Spectrum Brands Q1 Earnings Beat, Stock Falls on Soft Sales

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].