Spectrum Brands SPB Q1 2026 Earnings Transcript

Core Insights - Fiscal 2025 was challenging, but decisive actions have positioned the company for future growth, with first quarter net sales and adjusted EBITDA exceeding expectations despite ongoing headwinds [1][2] - The company is optimistic about the recovery in consumables, particularly in the global pet care business, which has returned to growth [4][44] - The overall financial results indicate that the company is on track to achieve its growth objectives for fiscal 2026, with expectations for net sales and adjusted EBITDA to show improvement [40][46] Financial Performance - First quarter net sales decreased by 3.3%, with organic net sales down 6%, primarily due to softness in the home and personal care business [16] - Adjusted EBITDA for the quarter was $62.6 million, a decrease of $15.2 million driven by lower volume and reduced gross margins [18] - The company generated nearly $660 million of adjusted free cash flow in the first quarter and repurchased approximately 600,000 shares [5][6] Business Unit Performance - The global pet care business reported an 8.3% increase in net sales, with organic net sales up 5.8%, driven by strong performance in companion animal categories [20][21] - Home and garden business net sales decreased by 19.8%, but the company expects sales to pick up as the season unfolds, with early indications of strong POS trends [27][29] - Home and personal care business saw a reported net sales decrease of 7.6%, with organic net sales down 11.1%, but there are signs of recovery in core markets [32][34] Strategic Initiatives - The company is focused on maintaining a healthy balance sheet and optimizing working capital, ending the first quarter with nearly $127 million in cash and a net leverage of 1.65 turns [9][12] - Strategic priorities for fiscal 2026 include investing in people, operational excellence, and transformation, with a focus on fewer, bigger, better initiatives [7][11] - The company is committed to disciplined expense management and is optimistic about the evolving M&A landscape, particularly in the global pet care and home and garden sectors [46][44] Market Outlook - The company expects net sales growth in the home and garden business to occur in the second half of the fiscal year, with anticipated improvements in consumer demand [41][39] - Adjusted EBITDA is expected to grow in low single digits, driven by the return to sales growth in the global pet care and home and garden businesses [40][46] - The company remains cautious about the home and personal care business, expecting continued softness in consumer demand in the near term [39][57]