Spectrum Brands (NYSE:SPB) executives said the company’s first-quarter fiscal 2026 results exceeded internal expectations as it continued to work through the aftereffects of tariff-related disruption and broader macroeconomic volatility that weighed on fiscal 2025. Chairman and CEO David Maura and CFO Faisal Qadir emphasized early signs of recovery in consumables, while durable products—particularly in Home and Personal Care—are taking longer to rebound.
Management reiterated its full-year fiscal 2026 framework, calling for net sales to be flat to up in the low single digits, adjusted EBITDA growth in the low single digits, and adjusted free cash flow conversion of roughly 50% of adjusted EBITDA.
Quarterly results: lower sales and EBITDA, but ahead of expectations
Gross margin was 35.7%, down 110 basis points, which management attributed largely to lower volume, higher trade spend, and higher tariff costs, partially offset by pricing, cost improvement actions, operational efficiencies, and favorable foreign exchange. Adjusted EBITDA was $62.6 million, down $15.2 million year over year, reflecting lower volume and reduced gross margins.
Despite lower operating income, management said GAAP net income and diluted EPS increased primarily due to a one-time tax benefit from a favorable settlement and a lower share count. Adjusted diluted EPS increased to $1.40, also supported by the one-time tax benefit and share count reduction, partially offset by lower adjusted EBITDA.
Cash flow, balance sheet, and shareholder returns
Maura highlighted cash generation and capital returns during what is typically a seasonally cash-using period as the company prepares for the Home and Garden season. He said Spectrum generated nearly $60 million of adjusted free cash flow in the first quarter.
The company ended the quarter with $126.6 million in cash, no borrowings on its revolver, and net leverage of 1.65x, which Maura said is below long-term targets. Qadir said Spectrum had $492.2 million available on its $500 million revolver and total debt of about $578.9 million, consisting of $496.1 million of senior unsecured notes and $82.8 million of finance leases, for quarter-end net debt of $452.3 million.
On capital returns, Maura said the company repurchased about 600,000 shares during the quarter and continued to buy back shares after quarter-end. Year to date through the call date, Spectrum had repurchased about 800,000 shares for roughly $42.3 million. He also noted a new $300 million share repurchase authorization and said the company has returned approximately $1.4 billion to shareholders since the close of the HHI transaction, repurchasing almost 45% of its share count since that deal closed.
Segment performance: Pet returns to growth; Home and Garden sees seasonal timing; Home and Personal Care remains pressured
Global Pet Care posted reported net sales growth of 8.3%, with organic net sales up 5.8% excluding foreign exchange. Qadir said companion animal sales increased in the high single digits and aquatics sales rose in the low double digits. In North America, sales increased in both categories, aided in part by an easier comparison tied to a prior-year retailer order shift of approximately $10 million ahead of Spectrum’s S/4HANA ERP implementation. After normalizing for that shift, North American net sales increased mid-single digits, including the impact of tariff-related pricing actions taken last fiscal year.
Management pointed to market share gains across key companion animal brands including Good ‘n’ Fun, DreamBone, Nature’s Miracle, and FURminator, and said point-of-sale trends were improving in core brands and top accounts. In EMEA, excluding foreign exchange, sales decreased in the low single digits, which Qadir attributed to lower dog and cat food sales following the refreshed Eukanuba portfolio launch in fiscal Q4 2025 that prompted some retailers to accelerate inventory purchases ahead of resets. That was partially offset by strength in the Good Boy brand, which management said gained share again in the UK and continued to expand in continental Europe.
Global Pet Care adjusted EBITDA was $49 million, down $2.5 million versus the prior year, and adjusted EBITDA margin was 17.4% versus 19.8% last year. The decline was attributed to higher tariff costs, inflation, and additional trade and investment spend, partially offset by higher volume, pricing, and cost actions. Management said it expects the first-quarter sales trend to continue and to deliver modest growth for the segment in fiscal 2026.
Home and Garden net sales fell 19.8%, which Qadir said was expected due to prior-year accelerated seasonal inventory builds by certain customers. Management emphasized that fiscal Q1 is typically the segment’s slowest quarter and represents a small portion of annual consumer activity, while the team is focused on staging and preparation for the season. Executives said the business gained share in U.S. pest control and delivered its best-ever first quarter for e-commerce.
Home and Garden adjusted EBITDA was $4.5 million versus $9.3 million a year earlier, with margin down 400 basis points to 6.1%, driven primarily by lower volume and partially offset by productivity and operational efficiencies. Qadir said tariff costs were largely mitigated through actions including pricing. Looking ahead, management said it expects point-of-sale trends to pick up late in the second quarter and that net sales growth for Home and Garden should be weighted to the second half of the fiscal year. Maura told analysts he would not “get over your skis” modeling Q2, suggesting results could be flat to slightly up year over year due to phasing, with a “big back half.”
Home and Personal Care reported net sales declined 7.6%, and organic net sales decreased 11.1% excluding favorable foreign exchange. Qadir said personal care was down mid-single digits and home appliances were down high single digits. EMEA organic sales fell in the mid-teens, affected by one retailer’s elevated inventory following a weaker-than-anticipated holiday season that reduced replenishment orders. LATAM organic sales rose in the high teens, driven by strong consumer reaction to new product launches. North America sales fell in the mid-teens, with management citing consumer softness and increased shelf prices tied to tariffs, noting Spectrum was among the first to negotiate pricing with retailers and therefore among the first to see tariff-related price increases hit shelves.
Home and Personal Care adjusted EBITDA was $20.7 million versus $26.7 million last year, with margin at 6.4%. The decline was attributed to lower volume and higher tariff costs, partially offset by pricing, reduced investment spend, cost initiatives, and favorable foreign exchange. Management said it expects continued softness in global demand in Q2, with sequential improvement expected in the second half as the company laps softer comparisons and realizes benefits from actions taken to strengthen the business.
Strategy and outlook: investment focus, ERP rollout, and M&A stance
Maura said Spectrum’s strategic priorities for fiscal 2026 remain unchanged, including maintaining a healthy balance sheet, focusing brand investment through its “fewer, bigger, better” approach, continuing SAP S/4HANA deployments, and investing in people after a difficult fiscal 2025 that involved hard cost actions.
Executives reiterated that Spectrum remains interested in disciplined acquisition opportunities in Global Pet Care and Home and Garden and described the company as well-positioned to be a consolidator. For Home and Personal Care, Maura said Spectrum is focused on maximizing results and improving profitability while continuing to work toward a “strategic solution” for the business.
On fiscal 2026 phasing, Qadir said the second quarter is expected to be challenging year over year, primarily due to continued softness in Home and Personal Care, while Home and Garden growth is expected to be concentrated in the second half as seasonal POS materializes and retailers remain disciplined on inventory. Management also said tariffs are expected to be largely offset through mitigation actions, including pricing.
About Spectrum Brands (NYSE:SPB)
Spectrum Brands Holdings, Inc is a global consumer products company that develops and markets a diverse portfolio of branded household and personal care products. Organized into four principal business segments—Hardware & Home Improvement, Home & Garden, Pet, and Appliances & Personal Care—the company offers a broad range of items including security and plumbing solutions, small electric appliances, grooming tools, and pet care accessories. Its hardware division features well-known brands such as Kwikset, Baldwin and Pfister, while the home appliance segment is anchored by names like Russell Hobbs and Remington.
