Spectrum Brands Holdings Inc (SPB) Reports Fiscal 2023 Fourth Quarter Results
Net sales decreased by 1.2% due to slower category Point of Sale (POS) and strategic exits.
Net income from continuing operations reached $53.5 million, with a significant increase in Adjusted EBITDA to $113.7 million.
Adjusted EBITDA, excluding investment income, stood at $81.2 million.
Spectrum Brands expects a low single-digit net sales decline and high single-digit Adjusted EBITDA growth for Fiscal 2024.
On November 17, 2023, Spectrum Brands Holdings Inc (NYSE:SPB) released its 8-K filing, disclosing its financial results for the fourth quarter of fiscal year 2023. The company reported a slight decrease in net sales of 1.2%, primarily due to lower consumer demand for kitchen appliances and the planned exit from non-strategic categories. Despite the sales dip, SPB saw a substantial increase in net income from continuing operations, which was $53.5 million compared to a loss in the prior year. Adjusted EBITDA also saw a significant rise to $113.7 million, a 52.2% increase from the previous year's quarter.
Financial Performance Overview
The company's net sales for the quarter were $740.7 million, a slight decrease from $749.5 million in the same quarter of the previous year. The organic net sales, which exclude the impact of favorable foreign exchange rates, decreased by 2.7%. Gross profit improved by 2.0%, and operating income remained relatively flat. The notable increase in net income was attributed to lower interest expenses, gains from debt repurchases, and an income tax benefit. Adjusted diluted earnings per share (EPS) from continuing operations saw a significant rise of 183.3%.
Segment Performance
The Global Pet Care (GPC) segment reported a 1.6% increase in net sales, while the Home & Garden (H&G) segment saw a 7.2% increase, driven by favorable weather conditions and increased advertising spend. However, the Home & Personal Care (HPC) segment experienced a 6.3% decline in net sales due to lower consumer demand, particularly in the kitchen appliances category.
Liquidity and Debt Position
SPB ended the fiscal year with a strong liquidity position, boasting a cash balance of $754 million and $1,103 million in short-term investments. The company's total debt stood at approximately $1,574 million, with the majority in senior unsecured notes. The net positive cash position reflects the company's solid balance sheet after accounting for short-term investments.
Outlook for Fiscal 2024
Looking ahead, Spectrum Brands anticipates a low single-digit decline in reported net sales for Fiscal 2024, with foreign exchange expected to have a slightly negative impact. Adjusted EBITDA is projected to grow by high single-digits. The company aims to maintain a long-term net leverage ratio of 2.0 - 2.5 times after fully deploying the proceeds from the sale of its HHI business.
Management Commentary
"We have concluded a pivotal year for the business as we close out our fourth quarter. We have already paid down $1.6 billion of our outstanding debt with the proceeds from the sale of our HHI business and have ended the year in a net cash position. We have reduced our inventory by over $300 million since the beginning of the year while improving fill rates across all businesses. We have also improved our margin structure by driving cost improvements and exiting non-core unproductive categories. With the latest financial results for the quarter, we have started to transition our business from defending against the various headwinds and preserving cash to leaning into the opportunities that a strong balance sheet and improved margins present to us," said David Maura, Chairman and Chief Executive Officer of Spectrum Brands.
For more detailed information on Spectrum Brands Holdings Inc (NYSE:SPB)'s financial results, including the full income statement, cash flow statement, and balance sheet, please refer to the company's 8-K filing.
Explore the complete 8-K earnings release (here) from Spectrum Brands Holdings Inc for further details.
This article first appeared on GuruFocus.
