Executive Summary & Highlights 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 negotiations3 - 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 202535 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 million4 Consolidated Financial Performance 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 Care7 - 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 EBITDA12 Segment Performance 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) 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 weakness8 Home & Garden (H&G) 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 orders10 Home & Personal Care (HPC) 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-digits13 Financial Position and Outlook 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 202516 - Due to uncertainty from global trade conditions, tariffs, and soft consumer demand, the company is not providing a Fiscal 2025 earnings framework16 - The company continues to target a long-term net leverage ratio of 2.0 - 2.5 times16 Financial Statements 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 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 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 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) 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 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 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 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 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 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, including293031 - 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 customer2930
Spectrum Brands(SPB) - 2025 Q3 - Quarterly Results