Spectrum Brands Q3 Earnings & Sales Miss on Soft Segment Performance

Core Insights - Spectrum Brands Holdings Inc. (SPB) reported disappointing third-quarter fiscal 2025 results, with both revenue and earnings falling short of Zacks Consensus Estimates. Although earnings improved year-over-year, sales experienced a decline [1][2]. Financial Performance - Adjusted earnings per share were $1.24, a 9.7% increase from the previous year, but below the expected $1.25. The improvement was mainly due to lower interest expenses, reduced tax liabilities, and a smaller share count, though offset by declines in operating and investment income [2]. - Net sales fell 10.2% year-over-year to $699.6 million, missing the consensus estimate of $739 million. Organic sales dropped 11.1%, excluding a $6.8 million positive impact from foreign exchange rates. The decline was attributed to temporary shipment pauses, tariff-related supply constraints, and softness in the Global Pet Care and Home & Personal Care categories [3]. - Gross profit decreased 12.8% year-over-year to $264.1 million, influenced by lower sales volume, an unfavorable product mix, inflationary pressures, and higher tariffs. The gross margin contracted by 110 basis points to 37.8% [4]. - Adjusted EBITDA from continuing operations fell 27.9% year-over-year to $76.6 million, with the adjusted EBITDA margin contracting 270 basis points to 10.9% [5]. Segment Performance - The Home & Personal Care segment saw sales decline 10.8% year-over-year to $255.2 million, with organic net sales down 11.4%. The decline was driven by weaker consumer sentiment and temporary shipment pauses during tariff negotiations [7]. - In the EMEA region, organic net sales fell in the low-double digits, while North America experienced a low 20% decline, particularly in the Personal Care category. Conversely, LATAM showed growth with organic net sales rising in the low-double digits [8]. - The Global Pet Care segment's sales decreased 9.6% year-over-year, with organic net sales down 11.4%. The decline was due to temporary shipment halts and supply constraints [10]. - The Home & Garden segment's sales dropped 10.3% year-over-year to $189.2 million, affected by unfavorable seasonal weather [14]. Financial Position - As of June 29, 2025, SPB had a cash balance of $122 million and outstanding debt of $681.1 million. The company reported total liquidity of $510.5 million, with a net debt of $559.1 million [16]. - In Q3, SPB repurchased 0.9 million shares for $54.4 million, totaling 17.1 million shares repurchased since the close of HHI, amounting to $1.3 billion [17]. Outlook - The company has suspended its fiscal 2025 earnings outlook due to increased uncertainty from global trade conditions and evolving tariff policies. However, it reaffirmed a target of generating $160 million in free cash flow for fiscal 2025 [18].