SPB - Earnings call transcript Q4 2018 | Spectrum Brands Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectrum Brands Fiscal 2018 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' prepared remarks, there will be a question-and-answer period. Instructions]. [Operator

Vice ladies XX. conference now Prichard, Thank introduce David reminder, today, being like you gentlemen, Relations Mr. November Investor conference. Monday, you. Prichard, may and begin a Brands. is this recorded to for your As Spectrum of Mr. President I would

David Prichard

moderator Spectrum I'll and Relations our Prichard, XXXX Vice for of Holdings' Investor Fourth be Webcast. Quarter Thank you, Brands and Dave operator, Earnings Spectrum I'm and Brands, for your welcome to today. Fiscal Conference Call call President

Now slide you there section remain spectrumbrands.com. follow the Calendar placed to at our help will Relations comments, presentation page following have our we of Investor Event site document a our call. Web on the This in

you'll Maura, our by deliver then our Doug Now Q&A be led opening and will Chairman Chief see and and that and if with Financial this we start Doug David call will remarks Executive Slide session. Chief Officer; X David Martin, the Officer. presentation, conduct of

today's Our to General now and statements, the dated statements. and please call. press outlook measures Q&A non-GAAP We our XXXX turn also recent and discuss the will management's site we will include factors update expectations, our Spectrum Maura. and upon our on Counsel, comments our review X, CEO, note based session. Brands November If to over today may beyond. in in are that for attendance Reconciliations to is Relations will our statements our GAAP and filings participate These financial he most nature Also, SEC in we release projections, and forward-looking are basis and filing, obligation the both forward-looking no are cautionary Ehsan on X the Chairman outlined and in call included release Zargar, I and and slides a including the now uncertain. materially. to risk this press X-K current call turn XX, encourages Web XXXX, fiscal that to any available which in measures assume on Brands in Investor are XX-K. you assumptions Due for by statements most differ results Actual these recent section. certain Holdings' David risk, Spectrum

David Maura

Dave, joining everybody you, Thank and for today. us thanks

'XX Over opportunities able for that the past believe and we new XXXX. Upon each and operating our pursuing, senior that and changes, the strategy expect tirelessly every its and significant I plus apply prepare transactions evaluate with sustainable towards results unit’s each team business six balance the long our reviewed business debt our and unit company be in months, value planned will challenges. we’re short-term meaningfully we growth strategic delever have I management my in and fiscal We’ve and team, billion to the reduction, gross the stabilize of available $X.X to will proceeds operational also divestitures, fiscal to assessed and prospects. completion this sheet. worked the which

four at us Garden, operating Home narrow our Home to business, to markets the stronger reinvest products strong and X.Xx focus remaining position, narrower the allow business given at while to a This the of pace which Pet maintenance end Hardware business. net Improvement we sheet at the cash transactions, approximately to at at Once delever a ended liquidity will our very we a which stood our will our growth our the Appliance of X.Xx. With restore behind and our sheet to will stood these strategically balance net fiscal the time leverage both which we and and & greatest 'XX, XXXX, have focus potential. the we & will businesses leverage resources our As total have global the stood balance growth X.Xx, units. faster of X.X focus of and much close billion EBITDA on

impacted As were during in explain our and quarter largely fourth that Doug in our call, in were investment this future this in success we one-time versus the will to the our expectations issues nature greater choices many company. detail cases accelerate of made

months. rawhide new issues fiscal recent this our for with meaningful significant inventory & multiyear investments for example, here our and, rebates and obsolete and growth product spend the liquidated Home the retailers. Home Pet Auto accrual. how up made that performs duty and to sales division, claim, obsolete we sheet Care actions and After & relaunch unfavorable prepared distribution did we Pet our the impacted 'XX we curtailed FURminator These for our season in in XXXX, and we Energizer next excited the Auto to States some wrote and of the a product Garden also excess Care expect with our over balance the unit, a state. business inventory fiscal For I’m In to to also and new gains. business In very lines. trade for XX business end experienced healthy Global established we in excess off Garden off Auto the year’s see in accrual meaningful in division Garden and selling liquidate sale sheet 'XX took launches In clean the Home obsolete business. established wrote United business, we a Care balance in business. review also similar business, associated meaningful was excess of cleaner reserves by at and support to for vendor inventory legal a our & this an this which numerous weather our we with the to one-time we our catch-up quarter lower We unit,

which the business and SmartBone our animal HHI acquisitions DreamBone year. While for both we still initial to in expect much is our outperform our PetMatrix, The business do our Pet have this companion work underwriting assumptions. of we solid and operations continues solid to operations, performance have our in Europe the made Despite fourth and GloFish during fundamental another effectively noise and year fiscal remaining steadier expected much meaningful changes expect we is 'XX. four our to year matched 'XX. businesses, its of course performance, quarter in performance ago fiscal to we earnings the

brands number future. significant our have And business, the products States, stabilize pending and each a we strong Additionally, we sales major renewed and and business, we business support forward. a the behind expect brands. In closing our upon significant for and our strong market we in-store With have pipeline going we strong X forward. number of on HHI in flow and Pet Home will a to HHI Care and and I innovation, believe selling, with operations go all our remaining reinvesting appliance result have flow in with have investments our marketing, the headwinds share businesses we growth we strengths good business we residential grow fiscal margins, and focus we this brands growth Slide In great innovative the personal have facing each excellent in transactions, growth, enhanced advertising more United now, number with meaningful are operations. free of have competitive making vertically and you XXXX expect great have businesses customer relationships this identified and margins new, small R&D, sales balanced turn margins. number the business marketing, gain a we solid unit, X recovering distribution, exposure. & here X cash units. brands to and can again. our a example, point sustainable X with channel are care our which retailer If as innovation cash of and In integrated X with and fantastic business, launching manufacturing business both in Garden behind builders’ and Appliance can In world-class the security is business. In with a in hardware, at we conversion we

be will core all investments material of our making in 'XX fiscal four During we businesses.

included increase upgrade you continuing XXXX. turn have EBITDA We $XXX invest the materially and In R&D. last investment and role and selling, to focus eliminate in new behind importance strength of have the to product company, priority my advertising months, the We culture free the our of and a and top fosters culture of firmly the information it X to company duplication. could and with and the expect been of from million power million XXXX. This is a has in of will guidance Slide a of operations inclusivity change the promoting level goal the organization to and the the marketing, the to talent of mine return the I meaningful ideas. the that I my both Hand-in-hand growth flow to seen offerings six If vitality please. trajectory $XXX by over

lines has For the has example, and company. Randy of new business company’s our culture. Operating already. of appointed Officer all is operator with Chief knowledge major several the to deep promoted leaders strongest Randy been the the businesses Lewis our of in He

to introduced incentive of the our on also new mentality longer-term an of structures have company-wide part promote ownership many employees. improved, all We and

our to to company’s this it up details say fourth unit also we them allow quarter XX.X% I of and I recently common own stock, XX.X% on to from year’s Jefferies will amended our for currently. the This Group. shareholder up agreement over Financial new with and Before to Doug want business have that turn outlook, amendment the

input in in confidence I of blackout company in mention and supportive and been that been has granted their the to constructive executive for to a team the a management sell the forward. have with worth up $XX We their stock. million going Jefferies we many us material to and have want period and value and relationship years, Separately, multiple business

needs but way repurchases. the shares we the will prospects share circumstances these the liquidity of rather personal balance we opportunity it close solely sheet, of With the delever consider announced substantial will selling relates Once turn over Our that, to for Doug. to management I transactions and in to on and company relates team. no the previously the have to

Douglas Martin

form good financials. this of did plan impact the and you with on results on first about for to I presentation to I as remind morning, as everyone. our Spectrum through the HRG morning, Brands but the the in and David, July time XX merger normal the like you I’d of Thanks, take operating QX our

renamed completion surviving Brands the was surviving name, combined as Following emerged the of operations, legacy merger, The two Spectrum consumer business. global a similar as entity the will the operate companies. run company Spectrum of the Board continue to and continue to company and to Spectrum Brands, a former with products The HRG group Brands. shareholder management

period comparable HRG include and a year-to-date than solely both Spectrum rather results Spectrum and As this, Brands. of result our QX activity

Spectrum fiscal Reported cash and I will will adjusted an XXXX, adjusted EBITDA performance flow HRG. from speaking to be numbers QX include perspective. both For and only primarily Spectrum free Brands and

You can related this find additional our details XX-K. in to

be historical on section In Relations Investor company addition, and complete our Web both financial filings found separate in the for businesses information can site.

$XXX.X predominantly review XXX unchanged with sales, excluding prior operations, year million, associated or Now the Slide basis XX HRG $XX.X from continuing compared the costs. X.X% of unfavorable net decreased Kansas higher of primarily negative from transaction the year X.X%. of and and turning quarter of to margin profit share gross write-off goodwill higher higher reported lower with last primarily of from our last at margin from net sales due and and $X.X to versus negative due with goodwill, input Fourth sales. diluted GAC transactions last mix. of primarily basis, margin costs $XXX.X per from of costs to gross last to costs, $XXX.X $X.XX increased to the XX.X% primarily Dayton XX.X% QX $X.XX in reported distribution the merger. a year, HHI of costs, impairment year write-off Reported diluted of operations and million, decreased operating the per driven beginning XX% by from to X.X% the HRG investments, continuing loss EPS continuing of million. FX GAC lower QX sales, were facilities, impairment merger due higher sales of On of compared of unfavorable net business year Reported million, profit a a results year gross costs. points Spectrum loss organic due $X.XX to share SG&A Reported grew shipping decreased of or compared XX.X% XX% operations prior approximately in of and operating $X.XX to million adjusted expense marketing inefficiencies distribution and a

blended in rate versus which for the in fiscal we years XXXX XX.X% corporate state XXXX, XX% In U.S. taxes. we’ll estimated to tax, includes rate. rate changes of fiscal prior tax due use XX% annual adjusted For a an used now

year significantly charges integration restructuring compensation. million $XXX.X and from XX. versus driven our payments including the $XXX in Turning of interest to year. by last than battery well increases XXXX year. payments million projects. and Spectrum discontinued cash debt Euro-denominated million of continuing and XXXX, on depreciation, operations costs from for tax to for $XXX.X cash million share-based were amortization of to notes the worldwide million our last Spectrum cash continuing timing Reported Slide and divestiture Higher $XX.X year $XX.X to operations of and of fiscal from acquisition payments rates. the million to Spectrum as appliance expense result $XX.X costs. million due compensation as and interest Dayton year and and million $XX.X $X.X other $XXX.X in processes share-based prior in higher of last related operations, million the from $XX.X were last Spectrum and primarily Kansas million million, non-repeating Care HRG million compared of operating merger acquisition the $XX.X lower HHI decreased expense timing and respectively, $XX.X XXXX Restructuring Auto consolidation increased were Global refunds increased inefficiencies primarily related charge in taxes and received higher due payments.

performance our refrigerants. unit QX driven year, $XXX.X results the Slide increased in from Care. Global to continuing beginning operations Auto reported million versus net XX on sales chemicals Now business of on X.X% by and prior growth

decline of organic higher brands. increased decreased million, Global duty continue driven net inefficiencies, million FX multiyear marketing margin XX.X% X.X%. points basis by catch-up unfavorable liquidation and accrual, operating of a Excluding reported input Care the we with Reported investments as X,XXX of sales grew a $XX.X distribution, EBITDA E&O support Dayton higher $X.X Auto mix, costs, to adjusted

quarter had agreement have quality successful Spectrum for fixing and Global preparing made inventory November sell Care including XXXX. The comprised the the that We in regulatory is and a equity. subject to business announced to transaction $XXX in of closing the of valued of Brands We entered to This billion. progress XX Energizer is $XXX facility, XXXX. customary is significant transaction cash the million at expected Auto a on into on transaction definitive improving $X.XX approvals, close to hand, conditions, of million value second Holdings fiscal and Holdings of Dayton a Energizer

normal at tailwind the of a modest returned in our which by the along DC, Turning an hardware $XXX.X Slide net last U.S., to of order with from backlog year customer plumbing strong demand reduction from of Improvement reported and sales QX builders’ Home QX. & XX. continued historical million, residential in to X.X% Hardware end increase Kansas of the the levels to security, due

adjusted a steel, zinc, basis of input of fell unfavorable sales X.X% to of XXX due organic as increased margin million and decrease million, freight Reported XX.X Excluding copper grew costs. higher net X.X%. with EBITDA well primarily costs $X.X for FX as points

XXXX stream product highlighted a Kansas is steady underlying in growth by planning of efficiency and a is product improvement bottom-line the New The e-commerce, electronic for at in market actions. at category pricing introductions launches, QX. security especially current and HHI continued in growth, and and pace fiscal further top the labor focus fast-growing in continued, steady facility new

and exit Slide animal a dog largely agreement U.S. is predominately our in a offsetting of sales also pet dog customer exit sales customer the from to to our in of cat Europe revenues U.S. the aquatics a primarily branded European order $XXX.X a tolling from million retailer driven sales. which backlogs temporary net food in consolidation negatively a segment sales was sales, lower decline as of from strong from at by X.X%. decline Global Now X.X% decrease contributing major the planned companion and which prior-year DCs which result chews Also negatively the QX XX. increase food $X fell business reported approximately affected Pet, treats. was European completed million now of Largely and of impacted largely

and organic of with decreased XX.X% by million margin Excluding $XX manufacturing $X.X to volume-related Reported operating FX X.X%. a adjusted million, unfavorable unfavorable basis sales primarily fell point DC reported net driven EBITDA XXX volumes, inefficiencies lower variances, decline mix. unfavorable

EBITDA its the improve U.S., the works organic of solid fell $X.X its of FX XX.X%. profitability Excluding of region, it largest In million million, European performance to adjusted as fiscal $XX.X Pet XXXX, in unfavorable operations. expects

mix and issue, in basis fell growth category to & XX.X% XX.X% Garden, the QX of The sales. Adjusted Garden in lower-than-expected lack solid against of unfavorable legal declines $XX.X of a a million and points. volumes & reported decreased unfavorable reported EBITDA million were a and partially and reserve net Moving year, by rebates, volumes, the Home the reduced, of variances XXX margin insecticide repellent offset exiting product for household decreased to deliver strong Slide timing to input hurricanes in due lower growth demand of production volume of retailers’ Home sales category to Garden lower improvement and the new by Home savings. relating and XX. inflation. & the EBITDA manufacturing $XXX.X driven result mix prior vendor XXXX, and from is early XXXX expects strong which as sales were X.X% cost promotional business, continued improved related continuous of timing unfavorable

cash $X.X X.Xx the at flow billion. a year. redemption of balance Brands. expenditures, million. senior the of X.Xx We January $XXX X.XXX% balance the our fiscal end outstanding Capital Slide million in liquidity revolver was including available prior of leverage $XXX strong was approximately at the XXXX, fiscal notes $XXX with including to and very merger $XXX of Total primarily XXXX, the XX. Debt million in Spectrum the on for end position prior were to million of cash than lower to XXXX sheet a million result a Spectrum Moving as compared in $XXX ended HRG $XXX on operations, slightly million of XXXX discontinued

guidance. XX Slide our and XXXX to Turning

We tariff-related current impact expect marketing innovation, include based The which is market from continuing well growth negative rates. sales in meaningful expected driven FX reported increased XXXX by net investments, be share to on actions, pricing as modestly operations on increases, gains. as sales

to million continuing EBITDA we the actions. We including and million of as expect partially be also anticipated in cost adjusted $XXX operations increases, operations impact the from and input stabilize to revenue-generating offset pricing $XXX range increase investments, by tariffs

timing free the time. Given guidance as at cash adjusted fiscal use proceeds, uncertain for expense, it to not this are interest and XXXX providing particularly of we relates flow

we XXXX. tax use blended For now versus adjusted rate rate you. of fiscal earnings, Thank XX.X% of state including a a in XX%, taxes,

questions. Now to back Dave for

David Prichard

Thank now you, David you may Q&A begin that, Doug. session and please. the Operator, with

Operator

Thank you. [Operator Instructions].

the go Your Alwy of ahead. first Bank. question comes from Please with line Faiza Deutsche

Faiza Alwy

Good morning. Hi. Yes.

David Maura

morning. Good

Faiza Alwy

question what quarter. about. on my like just of give you’ve lot So from changed if the your today first talked reported? view that I us just factors Because ago the seems guess it could Maybe about is you or knew when you on we three months last a

talk little quarter? bit So in you the may be this around more detail if surprised what you a most can

David Maura

around June to structures businesses attention then really margin quarter. of focused we role had getting consultants Doug. good the this April, pretty around stabilizing first had And rates and I a turn Dayton the And service, the backlog and stepped – go When I’ll customer getting our in you revenue, our we phenomenal double-digit to We the and think I when a – July, into spoke in Look, restored. over it facilities out, July I’ll first both some Edgerton some grew actually we under – belt. had that. in the

forward. talked & having I cleanup. a reserve a as Home here a remarks lot and process completed also I the number view and intentional in Garden think & power Garden fact of about weather-related for of I’m And just bullish there’s The that one-time don’t and very going of on in that’s 'XX I really our sort of for budgeting Home there’s that my and opening so things unit. impact earnings that to review that

yes, we’re almost effectively business The Auto And clean the way Dayton half it where and back to miss a the and XX% we’re in put balance We’ve handing back Energizer. the in fill more had anticipated of at did met our reserves. originally that’s very efficiently than I cleaning we able new going I HHI challenges at effectively that side, probably 'XX to On than up Care sheet DC that be. is Beukeboom, we should partners to XX%. the there, and Pet, a be much When at facility EBITDA. look And leader think rates to in of off think in that’s 'XX. we And Eric one-time are its the Europe. more frankly in I run

is what X based was think that we guidance, be to wanted about with very it on lower. I internal do million transparent you

So was all. covered I think – it that I

Douglas Martin

manufacturer with one us based the And appropriate August activity covered we much were Auto that from behalf mentioned of claim. very begin is duty also Dave you a were in the of were potential say multiyear business to I’d all. issue that had business. sell duty so a similar from Care to when tariffs was cleanup affirmative in other for a unforeseen greater issue items categories, simplify actually or for – action in it new our XX% pretty in was on claim as ownership issue inventory of business we accrue E&O mentioned. a of preceded for several implications Yes, Global the cleanup that simplifying settlement The was than and on discovered our was some think – another bigger quarter it that sales units business. and that reviewing the The an across the the it

time indicators; then actually those of to mentioned David at types of related And volume, less the things not those than guidance. those something to visible us last the and types things. the it’s the were half of weather, dynamics, category that So

David Maura

I thing robust is maintained only a fail we strong 'XX entered we foot. pretty on to sure did The behind to businesses investment a the mention you make to

of despite you’re that’s types these impact. business to So behind short-term the a that reasonable it And when situations invest the lot piece discipline facing as requires sure continue make a you of of well. to

Faiza Alwy

Okay. of how mean? the us – have the the of up could of if guidance. And you business? if maybe word talked is is of have sort much just so because I’m sales tariffs know growth. much real that the impact is voluntary you’re is – that then of much And tell and of or versus about of it rebase, rebase it trends, mentioned quantify invest you you’re follow experiencing making from is then on of sort pricing it? and out just business to or sort much you if in rebase how much size not could I see I your investments how of So could voluntary or incremental Maybe you’ve meaningful curious what you’re you that how business it for just the getting us you how to might the

David Maura

budget internally the my done we’ve probably operators call you three Look, what five appreciate believe to most me question collective, the do clarity. collaborative over budgets to we’re AOP last for the the from 'XX, best ground I’ll years. telling are up business-by-business the I we and I and basically give

netted the give the of tremendous have specifics on in of it I that, amount is is you confidence to underwriting So don’t against material. which it. I investment incremental the want but

great fortune guys XX had Chairman presiding the the through know and over I acquisition. building years a I – think as you of company

industry the brands. CPG you buy has I where changed buy businesses, longer just no think can

You’ve got to materially invest behind them.

to got have innovation. You’ve

trying Spectrum, your people and efficacy to You’ve why and marketplace got historically have and perform is products and where list for authentic we our model used vitality. tools create you the just what new them to advertising of the was tell We to pulling sale the a And products pull are through and pushed. either stuff to only greater a communication do that’s or through better level as demanding retailers And strategy digital I’m customers a of bring point better. have a excitement basically more right. of thing to news that to requires and

the the $XXX the AOP main I’m in cultural of guidance sorry, the So change $XXX and in million of really to it material. the and investment – strategic EBITDA is million that’s that is

Faiza Alwy

Okay.

Just could you’re thing add. EBITDA one Appliance business was last the just What I reconsolidating? if for now that the

David Maura

you that. Doug, take to want

Douglas Martin

the Appliance XXXX. fiscal million in EBITDA the $XXX business was about Yes, for

David Prichard

next Okay. Operator, can question we go to please? the

Faiza Alwy

you. Thank

Operator

Certainly.

question line Labick next Your comes the ahead. from Securities. Please of go Bob with CJS

Robert Labick

Good morning. you. Thank

David Maura

Bob. morning, Good

Robert Labick

stand started I on customer about price many and to ability forward? the do regaining and where talk going where relationships want have and of customers operational your to given you with things you our you are issues stand and discussed, how pricing those relationships and

David Maura

the those Look, we if grow costs for lot the HHI the downs, line a Yes. most had top and which on were And and see, relationships. Global maintaining continue to you the units. to disruption of I in thanks the ups Listen, Auto think even XXXX Care customer through of those question. can

of major to some actually able I why some ad centers we Garden retailer we good. our partner investments based – that next co-marketing put think I year dollars & retailers, we’re said need is now behind And with – it, on these about of of showing relationships our need doing and very actually them. and with talking last are such as we’re on then I collaborative call, have home and things to Home putting some again, But start that’s we’re outlook bullish traction. the gaining

relationships retailer be we’ve to launched some the think is and some are listings products, the new I with POS the honest in the you. Appliance centers good. year business So fantastic in quite new this home got Even

We very was almost maintained relationships proposition, intact. and is it those good. customer at cost are all So expensive an the book but

Robert Labick

Okay.

David Maura

effect here. And during had margins material course a you degradation of lag There’s listen, the you as a Yes, to on 'XX. pricing. asked see we always

Again, our Obviously, in been have most sticking positions have a most number operations always pricing than that. remiss in have pass taking them give the through, of an businesses. on. successful X, hope continuing you more want that you. number increases be we in trying price remarks, has passing do retailer not go of We we to X been of power. if absolute been the we’ve these my tariffs. We we some dollar passing the for just basis. would tariff pricing. to successful But, had on all opening We’ve in we Pricing price to been look, would because take businesses to not simply say on basis all, But we’re

not We’re sort of margin any getting there.

just dollar is near the for because are 'XX you in because but dollar why in 'XX that it’s helpful? could nowhere be pricing margin of that. the stabilize we’re and we Is experienced to extent expect we XXXX margins So which dilutive structure indicating in

Robert Labick

Yes. three That plan complementary Are businesses? assets us and outside even the maybe I talk the few appreciate there’s from step was the you and last taking over of for change lot then reshuffling us these that. fit a vision And very days deck. helpful. these obviously right back, as five-year a for the that maybe been three the the And to of together growth what’s the long-term even rates to businesses? about five-year to the company? Can

David Maura

when retailer our Yes, earnings. and retailers creates holding a on typically employee into fall wait look, interest that to of or the quite for when we the base. to It’s out in it a frankly at announced to think us lot to day I that were for very going good indications in. disruptive. And sale, lot up is of of of and is we things wait are hands one going it sale, a I put instability end see very unit going the think see end for caused street to you lost then assets and degradation the the the end that that of they at And buyers up a the Appliance we last where who’s gets had business the

major at can personal the on I – tracking centers in and we behind by you That’s division. recently Just POS X%. made now investments care we is plus it appliances the putting just books, back tell

out just We more copper Foreman productive replaced. and grill launched with We’re it’s than regaining the George it SKU a new – listings. came XX%

know small stimulus. we with investments So get you tremendous that this

by tremendous confident back books, for then at behind start converter. can a pretty up of for to able it at course putting pressure grow And interest asset. X.X it, we that sale we’re that and at trades putting done, listings, caused some don’t the results we’ve multiples I and it it’s to conglomerate appliances deteriorate instability flow our a price cost been the a assets of the level. Unfortunately, indications had of business so the billion by regain We on divestitures cash that. reinvesting at to to on And year. if operating to any taker during sell want discount the we you meaningful And be while we’ve the of free think look double-digit

allow think to the six get there’s we is And again, meaningful four investment this of narrowing noise us but just from not is company. to that operating so been momentum in and critical. to going but to the And restore line which appreciate our behind also growing a business tremendous units value applying year then focus I think I lot there’s top EBITDA those

X And me with in materially Board stepped so my as the the here sheet. volatility, agreed given priority number was this balance I and April, delever let’s in operating

is we while honestly business really fantastic Global were a Auto we That cleaned so had June with Care, good And up. a on trajectory quarter.

synergistic rates fill today. the from can out Energizer. had an them. they There’s have scale, a auto greater Care. frankly industrial and business assets right, battery of and from logic them us, and there that sense gives We greater Auto and of makes batteries. unsolicited invest them. actions similar They auto they businesses business take behind XX% at for buying those an It grow and They’re diversity We’re Global offer can

we next five three So have four applying think portfolio really I that to of going can help years, company resources the getting but core our I think the to these transactions of debt four limited and is stability now in and our to settle defining XXXX. then invest behind, meaningfully down employees reduction of the we all frankly very our the focus closing proceeds – over businesses, to the a look, for narrowed bullish businesses given outlook

Robert Labick

Thanks Super. very much.

David Prichard

queued Thank get please, for you. can everybody to chance next questions. so Can up question a we that’s their the go

Operator

Certainly.

Next Capital ahead. we go Please Markets. Modi have Nik with RBC

Nik Modi

Thanks. Good morning, everyone.

from Just quick side. my questions a couple of

within company? there’s just lot inning relates next on changes the going process? much. the of back of because leadership now what kind wanted as in a last change think to very are as to address just couple I what you can maybe see of Just in of entity is then of going we now question, right Thank the want if where Dave, we’re understand you years? Just to to And category it kind that out rate you obviously the new the growth

David Maura

Listen, top the to going I line. Look, took grow never – past. deliberately Yes. category the kind liked of description in I meaningfully the growth we’re

gains. We have distribution

have a products. new lot We of

relationships a pretty we’re good. and have innovation. pricing are for We pricing pricing commodity good. for lot we’re and are Customer taking of pipelines obviously The tariffs. we’re And

So and you’re The very line. is this meant company. programs reinvesting good they’re they’re numbers meaningful. that not going to top Again, new revitalize are investment really and see large doing to but giving focus I’m numbers pretty

part trying second the was of I’m remember. your what – to so And question?

Douglas Martin

changes -- Leadership

David Maura

the company. eight Randy inning, Leadership there’s underneath changes the in terms probably across appointments listen, of different been

the do But we’ve pieces. You all bottomed can never of say do we’ve it moving never. are identified Listen, headwinds. I lot kind I of a believe believe there out.

I add add might I expertise might so additional some some marketing additional people. And e-com, in

We’re making major marketing, investments selling, R&D. behind

there. want But seventh going you so business we’re open an hiring to for And inning, inning. we’re be and

Nik Modi

helpful. Very Thanks. Great.

David Prichard

Okay.

question, Next operator.

Operator

of go line the Zaffino Oppenheimer, From you. Ian please ahead. with Thank

Ian Zaffino

Great. Hi.

What the is kind And reason they’re assigning guess guess not I’m I criteria Just now. in it? sort you’re to keep portfolio. the of of portfolio business whether that very sort that decide business more or why is of asking each one disparate the right you’re just because the about it I question going to keep

low You businesses. margin have some

businesses. margin high some have You

in areas some have some You areas. inflation but you don’t in other

give sense kind transformation the you a of kind once what done? the just want portfolio you think this of to how is and company be about So of

David Maura

exciting the right direction to back innovative allow us Look, mix provide in we the investing and margin that up, and products to sustainable are provide get growth.

about heard decade from that’s mission still a flow. my was the me going be always maximizing sustainable going over to probably You And free forward. that cash focus

In terms of disparate businesses, we’re focus. selling two and the so we’re narrowing

strong I portfolio. a very think less disparate Listen, have have we company. we a

We have great brands.

have products. We great

We the was right got go in company appliances the internal because with share transactions. now It’s the didn’t company’s HRG lot a the operationally. on Care, same of noise year got have time look off just the got deal bright got took and we Batteries that very many at future. way. projects XXXX, track too all a great It It a positions. consolidation July that and uncertainty market introduced of lot And Auto too that’s just done. And this we moving much pieces. the

lead invest to position. And all a businesses. underestimate over stabilize strategic that’s we so have better this settle inherently with can behind months, to several we And next the sheet I things can much we operating we we complete materially performance. balance the think as phenomenal stronger going transformation down just liquidity We’ll and the a company,

businesses, you people right the happen. seats get right in invest behind the the You things good and

Ian Zaffino

a have you grow just about think this dividend. capital up dividends? or the follow You --? buybacks, cash that then And how on Is flow, Okay. free to allocation, going

David Maura

I quarters stock on buyback. on the a the $X stability are to We sitting we liquidity. before last about think Listen, ton said I want operational of aggressive it clearly billion I get see several with call

think I X.X today. about it’s billion

debt the We’re can couple in it’s of the months. just depending of we what pay on months of free debt. six of about dollars out to And going three somewhere free and pay on couple proceeds side, flow look – billion to next coming X flow the boost if worth of tranches across be trend gross materially assume the cash a cash of tranches you we down, down you billion

a be visibility we come as the so, to but be float. I rhythm going it’s consistent, And to we’ll modest. look, and and stock reverse clearly quarter buying dilution of performance in in our earnings selling greater the the it. cadence going But to and shrink get back proceeds getting to this operating with aggressive way confidence are more get from look And to it’s as

Ian Zaffino

Okay. And dividend? the

David Maura

Dividend is fine.

solid. to And going leave it We’re unchanged. it’s

Ian Zaffino

Thanks very much.

David Prichard

Next question, operator.

Operator

Bank Your next the of Please Tong comes line Olivia from go America. of question with ahead.

Olivia Tong

morning. Great. Thanks. Good

to the years; top “meaningful grow so line, game understand like better just organic invest on growth” fiscal then trying two the EBITDA. to envision plan And for is with down First that to point you obviously you from how the grow question what EBITDA next heavily three but growth. fiscal to 'XX, so flat 'XX sales sounds sales to

I’m that want make just First, sure to that understanding correctly.

David Maura

correct. Absolutely

You got it.

Olivia Tong

Perfect.

is think then overview your you just category of how go-forward can in Okay. the of going now growing is given much categories on in a And some at it Spectrum some your of what you right specific, better are us is on, just it give terms businesses? perspective specific,

Douglas Martin

They vary, Olivia.

three of kind has X% of As we’re where in Pet our you markets It’s rate range. growing X% our part The in different business the growth HHI largest. to that alone business a range. animal in we’re businesses. to and probably X% healthy across The know, growth categories the really companion that’s U.S. currently is X%

you Our to of is aquatics down flat a business as category. kind know

Appliance Some over have that, recent years relatively some single-digit David growing category. some grows we’re in us little, been categories business low little but & it’s last down years the it business couple years mentioned, but in a Home not challenged the The category. a for bit. only as Garden of the is seeing improvement And

Olivia Tong

strong believe maybe Care, specifically mentioned business obviously then some degradation. setting you the up your you’re big have margins in but that pretty for on a Auto you prepared Perfect. Energizer remarks just And

business now feel XX your get you and – view, how be in footing? does long the or turn at on bit from does footing on in that starting there So to like order fair there, solid do to need move to need get still business solid that to mark it’s a can

David Maura

equity. All X X they’re fixed again, or XX%. in The plan the No. have business. this only And love dominant but Armor more we And because it. X Listen, those consolidation at phenomenal to machine and and synergies behind business. strong If our going wasn’t of It’s it, back through headaches equity are brand strong completed us fill at share core sold not it’s caused rates a time. actually the very in that ahead Energizer believe number invest that the deleveraging have of we can but XX% to we are asset. marketing back took realize it’s I brands. internal lot they the market got a wouldn’t point That’s a and priority,

the So, in a investing and business, grew it’s that listen, in look, to I not EBITDA million good which hoping and XXX we’re ago XXX the do We was a it was – a EBITDA year in the long from last It million and to hands. And think year. can with It’s stewardship participate very million I EBITDA. it two the XXX in We they change. XXX business in lot it probably Energizer behind did with franchise. I million think right I expect think And our bought business. upside.

Olivia Tong

you. Great. Thank

Operator

Monness, Hardt. go with ahead. comes of Please question from Jim the Crespi, next line Your Chartier

Jim Chartier

my of terms just of the give us then talk FY or concern in the housing turnover? today? stands in starts estimate about EBITDA questions. terms Doug, And of 'XX? margin cost can the new kind a I taking for And you to leverage of Thanks then lot just about HHI. of think housing and what related of stock. where the HHI just impact want there’s HHI operationally kind business you operational an homebuilder in Thanks. issues Hi. home HHI market to general on at What’s that

Douglas Martin

make get all. sure I Okay. Those I things, think, them three

so. of and the outside well – since the business had the business consistently performed over or that operationally we’ve last purchased it DC today has operationally recent the challenges a we half So year

improvements we the all labor continues perspective level from want meets it’s that a Operationally, get well. there. chain have little vertically is perform do shipping work quite still to than to in to the DC at and to consistent business more expectations well. of continues So to seeing facilities team that’s and our back and a expectations customers’ service a We as highly outside that The integrated the itself working our the we’re supply got DC, well. and

– So is today the business operating fine. operating

what related On is DC. bifurcate related hard distribution a structure, mix to versus the little versus margin it’s actual

I spend time will say are So that. overall. up costs I of on won’t a lot distribution

get others inflation. the a a You then see of that that across can had our you piece and versus bit and for sense business And little DC. we’ve

was not with associated margin the So lot degradation a challenges. of the DC

housing to repair kind slow bit, In tend fact, large starts, housing to some new starts business perspective, in of that especially have even XX% remodel centers. category a build, do remains From well down healthy, new thing, of home the when a or in big XX% restructuring housing of turnover as little went that to our we so housing we we bucket. through starts. and have a as But new direct because long exposure

diversified So well we’re fairly there.

David Maura

versus and We despite brands add got $XXX HHI strong the We me year. the fiscal market line in issues share. top we’ve dominant Listen, leading to grew all million grew have and DC a prior 'XX, very that. X% we do do have it relationships. Let

want labor consultants hourly the headcount Doug. down think, our with by and That I because got backlog on We’ve demand. got But team pent-up quarter. the stabilization workforce efficiency to Edgerton. with the still June XX% clearing got excited we’ve we’ve about at I the agree ground. So look, down. we driven while with also increase us get very They’re working

is business footing. think I good on the very So

products continues got got literally we’ve lot and a double-digit quarter a highlight. new be We’ve just electronics business continuing every to Our there. coming of growth

have to for U.S., has to of the us. the which new one to locks makes Weiser of key a homebuilders so with our in peace converting easy mind, Kwikset it technology Canada no of copies in We’re to is It the very keys. homebuyers SmartKey with proprietary builders turnover

be mentioned, that to new our new the SmartKey cycle of invest sales. behind when project, house. to XX% sales a decline, are some start you But clearly got see and there we And takes honest XX even we pound Doug replacement We a as which finish to in home headwinds continue it technology. X, have it. basically And away where sales we home about should months

aren’t thing we would 'XX, feel prospects outlook HHI. interest headwinds. I So good clearly That good a we rates about be very rising. But good the pretty us. for despite for feel for wish the about

Jim Chartier

Great. Thank you.

Operator

Your go with comes ahead. Altobello of from James. Joe next Raymond Please question the line

Joe Altobello

Good morning. guys. Hi, Thanks.

David Maura

Good morning, Joe.

Joe Altobello

use about you gave leakage it NOLs you leverage would I’m reason – have even that want pretty that X.Xx, the your to just divestiture question It asking Xx. morning that would is like First the to the given talk offset to question, guys be here. got I you I because low closer calculate ratio this of tax seem you

terms in Thanks. So of I’m curious missing calculation. that what I’m

David Maura

Well, room we back piece. I’ll some tax the leakage to to want shares. But leave buy Doug let might take

Douglas Martin

Yes.

the costs, Auto tax Joe, and business tax On I’ll both piece, group the just the you’re Care between two, transaction and but around $XXX million. probably Global on batteries

Joe Altobello

very so small. it’s Okay,

Second, I’m and correct if me David. wrong,

to that executives to selling stock $XX behind senior the correct? – that? some what’s million. are process or You And that thought mentioned back open you Is are to selling Thanks. company to the up earlier open

David Maura

stock. around has Yes. the of Performance good in over been not Listen, of execs a couple got [indiscernible] last we’ve lot years.

won’t it. we of make it’s And not at use end employees want we year. available And to to probably And employees. been have liquidity bonuses. so paid just even just But available of all people to the the

Joe Altobello

include Does you? Okay. that

David Maura

converted and Spectrum family have and commitments obligations. stock charity It year-end My financial to does. shares I’ve I certain made into HRG old

yes. And so,

Joe Altobello

Okay. Thank guys. you,

Douglas Martin

Joe. Thanks,

Operator

of the Fargo. comes question next from Wells Your ahead. Sam line Please go Reid with

Sam Reid

so Thanks. opportunities to to give in about At a do reduce here? Appliance your week talked you think the Friday as heading things this a I online? do guys Thanks for mix Friday this exposure And point retail further versus it my us deemphasizing to Black actually. brick you Would time, Black right-sized know segment. for relates bit able less little guys. or mortar have few taking or into past guys you’re much in be you on see this more the then to your as Hi, stands here. sense where you and A question business

Douglas Martin

exposure online I the On that. one, grab can

on So across range small depending we closer it’s somewhere XX% to and category. personal care range appliances, the XX% – the in

growing very healthy healthy and that We’re to in grow continue channel.

David Maura

the have picked we’re seeing some tell the just look, time terms up of first you, I’ll for Black home our Friday, centers and good POS. appliances In of extremely

some to have for is we and up We diversify literally mix XXX%. distribution us channels new our bricks as in are try specialty mortar. And POS that

Helix it’s – hand we also mixer new & one developments. favorite a we extremely about good also to some So of get into coverage is we But just which day. I about I had pretty out a XX because favorable sell Foreman things. Oprah – to talked and earlier George copper as Black used there don’t those the there’s grill. Decker it picked want her getting of

We’re we’re to selling a just and trying X,XXX day demand. meet

very very very, we Friday placement, very Friday And department we have even we So good in nation, good placement actually for the a across Black up. stores have have set TV strong on. and support the Black

well, investment real going where there’s see And we appliances. on behind So let’s go.

Sam Reid

Thanks kind I Awesome. in are business? retail in so one Thanks, today if inventories. of sneak think are much. might speaking say XXXX? would where at you rationalization more on inventories where across there retailer here And then some And Broadly be just any more you guys. could there just pockets your

Douglas Martin

much their behind than in never-ending see but did think so we of possible. in a most is think positions from retailer’s previous We little that as the Well, XX it But path had inventory we perspective a bit as quarter, months. us. of to efficient there’s a less make the we

stable So I’d say we’re relatively a at position.

Sam Reid

you. Got Thanks.

Operator

line JPMorgan. of Casella comes the question Please next Your from go Carla ahead. with

Carla Casella

sense gross about of for should on give the we giving and can adding forward auto given you in? additional appliances color But that appliances. then you the margin Thank what for year going got you us the but a Hi. rid are back profile for of EBITDA was think revenue how

Douglas Martin

sales you was the we’ve you billion give – that given business. well, on net about the $X.X can and I EBITDA Sure.

out on do margin can the well. And across math the as the Auto Global Care there. is one you So quick there

Carla Casella

Is just the margin, do gross wondering that --? on I’m

Douglas Martin

a not tell that generally portfolio. to the the across will gross the businesses, our the margin. you bit about lower on total Global Appliance That’s but healthy something is little not we Auto Sorry, business businesses. talk Care I than relative

Carla Casella

said would the any Okay, which down? you callable you have take currently. I’m one the you most But great. pay debt color And target then that’s to would out assuming expensive there? more bond,

David Maura

want don’t to commit I anything. Look, to

three-quarter get and would at from the rid the tell notes XXX look proceeds of I’m to But point. you would look committing get that at term million But we for away loan with months I’m of down piece collapse Also pay get can that at of financial I paper. and hopefully, Let’s I if a in, get the we and I of forward, to not see just in. proceeds time. bank secured senior like we materially HRG the believe inherited a this amount, don’t have large yes, we’re we that flexibility it. the to debt But debt. to like going seven structure. I multi-billion-dollar excited we’ll that anything When

Carla Casella

does from just if growing a concern? continuing I bankruptcy ask on on greater liquidating and Can impact, end impact a Any there’s specifics as one too. the Sears? company are more versus We the up Sears

Douglas Martin

No.

Kmart, our the there. Sears million. terms very early $X.X modest than a less first the and fiscal have all write-off to for in year businesses We quarter We of changed in related virtually

Carla Casella

you. Thank Great.

David Prichard

the hour. Operator, near Okay. of we’re the top

one have Why the we’ll more And all don’t that? we exhaust think down questions. I And call. take we that close question. will

Operator

Certainly.

the from go America. question ahead. Reuter comes line of Please final of Your William with Bank

William Reuter

some a had operations. been talk little question lot quarter, the the a in fourth third challenges? of it you I third have Kansas bit that related then into had improved what challenges just quarter. and the I about one can those of second In to Dayton. little the and between you happened quarter sounded maybe had guess a reverted Hi. bit the some like And

David Maura

had Pet, in hit But DCs us I continued Garden weather & issues side. that. improve. had in to DC hurt think we we The we on the Europe. Home

reserves. delta we a now from both On going million much run mostly the really of XX the in took as the P&L for the that company more the general, that’s was healthy a GAC to well. rest this portfolio reality. reserves sheet cleanup sheet Look, that across conservatively standpoint sold, of to and I’m and balance get And just related that’s and and also is balance to inventory which E&R piece,

William Reuter

are just up. tariffs you. follow the then And like to impact one It Okay. sounds going

you you you happen these, tariffs However, to are what to Meaning a increases smaller through you’ve not been to have than it talking like. sounds through pushing would this pricing? about repealed, the price less amount pushed In lot had at be or increases of price however, the offset that event point? have offset conversations would a fully them

David Maura

hope I you’re That’s right. a good assumption.

only through. the choppy What on remain Your trying we’re God��s ears look, them margin. And we’re it through repealed. to tariffs. tariffs, that want lips But them continues dollar. obviously to be passing for on But communicate to And dollar passing if we’ll getting we constrain to first. priced through is, look, get waters we have for them

William Reuter

sense. Makes

Okay. Thank you.

David Prichard

Thank reached you. of top have the With we hour. the that,

will Doug. And XXXX fiscal good and behalf we a call. want for day. all full thank call. thank of conference Spectrum you both on our of earnings conclude fourth quarter here I participating certainly Have So to in us at our Brands, David and year

Operator

concludes conference This call. today’s

disconnect. now may You

Spectrum Brands (SPB) 19 Nov 182018 Q4 Earnings call transcript