Spectrum Brands (NYSE: SPB) reported Q2 EPS of $0.26, $0.10 worse than the analyst estimate of $0.36. Revenue for the quarter came in at $906.7 million versus the consensus estimate of $873.51 million.

• Reported and Organic Sales Growth of 3% and 5%
• Repurchased 8.6% of Common Shares Outstanding
• Significant Deleveraging from Debt Reduction Totaling $2.4 Billion

“Our Q2 results, highlighted by strong and broad-based top-line growth, met our expectations, and we remain on track to deliver full-year adjusted EBITDA within our guidance range of $560-$580 million,” said David Maura, Chairman and Chief Executive Officer of Spectrum Brands Holdings.

• Net sales growth was led by a 14% increase in Home & Garden and strong growth in Hardware & Home Improvement. Organic net sales increased 4.9%, excluding $19.3 million of unfavorable foreign exchange, with all four divisions delivering organic sales growth.
• Gross profit margin decreased 100 basis points primarily due to input cost inflation and unfavorable product mix, partially offset by pricing.
• Operating income increased as a result of lower acquisition, integration and restructuring charges. Operating margin expanded 100 basis points.
• Increased net loss and diluted loss per share were driven by one-time interest charges related to early debt extinguishment and foreign exchange losses associated with multi-currency divestiture loans, partially offset by lower restructuring and acquisition and integration expense and a larger income tax benefit.
• Lower adjusted diluted EPS was attributable to higher operating expenses driven by a year-over-year change in stock-based compensation and higher interest costs from assumed HRG debt.
• Adjusted EBITDA of $115.6 million was essentially unchanged. Growth in Home & Garden and Hardware & Home Improvement, as well as lower corporate expenses and investment income, was offset by decreases in Home & Personal Care and Global Pet Supplies.
• Adjusted EBITDA margin fell 40 basis points driven primarily by increased distribution costs and unfavorable mix.
• Income from discontinued operations, net of tax, was $783.6 million as a result of the completion of the Global Battery & Lighting and Global Auto Care divestitures in January of 2019.

“Significant, value-creating actions were completed in the second quarter,” Mr. Maura said, “that accelerate Spectrum Brands’ transformation in 2019 into a meaningfully stronger and more focused consumer products company poised to resume profitable growth in 2020 and drive long-term value creation.

“We quickly used $2.9 billion in asset sale proceeds to reduce debt by $2.4 billion and materially delever our balance sheet, while ending the quarter with strong liquidity of more than $800 million,” he said. “We also returned $250 million to shareholders through an aggressive repurchase of nearly 9 percent of our shares, leaving up to $750 million available on our existing 3-year buyback authorization.

“We are currently conducting a detailed analysis of our global operating model to identify opportunities for significant performance improvement and operating efficiencies across our businesses as we seek to position the new Spectrum Brands as a more focused and streamlined company,” Mr. Maura said. “At the same time, we continue to refine our organizational structure with new leadership in key roles, expand our innovation pipeline across all four businesses, and meaningfully step up investment spending behind our strongest brands.”

Fiscal 2019 Outlook for Continuing Operations

Spectrum Brands expects reported net sales growth driven by innovation, increased marketing investments, pricing actions and market share gains. The impact from foreign exchange on net sales is now expected to have a negative impact of approximately 130 basis points based upon current rates.

Adjusted EBITDA is expected to be between $560-$580 million, and capital expenditures are expected to be between $70-$75 million.

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