What Spectrum Brands (SPB) Said on Its Q4 Earnings Call

Key Points

• Spectrum expects fiscal 2027 sales and adjusted EBITDA to be flat to up in the low single digits, despite about $80 million in added input-cost inflation. It plans to counter costs with productivity gains, lower tariffs and selective price increases.
• Fiscal 2026 net sales rose 1.5%, and adjusted EBITDA increased 9.8% to $317.4 million excluding tariff-refund benefits. Fourth-quarter sales fell 2.8%, mainly because of weakness in Home and Garden amid poor weather and elevated retailer inventories.
• CEO David Maura defended Empower Brands’ proposal to acquire Helen of Troy, arguing the deal would add scale for investment and create operational efficiencies. He said Spectrum is open to further due diligence, but the offer price was not discussed.

Spectrum Brands NYSE: SPB expects fiscal 2027 sales and adjusted earnings to hold steady or grow slightly, even as the consumer products company faces approximately $80 million in additional input-cost inflation.

On its fiscal fourth-quarter earnings call, management said it plans to offset higher costs through productivity improvements, lower tariff rates and selective price increases. The outlook followed a year in which sales grew in the company’s Global Pet Care and Home and Garden businesses, while Home and Personal Care faced continued demand pressure.

Chairman and CEO David Maura also used the call to defend a proposal by Empower Brands, a business jointly owned by Spectrum and Oaktree, to acquire Helen of Troy. He said a combination would provide the scale needed to invest in innovation and marketing in a crowded consumer products market.

Inflation shapes fiscal 2027 outlook

Spectrum expects fiscal 2027 net sales to be flat to up in the low single digits from the prior year. Adjusted EBITDA is also expected to be flat to up in the low single digits, after normalizing for one-time tariff refund benefits received in fiscal 2026. Adjusted free cash flow is projected to be approximately 50% of adjusted EBITDA.

Maura described the inflation as “a most unwanted recent development.” The company attributed the expected increase in costs to diesel fuel, transportation, commodities, purchased products, finished goods and labor.

During the question-and-answer session, Maura said factory automation and product re-engineering would be central to cost reductions. CFO Faisal Qadir said pricing actions would be strategic rather than applied across the board. Maura added that Spectrum intends to grow volume in fiscal 2027 after volume gains in Pet Care and Home and Garden during fiscal 2026.

Management expects both of those businesses to post low-single-digit sales growth in fiscal 2027, while Home and Personal Care sales are expected to be relatively flat. Elevated retailer inventory is expected to weigh on Home and Garden in the first half before largely normalizing ahead of the main selling season.

Full-year earnings rise despite softer fourth-quarter sales

For fiscal 2026, Spectrum reported a 1.5% increase in net sales, while organic net sales declined 0.3%. Adjusted EBITDA was $374.8 million. Excluding $57.4 million in tariff refund-related benefits, adjusted EBITDA rose 9.8% to $317.4 million.

Adjusted free cash flow was $247.3 million, including $59.1 million in tariff refunds. Excluding that benefit, it was $188.2 million, or approximately $8 per share. The company ended the year with $339.9 million in cash and approximately $289.9 million in net debt, Qadir said.

Fourth-quarter net sales fell 2.8%, or 3.1% on an organic basis. Qadir said the decline was driven primarily by Home and Garden, where unfavorable weather and elevated retailer inventories reduced replenishment orders. Global Pet Care and Home and Personal Care sales also declined.

Fourth-quarter gross margin expanded by 260 basis points to 37.6%, helped by pricing, lower trade spending, reduced tariff costs and cost improvements. Adjusted EBITDA rose to $69.9 million from $63.4 million. Qadir said the latest figure included a $3.2 million reinvestment of tariff refund proceeds into the supply chain; excluding that reinvestment, adjusted EBITDA was $73.1 million.

Pet and garden growth contrasts with home products pressure

Global Pet Care sales grew 5.1% for the full year, although fourth-quarter sales declined 1.5%. Companion animal sales rose in the low single digits during the quarter, while aquatics sales fell in the low double digits. Qadir attributed the aquatics decline partly to distribution losses in hard goods, which he said are not central to the company’s long-term strategy.

Home and Garden sales grew 3.9% for the year but fell 9.3% in the fourth quarter after unfavorable weather softened demand and left some retailers with excess inventory. Qadir said brands including Spectracide, Hot Shot and Repel gained market share during the quarter.

Home and Personal Care sales declined for the full year, though Maura said second-half sales were relatively flat. The business generated $68.9 million in full-year adjusted EBITDA excluding tariff refunds, with margin expansion of 130 basis points. Qadir said the fourth quarter benefited from approximately $7 million in retailer orders accelerated ahead of a technology-system launch in Europe, the Middle East and Africa.

CEO presses case for Helen of Troy proposal

Maura said the proposed Helen of Troy acquisition would expand Empower Brands’ portfolio and create opportunities for operational efficiencies and investment. He criticized Helen of Troy’s strategic plan and said he was disappointed by its response to the proposal.

Maura said Spectrum would be willing to sign a customary nondisclosure agreement that could potentially support an improved proposal. He estimated that due diligence and a merger agreement could be completed in approximately 45 days, and said the agreement would not contain financing contingencies. The company did not discuss the offer price on the call.

Maura said the proposed combination would also advance Spectrum’s strategy to unlock the value of its Home and Personal Care business through a potential spin-off, merger or sale. He declined to take detailed questions about the transaction while the process remains ongoing.

About Spectrum Brands (NYSE:SPB)

Spectrum Brands Holdings, Inc. is a global consumer products company that develops, manufactures and markets products for homes, pets and gardens. Its businesses serve consumers through a portfolio of established brands and retail, e-commerce and other distribution channels. The company's Home and Personal Care products include small kitchen appliances, personal care devices and home appliances sold under brands such as Remington, Russell Hobbs, George Foreman and Black+Decker, under license. Its Global Pet Care business offers products for aquatic pets, companion animals and pet health, including brands such as Tetra, DreamBone and Nature's Miracle.

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