Spectrum Brands Q3 Earnings Call Highlights

Spectrum Brands reported broad-based growth: Fiscal Q3 sales rose 7.7% year over year, with all three business units growing and Home & Garden posting record sales. Excluding tariff refunds, adjusted EBITDA increased 27.5% to $97.7 million. Tariff refunds significantly boosted reported results: A one-time $60.6 million refund lifted adjusted EPS by $1.90 and gross margin to 49.2%; management said the recovered funds will support commercial investment and rehiring. The company raised its outlook for profitability: Fiscal 2026 sales are still expected to be flat to up low-single digits, while adjusted EBITDA excluding tariff refunds is now projected to grow at a mid-single-digit rate. Fourth-quarter performance may face pressure from weather, inventories and tougher comparisons in Pet Care.

Spectrum Brands NYSE: SPB reported third-quarter fiscal 2026 sales growth across all three of its business units, led by a record quarter in Home & Garden, while raising its outlook for adjusted EBITDA growth excluding tariff refunds. Net sales rose 7.7% from a year earlier, or 6.6% organically excluding $7.5 million of favorable foreign exchange. Chairman and Chief Executive Officer David Maura said the company’s Global Pet Care, Home & Garden and Home & Personal Care businesses each generated growth during the quarter.

“Our quarterly results once again outperformed expectations on both the top and the bottom lines,” Maura said, adding that the company had returned to organic growth on a year-to-date basis despite geopolitical uncertainty, changing trade conditions and uneven consumer demand in some categories.

Third-quarter gross profit increased $106.3 million and gross margin rose 11.4 percentage points to 49.2%, including a one-time $60.6 million tariff refund. Excluding the refund, gross profit increased $45.7 million and gross margin was 41.1%, up 330 basis points from the prior year.

Chief Financial Officer Faisal Qadir said the underlying margin improvement reflected higher volume, pricing, lower trade spending, favorable product mix and cost-improvement actions, partly offset by higher tariff costs. Adjusted EBITDA totaled $158.3 million, up $81.7 million year over year. Excluding tariff refunds, adjusted EBITDA was $97.7 million, an increase of $21.1 million, or 27.5%. Adjusted diluted earnings per share reached $2.79, including a $1.90-per-share benefit from tariff refunds. Excluding that benefit, adjusted EPS was $0.89. Operating expenses increased 52.3% to $354.5 million, including an impairment charge related to the Home & Personal Care business and the company’s recent transaction with Oaktree. Excluding the impairment, operating expenses rose $25.5 million, or 11.3%, primarily due to increased investment spending.

Maura characterized the refunds as a recovery of prior costs rather than a windfall. He said the company had previously cut investments and reduced its workforce while addressing tariff-related inflation, and it intends to use recovered funds to support commercial activity and rehiring. The company recognized receivables for the refunds during the quarter. Maura said Spectrum Brands had collected substantially all phase-one refunds and filed more than 95% of phase-two claims. Qadir said about half of the total expected cash refund had been received as of the call, with most of the balance expected during the fiscal year and all cash expected by the end of the calendar year.