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    SPB
    Earnings call· Jun 2026(Q3 FY26)

    Spectrum Brands Holdings Q3 FY26 earnings call SPB

    Aug 7, 2026 Source

    Executive summary

    Spectrum Brands Q3 FY26 — Strong Organic Growth and Increased EBITDA Outlook

    Spectrum Brands delivered strong Q3 FY26 results, driven by broad-based growth across all segments and significant progress on its S/4HANA ERP transformation. Despite ongoing macroeconomic volatility and anticipated Q4 headwinds in certain segments, management raised its full-year adjusted EBITDA outlook, emphasizing disciplined execution and strategic investments in brand innovation and M&A. The company views tariff refunds as a recovery of prior losses, intended for reinvestment in commercial activities.

    Highlights

    5

    • Net sales increased 7.7% versus the prior year, with all three business units delivering growth.

    • Home & Garden business delivered a record-setting quarter with net sales of $225 million.

    • On a year-to-date basis, the company returned to organic growth, a meaningful achievement.

    • Adjusted EBITDA (excluding tariff refunds) increased $21.1 million or 27.5% to $97.7 million.

    • Ended the quarter with a net leverage ratio of about 1x, well below the long-term target of 2 to 2.5 turns.

    Concerns

    3

    • Anticipated softness in the Home & Personal Care unit, consistent with expectations.

    • Modest inflationary pressure across commodities and freight continues.

    • Q4 sales are anticipated to be down for Global Pet Care due to tougher comparisons and for Home & Garden due to unfavorable weather and elevated retailer inventory levels.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year FY26 Net Sales
    flat to up low single digits
    high materiality
    High
    Full-year FY26 Adjusted EBITDA (ex-tariff refunds)
    increase mid-single digits
    high materiality
    High
    Full-year FY26 Adjusted Free Cash Flow (ex-tariff refunds) as % of Adjusted EBITDA
    approximately 50%
    medium materiality
    High
    Full-year FY26 Depreciation and Amortization
    $115 million and $125 million
    low materiality
    High
    Full-year FY26 Stock-based Compensation
    approximately $20 million to $25 million
    low materiality
    High
    Full-year FY26 Cash payments for restructuring, optimization, and strategic transaction costs
    $25 million and $35 million
    low materiality
    High
    Full-year FY26 Capital Expenditures
    $50 million and $60 million
    medium materiality
    High
    Full-year FY26 Cash Taxes
    $40 million and $50 million
    low materiality
    High
    Full-year FY26 Adjusted EPS Effective Tax Rate
    32.8%
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Global Pet Care
    Reported net sales increased 3.3%, with organic net sales up 2.9%. North America sales increased high single digits, led by companion animal strength and market share gains. EMEA organic sales decreased mid-single digits, impacted by S/4HANA timing, but underlying performance was strong. Focus on consumer-led innovation and digital marketing, including TikTok Shops.
    Organic net sales: 2.9% increaseNorth America sales: high single digits increaseCompanion animal sales (North America): high single digits increaseAquatics sales: mid-single digits decreaseEMEA organic sales: mid-single digits decrease (including $6M headwind from S/4HANA go-live timing)Adjusted EBITDA margin (ex-tariff refunds): 19.7%Adjusted EBITDA margin expansion: 250 bps
    		—3.3%—$51.9 million
    Home & Garden
    Delivered a record quarter with reported net sales of $225 million, an increase of 19%. Growth was broad-based across pest controls and herbicide categories, driven by favorable weather in April. Key brands like Spectracide, Hot Shot, and Repel outperformed the market. Continued investment in innovation and marketing.
    Double-digit gains across all pest controls and herbicide categoriesAdjusted EBITDA margin (ex-tariff refunds): 21.5%Adjusted EBITDA margin improvement: 110 bps
    		$225 million19%—$48.4 million
    Home & Personal Care
    Reported net sales increased 3.6%, with organic net sales up 1.1%. Personal Care sales increased mid-teens, while home appliances were down mid-single digits. EMEA organic sales increased mid-single digits, and Latin American organic sales increased high single digits. North American sales decreased due to home appliances softness and DRTV exit. Focus on DTC expansion and brand partnerships.
    Organic net sales: 1.1% increasePersonal Care sales: mid-teens increaseHome Appliances sales: mid-single digits decreaseEMEA organic sales: mid-single digits increaseNorth American sales: mid-single digits decreaseLatin American organic sales: high single digits increaseAdjusted EBITDA margin (ex-tariff refunds): 5.4%Adjusted EBITDA margin expansion: 270 bps
    		—3.6%—$14.4 million

    Operational metrics

    27
    Net sales
    7.7%YoY
    Q3 FY26

    Excluding $7.5 million of favorable foreign exchange, organic net sales increased 6.6%.

    Gross profit
    $106.3 millionYoY
    Q3 FY26

    Includes a one-time tariff refund of $60.6 million. Excluding this benefit, gross profit increased $45.7 million.

    Gross margin
    49.2%11.4 percentage points
    Q3 FY26

    Excluding tariff refund benefit, gross margin was 41.1%, an increase of 330 basis points, driven by higher sales volume, pricing, lower trade spend, favorable mix and cost improvement actions, partially offset by higher tariff costs.

    Operating expenses
    $354.5 million52.3%
    Q3 FY26

    Increased by 52.3%, including an impairment charge for the HPC business. Excluding this charge, operating expenses increased $25.5 million or 11.3%, largely due to increased investment spend.

    Operating income
    $15.9 milliondecreased $15.4 million
    Q3 FY26

    Decreased by $15.4 million, driven by higher operating expenses, partially offset by the gross profit increase.

    Adjusted EBITDA
    $158.3 millionincreased $81.7 million
    Q3 FY26

    Excluding tariff refunds, adjusted EBITDA was $97.7 million, an increase of $21.1 million or 27.5%, driven by improved gross margin and increased volume, partially offset by higher investment spend.

    Adjusted diluted EPS
    $2.79
    Q3 FY26

    Excluding $1.90 per share benefit from tariff refunds, adjusted EPS decreased to $0.89.

    Interest expense from continuing operations
    $8.2 milliondecreased $0.2 million
    Q3 FY26

    Decreased $200,000 from the prior year.

    Cash taxes
    net refund of $1.3 milliondecreased $15.3 million
    Q3 FY26

    Net refund of $1.3 million, a decrease of $15.3 million from the prior year.

    Depreciation and amortization
    $24.8 milliondecreased $0.3 million
    Q3 FY26

    Decreased $300,000 from last year.

    Share-based compensation
    $6 millionincreased from $4.8 million
    Q3 FY26

    Increased from $4.8 million in the prior year.

    Capital expenditures
    $9.8 milliondecreased $0.2 million
    Q3 FY26

    Decreased $200,000 from the prior year.

    Cash payments towards strategic transactions, restructuring-related projects and other unusual nonrecurring investments
    $7.4 millionversus $8.6 million last year
    Q3 FY26

    Compared to $8.6 million last year.

    Cash balance
    $258.9 million
    Q3 FY26

    Quarter end balance.

    Revolver availability
    $494.8 million
    Q3 FY26

    Available on $500 million cash flow revolver, with $0 drawn.

    Total debt outstanding
    $633 million
    Q3 FY26

    Consisting of senior unsecured notes, finance leases, and HPC term loan.

    Net debt
    $374.1 million
    Q3 FY26

    Quarter end balance.

    Net leverage ratio
    about 1x
    Q3 FY26

    Well below the long-term target of 2 to 2.5 turns of leverage.

    Shares repurchased
    200,000 shares
    Q3 FY26

    Repurchased for about $15.8 million, with over $300 million of additional Board authorization still remaining.

    S&OP fill rates
    above 95%
    Q3 FY26

    Maintained fill rates above 95% across all 3 business units on a leaner inventory base.

    Tariff refunds collected
    substantially all Phase 1
    Q3 FY26

    Substantially all refunds associated with Phase 1 collected, and over 95% of Phase 2 claims filed. A more substantial cash collection occurred subsequent to the quarter close.

    HPC impairment charge
    —
    Q3 FY26

    An impairment charge was recognized in the current quarter for the HPC business related to the recent transaction with Oaktree.

    Sales growth
    high single digits
    Q3 FY26

    Sales in North America increased high single digits led by strength in companion animal.

    Organic sales growth
    mid-single digits decrease
    Q3 FY26

    Organic net sales in EMEA decreased in the mid-single digits, including an approximately $6 million headwind driven by retail partners accelerating orders.

    Organic sales growth
    mid-single digits
    Q3 FY26

    Organic net sales in EMEA increased mid-single digits with growth in both home appliances and personal care.

    Sales decrease
    mid-single digits
    Q3 FY26

    North American sales decreased in the mid-single digits, driven by lower sales in home appliances, reflecting softness across certain brands and the exit of our U.S. DRTV business.

    Organic sales growth
    high single digits
    Q3 FY26

    In our Latin American region, organic sales increased in the high single digits, primarily driven by double-digit growth in Personal Care.

    Industry KPIs

    9
    MetricValueDetails
    Effective tax rate32.8%%
    Organic sales growth6.6%%
    Regional emerging market growthhigh single digits
    Advertising marketing investmentelevated
    Commodity input cost sensitivitymodest inflationary pressure
    Category level organic sales growthdouble-digit gains
    Innovation new product contributiona lot
    Category growth benchmark market sharegained
    Core underlying EPS and operating margin$0.89USD

    Product announcements

    4
    ProductTypeDetails
    Spectracide Wasp, Hornet and Yellowjacket Trapexpansion
    Hot Shot Flying Insect Trapsexpansion
    Rejuvenate PowerMax Multi-Surface Moplaunch
    Remington brand with the Gloss collectionlaunch

    Deals & partnerships

    2
    OaktreeStrategic partnership for Home & Personal Care business

    Partnership to maximize value at HPC, exploring potential exciting opportunities to create the right structure. Management looks forward to sharing more progress as the relationship matures.

    America's Test KitchenIntegrated multichannel media campaign

    Partnership featuring the Black & Decker brand with the VacuSteam and Perfect Pint Ice Cream Maker through an integrated multichannel media campaign.

    Capital programs

    1
    S/4HANA ERP Transformationunderway

    Benefit: 100% of Global Pet Care and Home & Garden businesses and all but the EMEA region in Home and Personal Care are now operating on a single unified ERP platform.

    Completed first S/4HANA deployment into the Home and Personal Care business in North America, while also finalizing implementation across the remaining Global Pet Care and Home & Garden entities. Only the HPC EMEA region deployment remains later this year.

    Risks & headwinds

    6
    Macroeconomic volatility and geopolitical tensionsongoing

    weigh on consumer sentiment

    Mitigation: proactive approach taken last year positions us well to navigate these pressures

    Inflationary pressurenear term

    modest inflationary pressure, particularly across commodities and freight

    Mitigation: proactive approach taken last year positions us well to navigate these pressures

    Evolving tariff landscapeongoing

    recent expiration of the Section 122 tariffs and the announcement of new Section 301 tariffs

    Mitigation: proactive approach taken last year positions us well to navigate these pressures in the near term; not viewed as a significant headwind for the balance of this year

    Home & Personal Care unit softnessongoing, expected to moderate rate of decline in H2

    some expected softness

    Mitigation: focus remains on improving profitability with plans in place to deliver full year adjusted EBITDA growth despite projected decline in net sales

    Global Pet Care tough prior year comparisonsQ4 FY26

    tougher comparisons related to both the stop shipment dynamic discussed earlier and Eukanuba order timing

    Mitigation: confident in our brand's ability to continue gaining share in the marketplace

    Home & Garden unfavorable weather and elevated retailer inventoryQ4 FY26

    unfavorable weather conditions experienced in late June continued into July with more widespread and persistent heat impacting much of the country; certain retailers carrying elevated inventory levels

    Mitigation: expect will temper replenishment orders and weigh on fourth quarter results; will continue to partner closely with our customers to ensure we can appropriately supply the products to meet consumer demand

    What to watch in Q4 FY26

    5

    Home & Garden Retailer Inventory Levels

    next quarter
    Currentelevated
    Targethealthy inventory levels

    Why it matters

    Elevated inventory could impact future replenishment orders and overall sales for the Home & Garden segment, which had a record Q3.

    Latest weather projections for August and September indicate warmer-than-average conditions for a majority of the country with an increased chance of precipitation along the East Coast. We will continue to partner closely with our customers to ensure we can appropriately supply the products to meet consumer demand and drive further expansion of the Fall Call Program. We remain focused on driving consumer-led innovation, and we will continue to strategically invest in our brands through the balance of the year.

    Q&A highlights

    7

    How much of the organic growth is driven by pricing vs. volume, and what role does innovation play, including future pipeline?

    David Maura emphasized a long-term approach, focusing on commercial health after deleveraging and operational improvements. He highlighted Home & Garden's strong growth driven by new, innovative products addressing consumer needs. Faisal Qadir added that GPC and H&G are expected to have positive volume and pricing growth for the full year, while HPC remains volume-challenged. He noted that successful product launches gain broader distribution in their second year, driving volume.

    “We have got to continue doing fewer, bigger, better, bolder innovation around here.”

    asked by Bob Labick · answered by David Maura

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 Performance Highlights

    Spectrum Brands reported a strong Q3 FY26, with net sales up 7.7% and all three business units contributing to growth. The Home & Garden segment achieved a record $225 million in net sales, surpassing pre-pandemic levels. The company also returned to organic growth on a year-to-date basis, demonstrating resilience despite geopolitical tensions and volatile trade environments. Adjusted EBITDA, excluding tariff refunds, increased 27.5%, reflecting improved gross margins and increased volume.

    02

    ERP Transformation Milestone

    The company reached a significant milestone in its multi-year S/4HANA ERP transformation, completing the first deployment in Home & Personal Care North America and finalizing implementations across Global Pet Care and Home & Garden. This leaves only the HPC EMEA region for later this year, establishing a unified global ERP system to drive future efficiencies, standardize processes, and unlock the full potential of the business.

    03

    Balance Sheet Strength & Capital Allocation

    Spectrum Brands ended the quarter with $258.9 million in cash, zero drawn on its revolver, and a net leverage ratio of approximately 1x, well below its long-term target of 2-2.5x. The company repurchased 200,000 shares for $15.8 million, with over $300 million remaining in authorization, signaling an opportunistic approach to share repurchases and flexibility to capitalize on market opportunities.

    04

    Tariff Refunds & Reinvestment Strategy

    The company made significant progress on IEEPA tariff refunds, collecting substantially all Phase 1 claims and filing over 95% of Phase 2. While a substantial cash collection occurred post-quarter, management emphasized these refunds are a recovery of prior losses, not a windfall. The funds will be reinvested into commercial activities and talent to address past curtailments and drive future growth, rather than being treated as organic earnings.

    05

    Strategic Priorities & M&A Outlook

    Management reiterated its focus on financial stewardship, operational excellence, investing in people, and strategic transformation. M&A remains a priority, with the company actively evaluating opportunities in Pet and Home & Garden, leveraging its strong balance sheet for disciplined, value-accretive acquisitions. The partnership with Oaktree for HPC is progressing, exploring potential exciting opportunities to create the right structure and maximize value.

    06

    Q4 Outlook & Headwinds

    While the full-year outlook was raised, Q4 is expected to face challenges. Global Pet Care will contend with tough prior-year comparisons, and Home & Garden anticipates tempered replenishment orders due to unfavorable weather conditions in late June and July, leading to elevated retailer inventory levels. Despite these headwinds, the company remains confident in its underlying brand performance and ability to finish the year strong.

    AI-generated summary of the company’s earnings call. Not investment advice.