Spectrum Brands Holdings Reports Fiscal 2024 Second Quarter Results
MIDDLETON, Wisc. , May 09 /Businesswire/ - Spectrum Brands Holdings, Inc. (NYSE: SPB; “Spectrum Brands” or the “Company”), a leading global branded consumer products and home essentials company focused on driving innovation and providing exceptional customer service, today reported results from continuing operations for the second quarter of fiscal 2024 ended March 31, 2024.
“We are pleased to report a strong second quarter of fiscal 24, building off the operating momentum we drove in our first quarter. Our sales performance improved sequentially and our operations produced a gross margin of 38.1%, an 870 basis point improvement over last year. Our net income increased $124.9 million and our Adjusted EBITDA, excluding investment income, more than doubled to $95.3 million. Net income margins increased to 6.9% and Adjusted EBITDA margins, excluding investment income, nearly doubled to 13.3%. Given our first half performance, and expectations for modest top-line growth in the second half of the year, we are raising our full year Earnings Framework and now expect net sales to be relatively flat and Adjusted EBITDA to grow in the low double-digits,“ said David Maura, Chairman and Chief Executive Officer of Spectrum Brands.
Mr. Maura continued, "I am also happy to announce that we have entered into a new agreement with Stanley Black & Decker to license the Black & Decker name in the same categories and geographies as before through the end of calendar 2027, with two additional four year extensions, providing us with access to the Black & Decker brand name through the end of calendar 2035. This is a significant milestone for us, providing certainty on our future access to this important brand name. Given this and the continued improving financial performance in our Home and Personal Care business (“HPC”), we are continuing to pursue a strategic alternative for HPC via a sale, joint venture or spin later this year. To that end, our internal teams, along with outside advisors, have made significant progress in preparation to launch a multi-track process and we anticipate filing an initial Form 10 spin document this summer."
Fiscal 2024 Second Quarter Highlights |
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|
Three Month Periods Ended |
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|
|
|
||||||||||
(in millions, except per share and %) |
|
March 31, 2024 |
|
April 2, 2023 |
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Variance |
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Net sales |
|
$ |
718.5 |
|
|
$ |
729.2 |
|
|
$ |
(10.7 |
) |
(1.5 |
)% |
|
Gross profit |
|
|
273.4 |
|
|
|
214.5 |
|
|
|
58.9 |
|
27.5 |
% |
|
Gross profit margin |
|
|
38.1 |
% |
|
|
29.4 |
% |
|
|
870 |
|
bps |
||
Operating income (loss) |
|
$ |
75.9 |
|
|
$ |
(77.0 |
) |
|
$ |
152.9 |
|
n/m |
|
|
Net income (loss) from continuing operations |
|
|
49.9 |
|
|
|
(75.0 |
) |
|
|
124.9 |
|
n/m |
|
|
Net income (loss) from continuing operations margin |
|
|
6.9 |
% |
|
|
(10.3 |
)% |
|
|
1,720 |
|
bps |
||
Diluted earnings per share from continuing operations |
|
$ |
1.65 |
|
|
$ |
(1.83 |
) |
|
$ |
3.48 |
|
n/m |
|
|
Non-GAAP Operating Metrics |
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|
|
|
|
|
|
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Adjusted EBITDA from continuing operations |
|
$ |
112.3 |
|
|
$ |
51.0 |
|
|
$ |
61.3 |
|
120.2 |
% |
|
Adjusted EBITDA margin |
|
|
15.6 |
% |
|
|
7.0 |
% |
|
|
860 |
|
bps |
||
Adjusted EPS from continuing operations |
|
$ |
1.62 |
|
|
$ |
(0.14 |
) |
|
$ |
1.76 |
|
n/m |
|
|
n/m = not meaningful |
|
|
|
|
|
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- Net sales decreased 1.5% with a decrease in organic net sales of 1.6%, excluding the impact of $1.2 million of favorable foreign exchange rates. Net sales declined due to lower sales in home appliances, volume declines in Aquatics in North America, and the impact of SKU rationalizations, offset by stronger Controls sales.
- Gross profit and gross profit margin increased from the sale of lower cost inventory, lower inventory-related expenses, favorable mix and cost improvements.
- Operating income increased due to the recognition of a $65 million gain from representation and warranty insurance proceeds, reduced intangible asset impairments, distribution cost favorability, reduced spend on restructuring, optimization and strategic transaction activities and lower factoring charges, offset by increased investments in advertising and marketing.
- Net income from continuing operations and diluted earnings per share increased from the increase in operating income, higher investment income, lower interest costs, and lower share count.
- Adjusted EBITDA increased 120.2% and adjusted EBITDA margin increased 860 basis points attributable to higher gross margins, lower operating expenses and higher investment income, partially offset by the reduction in sales volume.
- Adjusted diluted EPS increased to $1.62 due to higher Adjusted EBITDA and a reduction in outstanding shares.
Fiscal 2024 Second Quarter Segment Level Data |
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Global Pet Care (GPC) |
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Three Month Periods Ended |
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(in millions, except %) |
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March 31, 2024 |
|
April 2, 2023 |
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Variance |
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Net sales |
|
$ |
289.9 |
|
|
$ |
296.7 |
|
|
$ |
(6.8 |
) |
(2.3 |
)% |
|
Segment net income |
|
|
53.0 |
|
|
|
30.2 |
|
|
|
22.8 |
|
75.5 |
% |
|
Segment net income margin |
|
|
18.3 |
% |
|
|
10.2 |
% |
|
|
810 |
|
bps |
||
Adjusted EBITDA |
|
$ |
62.3 |
|
|
$ |
46.3 |
|
|
$ |
16.0 |
|
34.6 |
% |
|
Adjusted EBITDA margin |
|
|
21.5 |
% |
|
|
15.6 |
% |
|
|
590 |
|
bps |
||
Net sales decreased 2.3%, with a decrease in organic net sales of 3.0%, excluding favorable foreign currency impacts of $2.2 million.
The decrease in net sales was driven by the exit of non-strategic and lower-profit SKUs, as well as demand softness in the aquatics category in North America. Global companion animal sales were relatively flat, despite the impact of exiting non-strategic and lower-profit SKUs. North American sales declined due to soft demand in aquatics and the SKU exits. Sales in EMEA increased due to growth in both the Companion Animal and Aquatics categories.
Segment net income, Adjusted EBITDA and margins increased due to lower cost inventory compared to the prior year, favorable product and channel mix, and savings from operational productivity investments. This was partially offset by lower volumes, increased investments in advertising and programming, and FX.
Home & Garden (H&G) |
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|
Three Month Periods Ended |
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|
|
|
|||||||||
(in millions, except %) |
|
March 31, 2024 |
|
April 2, 2023 |
|
Variance |
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Net sales |
|
$ |
160.7 |
|
|
$ |
153.3 |
|
|
$ |
7.4 |
4.8 |
% |
|
Segment net loss |
|
|
(14.6 |
) |
|
|
(39.8 |
) |
|
|
25.2 |
(63.3 |
)% |
|
Segment net loss margin |
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|
(9.1 |
)% |
|
|
(26.0 |
)% |
|
|
1,690 |
bps |
||
Adjusted EBITDA |
|
$ |
29.2 |
|
|
$ |
15.1 |
|
|
$ |
14.1 |
93.4 |
% |
|
Adjusted EBITDA margin |
|
|
18.2 |
% |
|
|
9.8 |
% |
|
|
840 |
bps |
||
Net sales and organic net sales increased 4.8%. The net sales increase was primarily driven by higher sales in the Controls business, where favorable weather trends in key regions drove higher retail POS and acceleration of purchases by retailers, offset by declines in Household Insect Controls and Repellents. 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 improved segment net income, Adjusted EBITDA, and margins were driven by higher sales, manufacturing efficiencies, operational cost reductions from cost improvement initiatives, and favorable mix, offset by increased investments in innovation and advertising. Segment net income was also impacted by lower year-over-year impairment charges.
Home & Personal Care (HPC) |
|||||||||||||||
|
Three Month Periods Ended |
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|
|
|
||||||||||
(in millions, except %) |
|
March 31, 2024 |
|
April 2, 2023 |
|
Variance |
|||||||||
Net sales |
|
$ |
267.9 |
|
|
$ |
279.2 |
|
|
$ |
(11.3 |
) |
(4.0 |
)% |
|
Segment net income (loss) |
|
|
69.3 |
|
|
|
(37.7 |
) |
|
|
107.0 |
|
n/m |
|
|
Segment net income (loss) margin |
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