Executive Summary

Spectrum Brands’ Q2 2025 was challenged: revenue $675.7M (-6.0% YoY), adjusted EBITDA $71.3M (-36.5% YoY), adjusted EPS $0.68 (-51% YoY). Management pivoted to maximize cash, withdrew FY25 earnings framework, and guided to ~$160M free cash flow for FY25 .
Results missed Street consensus: adjusted EPS $0.68 vs $1.38; revenue $675.7M vs $693.0M; adjusted EBITDA $71.3M vs $86.5M. Q1 2025 was a mixed quarter (EPS beat, revenue slight miss). Values retrieved from S&P Global.*
Segment backdrop: Global Pet Care and Home & Personal Care saw North American category softness; Home & Garden was impacted by Q1 pull-forward yet maintained innovation momentum (Spectracide, Hot Shot) .
Strategic catalysts: rapid supply-chain relocation out of China (GPC to ~$20M remaining by FY25-end; HPC ~35% U.S.-bound alternative sourcing by FY25-end, ~45% by calendar year-end), continued buybacks ($140M authorization remaining), and M&A optionality in pet consumables. HPC separation delayed amid tariff/geopolitical headwinds .

What Went Well and What Went Wrong

What Went Well

Liquidity/Balance Sheet: $96.0M cash, $504.6M total liquidity, net debt ~$560.9M; net leverage ~1.7x provides flexibility to secure non-China supply and pursue opportunistic M&A .
Rapid tariff mitigation: “We made the tough decision to pause virtually all finished purchase goods from China… GPC… expects to reduce that exposure to approximately $20 million by fiscal year-end,” with HPC alternative sourcing ramping to ~35% by FY25-end and ~45% by calendar year-end .
Innovation/commercial execution: H&G pipeline (Spectracide traps, Hot Shot Flying Insect Trap) with strong early POS; GPC brand campaigns (Good ‘n’ Fun WNBA halftime sponsorship) and new pet nutrition launches; HPC product launches (Emeril French Door air fryer variant, Remington Botanicals at Walmart) .

What Went Wrong

Tariffs and demand softness: North American category demand softened in GPC and HPC; tariff exemption expirations and incremental tariffs pressured margins; Home & Garden impacted by Q1 retailer pull-forward and S/4HANA timing .
Profitability compression: Gross margin down 60 bps to 37.5%; adjusted EBITDA margin down 500 bps to 10.6%; adjusted EPS fell to $0.68; HPC adjusted EBITDA fell to $7.3M (2.9% margin) on lower volumes, higher trade spend, unfavorable mix, and tariffs .
Visibility reduced: Withdrawal of FY25 earnings framework due to unprecedented tariff conditions and softer U.S./European demand; HPC separation delayed until tariff clarity or supply chain transition completes .

Financial Results

Consolidated Performance by Quarter (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$773.7	$700.2	$675.7
GAAP Diluted EPS – Continuing Ops ($)	$0.45	$0.87	$0.06
Adjusted Diluted EPS ($)	$0.97	$1.02	$0.68
Gross Margin (%)	37.2%	36.8%	37.5%
Adjusted EBITDA ($USD Millions)	$68.9	$77.8	$71.3
Adjusted EBITDA Margin (%)	8.9%	11.1%	10.6%
Net Income Margin – Continuing Ops (%)	1.7%	3.5%	0.3%

Q2 2025 Actual vs Consensus

Metric	Actual	Consensus	Beat/Miss
Adjusted EPS ($)	0.68	1.38	Miss*
Revenue ($USD Millions)	675.7	693.0	Miss*
Adjusted EBITDA ($USD Millions)	71.3	86.5	Miss*

Values retrieved from S&P Global.*

Segment Net Sales and EBITDA

Q2 YoY comparison:

Segment	Net Sales Q2 2024 ($MM)	Net Sales Q2 2025 ($MM)	Adjusted EBITDA Q2 2024 ($MM)	Adjusted EBITDA Q2 2025 ($MM)
Global Pet Care	$289.9	$269.2	$62.3	$50.0
Home & Garden	$160.7	$152.3	$29.2	$26.7
Home & Personal Care	$267.9	$254.2	$17.8	$7.3

Sequential (Q1 → Q2):

Segment	Net Sales Q1 2025 ($MM)	Net Sales Q2 2025 ($MM)	Adjusted EBITDA Q1 2025 ($MM)	Adjusted EBITDA Q2 2025 ($MM)
Global Pet Care	$260.0	$269.2	$51.5	$50.0
Home & Garden	$92.1	$152.3	$9.3	$26.7
Home & Personal Care	$348.1	$254.2	$26.7	$7.3

KPIs and Balance Sheet

KPI	Q2 2025
Cash and Cash Equivalents	$96.0M
Total Liquidity	$504.6M (incl. $408.6M undrawn revolver)
Total Debt	$656.9M (Revolver $83.0M; Notes $496.1M; Leases $77.8M)
Net Debt	~$560.9M
Share Repurchases	2.0M shares for $159.9M in Q2; $1.28B since HHI close; 24.9M shares outstanding “as of today”
FY25 Free Cash Flow Guidance	~ $160M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Reported Net Sales Growth	FY 2025	Low single-digit growth	Framework suspended	Lowered/Withdrawn
Adjusted EBITDA Growth	FY 2025	Mid to high single-digit growth	Framework suspended	Lowered/Withdrawn
Adjusted Free Cash Flow	FY 2025	~50% of adjusted EBITDA	~$160M	Updated methodology (cash focus)
Capex	FY 2025	$50–$60M	No update in Q2 (framework suspended)	Indeterminate
Cash Taxes	FY 2025	$40–$45M	No update in Q2 (framework suspended)	Indeterminate
D&A; SBC	FY 2025	D&A $115–$125M; SBC $20–$25M	No update in Q2 (framework suspended)	Indeterminate
Dividend	Quarterly	$0.47 per share declared (raised to $0.47 in Nov-2024)	$0.47 payable Jun 17, 2025	Maintained
Share Repurchases	Ongoing	$402.7M remaining as of FY24-end	~$140M remaining authorization; “strategically utilizing”	Reduced remaining capacity post buybacks

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 & Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Macro	Anticipated ocean freight inflation; tariff exclusion expiration headwinds; cautious consumer outlook	Unprecedented tariff escalation; paused China finished goods imports; FY25 framework withdrawn	Deteriorated; visibility reduced
Supply Chain Relocation	Initiated shifts post Section 301 expiration; planning for alternatives	GPC to ~$20M China by FY25-end; H&G virtually out by FY25-end; HPC ~35% alt sourcing FY25-end, ~45% by CY-end	Accelerating relocation
HPC Separation	Actively engaged with buyers; dual-track sale/spin; timeline extended by geopolitics	Delayed until tariff clarity or supply outside high-tariff countries; not feasible to spin near term	Postponed
Consumer Demand	Q4: value skew in H&G; premium pressure in GPC; HPC e-com strength	North America softness in GPC/HPC; cautious EMEA; retailers’ prebuild phasing in H&G	Cautious
E-commerce	HPC e-commerce strong; POS improving; GPC online momentum	HPC e-commerce outpacing brick & mortar; GPC online engagement to stabilize demand	Positive channel mix
Innovation	Spectracide One-Shot, Hot Shot wins; GloFish Angelfish launch; Remington/Black+Decker SKUs	New H&G trap with strong early POS; GPC nutrition launches and campaigns; HPC product extensions	Sustained
Capital Allocation	FY24 buybacks ($482.7M); dividend raised to $0.47	~2.0M shares repurchased Q2; ~$140M authorization remaining; balancing buybacks with M&A optionality	Disciplined, opportunistic

Management Commentary

“We made the tough decision to pause virtually all finished purchase goods from China… we expect to have sourcing alternatives outside of China for the U.S. market for all but about $20 million of our total GPC purchases by the end of the fiscal year.” — David Maura, CEO .
“Given the unprecedented global tariff conditions… we do not have sufficient visibility to continue providing an earnings framework for fiscal ’25. We expect to deliver $6 to $7 per share of free cash flow this fiscal year.” — David Maura, CEO .
“Adjusted EBITDA was $71.3 million… driven by lower volume, reduced gross margins and increased brand-focused investments; excluding prior-year investment income, adjusted EBITDA declined $24 million.” — Jeremy Smeltser, CFO .
“Home & Garden sales decreased 5.2% due to timing shifts… early POS reads on innovation are well above expectations.” — Jeremy Smeltser, CFO .
“HPC adjusted EBITDA margin declined to 2.9%… driven by lower volumes, higher trade promotions, unfavorable mix, incremental tariffs… and inflation.” — Jeremy Smeltser, CFO .

Q&A Highlights

Competitive advantage under tariffs: Management emphasized scale (e.g., Black+Decker $400M brand; Good ‘n’ Fun >$250M) and strong balance sheet to secure priority with alternative factories, while pricing under worst-case tariff scenarios .
Tariff impact framing: CFO outlined ~$300M prior China sourcing exposure ($100M pet, $200M HPC) but noted immediate halt to China orders and business-by-business mitigation; Q3 expected similar to Q2, with Q4 uncertainty tied to demand/product availability .
Capital allocation pivot: Ongoing buybacks while preserving liquidity for accretive pet M&A; focus on consumables (niche food/treats, health/wellness, cat) to lift portfolio multiple .
HPC transition details: 15–20% of HPC U.S. SKUs may not move (smaller, lower-margin) near term; majority of alternative sourcing through existing suppliers in new geographies (Asia, Mexico) .
Free cash flow building blocks: Working capital actions (sell-down of U.S. HPC inventory and receivable collections in H2), disciplined spend, and no significant forward inventory buying for tariffs; majority FCF in second half .

Estimates Context

Q2 2025: Spectrum missed consensus on adjusted EPS ($0.68 vs $1.38), revenue ($675.7M vs $693.0M), and adjusted EBITDA ($71.3M vs $86.5M). Values retrieved from S&P Global.*
Q1 2025: Adjusted EPS beat ($1.02 vs $0.92), while revenue slightly missed ($700.2M vs $703.3M). Values retrieved from S&P Global.*
Q4 2024: Adjusted EPS missed ($0.97 vs $1.07), revenue beat ($773.7M vs $747.5M). Values retrieved from S&P Global.*

Where estimates may need to adjust: Models should reflect tariff-driven volume constraints in U.S. HPC and continued premium trade-down in GPC, tempered by rapid supply relocation and H&G seasonal ramp with innovation. Management’s withdrawal of the FY25 framework necessitates wider bands on H2 assumptions and closer monitoring of tariff policy outcomes .

Key Takeaways for Investors

Near-term setup: Guidance withdrawal and broad consensus misses point to elevated uncertainty into Q3/Q4; H&G seasonal performance and tariff developments are key trading catalysts .
Cash-first operating model: Management pivot to maximize FY25 FCF (~$160M) and protect liquidity reduces downside risk and supports ongoing buybacks/M&A optionality despite earnings pressure .
Supply-chain agility: Concrete milestones to exit China for GPC/H&G by FY25-end and materially reduce HPC exposure by CY25-end mitigate tariff risk and should support margin/availability stabilization in FY26 .
Segment lens: Favor H&G into the core season (innovation and retailer support), remain cautious on North America HPC/GPC premium categories; e-commerce remains a structural tailwind for HPC .
Strategic optionality: Strong balance sheet/leverage (~1.7x) positions SPB to consolidate pet consumables and re-rate; HPC separation likely revisited post tariff clarity/sourcing transition .
Watch list: Pricing actions, retailer reorder patterns, the pace of alternative sourcing, and tariff policy headlines; non-GAAP adjustments (impairments, ERP/separation costs) remain notable in reported metrics .
Actionable: Model H2 with constrained U.S. HPC supply and cautious GPC demand; carry H&G upside scenario on favorable weather/POS; tilt valuation weight to FCF and balance sheet strength over near-term GAAP EPS volatility .

Citations: Q2 2025 8‑K press release and exhibits ; Q2 2025 earnings call transcripts and –; Q1 2025 press release –; Q4 2024 press release/call – –; Dividend press release .

*Values retrieved from S&P Global.

Spectrum Brands Holdings, Inc. (SPB)·Q2 2025 Earnings Summary