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SPB Q4 Earnings Miss Estimates, Organic Sales Increase 4.8% Y/Y
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Spectrum Brands Holdings Inc. (SPB - Free Report) reported fourth-quarter fiscal 2024 results, wherein the top line surpassed the Zacks Consensus Estimate but the bottom line missed. While sales increased year over year, earnings dipped.
SPB’s shares fell more than 8% in trading hours today on soft earnings results in the reported quarter. Shares of this Zacks Rank #4 (Sell) company have lost 2.9% in the past three months against the industry's 1.3% rise.
The company’s businesses reverted to growth in the second half of the fiscal year despite the tough economic and geopolitical conditions hurting consumer demand. It is focused on boosting top-line growth through commercial investments. It has been significantly investing in brand-focused advertising, marketing and innovation.
SPB’s Q4 Highlights
SPB reported adjusted earnings of 97 cents per share, which lagged the Zacks Consensus Estimate of $1.13. The figure decreased 13.4% from the year-ago quarter’s adjusted earnings of $1.12 a share, mainly attributable to lower adjusted EBITDA, which was offset by decreased interest expenses and share count.
Spectrum Brands' net sales grew 4.5% year over year to $773.7 million and surpassed the consensus estimate of $740 million. The increase was due to an organic net sales rise of 4.8%, excluding the foreign currency impacts of $2.7 million. Sales rose in all segments with increased volumes in GPC, backed by favorable weather leading to an extended season and better retailer inventory health in H&G, as well as higher global sales across the Home Appliance and Personal Care categories in HPC.
Spectrum Brands Holdings Inc. Price, Consensus and EPS Surprise
The gross profit advanced 17.8% year over year to $288 million, backed by productivity, operational efficiencies and inventory-related efforts, partly offset by ocean freight inflation. Meanwhile, the gross margin expanded 420 bps year over year to 37.2%.
Adjusted EBITDA from continuing operations decreased 38.2% year over year to $68.9 million, due to $32.5 million of lower investment income and $25.9 million of higher brand-related investments, compensated by higher gross profit. The adjusted EBITDA margin contracted 620 bps year over year to 8.9%.
Spectrum Brands’ Segmental Performance
Sales in the Home & Personal Care segment jumped 4.1% year over year to $336.3 million due to organic sales growth of 5.4%, excluding unfavorable foreign currency impacts of $4.4 million. Organic sales were aided by mid-single digit growth in the Home and Personal Care categories. Sales volumes in each category were supported by higher promotional activity.
The segment's adjusted EBITDA dipped 6.4% year over year to $19 million, while the adjusted EBITDA margin declined 70 bps to 5.6% due to increased brand-related investments, elevated freight costs and unfavorable mix, somewhat offset by increased sales and cost-improvement efforts.
The Global Pet Care segment's sales were up 3.5% year over year to $302.5 million, backed by organic sales growth of 2.9%, excluding favorable foreign currency impacts of $1.7 million. Higher sales in Companion Animal were offset by sluggishness in Aquatics. Sales rose on higher volumes and favorable foreign currency.
The segment's adjusted EBITDA fell 17.2% year over year to $44.3 million, while the adjusted EBITDA margin contracted 370 bps to 14.6%.
The Home & Garden segment's sales climbed 7.7% year over year to $134.9 million, mainly backed by higher volumes and increased sales in the Controls, Household and Repellents categories, somewhat offset by decreases in the Cleaning category.
The segment's adjusted EBITDA of $43.3 million dropped 9.5% from the year-ago quarter, while the adjusted EBITDA margin declined 270 bps to 14.1%.
Spectrum Brands’ Other Financials
As of Sept. 30, 2024, the company had a cash balance of $368.9 million and an outstanding debt of $578 million, including $496 million of senior unsecured notes and $82 million of finance leases. Spectrum Brands had a total liquidity of $860 million, comprising the undrawn capacity on its cash flow revolver. It exited the quarter with a net debt of about $209 million.
In fiscal 2024, SPB returned $482.7 million to its shareholders via share repurchases. The company had roughly $402.7 million remaining on its refreshed share-repurchase authorization at the end of fiscal 2024.
What to Expect From SPB in Fiscal 2025?
For fiscal 2025, Spectrum Brands anticipates low single-digit increase in reported net sales and mid to high single-digit rise in adjusted EBITDA. Adjusted free cash flow is likely to be roughly 50% of adjusted EBITDA .
Management targets a long-term net leverage ratio of 2.0-2.5 times.
Stocks to Consider
We have highlighted three better-ranked stocks, namely, Planet Fitness (PLNT - Free Report) , Gildan Activewear (GIL - Free Report) and Royal Caribbean (RCL - Free Report) .
Planet Fitness has a trailing four-quarter earnings surprise of 7.8%, on average. The Zacks Consensus Estimate for PLNT’s current financial-year sales indicates growth of 8.9% from the year-ago figure.
Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.
The consensus estimate for Gildan Activewear’s current financial-year earnings per share (EPS) indicates growth of 15.6% from the year-ago figure.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 16.2%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.6% and 71.6%, respectively, from the year-ago levels.
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SPB Q4 Earnings Miss Estimates, Organic Sales Increase 4.8% Y/Y
Spectrum Brands Holdings Inc. (SPB - Free Report) reported fourth-quarter fiscal 2024 results, wherein the top line surpassed the Zacks Consensus Estimate but the bottom line missed. While sales increased year over year, earnings dipped.
SPB’s shares fell more than 8% in trading hours today on soft earnings results in the reported quarter. Shares of this Zacks Rank #4 (Sell) company have lost 2.9% in the past three months against the industry's 1.3% rise.
The company’s businesses reverted to growth in the second half of the fiscal year despite the tough economic and geopolitical conditions hurting consumer demand. It is focused on boosting top-line growth through commercial investments. It has been significantly investing in brand-focused advertising, marketing and innovation.
SPB’s Q4 Highlights
SPB reported adjusted earnings of 97 cents per share, which lagged the Zacks Consensus Estimate of $1.13. The figure decreased 13.4% from the year-ago quarter’s adjusted earnings of $1.12 a share, mainly attributable to lower adjusted EBITDA, which was offset by decreased interest expenses and share count.
Spectrum Brands' net sales grew 4.5% year over year to $773.7 million and surpassed the consensus estimate of $740 million. The increase was due to an organic net sales rise of 4.8%, excluding the foreign currency impacts of $2.7 million. Sales rose in all segments with increased volumes in GPC, backed by favorable weather leading to an extended season and better retailer inventory health in H&G, as well as higher global sales across the Home Appliance and Personal Care categories in HPC.
Spectrum Brands Holdings Inc. Price, Consensus and EPS Surprise
Spectrum Brands Holdings Inc. price-consensus-eps-surprise-chart | Spectrum Brands Holdings Inc. Quote
The gross profit advanced 17.8% year over year to $288 million, backed by productivity, operational efficiencies and inventory-related efforts, partly offset by ocean freight inflation. Meanwhile, the gross margin expanded 420 bps year over year to 37.2%.
Adjusted EBITDA from continuing operations decreased 38.2% year over year to $68.9 million, due to $32.5 million of lower investment income and $25.9 million of higher brand-related investments, compensated by higher gross profit. The adjusted EBITDA margin contracted 620 bps year over year to 8.9%.
Spectrum Brands’ Segmental Performance
Sales in the Home & Personal Care segment jumped 4.1% year over year to $336.3 million due to organic sales growth of 5.4%, excluding unfavorable foreign currency impacts of $4.4 million. Organic sales were aided by mid-single digit growth in the Home and Personal Care categories. Sales volumes in each category were supported by higher promotional activity.
The segment's adjusted EBITDA dipped 6.4% year over year to $19 million, while the adjusted EBITDA margin declined 70 bps to 5.6% due to increased brand-related investments, elevated freight costs and unfavorable mix, somewhat offset by increased sales and cost-improvement efforts.
The Global Pet Care segment's sales were up 3.5% year over year to $302.5 million, backed by organic sales growth of 2.9%, excluding favorable foreign currency impacts of $1.7 million. Higher sales in Companion Animal were offset by sluggishness in Aquatics. Sales rose on higher volumes and favorable foreign currency.
The segment's adjusted EBITDA fell 17.2% year over year to $44.3 million, while the adjusted EBITDA margin contracted 370 bps to 14.6%.
The Home & Garden segment's sales climbed 7.7% year over year to $134.9 million, mainly backed by higher volumes and increased sales in the Controls, Household and Repellents categories, somewhat offset by decreases in the Cleaning category.
The segment's adjusted EBITDA of $43.3 million dropped 9.5% from the year-ago quarter, while the adjusted EBITDA margin declined 270 bps to 14.1%.
Spectrum Brands’ Other Financials
As of Sept. 30, 2024, the company had a cash balance of $368.9 million and an outstanding debt of $578 million, including $496 million of senior unsecured notes and $82 million of finance leases. Spectrum Brands had a total liquidity of $860 million, comprising the undrawn capacity on its cash flow revolver. It exited the quarter with a net debt of about $209 million.
In fiscal 2024, SPB returned $482.7 million to its shareholders via share repurchases. The company had roughly $402.7 million remaining on its refreshed share-repurchase authorization at the end of fiscal 2024.
What to Expect From SPB in Fiscal 2025?
For fiscal 2025, Spectrum Brands anticipates low single-digit increase in reported net sales and mid to high single-digit rise in adjusted EBITDA. Adjusted free cash flow is likely to be roughly 50% of adjusted EBITDA .
Management targets a long-term net leverage ratio of 2.0-2.5 times.
Stocks to Consider
We have highlighted three better-ranked stocks, namely, Planet Fitness (PLNT - Free Report) , Gildan Activewear (GIL - Free Report) and Royal Caribbean (RCL - Free Report) .
Planet Fitness (PLNT - Free Report) , the leading franchisors and operators of fitness centers, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Planet Fitness has a trailing four-quarter earnings surprise of 7.8%, on average. The Zacks Consensus Estimate for PLNT’s current financial-year sales indicates growth of 8.9% from the year-ago figure.
Gildan Activewear, a manufacturer of premium quality branded basic activewear, carries a Zacks Rank #2 (Buy) at present. GIL has a trailing four-quarter earnings surprise of 5.4%, on average.
The consensus estimate for Gildan Activewear’s current financial-year earnings per share (EPS) indicates growth of 15.6% from the year-ago figure.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 16.2%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.6% and 71.6%, respectively, from the year-ago levels.