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Spectrum Brands' Q4 Earnings Beat Estimates on Margin Gains
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Key Takeaways
SPB's Q4 adjusted earnings fell 46.7% to $1.39 per share but topped estimates; sales declined 2.8%.
Gross margin expanded 260 basis points to 37.6%, while adjusted EBITDA rose 10.3% to $69.9 million.
SPB expects fiscal 2027 sales and adjusted EBITDA to remain flat or grow in the low-single digits.
Spectrum Brands Holdings, Inc. (SPB - Free Report) reported mixed fourth-quarter fiscal 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues fell short. Both the top and bottom lines declined year over year, reflecting softer demand and reduced income tax benefits.
SPB posted adjusted earnings from continuing operations of $1.39 per share, declining 46.7% from $2.61 in the year-ago quarter but surpassing the Zacks Consensus Estimate of 83 cents.
Net sales decreased 2.8% year over year to $713.2 million, missing the Zacks Consensus Estimate of $721 million.
Spectrum Brands Holdings Inc. Price, Consensus and EPS Surprise
Spectrum Brands' organic net sales declined 3.1%, excluding $2.7 million of favorable foreign exchange. The decline was primarily due to unfavorable weather conditions and elevated retailer inventory levels in Home & Garden, alongside softness in Aquatics and Home Appliances.
Gross profit increased 4.6% year over year to $268.4 million, while gross margin expanded 260 basis points to 37.6%. Pricing, lower trade spending, reduced tariff rates and cost-improvement initiatives supported profitability, partially offset by lower sales volumes.
Operating expenses increased 7.4% to $244 million, primarily reflecting higher investment spending. Adjusted EBITDA increased 10.3% to $69.9 million. Excluding $3.2 million of costs associated with reinvesting tariff refund proceeds, adjusted EBITDA rose 15.3% to $73.1 million from $63.4 million in the prior-year quarter. Improved gross margins supported profitability despite lower volumes and higher operating expenses.
Spectrum Brands' Global Pet Care Faces Sales Pressure
Global Pet Care sales declined 1.5% year over year to $293.5 million, while organic net sales decreased 1.1%. Companion Animal sales increased in the low-single digits, whereas Aquatics sales declined in the low-double digits. The metric missed the Zacks Consensus Estimate of $300 million.
North American sales increased in the low-single digits, supported by Companion Animal growth and market share gains across key brands. EMEA organic sales declined in the mid-single digits, as Companion Animal faced a difficult year-ago comparison and Aquatics remained affected by category weakness in key markets.
Excluding tariff refund impacts, adjusted EBITDA decreased $1.4 million to $48.2 million, while the adjusted EBITDA margin contracted 20 basis points to 16.4%. Lower volumes and increased investment spending weighed on profitability, partially offset by pricing, favorable mix and cost improvements. The metric missed the Zacks Consensus Estimate of $52 million.
SPB's Home & Garden Hurt by Unfavorable Weather
Home & Garden sales decreased 9.3% year over year to $126.3 million, with organic net sales declining at the same rate. Unfavorable weather and elevated retailer inventories reduced replenishment orders, while a double-digit decline in the controls category weighed heavily on sales. The metric missed the Zacks Consensus Estimate of $137 million.
Despite softer demand, Spectracide, Hot Shot and Repel gained market share. The Rejuvenate PowerMax Multi-Surface Spray Mop launch also contributed to sales growth in the cleaning category.
Adjusted EBITDA declined 21.3% to $13.3 million, while the adjusted EBITDA margin contracted 160 basis points to 10.5%. Lower volumes weighed on profitability, partially offset by productivity improvements and expense management. The metric missed the Zacks Consensus Estimate of $19.1 million.
Spectrum Brands' Home & Personal Care Margins Improve
Home & Personal Care sales declined 0.9% year over year to $293.4 million, missing the Zacks Consensus Estimate of $296 million, while organic net sales decreased 2.3%. Personal Care sales remained flat, while Home Appliances sales declined in the low single digits.
EMEA organic sales increased in the low-single digits, aided by approximately $7 million of retailer orders brought forward ahead of the regional SAP S/4HANA rollout. North American sales declined in the low-double digits, reflecting distribution losses in Home Appliances and intensifying competition in Personal Care. Latin American organic sales increased in the mid-single digits.
Excluding tariff refund impacts, adjusted EBITDA increased $10 million to $25.7 million, surpassing the Zacks Consensus Estimate of $17.6 million, while the adjusted EBITDA margin expanded 350 basis points to 8.8%. Reduced tariff rates, operational efficiencies and favorable foreign exchange supported profitability, partially offset by lower volumes.
SPB's Liquidity Position Remains Strong
Spectrum Brands exited fiscal 2026 with cash and cash equivalents of $339.9 million and total liquidity of $836.2 million, including $496.3 million of available revolving credit capacity.
Total outstanding debt was $629.8 million, comprising $496.1 million of senior unsecured notes, $73.7 million of finance leases and a $60 million Home & Personal Care term loan. Net debt stood at $289.9 million.
For fiscal 2026, adjusted free cash flow reached $247.3 million. Excluding $59.1 million of tariff refunds, adjusted free cash flow was $188.2 million, reflecting disciplined working capital management.
Spectrum Brands expects fiscal 2027 net sales to remain flat or increase in the low-single digits. Global Pet Care and Home & Garden are expected to deliver growth, while Home & Personal Care sales are projected to remain relatively flat.
The company anticipates approximately $80 million of incremental input cost inflation, driven by higher transportation, fuel, commodity and labor costs. Management expects selective pricing actions, reduced tariff rates and cost-improvement initiatives to offset these pressures.
Adjusted EBITDA is expected to remain flat or increase in the low-single digits compared with fiscal 2026 results adjusted to exclude the one-time tariff refund benefit. Adjusted free cash flow is expected to represent approximately 50% of adjusted EBITDA.
In the past three months, this Zacks Rank #4 (Sell) company’s shares have lost 2.4% against the???industry’s 0.6% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
ACCO Brands Corporation (ACCO - Free Report) is a global consumer and business products company that designs, manufactures and markets office, school, technology and workspace products. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ACCO Brands’ current fiscal-year sales and earnings suggests growth of 4.5% and 16.7%, respectively, from the year-ago actuals. ACCO delivered a trailing four-quarter average earnings surprise of 48.7%.
SharkNinja, Inc. (SN - Free Report) is a global product design and technology company focused on small household appliances. It also carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for SharkNinja’s current fiscal-year sales and earnings indicates growth of 18.9% and 25.4%, respectively, from the year-ago actuals. SN delivered a trailing four-quarter average earnings surprise of 13.7%.
The RealReal, Inc. (REAL - Free Report) operates an online marketplace for consigned luxury goods. It offers resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products. The company also holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for RealReal’s current fiscal-year earnings and sales indicates growth of 16.9% and 200%, respectively, from the year-ago actuals. REAL delivered a trailing four-quarter average negative earnings surprise of 50%.
View the Zacks #1 Rank List
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Spectrum Brands' Q4 Earnings Beat Estimates on Margin Gains
Key Takeaways
Spectrum Brands Holdings, Inc. (SPB - Free Report) reported mixed fourth-quarter fiscal 2026 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues fell short. Both the top and bottom lines declined year over year, reflecting softer demand and reduced income tax benefits.
SPB posted adjusted earnings from continuing operations of $1.39 per share, declining 46.7% from $2.61 in the year-ago quarter but surpassing the Zacks Consensus Estimate of 83 cents.
Net sales decreased 2.8% year over year to $713.2 million, missing the Zacks Consensus Estimate of $721 million.
Spectrum Brands Holdings Inc. Price, Consensus and EPS Surprise
Spectrum Brands Holdings Inc. price-consensus-eps-surprise-chart | Spectrum Brands Holdings Inc. Quote
SPB Benefits From Improved Gross Margins
Spectrum Brands' organic net sales declined 3.1%, excluding $2.7 million of favorable foreign exchange. The decline was primarily due to unfavorable weather conditions and elevated retailer inventory levels in Home & Garden, alongside softness in Aquatics and Home Appliances.
Gross profit increased 4.6% year over year to $268.4 million, while gross margin expanded 260 basis points to 37.6%. Pricing, lower trade spending, reduced tariff rates and cost-improvement initiatives supported profitability, partially offset by lower sales volumes.
Operating expenses increased 7.4% to $244 million, primarily reflecting higher investment spending. Adjusted EBITDA increased 10.3% to $69.9 million. Excluding $3.2 million of costs associated with reinvesting tariff refund proceeds, adjusted EBITDA rose 15.3% to $73.1 million from $63.4 million in the prior-year quarter. Improved gross margins supported profitability despite lower volumes and higher operating expenses.
Spectrum Brands' Global Pet Care Faces Sales Pressure
Global Pet Care sales declined 1.5% year over year to $293.5 million, while organic net sales decreased 1.1%. Companion Animal sales increased in the low-single digits, whereas Aquatics sales declined in the low-double digits. The metric missed the Zacks Consensus Estimate of $300 million.
North American sales increased in the low-single digits, supported by Companion Animal growth and market share gains across key brands. EMEA organic sales declined in the mid-single digits, as Companion Animal faced a difficult year-ago comparison and Aquatics remained affected by category weakness in key markets.
Excluding tariff refund impacts, adjusted EBITDA decreased $1.4 million to $48.2 million, while the adjusted EBITDA margin contracted 20 basis points to 16.4%. Lower volumes and increased investment spending weighed on profitability, partially offset by pricing, favorable mix and cost improvements. The metric missed the Zacks Consensus Estimate of $52 million.
SPB's Home & Garden Hurt by Unfavorable Weather
Home & Garden sales decreased 9.3% year over year to $126.3 million, with organic net sales declining at the same rate. Unfavorable weather and elevated retailer inventories reduced replenishment orders, while a double-digit decline in the controls category weighed heavily on sales. The metric missed the Zacks Consensus Estimate of $137 million.
Despite softer demand, Spectracide, Hot Shot and Repel gained market share. The Rejuvenate PowerMax Multi-Surface Spray Mop launch also contributed to sales growth in the cleaning category.
Adjusted EBITDA declined 21.3% to $13.3 million, while the adjusted EBITDA margin contracted 160 basis points to 10.5%. Lower volumes weighed on profitability, partially offset by productivity improvements and expense management. The metric missed the Zacks Consensus Estimate of $19.1 million.
Spectrum Brands' Home & Personal Care Margins Improve
Home & Personal Care sales declined 0.9% year over year to $293.4 million, missing the Zacks Consensus Estimate of $296 million, while organic net sales decreased 2.3%. Personal Care sales remained flat, while Home Appliances sales declined in the low single digits.
EMEA organic sales increased in the low-single digits, aided by approximately $7 million of retailer orders brought forward ahead of the regional SAP S/4HANA rollout. North American sales declined in the low-double digits, reflecting distribution losses in Home Appliances and intensifying competition in Personal Care. Latin American organic sales increased in the mid-single digits.
Excluding tariff refund impacts, adjusted EBITDA increased $10 million to $25.7 million, surpassing the Zacks Consensus Estimate of $17.6 million, while the adjusted EBITDA margin expanded 350 basis points to 8.8%. Reduced tariff rates, operational efficiencies and favorable foreign exchange supported profitability, partially offset by lower volumes.
SPB's Liquidity Position Remains Strong
Spectrum Brands exited fiscal 2026 with cash and cash equivalents of $339.9 million and total liquidity of $836.2 million, including $496.3 million of available revolving credit capacity.
Total outstanding debt was $629.8 million, comprising $496.1 million of senior unsecured notes, $73.7 million of finance leases and a $60 million Home & Personal Care term loan. Net debt stood at $289.9 million.
For fiscal 2026, adjusted free cash flow reached $247.3 million. Excluding $59.1 million of tariff refunds, adjusted free cash flow was $188.2 million, reflecting disciplined working capital management.
Spectrum Brands Projects Modest Fiscal 2027 Growth
Spectrum Brands expects fiscal 2027 net sales to remain flat or increase in the low-single digits. Global Pet Care and Home & Garden are expected to deliver growth, while Home & Personal Care sales are projected to remain relatively flat.
The company anticipates approximately $80 million of incremental input cost inflation, driven by higher transportation, fuel, commodity and labor costs. Management expects selective pricing actions, reduced tariff rates and cost-improvement initiatives to offset these pressures.
Adjusted EBITDA is expected to remain flat or increase in the low-single digits compared with fiscal 2026 results adjusted to exclude the one-time tariff refund benefit. Adjusted free cash flow is expected to represent approximately 50% of adjusted EBITDA.
In the past three months, this Zacks Rank #4 (Sell) company’s shares have lost 2.4% against the???industry’s 0.6% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
ACCO Brands Corporation (ACCO - Free Report) is a global consumer and business products company that designs, manufactures and markets office, school, technology and workspace products. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ACCO Brands’ current fiscal-year sales and earnings suggests growth of 4.5% and 16.7%, respectively, from the year-ago actuals. ACCO delivered a trailing four-quarter average earnings surprise of 48.7%.
SharkNinja, Inc. (SN - Free Report) is a global product design and technology company focused on small household appliances. It also carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for SharkNinja’s current fiscal-year sales and earnings indicates growth of 18.9% and 25.4%, respectively, from the year-ago actuals. SN delivered a trailing four-quarter average earnings surprise of 13.7%.
The RealReal, Inc. (REAL - Free Report) operates an online marketplace for consigned luxury goods. It offers resale product categories, including women's, men's, kids', jewelry and watches, as well as home and art products. The company also holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for RealReal’s current fiscal-year earnings and sales indicates growth of 16.9% and 200%, respectively, from the year-ago actuals. REAL delivered a trailing four-quarter average negative earnings surprise of 50%.