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Mar 31, 2024
Spectrum Brands Q2 2024 Earnings Report
Spectrum Brands' financial performance improved significantly, driven by gross margin expansion and strategic initiatives.
Key Takeaways
Spectrum Brands Holdings reported a decrease in net sales by 1.5%, but a significant improvement in net income and adjusted EBITDA. The company is updating its fiscal 2024 earnings framework to expect net sales to be relatively flat and adjusted EBITDA to grow in the low double-digits, excluding investment income.
Net sales decreased by 1.5%, influenced by lower consumer demand in home appliances and aquatics, alongside SKU rationalizations.
Net income from continuing operations increased by $124.9 million, reaching $49.9 million.
Adjusted EBITDA improved by $61.3 million to $112.3 million, or $95.3 million excluding investment income.
The company repurchased 1.2 million shares in Q2 for $98 million and entered into a new long-term Black & Decker license agreement.
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 net sales to be relatively flat compared to the prior year and, excluding investment income, adjusted EBITDA to grow low double-digits.
Positive Outlook
- Net sales expected to be relatively flat to Fiscal 2023.
- Adjusted EBITDA, excluding investment income, 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.
- Pursuing a strategic alternative for HPC via a sale, joint venture or spin later this year.
- Entered into a new agreement with Stanley Black & Decker to license the Black & Decker name through the end of calendar 2035.
Challenges Ahead
- Net sales decreased by 1.5% due to lower consumer demand.
- Global companion animal sales were relatively flat, despite the impact of exiting non-strategic and lower-profit SKUs.
- Sales in the Cleaning category also declined, as consumer demand for certain product lines within this category remain soft compared to COVID demand levels.
- The decrease in net sales is primarily due to sales declines in small Kitchen Appliances.
- Increased investments in advertising and marketing.
Revenue & Expenses
Visualization of income flow from segment revenue to net income