Stock Story -
Household products company Spectrum Brands (NYSE:SPB) reported results ahead of analysts' expectations in Q1 CY2024, with revenue down 1.5% year on year to $718.5 million. It made a non-GAAP profit of $1.62 per share, improving from its loss of $0.14 per share in the same quarter last year.
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Spectrum Brands (SPB) Q1 CY2024 Highlights:
- Revenue: $718.5 million vs analyst estimates of $708.6 million (1.4% beat)
- Adjusted EBITDA: $62.3 million vs analyst estimates of $60.0 million (3.8% beat)
- Guidance for full year revenue now flat compared to 2023 (previously expected a decline)
- Gross Margin (GAAP): 38.1%, up from 29.5% in the same quarter last year
- Free Cash Flow was -$9 million compared to -$12.7 million in the previous quarter
- Organic Revenue was down 1.6% year on year
- Market Capitalization: $2.56 billion
A leader in multiple consumer product categories, Spectrum Brands (NYSE:SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.
Household ProductsHousehold products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.
Sales GrowthSpectrum Brands carries some recognizable brands and products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the other hand, Spectrum Brands can still achieve high growth rates because its revenue base is not yet monstrous.
As you can see below, the company's revenue has declined over the last three years, dropping 7.5% annually. This is among the worst in the consumer staples industry, where demand is typically stable.
This quarter, Spectrum Brands's revenue fell 1.5% year on year to $718.5 million but beat Wall Street's estimates by 1.4%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.
Organic Revenue GrowthWhen analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.
Spectrum Brands's demand has been falling over the last eight quarters, and on average, its organic sales have declined by 5.1% year on year.
In the latest quarter, Spectrum Brands's organic sales fell 1.6% year on year. This decrease was an improvement from the 10.1% year-on-year decline it posted 12 months ago. It's always great to see a business improve its prospects.
Key Takeaways from Spectrum Brands's Q1 Results We liked seeing Spectrum Brands beat analysts' adjusted EBITDA expectations this quarter. We were also excited its gross margin outperformed Wall Street's estimates. Lastly, the company raised its full year revenue outlook, now expecting it to be flat vs. 2023 compared to a prior expectation of a sales decline. Zooming out, we think this was a solid quarter. The stock is flat after reporting and currently trades at $84.52 per share.
