Spectrum Brands Lifts 2021 Forecast on Strong Consumer Demand After Second-Quarter Beat; Plans Price Hikes to Offset Rising Costs
02:09 PM EDT, 05/07/2021 (MT Newswires) -- Spectrum Brands Holdings (SPB) said strong consumer demand across its broad range of home products and hardware supplies continued to outpace supply as the maker of Remington shavers and George Foreman grills thumped Street estimates and raised its annual forecast, saying it plans to offset rising logistics costs with price hikes.
The Middleton, Wisconsin-based company reported adjusted earnings per share from continuing operations of $1.76 for the quarter ended April 4, from $0.91 a year earlier, sweeping past the $0.99 average analyst estimate compiled by Capital IQ poll. Net sales rose 23% to $1.15 billion, versus the Street's view for $1.03 billion.
"Our latest financial results for second quarter reflect another quarter of exceptional top line growth," Chief Executive David Maura said in a statement. "Our operating leverage also improved despite higher inflation and incremental investments in marketing and advertising. Higher re-investments continue to reignite the fly wheel of new product launches, improving our top line growth, expanding our margins and driving greater profitability and cash flow generation."
The company said it now expects fiscal 2021 net sales and adjusted earnings before interest, tax, depreciation, and amortization growth in mid-teens, from high single-digit gains previously. Commodity and transportation costs are expected to increase by $120 million to $130 million from fiscal 2020, Spectrum said, exceeding company projections of $100 million to $110 million three months ago.
"We are working in concert with our supplier partners to offset this inflation and have additional mitigation actions in many areas, such as ocean freight and supplier management," Chief Operating OIfficer Randal Lewis said on the earnings conference call, according to the Capital IQ transcript.
"The agreed-upon price increases with our retail partners are going into effect now during Q3 and are expected to continue to step up during Q4," he added." We anticipate further pricing discussions being necessary in the back half of the calendar year. Some of these inflationary pressures are likely temporary in nature and may begin to moderate in fiscal 2022."
Hardware and home improvement sales rose 18% year-over-year to $389.5 million, "as consumer demand continues to outpace supply," according to the company. "We expect continued demand increases throughout the balance of 2021 driven by our new product introductions and incremental advertising investments, " Lewis said. "Fundamentals across both the repair and remodel segment as well as the newbuild channels continue to be strong."
Home and personal care net sales surged 28% to $297.9 million, driven by strength in small kitchen appliances and personal care products and an assist from recent US stimulus payments, Spectrum Brands said.
Global pet care net sales jumped 24% to $293.6 million, and the company expects the category's gains amid a pandemic-fueled demand for pets to stick. "We anticipate sustained demand for our high-margin consumables given all of the new pet parents in companion animal and all the new hobbyists who have recently entered the aquatics and reptile categories," Lewis said. Home and garden net sales grew 21% to $168.8 million, reflecting "improved production capabilities to meet continued high levels of demand," the company said.
Price: 92.76, Change: +1.19, Percent Change: +1.30