Spectrum Brands Beats Q1 Earnings & Sales Estimates, Reaffirms View

Spectrum Brands Holdings Inc. SPB reported strong first-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Earnings improved year over year, while sales declined.SPB’s shares gained 10.2% yesterday, driven by the better-than-expected fiscal first-quarter results. Shares of the Zacks Rank #4 (Sell) company have gained 27.7% year to date compared with the industry's 8.3% growth. Image Source: Zacks Investment Research SPB reported adjusted earnings of $1.40 per share, increasing significantly from $1.02 in the year-ago quarter and surpassing the Zacks Consensus Estimate of 77 cents. The earnings improvement was primarily buoyed by lower income tax and decreased outstanding shares, partly offset by lower adjusted EBITDA.Spectrum Brands' net sales declined 3.3% year over year to $677 million and beat the Zacks Consensus Estimate of $666 million. Organic net sales declined 6%, excluding the favorable foreign currency impacts of $18.5 million. Net sales decreased mainly due to ongoing weakness in category demand and the lingering effects of an increased seasonal inventory build by some Home and Garden customers last year. These pressures were partly mitigated by renewed growth in the Global Pet Care segment, with key Companion Animal brands outperforming the market and benefiting from a more favorable prior-year comparison.The gross profit dropped 16.2% year over year to $241.6 million, driven by soft volumes, increased trade spending and higher tariff-related costs. These pressures were partially offset by pricing actions, ongoing cost-improvement initiatives, enhanced operational efficiencies and favorable foreign exchange movements. The gross margin contracted 110 bps year over year to 35.7%.Adjusted EBITDA from continuing operations declined 15.2% year over year to $62.6 million in the fiscal first quarter due to lower volumes and gross margin, driven by tariff-related disruptions. The adjusted EBITDA margin contracted 190 bps year over year to 9.2%.Spectrum Brands Holdings Inc. Price, Consensus and EPS Surprise  Spectrum Brands Holdings Inc. price-consensus-eps-surprise-chart | Spectrum Brands Holdings Inc. Quote Spectrum Brands’ Segmental PerformanceSales in the Home & Personal Care segment fell 26.6% year over year to $321.5 million, while organic net sales declined 7.6%. Excluding favorable currency impacts, organic net sales moved down 11.1%. Net sales in Personal Care decreased in the mid-single digit, while net sales in Home Appliances declined in the high-single digit. Excluding the favorable currency impacts, organic net sales in EMEA declined across both Home Appliances and Personal Care, reflecting continued softness in category demand. The EMEA performance was further pressured by elevated inventory levels at a key retailer. In contrast, LATAM organic net sales rose in the high-teens, supported by growth across both categories. Meanwhile, North American net sales declined in the mid-teens due to lower volumes in both categories stemming from higher product costs associated with increased tariffs.The segment's adjusted EBITDA of $20.7 million was down 6% year over year due to lower volumes and higher tariff costs. This was partly offset by pricing, lower brand-focused investments, cost improvement initiatives and favorable currency.The Global Pet Care segment's sales advanced 21.6% year over year to $281.6 million, with organic net sales improving 8.3%. Excluding favorable foreign currency impacts, organic net sales rose 5.8%. The rally was driven by high-single-digit sales growth in Companion Animal and a low-double-digit rise in Aquatics.North American net sales in both categories benefited from a strategic pull-forward of retailer orders in the prior fiscal year. Excluding the positive impacts of foreign currency, organic net sales in the EMEA Companion Animal segment declined, primarily reflecting order-timing disruptions in Dog and Cat Food following a product launch in the prior year. This weakness was partially offset by continued strength in the GoodBoy brand. In contrast, EMEA Aquatics’ organic net sales increased, supported by the solid performance of the Tetra brand and an easier year-over-year comparison. The segment's adjusted EBITDA of $49 million fell 2.5% year over year, reflecting higher tariff-related costs, inflationary pressures, and increased trade and investment spending. These headwinds were partially offset by higher sales volumes, pricing actions and ongoing cost-improvement initiatives. The segment’s adjusted EBITDA margin contracted 240 bps to 17.4%.The Home & Garden segment's sales declined 18.2% year over year to $73.9 million, with organic net sales also down 19.8%. The decline in net sales was primarily due to an accelerated seasonal inventory build by certain retailers in the prior year, which weighed on the performance across all pest control categories.The segment's adjusted EBITDA fell 4.8% year over year to $4.5 million, while the adjusted EBITDA margin contracted 400 bps to 6.1%. Adjusted EBITDA declined primarily due to lower sales volumes, though the impacts were partially offset by productivity gains and improved operational efficiencies.Spectrum Brands’ Other FinancialsAs of Dec. 28, 2025, SPB had a cash balance of $126.6 million. It had an outstanding debt of $578.9 million, including no outstanding borrowings on the revolver, $496.1 million of senior unsecured notes and $82.8 million of finance leases. The company had a total liquidity of $618.8 million, comprising the undrawn capacity on its cash flow revolver of $492.2 million. It exited the quarter with a net long-term debt of $554.3 million. In first-quarter fiscal 2026, SPB repurchased 0.6 million shares for $36 million. The company authorized a repurchase program to buy back $300 million in shares.SPB’s OutlookLooking ahead, management emphasized a continued commitment to disciplined strategy execution, while acknowledging that substantial work remains. Management expressed confidence in the company’s ability to return its Global Pet Care and Home & Garden segments to growth in fiscal 2026. The company highlighted ongoing efforts to strengthen the fundamentals of the Home & Personal Care business, with a clear focus on delivering improved profitability across all three segments.Reflecting this outlook, the company reaffirmed its earnings framework. Spectrum Brands continues to project delivering flat to low-single-digit growth in reported net sales in fiscal 2026. Fiscal 2026 adjusted EBITDA is likely to rise in the low-single digit. The adjusted free cash flow is forecast to be 50% of adjusted EBITDA. Management continues to expect a long-term net leverage ratio of 2.0-2.5 times.Stocks to Consider in the Consumer Discretionary SpaceColumbia Sportswear COLM engages in the sourcing, marketing and distribution of outdoor and active lifestyle apparel, footwear, accessories and equipment in the United States and internationally. It currently sports 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 COLM’s current financial-year sales indicates growth of 2.1% from the year-ago number. COLM delivered a trailing four-quarter earnings surprise of 25.2%, on average.  Interparfums, Inc. IPAR is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Interparfums’ current financial-year sales indicates growth of 2.5% from the year-ago number. IPAR delivered a trailing four-quarter earnings surprise of 5.03%, on average. Reynolds Consumer Products REYN is a consumer-branded and private-label products company. It produces and sells branded and store-brand products, which include cooking products, waste and storage products, and tableware. REYN currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for REYN’s current financial-year EPS is expected to rise 6.7% from the year-ago reported figure. Reynolds delivered a trailing four-quarter earnings surprise of 2.2%, on average.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Columbia Sportswear Company (COLM): Free Stock Analysis Report Interparfums, Inc. (IPAR): Free Stock Analysis Report Spectrum Brands Holdings Inc. (SPB): Free Stock Analysis Report Reynolds Consumer Products Inc. (REYN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks