Why Is Spectrum Brands Stock Surging Thursday?
Spectrum Brands Holdings, Inc. (NYSE:SPB) surged on Thursday after the company delivered a major earnings beat and strong cash metrics.
Investors also welcomed fresh guidance calling for modest growth, improving profitability, and disciplined balance sheet management in fiscal 2026, with the CEO, David Maura, highlighting merger and acquisition prospects.
The company reported fourth-quarter adjusted earnings per share of $2.61, beating the analyst consensus estimate of 86 cents.
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Quarterly sales of $733.50 million missed the Street view of $741.11 million.
Fourth-quarter net sales fell 5.2%, while organic net sales declined 6.6%.
The net sales decline mainly reflected weaker GPC and HPC revenue tied to supply constraints and softer category demand.
“Earlier in the year, we made the difficult but necessary decision to address the uncertain trade policy by halting all imports from China for the U.S. market and focus on running the business for cash,” said Maura.
“Our fourth quarter and full year results reflect the impacts of those decisions and a challenging macroeconomic environment.”
Gross profit in the quarter under review totaled $256.6 million, lower than $288 million. Gross profit margin fell 220 basis points to 35%. Operating income increased to $29.4 million, up from $21.9 million last year.
Gross profit and margin decreased from lower volume, unfavorable mix, inflation and tariffs, partially offset by impacts from pricing, cost improvement actions and operational efficiencies.
Adjusted EBITDA from continuing operations slumped 5.5% to $63.4 million, while adjusted EBITDA margin fell 30 basis points to 8.6%.
As of the end of the quarter, the company had a cash balance of $123.6 million and total liquidity of $615.9 million.
The company ended the quarter with net debt of $457.8 million.
Outlook
The company expects flat to low single-digit growth in reported net sales for fiscal 2026, with adjusted EBITDA rising by a similar pace and adjusted free cash flow at roughly half of adjusted EBITDA.
It continues to target a long-term net leverage ratio between 2.0 and 2.5 times.
“We remain optimistic about strategic M&A opportunities that can accelerate our long-term growth,” the CEO said.
Price Action: SPB shares were trading higher by 15.83% to $61.67 at last check Thursday.
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