Spectrum Brands (NYSE: SPB) reported Q2 EPS of $1.19, $0.07 worse than the analyst estimate of $1.26. Revenue for the quarter came in at $1.17 billion versus the consensus estimate of $1.22 billion.

Fiscal 2017 Outlook

Spectrum Brands expects fiscal 2017 reported net sales to grow above category rates for most categories, along with an anticipated negative impact from foreign exchange of approximately 100 to 150 basis points.

Fiscal 2017 adjusted free cash flow is projected to be approximately $575-$590 million compared to $535 million in fiscal 2016. Capital expenditures are expected to be in the range of $110 million to $120 million, including rollover spending from fiscal 2016. These incremental investments will support footprint optimization, vertical integration improvements, technology and innovation and are expected to enhance the Company’s margin structure and organic net sales growth rate.

Fiscal 2017 Second Quarter Highlights:

• Net sales of $1.17 billion in the second quarter of fiscal 2017 decreased 3.3 percent compared to $1.21 billion last year. Excluding the negative impact of $9.7 million of foreign exchange, organic net sales fell 2.5 percent from the prior year.
• Net income of $58.8 million and diluted EPS of $1.00 in the second quarter of fiscal 2017 decreased compared to net income of $92.6 million and diluted EPS of $1.55 in fiscal 2016 primarily due to a lower effective tax rate last year relating to the adoption of a new accounting standard for stock compensation.
• Adjusted diluted EPS of $1.19 in the second quarter of fiscal 2017 improved 2.6 percent compared to $1.16 last year primarily due to lower interest costs, partially offset by the negative impact of foreign exchange.
• Operating income of $144.1 million in the second quarter of fiscal 2017 declined 3.0 percent compared to $148.5 million in fiscal 2016 primarily as a result of lower volumes, the negative impact of foreign exchange and one-time operating expenses of $4.8 million associated with a retail bankruptcy, employee-related taxes from an acquired business and legal costs.
• Operating income margin of 12.3 percent in the second quarter of fiscal 2017 was unchanged compared to the prior year.
• Adjusted EBITDA of $220.1 million in the second quarter of fiscal 2017 decreased 4.1 percent compared to $229.6 million in fiscal 2016. Excluding the negative impact of foreign exchange of $3.6 million, organic adjusted EBITDA of $223.7 million decreased 2.6 percent versus the prior year.
• Adjusted EBITDA margin of 18.8 percent in the second quarter of fiscal 2017 was slightly lower compared to 19.0 percent in fiscal 2016 primarily due to the negative impact of foreign exchange and one-time operating expenses of $4.8 million associated with a retail bankruptcy, employee-related taxes from an acquired business and legal costs.
• Adjusted free cash flow is expected to grow to approximately $575-$590 million versus $535 million in fiscal 2016 and $454 million in fiscal 2015, based on expected net cash provided from operating activities of $695-$710 million after expected purchases of property, plant and equipment of $110-$120 million.

For earnings history and earnings-related data on Spectrum Brands (SPB) click here.