MIDDLETON, Wisc. - Spectrum Brands Holdings, Inc. (NYSE: NYSE:SPB), a global consumer products company, reported a significant beat in its second-quarter earnings, with an adjusted EPS of $1.62, surpassing the analyst expectations of $0.68. The company's revenue also exceeded forecasts, coming in at $718.5 million against the consensus estimate of $708.54 million.
The strong quarterly performance can be attributed to improved operational efficiency and a robust gross margin of 38.1%, which marked an 870 basis point improvement over the previous year.
The company's net income saw a remarkable increase of $124.9 million, and adjusted EBITDA, excluding investment income, more than doubled to $95.3 million. Spectrum Brands also reported a significant improvement in net income margins, which rose to 6.9%, and adjusted EBITDA margins, excluding investment income, nearly doubled to 13.3%.
David Maura, Chairman and CEO of Spectrum Brands, expressed satisfaction with the quarter's results, highlighting the sequential improvement in sales performance and the doubling of adjusted EBITDA.
"Given our first half performance, and expectations for modest top-line growth in the second half of the year, we are raising our full-year Earnings Framework and now expect net sales to be relatively flat and Adjusted EBITDA to grow in the low double-digits," Maura stated.
Despite the overall revenue decline of 1.5%, mainly driven by lower consumer demand in home appliances and aquatics in North America, as well as the impact of SKU rationalizations, the company managed to offset these declines with stronger sales in the Controls business due to favorable weather trends.
Spectrum Brands also announced a new long-term license agreement with Stanley Black & Decker (NYSE:SWK) for the Black & Decker brand, which is expected to provide access to the brand name through the end of calendar 2035.
Additionally, the company is exploring strategic alternatives for its Home and Personal Care business, including a potential sale, joint venture, or spin later this year.
The company's financial position remains solid, with a cash balance of $746 million, short-term investments of $500 million, and a net debt of approximately $155 million as of the end of the quarter.
Investors reacted positively to the earnings release, although specific stock movement data was not provided. The company's forward-looking guidance indicates confidence in its ability to continue delivering value to shareholders while navigating the dynamic market conditions.
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