Spectrum Brands Inc: This dog won’t bite; maintain Overweight

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Spectrum Brands Inc: This dog won’t bite; maintain Overweight

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Spectrum Brands Inc

This dog won’t bite; maintain Overweight

Credit Analysis

Maintain Overweight 15 July 2026

We maintain our Overweight on the 3.875% Sr Notes due 2031 as bonds continue to High Yield Credit

trade wide relative to credit metrics and we expect FY26 to be a solid year. Demand for United States

pet products has stabilized and comparisons are favorable in Home & Garden (H&G). The Consumer Products

3.875s trade at a yield of 7.2%, which is wide relative to other HY consumer products

William M. Reuter

companies with net leverage below 2x. We expect solid results to cause spreads to Research Analyst

tighten. BofAS

+1 646 855 6363

william.m.reuter@bofa.com

HPC segment receives investment Michael DeRienzo

Spectrum Brands announced that Oaktree will invest $127 million in its Home and Research Analyst

BofAS

Personal Care (HPC) business. The investment will consist of (1) $67 million of michael.derienzo@bofa.com

convertible preferred equity and (2) a $60 million first lien term loan. The HPC business

will no longer be a part of the collateral package of the parent company’s debt. Oaktree Spectrum Brands Inc (SPB)

will own 27% of HPC equity. The transaction is part of an effort to separate HPC from Key Data 2Q2025A 2Q2026A LTM

Spectrum. Operating (US$ mm)

Revenues 676 709 2,819

2Q was far above our estimates Adj EBITDA 71 84 287

2Q26 Adj EBITDA increased 18% to $84 million due to growth in all three business Cash from ops 23 10 331

segments. Results were significantly above our estimates. Revenue increased 5% to Capex (9) (9) (41)

$709 million including: Global Pet +11%, Home & Garden (H&G) +11%, and Home & Free cash flow 14 1 290

Personal Care (HPC) -6%. Organic revenue increased 2%.