Spectrum Brands Delivers Wider-Than-Expected Q1 Loss

Spectrum Brands (SPB) delivered mixed Fiscal Q1 2022 results characterized by a wider-than-expected net loss. Sales topped consensus estimates despite the company grappling with supply-chain constraints offset by demand outpacing supply. SPB shares rose 0.15% to close at $88.80 on February 4.

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Spectrum Brands is a manufacturer and supplier of residential locksets, residential builders hardware, plumping, and personal care products.

Results

Net sales in the quarter were up 2.9% year-over-year to $757.2 million, beating consensus estimates of $741.86 million. Sales in the Home & Personal Care segment grew 0.3% to $379.7 million, driven by growth in the Latin America region. Global Pet Care posted a 9.7% increase in sales to $302.2 million, while the Home & Garden segment posted $75.3 million in sales.

However, Spectrum Brands saw adjusted EBITDA shrink 53.4% to $49.3 million. Adjusted earnings per share landed at a loss of $0.06, far worse than analyst expectations for earnings of $0.25. The wider-than-expected net loss is attributed to lower operating income.

Spectrum Brands expects full-year sales to grow by mid to high single digits. Adjusted EBITDA is expected to increase by low single digits. The company also expects additional inflation of between $310 and $330 million, up from the previous range of between $240 and $260 million. It plans to offset the high inflation through additional pricing.

Stock Rating

Last month, Deutsche Bank analyst Stephen Powers reiterated a Buy rating on Spectrum Brands stock and lowered the price target to $116 from $117, implying 30.63% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 6 Buys. The average Spectrum Brands price target of $121.67 implies 37.02% upside potential to current levels.

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