Spectrum Brands +12% After Q2 Results - Read Why

Zinger Key Points
  • Spectrum Brands beats Q2 earnings estimates with adjusted EPS of $1.62, surpassing street view of 62 cents.
  • Despite 1.5% net sales decline, gross profit jumps 27.5% to $273.5 million, with gross profit margin rising to 38.1%.

Spectrum Brands Holdings, Inc. SPB shares are trading higher on Thursday.

The company reported second-quarter adjusted earnings per share of $1.62, beating the street view of 62 cents

Quarterly sales of $718.50 million beat the street view of $707.52 million.

Net sales declined by 1.5%, influenced by reduced consumer demand in home appliances and aquatics, notably in North America. Additionally, SKU rationalizations had an impact, although there was strong point-of-sale performance in controls, attributed to favorable weather trends.

Gross profit jumped 27.5% to $273.5 million, while gross profit margin jumped 870 basis points to 38.1%. Gross profit and gross profit margin increased from the sale of lower cost inventory, lower inventory-related expenses, favorable mix and cost improvements.

“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%,” said David Maura, Chairman and Chief Executive Officer of Spectrum Brands.

Adjusted EBITDA from continuing operations jumped 120.2% to $112.3 million. 

As of the end of the quarter, the company had a cash balance of $746 million plus $500 million of short-term investments.

Spectrum Brands declared a quarterly dividend of $0.42 per share, payable on June 18 to shareholders of record as of May 28.

Outlook: Spectrum Brands now expects FY24 reported net sales to be relatively flat to fiscal 2023 (prior view: decline by low single-digits). 

Fiscal 2024 Adjusted EBITDA, excluding investment income, is expected to increase by low double-digits (prior view: increase by high single-digits).

The company continues to target a long-term net leverage ratio of 2.0 – 2.5 times after full deployment of HHI sale proceeds.

Price Action: SPB shares are trading higher by 12.2% to $94.80 at last check Thursday.

Photo via Shutterstock

Market News and Data brought to you by Benzinga APIs
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsEquitiesNewsGuidanceMarketsMoversGeneralBriefsStories That Matterwhy it's moving
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!