Spectrum Brands Misses on Q2 Earnings, Suspends View on Tariffs Woes

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]