Spectrum Brands (NYSE: SPB) reported Q3 EPS of $1.76, $0.21 better than the analyst estimate of $1.55. Revenue for the quarter came in at $945.5 million versus the consensus estimate of $900.74 million.

Fiscal 2018 Third Quarter Highlights from Continuing Operations:

• Net sales of $945.5 million in the third quarter of fiscal 2018 increased 9.6 percent compared to $862.9 million last year. Excluding the impact of $4.9 million of favorable foreign exchange and acquisition sales of $14.5 million, organic net sales increased 7.3 percent versus the prior year.
• Net income from continuing operations of $377.4 million and diluted EPS from continuing operations of $11.51 in the third quarter of fiscal 2018 increased compared to a net loss from continuing operations of $16.6 million and diluted loss per share from continuing operations of ($0.51) in fiscal 2017 primarily due to increased operating income, changes in the U.S. corporate tax rate, and release of HRG valuation allowances.
• Adjusted diluted EPS from continuing operations of $1.76 in the third quarter of fiscal 2018 increased 23.9 percent versus $1.42 last year predominantly due to higher gross profit and changes in the U.S. corporate tax rate.
• Operating income of $126.3 million in the third quarter of fiscal 2018 increased 25.4 percent versus $100.7 million last year primarily as a result of higher volumes.
• Operating income margin of 13.4 percent in the third quarter of fiscal 2018 increased 170 basis points versus 11.7 percent last year.
• Adjusted EBITDA of $206.4 million in the third quarter of fiscal 2018 increased 3.6 percent compared to $199.3 million in fiscal 2017. Excluding the impact of favorable foreign exchange of $0.4 million and acquisition EBITDA of $5.6 million, organic adjusted EBITDA of $200.4 million increased 0.6 percent versus the prior year.
• Adjusted EBITDA margin of 21.8 percent in the third quarter of fiscal 2018 decreased 130 basis points compared to 23.1 percent in fiscal 2017 primarily due to operating inefficiencies, input cost inflation and higher distribution costs.

“I am pleased to report to you today that the turnaround of our HHI and GAC business units is well under way,\" said David Maura, Chairman and CEO of Spectrum Brands Holdings. “While we have much more progress to make and will be investing in further efficiency measures over the next 12 months, I am thrilled that the leadership changes we have made and the focus on restoring the ownership accountability culture of our Company are already reading through to positive financial results. To execute 14.7 percent sales growth in our HHI division and a 12.5 percent top-line growth in our GAC division is gratifying, and a testament to what is possible with new leadership, new culture and an intense passion to win from our employee partners in these divisions.

“As we are regaining operating momentum, we are on track to deliver the improved performance we promised in the second half of this fiscal year,” Maura said. “As such, we reiterate our fiscal 2018 adjusted EBITDA guidance for continuing operations of $600-$617 million and total company adjusted free cash flow of $485-$505 million.

“Led by double-digit growth in our HHI and Auto Care businesses and a strong top line in Home & Garden, we reported our highest organic sales growth rate in many years in the third quarter, our largest fiscal quarter, as we experienced solid market demand for our brands and benefited from markedly reduced order backlogs in Kansas and Dayton,” he said. “Adjusted EBITDA grew 4 percent, while our margins continued to be impacted by increased input and freight costs, unfavorable product mix, and higher costs even as we continue to improve the efficiency of the Kansas and Dayton facilities.

“I am particularly pleased with our EBITDA margin recovery in our GAC business as we rebounded from a 16% EBITDA margin in our second quarter to a 28.6% EBITDA margin in the third quarter,” Maura said. “We have much more work to do in Dayton, but we are on our way and the business is rebounding, proving the issues we faced were indeed largely transitory.

“As we anniversary our rawhide recall, I continue to be bullish on the outlook for our Pet unit. This quarter’s results, however, were impacted by short-term, start-up issues in late April and May with the consolidation of our European aquatics and pet distribution centers in the Netherlands,” said Maura. “The temporary customer order backlog that developed in the third quarter we expect to ship in the fourth quarter as this facility returns to normal operating rhythm. Our U.S. Pet business delivered encouraging results in the third quarter, with our PetMatrix and Glofish acquisitions leading the way and last year’s rawhide recall now essentially behind us.

“Our tax-free merger with HRG Group closed on July 13, and we welcome HRG shareholders to the Spectrum Brands family,” Maura said. “This transaction results in a more widely distributed shareholder base, meaningfully increased trading liquidity, and an independent governance structure, while bringing us important tax attributes.

“We remain on track to close the sale of our Global Battery and Lighting business to Energizer Holdings for $2 billion in cash by the end of calendar 2018,” he said, “and we remain in active discussions to divest, and continue to market, our Personal Care and Small Appliances businesses.

“The significant net proceeds we will receive from these divestitures,” Maura said, “will be used to reduce debt, repurchase shares, and increase investment in organic growth initiatives and bolt-on acquisitions in our four higher-margin and faster-growing remaining businesses.”

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