Spectrum Brands Clocks 2.9% Sales Growth In Q1; Notes Margin Pressure

Spectrum Brands Holdings Inc SPB reported first-quarter FY22 sales growth of 2.9% year-on-year, to $757.2 million, beating the analyst consensus of $728.17 million.

• Net sales from the Home & Personal care segment rose 0.3% Y/Y to $379.7 million, Global Pet Care grew 9.7% to $302.2 million, and Home & Garden fell 8.5% Y/Y to $75.3 million.
• Adjusted EPS of $(0.06) missed the consensus of $0.17.
• Adjusted EBITDA of $49.3 million decreased 53.4% Y/Y.
• The gross profit fell 13.3% Y/Y to $219.3 million, with the margin contracting 530 basis points to 28.9%. The company reported an operating loss of $(23.8) million.
• "Our first quarter went largely as expected, with continued top-line growth, while margins contracted as input cost inflation exceeded price increases," said David Maura, Chairman, and CEO.
• Spectrum Brands held $207 million in cash and equivalents as of January 2, 2022.
• Recently, Spectrum Brands' board declared a quarterly dividend of $0.42 per share payable on March 15, 2022, to stockholders of record on February 22, 2022.
• Outlook: Spectrum Brands raised additional inflation expectation to $310 million - $330 million from $240 million - $260 million. It intends to offset the high inflation through additional pricing as needed.
• Spectrum Brands continues to expect mid to high single-digit reported net sales growth in FY22. The company sees FY22 adjusted EBITDA to increase by low-single digits.
• Acquisition: Spectrum Brands issued a separate press release that it agreed to acquire the home appliances and cookware categories of Tristar Products, Inc. for $325 million, in cash, at closing, up to $100 million if specific gross profit targets are achieved in 2022 and another $25 million if certain other gross profit targets are achieved in 2023.
• The company plans to use the combined Home Appliances and Personal Care businesses to create a separate, pure-play global platform. It intends to update investors on the separation later this year.
• Price Action: SPB shares closed 2.77% lower at $88.67 on Thursday.