Spectrum Brands Holdings — Fiscal 2026 Third Quarter Earnings Summary

Financial Performance

• Net sales increased 7.7% year-over-year to $753.3 million, with organic net sales (excluding favorable foreign exchange) increasing 6.6%.
• Gross profit increased 40.2% to $370.4 million, with gross profit margin expanding 1,140 basis points to 49.2% from 37.8%.
• Operating income decreased 49.2% to $15.9 million from $31.3 million, driven by higher operating expenses.
• Net loss from continuing operations was $20.3 million, a decrease of $40.8 million from the prior year's $20.5 million profit, including a $104.0 million one-time non-cash impairment charge on the HPC business.
• Diluted earnings per share from continuing operations decreased to $(1.11) from $0.83.
• Adjusted EBITDA increased 106.7% to $158.3 million, with adjusted EBITDA margin expanding 1,010 basis points to 21.0%.
• Excluding $60.6 million in IEEPA tariff refunds, Adjusted EBITDA was $97.7 million, an increase of 27.5%.
• Adjusted diluted EPS increased 125.0% to $2.79; excluding tariff refunds, adjusted diluted EPS was $0.89.
• Net debt leverage ended the quarter at 1.02x Adjusted EBITDA.
• Cash balance was $258.9 million with total liquidity of $753.7 million, including $494.8 million in undrawn revolver capacity.
• Total debt outstanding was $633.0 million, resulting in net debt of $374.1 million.

Guidance and Future Outlook

• Updated Fiscal 2026 framework expects net sales to be flat to up low single digits.
• Raised Adjusted EBITDA expectation (excluding tariff refunds) to up mid single digits.
• Maintains expectation for approximately 50% conversion of Adjusted EBITDA to Adjusted Free Cash Flow (excluding favorable tariff refunds).
• Long-term target net leverage ratio remains 2.0 to 2.5 times.

Business Segments and Product Lines

• Global Pet Care (GPC): Net sales increased 3.3% to $263.7 million; organic sales up 2.9%. Adjusted EBITDA increased 91.8% to $84.4 million (margin 32.0%). Companion Animal sales grew mid single digits, while Aquatics decreased mid single digits. North American sales increased, while EMEA organic sales decreased due to strategic order acceleration ahead of ERP implementation.
• Home & Garden (H&G): Net sales increased 19.0% to $225.2 million, with organic sales up 19.1%, driven by favorable weather and market share gains. Adjusted EBITDA increased 30.6% to $50.4 million (margin 22.4%).
• Home & Personal Care (HPC): Net sales increased 3.6% to $264.4 million; organic sales up 1.1%. Personal Care sales grew mid teens, while Home Appliances decreased mid single digits. North American sales declined mid single digits due to softness in Home Appliances and exiting the DRTV business. Adjusted EBITDA increased 480.0% to $40.6 million (margin 15.4%).

Market and Competitive Landscape

• Key brands in Global Pet Care and Home & Garden continued to outperform the market.
• Home & Personal Care performance in North America is impacted by soft consumer demand, though signs of stabilization are emerging.
• Latin American brands in Home & Personal Care continue to perform well.
• Home & Personal Care sales face increased competition in both Home Appliances and Personal Care categories.

Risks and Challenges

• HPC business impacted by higher tariff costs and investment spend.
• Home & Personal Care North American sales impacted by exiting the DRTV business and softness in certain brands.
• EMEA organic sales in Global Pet Care impacted by strategic acceleration of retailer orders into the second quarter.
• Future risks include macroeconomic conditions, trade policy changes, supply chain disruptions, and geopolitical conflicts.

Management Commentary and Tone

• Chairman and CEO David Maura expressed pleasure with results, noting all three businesses delivered top-line growth and Adjusted EBITDA growth.
• Management highlighted that earnings strength was driven by operational execution and business fundamentals independent of tariff refunds.
• Noted the completion of the first SAP S/4 HANA deployment in Home & Personal Care and implementation across remaining Global Pet Care and Home & Garden entities, with HPC EMEA implementation expected later in the year to unify the ERP platform.
• Stated that tariff refunds represent a recovery of prior losses to be reinvested for long-term health.

Other Key Points

• A one-time non-cash impairment charge of $104.0 million was recorded on the HPC business related to the recent Oaktree investment.
• IEEPA tariff refunds totaled $60.6 million, contributing $1.90 net of tax to adjusted diluted EPS.
• The company completed the first SAP S/4 HANA deployment within the Home & Personal Care business.
• Nine-month net cash provided by operating activities was $160.9 million.
• Nine-month adjusted free cash flow was $136.1 million.
• Treasury stock purchases for the nine-month period totaled $58.2 million.
• Dividends paid to shareholders for the nine-month period were $32.6 million.