated Statements of Cash Flow](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Cash Flow Summary - Nine Months Ended | (in millions) | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32.5 | $81.9 | | Net cash (used) provided by investing activities | ($25.2) | $885.0 | | Net cash used by financing activities | ($245.0) | ($1,563.9) | | Net change in cash | ($245.0) | ($596.2) | [Condensed Consolidated Statements of Financial Position](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Balance Sheet Summary | (in millions) | June 29, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Total current assets | $1,338.9 | $1,578.6 | | Total assets | $3,542.3 | $3,842.3 | | Total current liabilities | $553.1 | $687.1 | | Total liabilities | $1,648.5 | $1,700.6 | | Total equity | $1,893.8 | $2,141.7 | [Supplemental Information (Non-GAAP Reconciliations)](index=14&type=section&id=Supplemental%20Information%20%28Non-GAAP%20Reconciliations%29) This section provides GAAP to non-GAAP reconciliations for organic net sales, Adjusted EBITDA, Adjusted Diluted EPS, and Adjusted Free Cash Flow, enhancing insight into core operational performance [Net Sales and Organic Net Sales](index=14&type=section&id=Net%20Sales%20and%20Organic%20Net%20Sales) Q3 FY2025 Net Sales to Organic Net Sales Reconciliation | (in millions) | Net Sales | FX Effect | Organic Net Sales | YoY Organic Change | | :--- | :--- | :--- | :--- | :--- | | GPC | $255.2 | ($5.3) | $249.9 | (11.4)% | | H&G | $189.2 | $0.1 | $189.3 | (10.3)% | | HPC | $255.2 | ($1.6) | $253.6 | (11.4)% | | **Total** | **$699.6** | **($6.8)** | **$692.8** | **(11.1)%** | [Adjusted EBITDA and Adjusted EBITDA Margin](index=15&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) Q3 FY2025 Net Income to Adjusted EBITDA Reconciliation | (in millions) | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Net income from continuing operations | $20.5 | $19.1 | | Adjustments (Taxes, Interest, D&A, etc.) | $49.8 | $67.8 | | Other Adjustments (Impairment, Restructuring, etc.) | $6.3 | $19.4 | | **Adjusted EBITDA** | **$76.6** | **$106.3** | [Adjusted Diluted EPS](index=16&type=section&id=Adjusted%20Diluted%20EPS) Q3 FY2025 Diluted EPS to Adjusted Diluted EPS Reconciliation | (per share amounts) | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Diluted EPS from continuing operations | $0.83 | $0.66 | | Pre-tax adjustments | $0.65 | $0.68 | | Tax impact of adjustments | ($0.24) | ($0.21) | | **Adjusted Diluted EPS** | **$1.24** | **$1.13** | [Adjusted Free Cash Flow](index=17&type=section&id=Adjusted%20Free%20Cash%20Flow) YTD FY2025 Operating Cash Flow to Adjusted Free Cash Flow | (in millions) | Nine Months Ended June 29, 2025 | | :--- | :--- | | Net cash provided by operating activities | $33.1 | | Purchases of property, plant and equipment | ($25.1) | | **Free cash flow** | **$8.0** | | Adjustments (Deal costs, etc.) | $4.6 | | **Adjusted free cash flow** | **$12.6** | [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section details forward-looking statements and risks, including geopolitical and economic conditions, supplier reliance, tariffs, consumer spending, and supply chain complexities - The report identifies significant risks that could impact future performance, including[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - Economic, social, and political conditions, including the Russia-Ukraine and Israel-Hamas wars - Reliance on third-party suppliers and distributors, especially with government intervention in China - The impact of tariffs, trade policies, inflation, and potential recession on the business - Fluctuations in transportation, fuel, and commodity costs - Loss of or reduced sales to any significant retail customer[29](index=29&type=chunk)[30](index=30&type=chunk)

Company Overview - Spectrum Brands (SPB) is expected to report earnings of $1.25 per share for the quarter ended June 2025, reflecting a year-over-year increase of +13.6% [3] - Revenues are anticipated to be $738.59 million, which represents a decline of 5.2% compared to the same quarter last year [3] Earnings Estimates and Revisions - The consensus EPS estimate has been revised 5.73% higher in the last 30 days, indicating a positive reassessment by analysts [4] - However, the Most Accurate Estimate for Spectrum is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.71%, suggesting a bearish outlook from analysts [12] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of actual earnings deviating from consensus estimates, but it is more reliable for positive readings [9][10] - Spectrum's current Zacks Rank is 3 (Hold), which complicates the prediction of an earnings beat [12] Historical Performance - In the last reported quarter, Spectrum was expected to post earnings of $1.35 per share but only achieved $0.68, resulting in a surprise of -49.63% [13] - Over the past four quarters, Spectrum has only beaten consensus EPS estimates once [14] Industry Comparison - Central Garden (CENTA), a competitor in the Zacks Consumer Products - Discretionary industry, is expected to report earnings of $1.34 per share, with a year-over-year change of +1.5% and revenues of $987.14 million, down 0.9% [18][19] - Central Garden has a higher Earnings ESP of +6.98% and a Zacks Rank of 1 (Strong Buy), indicating a strong likelihood of beating consensus EPS estimates [20]

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)

Financial Data and Key Metrics Changes - In Q2, net sales decreased by 6%, while organic net sales decreased by 4.6% when excluding unfavorable foreign exchange impacts [21][36] - Adjusted EBITDA was $71.3 million, a decline of $24 million compared to the previous year, excluding investment income [23][36] - Gross margins decreased by 60 basis points to 37.5%, driven by lower volume, higher trade promotions, and inflation [23][36] Business Line Data and Key Metrics Changes - Global Pet Care reported a 7.1% decrease in net sales, with organic sales down 6.3%, primarily due to softness in the companion animal and aquatics categories [41][42] - Home and Garden net sales decreased by 5.2%, attributed to timing shifts and retailer inventory builds [47][50] - Home and Personal Care saw a 5.1% decrease in reported net sales, with organic net sales down 2.2% due to softness in North America [54][56] Market Data and Key Metrics Changes - Consumer sentiment in the U.S. weakened, impacting category growth, with consumers seeking value amid economic uncertainty [22][24] - EMEA organic sales for Global Pet Care grew mid-single digits, while North American sales declined low double digits [42][43] - Latin America experienced low double-digit growth in organic net sales, driven by distribution wins and new product launches [57] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and generating free cash flow, targeting approximately $160 million for the year [25][62] - Plans to transition sourcing out of China are underway, with expectations to have minimal exposure by the end of the fiscal year [12][71] - The company aims to leverage its strong balance sheet for potential acquisitions in the pet category, positioning itself as a consolidator in the market [28][67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of maintaining liquidity and a strong balance sheet [19][70] - The company anticipates that the challenges related to tariffs will be resolved in the coming quarters, particularly for the Global Pet Care and Home and Garden segments [70][72] - Management remains optimistic about future growth opportunities despite current economic volatility [74] Other Important Information - The company repurchased approximately 3.2 million shares year-to-date, returning over $1.28 billion to shareholders since the HHI transaction [32][33] - Adjusted diluted EPS decreased to $0.68, driven by lower adjusted EBITDA and operating income [37][60] Q&A Session Summary Question: Any areas where you see yourself competitively advantaged versus your peers given the new landscape? - Management indicated that while the playing field is level, the company's scale and strong brand presence provide a competitive advantage in securing supply outside of China [79][82] Question: How is the company positioned to handle the current tariff situation? - Management highlighted that the company is well-prepared to transition sourcing and expects to have minimal exposure to China in the near future, which is seen as a competitive advantage [79][80]

Financial Data and Key Metrics Changes - In Q2, net sales decreased by 6%, while organic net sales decreased by 4.6% when excluding unfavorable foreign exchange impacts [20][35] - Adjusted EBITDA was $71.3 million, a decline of $24 million compared to the previous year, primarily due to lower sales volumes and increased brand-focused investments [22][36] - Gross margins decreased by 60 basis points to 37.5%, driven by lower volume, higher trade promotions, and inflation [22][35] Business Line Data and Key Metrics Changes - Global Pet Care reported a 7.1% decrease in net sales, with organic sales down 6.3%, affected by softness in both companion animal and aquatics categories [39][46] - Home and Garden net sales decreased by 5.2%, primarily due to timing shifts in retailer inventory builds [46][47] - Home and Personal Care saw a 5.1% decrease in reported net sales, with organic net sales down 2.2%, driven by softness in North America [53][58] Market Data and Key Metrics Changes - Consumer sentiment in the U.S. weakened, impacting category growth, with consumers seeking value amid economic uncertainty [21][22] - EMEA organic sales for Global Pet Care grew mid-single digits, while North American sales declined, particularly in premium segments [42][54] - Latin America experienced low double-digit growth in organic net sales, driven by strong new product launches [56] Company Strategy and Development Direction - The company is focused on protecting its balance sheet and generating free cash flow, targeting approximately $160 million for the year [24][61] - Plans to transition sourcing out of China are underway, with expectations to have 100% of Home and Garden sourced outside of China by the end of the calendar year [71][72] - The company aims to leverage its strong balance sheet for potential acquisitions in the pet category, positioning itself as a consolidator in the market [27][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment and emphasized the importance of maintaining liquidity and a strong balance sheet [18][74] - The company anticipates challenges in the Home and Personal Care segment but expects to emerge stronger due to its strategic initiatives [70][72] - Management highlighted the potential for strategic acquisitions as asset prices reset in the current economic climate [66][73] Other Important Information - The company repurchased approximately 2 million shares during the second quarter, continuing its disciplined approach to share repurchases [30][31] - The company does not have sufficient visibility to provide an earnings framework for fiscal 2025 due to the unpredictable nature of global trade negotiations [32][61] Q&A Session Summary Question: Are there areas where the company sees itself competitively advantaged in sourcing? - Management indicated that while the tariff situation presents challenges, the company is well-positioned to reduce its exposure to China and has a competitive advantage due to its scale and strong relationships with suppliers [80][84] Question: Can the company frame the gross impact of tariffs and mitigation actions? - Management stated that while it is difficult to provide absolute numbers, the company has pivoted its operating strategy and stopped ordering from China, which will mitigate the gross impact of tariffs [88]

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]