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Jan 01, 2023
Spectrum Brands Q1 2023 Earnings Report
Spectrum Brands' financial performance was marked by a decrease in net sales, alongside a net loss from continuing operations, but demonstrated progress in free cash flow generation through inventory reduction.
Key Takeaways
Spectrum Brands Holdings reported a 5.8% decrease in net sales, driven by lower replenishment orders and unfavorable foreign currency, but offset by positive pricing adjustments. The company experienced a net loss from continuing operations of $40.0 million. However, the company is focused on free cash flow generation, reducing inventory by $65 million in the first quarter. They expect to collect $4.3 billion upon completion of the sale of HHI, anticipated by the end of June 2023.
Net sales decreased by 5.8%, influenced by lower replenishment orders and unfavorable foreign exchange rates.
Net loss from continuing operations amounted to $40.0 million.
Adjusted EBITDA reached $39.8 million.
Inventory was reduced by $65 million, showcasing a focus on free cash flow generation.
Spectrum Brands
Spectrum Brands
Spectrum Brands Revenue by Segment
Revenue by Segment
Global Pet Care Revenue
CapyFin.comHome & Garden Revenue
CapyFin.comHome & Personal Care Revenue
CapyFin.com Forward Guidance
Spectrum Brands expects flat net sales for fiscal year 2023, with foreign exchange having a negative impact. Adjusted EBITDA is still expected to increase by low double-digits. The Company is targeting a long-term net leverage ratio of 2.0 - 2.5 times after full deployment of HHI sale proceeds.
Positive Outlook
- Flat reported net sales expected in Fiscal 2023.
- Adjusted EBITDA is expected to increase by low double-digits.
- Targeting a long-term net leverage ratio of 2.0 - 2.5 times after full deployment of HHI sale proceeds.
- Focus on profitability
- Focus on financial discipline and cost management
Challenges Ahead
- Foreign exchange is expected to have a negative impact.
- Continued heavy inventory levels at retail weighing on the volume of products sold during the quarter.
- Challenged by a difficult economic environment.
- Faces lower consumer demand compared to strong COVID related demand growth a year ago.
- EBITDA was also negatively impacted by approximately $25 million from the sales of higher cost inventory accumulated during last year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income