SPB - Earnings call transcript Q1 2019 | Spectrum Brands Holdings, Inc.

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Operator

Good morning. My name is Natalia and I will be your conference operator today. At this time I would like to welcome everyone to the Spectrum Brands, Fiscal 2019 First 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. February Investor conference. Thursday, you. Prichard, may and begin a Brands. is this recorded to for your As Spectrum of Mr. President I would

David Prichard

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

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

see we forward-looking Maura, management's deliver we that that assumptions by and Chief call led will you today Chairman Martin, and and be our Doug our if will opening do by are beyond. slide start two upon you'll want So will statements David today also projections our Chief expectations, nature outlook comments to differ to to include slide four, These Officer. slides and David may If our including fiscal Doug XXXX conduct session. remarks turning Executive and are Financial materially. note the Officer; Q&A they our of based presentation, then for and Actual three and by uncertain. current statements, and turn results this

to that and please forward-looking dated will on you X, this Spectrum the now included today's available discuss financial filings risk, for any recent call which website measures encourages outlined our factors Spectrum to Relations Also, to Chairman that measures most I our section. release these cautionary to we statement. no note GAAP in will We Maura. in Brands turn and are our assume most Holdings' that, recent XXXX, in CEO, February the due With basis are release obligation Investor XX-K. review press and statements update Now both in filing, our Brands the David and call. and press SEC Reconciliations X-K certain a on over non-GAAP risk

David Maura

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

I results, to to I jumping of our our I QX to you achievements. guess turn which highlight to want slide to tell need strategic six, Before some

of on along Businesses, significant company of proceeds We financial operational to largest closed and period stability us, are Battery less strength making period of $X.X their drive more opportunities. major business. we cash We transformation increased sold us These exiting and meaningfully a our January, two term much made a to our Global shares Auto one a with Energizer brought with we and now materially of combined Lighting long both with are shareholders. us leveraged meaningful our gross ambitions. entering in and $X.X and million consumer Global our Care flexibility sales products In to completing also into we focused of growth divestiture asset progress billion, that transition the approximately our issued

net bonds. of we battery for time. and reduce of further our the were death over redeemed of our reduced and last repay minimize all cash We $X.X former billion at notes. on X.XX% totaling by million Using which our capital it progress HRG about just our actions approximately million These U.S. care to all on and transactions. represent revolver operating these loans the of of of in our recently had week utilize cash $XXX major our $X.XX year strengthen interest term cash obligations. all full goal to to in balance $XXX the that our tenor improve our able our balance pre-paid beyond achieve the and to this materially payments in significantly and de-lever sheet, losses moved and full were we also We January in proceeds to quickly auto taxes billion These

these As we the year. track approximately fiscal steps year, of a this end result of early times are our this of X.X on at leverage to target achieve

a to repurchase sheet, look balance If our in repurchase time-to-time. we slide otherwise I to have market the we have or shares open As turn could may everyone from delevered agreement under the seven.

year to delivered we in our traditionally line quarter QX with generally specifically is turning smallest Now quarter, that and were a the results of expectations. our

the and ‘XX to the continue typically by also half EBITDA, second the experience Home sales & half expect of back in stronger We than Garden the first both HHI. we for be to of driven seasonality half larger and our

We the very Unit. year pleased Care Pet our in by fiscal are strong this start

a QX growth United by double Although the digit X% led States was growth, increase in organic markets. it was just

this a is way. As turnaround under business now

Show are and of innovation sales by year We the retail related, improve HHI began of forward, in largely housing closely see continuing markets, housing as performance recovery new period headwinds past growth driven driven faced from see assets. at the was recent We of drive strong to food smartlocks HHI despite year, strong to Dog in revenue November. net U.S. unveiling a impact our was this year We still efforts comp work customers Wi-Fi to such the Pet primarily loadings that also last the again our Consumer enabled the in by recent Halo non-repeating and quarter. late this the frankly new Europe, November. focus to line this January. to a had a expect It Electronics and to market just year Cat customers the and XX% hurricane this the must performance in with we effects the difficult significant now softer that two retail quite which business a by this began this we significant driven and last hurricane promotional from a

Personal As expected, and slowly. Care business our Home, Appliance started

We stood and up we are reintegrating this business this back business the quarter.

and fundamentals the are lapping we comps. half first on business focused We difficult improving are

the XXXX. into year innovation increasing materially are we to Additionally, investment and spend drive throughout

Personal improved and year. Home are we the expecting stabilizing are as and Care move performance we through We

Garden’s excited As depth between a the global brands terrific announce example we Personal team. football an our major the strength United thinking the Remington line morning and and partnership the This believe to worldwide are we a showcase will begin this our alliance new of year the new of process and is Care the about to five that we in had Manchester business, amazing of Porter Remington strong its XX% of lower & the business the strengthening about slightly prior absence Rico. was further only that hurricane a & smallest year QX representing quarter is the Home aftermath of sales. this revenue brand have inherent and unit. equity to year sales due Maria that from Garden seasonally full of Home

new and We distribution Garden and EBITDA mix. Home year driven wins this & expect sales by improved product growth for

look if for Now the full we you turn year ‘XX fiscal that. outlook at and slide eight to can

$XXX XXXX improve our ‘XX includes XXXX of marketing million of back major businesses. our brands of the in focus guidance behind increase and structure alignment same Spectrum streamline to vitality reduce of to This on initiatives up step It's and trajectory the our investment for is four a a our versus for to million reiterating fiscal to will the impactful both forma today EBITDA pro operating and year our the materially in strength adjusted spending impact EBITDA of put development a product guidance advertising, material growth Brands continuing activities $XXX new in of significant adjusted are and XXXX. Brands. a Spectrum year product processes We continued the we $XXX million organizational offering beginning the meaningful investments and and targeted waste.

accountability and providing and facilities and driven value it clarity our we In our of much will Spectrum and customer With by In creating faster, Brands being decision becoming team future excellence is over with establishing are strengthening making innovating We sheet the I this exceptional portfolio for to singularly service. in our focused is by quicker and ample are short, liquidity. and lines manufacturing shareholder are stronger we behind operational turn delivering focus. balance stronger clear consumer now of Doug. all this vision, supply a that, brands, on leading smarter, the of behind strong providing with chain closing,

Doug Martin

good Thanks David morning and everyone.

continuing and net sales. our from XX we'll slide and begin we review with to QX results Turning operations

net million First year. versus X.X% of reported last decreased quarter sales $XXX.X

million, as year, year. adjustment is into the catch-up to amortization integration put that Home from this & status, unfavorable lower the net were million Reported amortization last due of due or offset just and sales minute This currency going – XX.X% bank discontinued required Home Personal quarters to Hardware product acquisition as operations. X.X%. or because to charges one organic year, foreign compared catch-up fell continuing adjustment and this year, XX.X% of $XX $XX.X well $XXX.X this year. quarter we the it take points Improvement depreciation million primarily of Higher only sales & by remaining Care of of costs depreciation to and and related $XXX.X XX.X% of in time but lower recapture non-cash this last to not last expense, sales Personal SG&A also gross & more the Care million reported and adjustment a XX not HPC than margin primarily non-cash Home Excluding affects mix. and restructuring I’m about due XX.X% basis Reported were talk Pet sales year revenues. and a as business operations increased

For record that amortization been was in XXXX, that depreciation catch-up QX, QXof of and XXXX. would and in recorded of QX have all QX

last year impact $XX we’ll XXXX So going each and quarter. forward QX because in amortization; had we have it and will year-over-year for depreciation QX, zero comparisons roughly this our million also QX year

benefit depreciation this the in also to and a of year. last margin continuing depreciation diluted recapture primarily a due $XX adjustment, of on in QX primarily prior result first margin to Spectrum and Reform amortization, lower Personal amortization expense, attributable X.X% higher $X.XX $X.XX from contributed reported operations depreciation year, tax and then quarter Tax operations million year in adjusted merger. to impacted versus diluted loss as non-cash diluted we lower operating the decreased last $X.XX of of outstanding the last basis to compared to of year's the a to decline, per versus quarter of diluted last continuing per U.S. reported as well share the tax Reform. of HRG volume amortization loss and shares U.S. $X.XX income share only $X.XX and benefit interest year, share per Home Care X.X% had EPS to & this as from which income due adjusted year adjustment On by due the Tax Moving decreased about

due down pay cash Battery the primarily Turning year. from predominately million $XX.X integration million and interest and debt. and million, by inefficiencies our year's HHI the payments for compared of versus quarter million related amortization we $XX.X of to taxes $XX only and million for business first by quarter merger related operations year, year. first operations respectively amortization XXXX, were were year prior of on of of to the million The our million million cost year, in of hurricane Spectrum million discontinued lower based $XX in costs. Spectrum Spectrum revolver. classification and addition related and increased including slide Builders beginning of continuing slide Hardware retail of across strong Plumbing in Home operations $X.X about year incurred HRG the non-repeating Hardware housing result security the to Improvement. in sales XX, million decreased & operations the And charges the costs continuing restructuring Appliance million expense the last only our to a share from $XX.X payments & activities million for reported promotional $X.X driven in year, were Care cash related softness. and QX U.S. depreciation than $XXX.X continuing Acquisition from due absence HRG cash last $XX and interest decreased acquisition in Residential our $XX DC operations to $XX Personal of load-ins and depreciation, year million significant to recapture of were divestiture absence by drive cash reported X.X%, in taxes flat last channel from facility. & payments were recent our units, $X.X Home on timing Spectrum from last respectively HHI processes driven net wins year, to QX continuing last last revenues, Security, for as residential $X.X and cash last the of last market $XX now and of flow only XX operating battery Kansas of compensation to and carve-out. customer million from this reduced business

adjusted with Excluding unfavorable of leverage. $X.X margin of basis net to fell EBITDA million, volumes a million organic sales FX decrease operating reported expense points $XX.X unfavorable X.X%. Reported lower of XX due fell X.X% and

New a reflecting rate product QX, solid continue HHIs in year. introductions have at strongly steady have still and expect a pace to we – this HHI to performance vitality

Home of which X.X%, Care, $XX.X & slide HPC is of organic X.X%, QX revenues net excluding to $XXX.X $XXX.X million Personal million, while FX unfavorable XX. reported million. of fell Now decreased sales

consumer in the distribution For Europe in in than more Latin adjustments primarily growth strong Personal to demand K. your mass drug, Brexit-related in U.S., primarily soft of offset losses, was in and Care, U. the and decreases e-commerce retailer from America by due softness the impact prior

XXX improved appliances, small the second points expanding also demand and and from America, offset volumes reduced unfavorable reported margin decrease. U.S. lower product with Care Europe primarily UK. new in with in Europe Canada to fell by an EBITDA was the basis & $XX Latin due and Home half than consumer XX.X% by Pacific Brexit-related EBITDA e-commerce The Personal growth product Asia of in a million, results, expects distribution. in reported HPC lower mix. introductions more U.S. For and soft and was driven adjusted a

following mentioned, are the terrific Manchester worldwide significant will the we also a in and David announced for and This this five future. the As with be up exposure the that spending a of across year our clubs will step today example and provide partnership reach is brand. into given United brand good company Remington planning year

and companion companion animal is to to Moving and XX. due Pet, net U.S. partially double QX dog predominantly cat reported animal European increase of in offset sales. digit side revenues, X.X%, U.S. which by treats, chews sales grew aquatics primarily $XXX.X Global lower million, and

turnaround of its its expects a point with $X.X fiscal dog costs. margin basis it Excluding business. million fell an cat primarily higher Pet to Reported FX driven unfavorable X%. sales food distribution performance solid EBITDA U.S., adjusted continues unfavorable work by product region, and as solid XXX $XX mix increased million, XX.X% the of In operations, to decline organic improve a and largest the XXXX European branded to in XX.X%, profitability

is net Garden prior-year decreased Hurricane in Garden, reported repellent the million Rico sales X.X% the Turning slide of aftermath which to result & Maria. as Home of $XX.X revenues of & in XX. and a Home QX of absence strong Puerto household control

decline and improved decreased first and continuous As Home strong EBITDA of Reported distribution about seasonal smallest a by and of EBITDA sales a X.X% continues XX% mix $X.X XXX the timing result & & comprising production, of growth higher million mix points. new fiscal to wins, reminder, expect seasonally driven savings. Home XXXX input quarter, product unfavorable typically its margin costs. and full-year in Garden improvement adjusted fell of Garden’s XX.X% basis of reported revenue. The was quarter is

from to liquidity the $XXX Cash in prepaid entered its million full and term slide available $XXX in proceeds our and Revolver, debt of we step-change the the million Cash bonds Flow divestitures. sheet, cash our capital totaling its auto improvement quarter $XXX U.S. of XXXX care battery position, a $X.XX billion, loans redeemed balance X.XX% with XX, all and outstanding as structure solid January our company fiscal all of of a our billion. experienced on million Moving Flow in position of using on and balance Then $XXX a first including million million $XXX liquidity Revolver, $X.X and

fiscal capital were debt X.X from reduction debt last forma versus XXXX. the billion, QX of quarter fiscal and in the more result XX% million and expenditures pro X.X of approximately end. from operations as X.X This December $X.X from $XX.X EBITDA reduction trailing using leverage end of than and X.X times four quarter a times net down respectively, times our gross a in times XXXX our continuing this at from $XX.X million and reflects XX, operations, were of year. As continuing year

and Now turning slide XXXX to guidance. XX our

increased EBITDA continuing tariffs cost XXXX, points and reported environment, including expected million which our into actions, between effect in a We based by pricing to net driven in be from investments, input sales on approximately continuing growth X to March impact share of million the and reaffirm sales an include $XXX guidance go marketing expect of current offset We gains. rates. for revenue-generating expect adjusted basis on now innovation, increases, pricing tariff-related now from operations actions. and increases and by on we FX have as stabilize anticipated to $XXX market negative inflationary impact We increase operations investments partially operations XXX

of NOLs sales have billion post the usable used federal our We have and capital asset remaining $X.X of all losses.

use For now taxes. Dave and questions. you, XX%, tax now we to Thank state for a including rate adjusted earnings back of which

Dave Prichard

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

Operator

[Operator Instructions]. And the comes line from your first Tong. question Olivia of

Olivia Tong

Good start larger expectations the loss the year, loaded is your year's seasonality and of been your flow morning. full end to past. the wanted there, year this QX with a than cadence But routines significantly season businesses. [ph] for years in because and has given back cash free I always

puts the is loss So can and events? you that. from talk of of exogenous through big chunk takes there cost there? this any a a couple Are Obviously

portfolio Thanks. are no view go businesses longer is now tied businesses. So of your how that part to forward much your that versus your in of QX are in of

David Maura

really pieces, but Hey lot are know you things I down. morning. got Look think think a Olivia, to settle moving well. year this Hope are we I starting you of good we've

that. you $X.X paid $XXX can off on month math on I than million You up that a cash mean about know interest. on do little XX of That a billion just bit a rolling the debt, more basis. frees clearly we of

So by flow if done still We’ve a free year material more. amount. don’t and not giving because away of with why the of we've helps obviously that's we decision from all and you question our take going which forward that. got allocation the nitty-gritty stayed that making, Doug some moving of cash are But so see parts many I increasing it free cash let the kind capital affect this with will that

Doug Martin

of absolutely are lot related. there are You quarter a were non-cash Olivia; that first in pieces the

of all net proceeds Personal to a the So the two and in for our to Care inventory we business that businesses for The The you catch reflect write-down on that of three there. the or & months, this January know, in we reclassifications of the our as doubling results Home cash up used received the sold of one. businesses year part amortization, GAC in of four depreciation the the amortization our season. the across were investing up is that are we depending relating upon depreciation and big the additional fact business and in as first the we cash the

this choices story. know cash the as moving the paid, you interest proceeds, make so the ordinarily are the year. and we the seeing and working David but capital through been a free would payments when of cash of our for impact it’s continuing so they’ve just cash those confusing targets free cash business that become in we debt flow adjustments in on not a also mentioned, flow existing would that when have the this the year, And working are have sales, capital there capital structure pieces flow year’s representative or flowed make lot we of So will of operations really numbers some

we're tax as to can. significant is going this a going cash answer forward. cash not on we'll free you NOLs; relatively we year, payer, be as flow short expect guidance the modest we have We still many give pieces to update but So still tax payer

invest across at the the going business We forward. expect CapEx rate to about X% in

what again restructuring a structure. decided reason we’ve you do significant math guidance. in know long so our in parameters you know that's I on the And gave story, improvement also David year. not of are the the and kind it's expenses capital expect far We we the this the giving then, but to specific

Olivia Tong

with some I know and base of the that you “meaningful to if ratchet Maybe could the turn of advertising soft down R&D a lower guess also to of just to of expectations can of year the that, and it. to sort break about simply Got reflection are down, parcel talk you of investments did like. you guide for growth” growth. just remainder sales, order QX your the the down make for that is or planning the sort and you from I you part around said you of the and magnitude that

David Maura

U.S. insights the as very investments there, about side. know are and also consumer retailers actually go and Look, bunch Home be a that to more when making, in we there. was the anticipated little you of said actually of solid largely we in so HHI, saw know year very them have postponed we and end Obviously message, I in the The got blunt. that us Pet to of marketing and bit just been there. talking a obviously line and we communicating get year Garden planned so the you going know but expect expect Look you bit I the with we that out think are particularly the thing Organically particularly think sales in at healthy, innovation couple it’s new quarters and calendar good to backup little I we both out a remarks, think time, guidance in of was & last only HHI. the to and we came a tariffs the we a to weak what to we a year pricing spoke reinvest revenue the get had take you we quarter quarter in in we’ve very still as pretty appliances the in and we weakness opening to of and

rebuild in orders. capturing new know lot we that, As you a are we

about of new if In win ship the anew last talked call think that don't six we But wins even I get are fact months I new today, business. in I for in getting. listing I the it some today, and

So and anything to have we contingency being feel new in I planning, need we've look, June that's rate help we of kind more But Does that. we that fed now, of in spoke our see unit. much market weaker say there, to on particularly retailers that guard sure September we would changed really be got sales yeah where to the because that there's that declined that from see the the we that you we know in if year closely definitely result stronger last bring we and we quarter the we work have as have particular of home effects with planned, the much as – know it's originally interest you to a hikes time definitely and a you? make effects housing till need

Olivia Tong

I you mean Yeah, talk I could guess, benefit… the about

David Maura

don’t yeah, you is for a any house. in – and to I in we guide, full less think the there on than don’t to other want see delay some softness tariffs you is year I want confidence there the pricing that

Doug Martin

on a the based FX thing today. to that on from the on bips rates reported Yeah, quarter first guidance basis we’ve only are modest is Olivia additional impact moved where XXX

David Maura

you, I that. Yeah, Doug. missed Thank

Olivia Tong

what it housing mean just favorable you because the the Yeah, market past, guys but in HHI, the line. up on think I on kind following benefit housing of do on of guess now had the you you I and expect impact

David Maura

we I I in look you call replacement enjoy Yeah, know think in dominant cycle kind what position general model. of

United is a So smart largest you the which we've advantage competition. got material and set quick with in you product technology, know base installed the we our have our States key versus know

in excitement seeing Bluetooth of some Wi-Fi increase are locks. locks around and mechanical We our real the of new adoption and real

you we So I I we'll you that immune we're hope continue to continue right. would that, have side not – but know the on to gains think business. and know to say drive innovation

new is we way bips unaffordable and every up the the replacement business be know destroying are that that making study XX called other holds some It fed to XX% of cycle would raised to of better buyers. so that guess we rates, – it's of I and of kind kind But figured XX% piece you phrase sales [inaudible] is or that XX% So we it, of probably businesses. the our view and of the well. reports home has

so the fed fed to actually you we to know in of critical recent think agree and real in there late you such the you I increases softness. I And kind because and part November of the housing economy December, the with market competitors, stance the is turmoil, if was plus in some with pause, know talk general of think a to our talk our retailers fact,

is at all. an know not not recently You say it we've seen uptick and I’m again, using this to call clear

of to plan at performance solid HHI. the ’XX, headwinds still we for housing them think we balance pretty need fiscal for are but are I expecting –

Dave Prichard

the Okay, operator question could we next go please. to

Operator

question next Labick. Bob is Your the of from line

Bob Labick

morning. Good

David Maura

Bob. Hi

Doug Martin

Hi Bob.

Bob Labick

months performance? operationally. and the Where to take then are left of has long consolidation, Obviously wanted Hi, do operating when now in to so pile terms XX urgent shift center I of Kind what's etcetera. problems, should ongoing and in start been that a quite you fixing how improvements problems. shifting or versus get to last over distribution so there recalls, you the

David Maura

we know are there. You

So through I’ll the board rates and in are know you Edgerton Kansas XX and tell we you. took just of our fill directors

product and funny when get CFC, you of year efficient through really call this sliding fill is it took clean, first there was show how you in have with April the distribution facility this and center and them about I’m because what was me demand. through I on know know to You the rough taken could last the seat, new board I if backlog the to take and all down that we of now how it’s that, to

so that we're are listen, around ‘hey very, trying our now flipping customers, efficient. are we And very we and to tell

delivery.’ getting time of now exceedingly exceedingly last we and are year we were in innovation on we good and are no December And in We so you know good fulfillment and had funds. funds, you know terms with time

there off we examples around do back advantage housing. think and flip to know have in get – are in our you So particular it are is we need that foot part now using I know this and we difficult headwinds the you strategic we and

wins got own look service that you to customer we know I But and use fulfillment Global more the you Care. now longer obviously capability So drive go know Auto excellent think, volume. no new the and you’ve get and

I that Energizer it finish thing humming we couple know needs think is think work get April behind the years for are next and again. that lot at You friends our did kind you. and it of where I on the over Thank going that going that was be. we a and no, improvement now of it's to appreciate us on the us question, to offensive December But are – and triage I through the

Bob Labick

It’s of do that? what other no you where new Yeah, you mix does to expect or by relative kind of innovation in great. right you years? do launches and take terms overall, you products, thank to to do maybe Are accelerate to new know then so you. segment stand at And it good hear, of maybe or the

David Maura

are I think you we businesses No, okay, know know different. you are think I

HHI You would NPD know robust. strong been and is pipeline in say I remains the always

do catching you know good we I work but done up, still Pet is has a got Garden pretty job. Pat. in think Home & now to

of on beefing it much know or that believe product, appliances behind of consumer we're the in up States. that stewards the think that appliance that North the as could then in know again customers United we product big be hear to we a you done and and actually we right that do kind on better and actually to have making and add the healthy good to getting the the anything? we and I and are insights point, vitality actually not, marketing you story honestly and I more made right into then to the think consumer get Remington what insight, we that's see United could is Doug, changes orders. you of putting the our really communicating the in a half. NPD job end European benefits translating and to But need side continent retail of being – and here team and investment that true that a some have America out talk we Manchester into you division just think about want it they’ve getting better and management back why we and doing today brand think can Honestly, to of better customer very map. Global with I the back about your consumer get are I that a job hopefully starting telling there But really business the we yesterday

Doug Martin

Well said.

Bob Labick

clarification. and quick great, one just Okay,

net that is leverage Your gross X.X times or debt… a target, a

Doug Martin

It’s a target because here, you make some know we choices have to we’ll… so

David Maura

we and we we a I cash out billion the billion just got $X immediately on mean we nothing X listen, We've in very let's know a all our more any a of there revolver. At in done business term revolver off you got all lot short pay debt, $XXX we’ll if and loan. decisions, down, the January know capital blunt doing the right. of without year you wire of million to the end run we paid with HRG took right. be end period time, and moved January all we probably our allocation cash and some the debt of the of $X very

though liquid liquid probably you spring kind billion some we is and that's $X.X you so we the to being are here even as I of, make why enter the then think decisions into get got we've and know you just decisions summer know I commit and and are on our too liquidity, more market conditions, So not we look continue flow the capital cash and free the make to willing But you just know let at you accept, good us look continue to here. to know hopefully structure question asked. like at

David Prichard

Okay, operator next please. question

Operator

Modi. line the of from Nik next is Your question

David Maura

Yes, good morning.

Nik Modi

morning. doing? How’s everyone good Hey,

David Maura

We’re better, doing making we’re progress.

Nik Modi

couple quick from Excellent! ones of Just me. a questions,

softness channel distribution So and in talked kind the about on losses. side the HPC of you eCommerce

when more that. and function know you Dave there, taken how of you was you do kind the some fact of some that that. the that's fact us know know maybe think kind that’s season, the sell into to so on you Spectrum the and Brands amount are just give of question, you there And about are you Is guess first place just heading you the some change peak of about the at know maybe we over, turn question? disruption, you talent on can thoughts retention, slippage Just that you maybe broader business I clarity going that think a know

David Maura

piece. talent have look remind re-ask Yeah, a we your place, the about – going but I me where so I’ll you probably of look, super ADD, a and first I question, I’m take good sure that I are. actually feel make to to – piece then

last I done April said myself getting not challenge you know only and trying HRG – of think I was all just around, from thought you turn middle I of numbing year I our we would basically right. a was so to be the but not just operationally went a in transform a greatest are tracks look, sudden came doing the found look, so in deal year, mind off the the XXX% you company, you if – and back then

our of, know the a mean closed, the You over of batteries just pivoting then strategic appliances on it but auto. I then activity a tremendous we and had HRG more there selling off market, was get hands getting operationally being know amount and it of you took and full. to actually whether and than amount year

is done recommitment retail, going going uncertainty pricing But sale and reignited appliance winning flow lost people think I cash and you new reinvest the numbers bringing The a in take want this very inflationary appliance energy it people, are of an to orders. suffering free is a we we really the to generative tremendous tried to as growth see just on we are wasn't which the stronger high are go in we disruption, as know So again yes, see part I you so I'm get still in you partly your What it that really it’s actually to from we’re know market to free in back and job place flow, the side, team’s listings. for theme and starting question people know blame, business, today. and know of fact stable of are kind think of we still realize clearly those can stability why behind that lot that's turnover. again, you that To lot again we've we you back and and win amazing, good the balance on becoming of XXXX. pretty done invest strong which that did products in me is, is we advertise of XXXX cash a remember, for environment the I company showing we additionally shape know team see a they know business, great first we’re the showing getting get and a get business are the putting up, to experience materially the you level the they the sheet the and you to is that you to as we excitement creates listings bringing know and the out

business. and much you you stronger able And so I'll hopefully September know about June a be to to appliance in talk

Nik Modi

much thanks so color. Okay, for the

David Prichard

Thank Nik.

operator. Next question

Operator

next line Faiza from of your question Alwy. is the And

Faiza Alwy

Hello!

David Maura

Hi Faiza.

Faiza Alwy

hi, good Yes morning.

to your little I that first in you So that market market, alluded guess for a is to. housing this deeper softness what's on Have I wanted I you delve remodeling the the and seen outlook bit any just question? first guess the slowdown

David Maura

still homes know, blunt there's fact remains healthy always of think we market short to supply and you You pent in up better; you know that that see know. existing up holds so growth remodeling is we be demand, there

the it's know So uptick I and quarter where see. it’s are know we housing you since – and since you really the concerned an about mostly we've let's since me new to but numbers you seen just talking we then, again, December gotten published side look these

that in is work November, know, and of point to our what a stabilize disruption interest and because grow, the blip whole You market I just continued you I with for is, velocity kind you saw from prepare here ball. to don’t retailers we that you don't in do that's going a planning and are pullback it we kind know sale make of and know a a a know rate contingency have really think the caused that know December are know I softness hike get and we industry What I at the I doing. crystal to need of more sure

Faiza Alwy

Okay.

so kept even has market cautious there tone So like housing though in – and been your soft what as EBITDA the is more seems your guidance is. you've your the market,

embedding previously? environment would then rest are for So of you for what is know was guess you be that cover I too or there or bit an that market the sort year, material a could the around just raw more within that the you’re it conservative you assuming you little offset if And know like comes and back of the pricing helpful.

David Maura

that during we’ve mostly you softness. it is look, know know phased and know pricing occurred the taken pricing You you in and unfortunately

pricing isn’t that in know you quarter. so this And

a but some make phased were in in little know. December, got in you we our you pretty it it no I – got little know cycle, stable. is sure three so of multifamily. remodel, November of actually and to got too replacement benefit quarters bit a Its think You know business I its and you know it's bit of you

think see have and you story margin bulk pretty a but maintain big know. I done the in we know you of you the a you Alwy we full a and with and are is -- had call, business housing quarter this – you able saw have know it's you can't on know that little improved new I looks back this gross that's we this pull it stable, so like steady you You what is year outlook. to our pricing recession; some why the different and the took know pretty we housing that's unless bit

QX know a QX, into I HHI. good a a big is QX. you sit in I today putting and week about are again if look seasonally for know where Feb you HHI’s performance feel HHI quarters solid quarter think tiny I right, You

Faiza Alwy

in you more process are – that through you if question your your wondering time a Okay, around and as one decisions M&A alluded maybe little call. CEO on and a if of I I'm about talk what little talk and capital your if how of of a you've you ask more number you Could Dave this committed bit about Spectrum. know is to may more that terms you know know bit you and know how you with is could remaining just allocation spending

David Maura

my varied here last the froze the and we than floor You was coffee as spent before -XX XX cash you years brought things good. other lower the rates that and degrees interest job week. good are building we know, helped was know free of pretty a entry, hit obviously flow It I Look, company I businesses. it good you margin, car, did higher and with but that out higher allocating think externally capital and I’ve know higher

since ago, businesses three a but four too got on always embarked look, have linear ‘XX and years company. I we to high I I'm much internally, I my think could you I've April. very and know excited through you I'm know know the this multiples thought or company's better clearly you because the I was isn't you committed know love think company, capital is journey what Obviously done I of job about life buying future. stopped which allocating unexpected,

I'm to achieve we opportunities can and in. talk that about before you more we operational go all after think have I not here after know tremendous them, we

Faiza Alwy

much. so you thank Great,

David Prichard

operator. Okay, question next

Operator

Jim Your from Chartier. of the is line next question

David Maura

Hi Jim.

Doug Martin

Good Jim. morning

Jim Chartier

Good morning. question. my Thanks for taking

not retail? promotions Did wanted they really for to walking the about I from get HHI, in Did future terms of at First additional thought promotions any ask vendor this in about the might walking those process from another promotions execute the just away you then on thinking to and HHI. away be quarter.

David Maura

take let much talked on to I’m too this it, call. Doug I’ve going because

Doug Martin

the… them last the was we big a them big – box in of It’s we were that year Well, called data one one had promotions here. category non-traditional in the store,

David Maura

channels. Club

Doug Martin

other and in a in continue We pursue business Amazon the of And one was program Connect a the our out steady for more load for load. time to non-repeating channel, way. kind and our Club we that that us. than Secured period those ago one rather related – of us a opportunities as initial well and you, now channels, brands year to thank this and for in was in that is the there do heavy

Jim Chartier

Pet it’s to in Right. And then great U.S. the improvement business. the see

call advertising think were about business. hide you talked the defirmator more with the and raw I investing last the [ph] of on line re-launch behind where the you

update and So I an how Thanks. hide firmly as just the additional on wanted to just raw well. that get advertising and we’re doing with relaunch

David Maura

a it getting says such know. it it that what great It's It's is there does. works you one does of like product actually Listen, of rid product. it's lot it the phenomenal just counterfeits a and the and packaging was

team know in I got in take the and hat had my a Lewis we You off and Norfolk Randy to to St. down Louis. ton

so are to able and and counterfeiting that the You system and inscriptions register it with really new know stop we we so got of we've Amazon's registry many the packaging.

plan need to think I is also stay in think, need took I them. matrix remiss with innovation is in so well. great partnering If to longer retail be – phenomenal doing do so been I it know and and they marketing, great, think I way the need specialty brands, they realizing retail job I'd recall I've look personally but at we look yeah. say, GloFish great we a also you and stores. and the year the brands we’re haven't back these U.S. Pet creating not a innovation the companies CEOs of seen than had and back but smartphones websites, and are back it, you with just leading back owners with bone, we past, of and is retail. news going, into and us driving excitement it's that go traffic what and to and meetings their packaging, these thought you dream It's know is doing to know it's its you the because look, the a above from

Jim Chartier

all the in competitive of And first on your differences, of and kind you have of the any just U.S. that you’re would business. had I the product lines Can Europe in from success U.S. momentum a then and Europe in Great. kind terms know or prevent you've the getting there are export U.S. difference certain Europe we businesses the of

David Maura

on in bigger blunt. Catcher aquatic and success you to could harder, our the we've animal introducing obviously and – because it’s market around a GloFish had it animal been which aquatics investments it's No, CAGR. It's dog there. the Germany space and The issue higher it's all been we’ve based small. cat know. We've the and dog is there companion LA and mostly [ph] except you companion know has cat, made, be has

conference make make $X less EBITDA, a $XX to million lead You year this that know to I'm on us but try of about it million my clean neutral $X used I up. sick became and to of best you and than calls, it's million It that talking $XXX am million to it know revenue. doing

Jim Chartier

thanks. Best of luck. Great,

David Prichard

operator next Okay, please. call

Operator

next Your line of from Joe is Altobello. question the

Joe Altobello

Thanks guys.

David Maura

Joe. Hi

Joe Altobello

morning. Good

I been a couple it's asked already, one but question, more I I think the of So go to time wanted times suppose. it at

related pricing. what's tariff look you David happened businesses since the know mentioned you at You delayed to if that you November,

our on little change. housing still You’re a market. guidance HHI a worse in got softer seeing bit you and kept weakness more reaching FX

curious, and against all just went aren't I I'm you. all in themselves, know of they huge these of but So probably

comp keep XXX better to you got to what in So number? that XXX

David Maura

swing. he I’ll a get take doesn’t let follow-up. Doug If I’ll it,

Doug Martin

bit, actually them P&L to price and impact FX. they assumption able So went as the is the little tariffs because on had a we were for the for into Joe price de-risk tariffs think – our was we I

I know have the had that the that issue. in still and the our top-line we greater get to pressure on we a have bottom the ready and and confident then into for than a I'd range. translation say left price the consumers we’ve for there lease on partners we perspective from On line so finally shelf think particular So greater are you range we those had out relative less to pricing into the retail top-line less ultimately further from the we’ve year, impact a FX plans and us the and it’s we put

Joe Altobello

obviously tariffs. it take businesses of Got in you in competitive then those has commodity these still What secondly higher the and right pricing, where been are everybody in FX the did same response on prices? transportation businesses

David Maura

I too. take thank in most are people of the cases other trying to prices

monitor I that. think we and got are have do yet following where we some examples competitors not to

it’s so dynamic you joint store, – and put ways more do know in this know you is know business of there's to efforts, Do listen etcetera. a lots you things. marketing You you know

know You know prices. taking people you it’s do you mostly – are

brands the its taking I pricing restore you know just easer share, dominance see you Clorox's think structure to attribute can They entire their take. you it's and number. margin where have to strongest and

Joe Altobello

Okay, great. Thank you, guys.

David Prichard

please. next Operator question Thanks Joe.

Operator

Zaffino. Ian of line the from is question next Your

Ian Zaffino

thank you. great, Okay

strength you in more it's kind improves as guess can in the innovation, I on the of just as touching just Just get seeing that been little into and it is touch channel there a little or far improving bit why you Pet, Thanks. U.S. just know lapping that you the and so on what you bit are maybe that destocking, new well. a

David Maura

know about listen Ian, year it's happening, and team has thank over business. a for Again, you. Yeah, you finally look, but the the talking I’ve this no been reunderwritten

JP genuinely doing customers ferminator, and now acquisition partner got and consumers raw end and know product our know and we depending not innovating, to with Randy’s increase was is just marketing me digesteases it’s are It prior we you just and it's taken yeah, are and and brining say so they spend over I what retail do, bring not to to retail do just the and think bring team which anniversaring brand, they’ve know the the you news customer innovation, next specifically that behind excitement new now is and not a on they the the partners. know hide the to you the unit you and and recall. really blunt, it's the to excitement news be pipeline now

you excited. And so I'm know

I starting think better. getting correct they NPD are and to healthy the finally pipelines cultures

at So we to stay it. just got

more are not and more make. We lots improvements -- do lots to to

Ian Zaffino

or period the you there holding on for how do think state, that about thanks? that and Energizer Okay, is like a piece,

David Maura

think been know are Listen, – next and I able phenomenal take to have I you operators be terrific the those Rayovac they marketers partners. listen, know level. They think guys are you and to to going

off know auto share was of we is synergies I handed the are industrial and when know you they to just around going those is we they’ve I you exceedingly think not turn logic it's and both you saying know iconic that going deals but to XX% to are the you got market take it way the of there great you got the in it know – are and brands, overnight, they've participate wanted the upside strategic, going and real rest. know think – Dayton there I'm

we can the auto partner we that XXX the we power and we way to it as we in derailed can was by , where company, XXX but time X:X away you the at I'm can back. So they that but in upside. when they get a chip then which XXX-ish mean we got consolidation it them, really the and of did know hoping at were can it EBITDA I the I also before – bought look with participate earnings

for hold least year. we the a think stock I at

for happy term the team, Alan, respect to Mark have fans. and long are We I the their participate utmost we’re upside biggest and for in be for holders there. their

Ian Zaffino

lot. a thanks Okay,

David Prichard

please. next operator question Okay,

Operator

the from line Sam next Your Reid. question of

Sam Reid

question. my drill thanks I wanted bit question. guys, here to a Hey Personal on two I've Care got down a for taking part and actually more

you personal trended might total care know did is as sales of second, a sales. could in your big versus in And eCom proportion as sense XXXX? to us XQ then as Could XXXX how kind you us Personal first of in a Care give know have you how So fiscal sense specifically, growth? trend how the growth you just a it U.S. that to give that eCom

David Maura

is and you that to to around representing grow. of XX% XX% eCom know business continues Yeah

I look, three, getting think there I we to think there, the a I and we ratings, years mover you the think good very, getting very a kind were job ago, for – honest first did four growth. getting be of know out

expensive know not area and and are deploy I but think that our it to of it's our not on the it get in getting so we used I’m only yield on to we business that so de-listings side, tough competitors. Personal kind that’s why are we to lot competition you caught kind regain And comps to you that, those think grow have in know the going and tougher year to more on our be in of most to made to suffered we having blunt, the listings of right Care We a I be the where such another look, what investing need period and that's a we make ago, now. areas.

bucks. a couple actually grew this million Our EBITDA actual Appliance quarter business of by Home

partnership did over one global so know but why expect is Personal U.S. Appliances your U.S. Did with Care, that's we already Europe is when It’s Care stabilized, this benefit has Home Personal you Personal and Care So tremendous there Manu. question? I phenomenal really Person we we got getting fix I job done do the say kind number get but a And to of Care. I to in trajectory. and Remington has mean growth

Sam Reid

hear You to I wanted just much. here I you kind at follow-up a of Garden. And upbeat good did, well, to segment your on thank you sneak at so That’s – question & in this it’s as retail Home course if play the did, year segments? the the sense specifically cycle at how will those inventory out a of here in retail how look and over to inventory your Thanks. and get in you as could think

David Maura

Doug, go ahead.

Doug Martin

in know Yeah and last business. exited shape the fiscal think year good that’s you we we in a very those, seasonal

really last shelf years. that our couple our most a customers the with are So products had of capacity or beginning and liquids you way and know we lot of over will right listing representation have wins this of nice a in aerosols our ship a that expect we – shipping, season both buy at and where new these to now we in

well have to able well a to as being we working So better and opportunity to respond our as as inventory quickly there demand improve manage positions capital changes.

good things So for are looking our season.

David Maura

that know follow-on Garden back and And ‘look, then listen, said the you I down I and just a in that, have when in sat you the know Randy summer Home brands. spring & tremendous we with

got don't a product You know glyciphage the you to story have [ph] in tell. and we know a great we've

year, this were investment of in so And marketing support. again our part

dollars millions it. caused time the and and win to of putting it's are we behind for know are listings we're with and You in first we and to share us gain retailers [inaudible] it partnering

has to more very & weather I retailers is on And initiatives think partnering Home but bring got we products, We've by our we’ve be bullish great and so to got very going look, to on Garden. got value there, payback the fast. we're and a team cooperate, yeah marketing got I'm pricing here, great great going we to great innovation,

Sam Reid

much so I Thanks guys, appreciate Awesome! it.

David Prichard

please. time operator, in the we we final Okay call squeeze one have end call to before

Operator

Karru question is final line of from the Martinson. Your

Karru Martinson

Good morning, guys.

outage old support, stepping a for offered guys with I behind the up you partnering I'm lot mean you hearing of know on value them. always Just less. brand retailers, that advertising,

know. You

David Maura

it’s Spectrum new know, an You brand.

Karru Martinson

as should spend about we Absolutely! So go forward? how we think that

David Maura

just take good about of take I into program is I'll million one won't $X.X a example and question expected too I a that's look, piece very but No – the go and you a know one look, detail, much spend.

obviously will tens will revenue contribution to think fashion. back year are that of result a on and trying a pick-up $XX and million I dollars based million of same millions $XX in faster allocate new we in margins, pay of it than that

all not way the are We yet. there

at done on group I’ve know new me quarter new – where a spend I with only think don't that the put in sprint. we and accountable a an entire also got a past. analytics on sure it's looking marathon But in on the you was return working it, are We a year are and making I’ve not the in the

cheap. listen, So mean value doesn't

great through product, through through quick smart set price with $XXX our value technology, a value, to can Bluetooth, $XXX know be can and with key tremendous you it point. You Wi-Fi

didn't innovation, to brands in be doing We definitely that’s want communicating many is we want be be in things I we think I the yeah behind and past, our we to laser focus just in going to many future. going to the inch going a more but thing deep, are do investing wide, an with the investing I to are we too mile to more, what be be the too customers. people. we're and are that more, try

a creating we are company. stronger faster, We smarter,

Karru Martinson

is just Okay gross X.X so and target today? leverage we then gross that – the target, are just X.X clear, from a the leverage

David Maura

No, don't because to you know want look, hole. pigeon I

if liquidity. You got I've the billion undrawn $X million, run know six nine and revolver months math of probably an too about, much if over checking you I a the sitting to that’s think next $XXX in account,

down free to you a but made. allocation there $X.X going flow there And we liability to other lot so side, of look generate pay at forward, be more decisions is going are if the billion Right capital yeah and to and that’s cash do?

neck break just And been have so moving listen, pace. – at we we

stable, in liquid we're time. wasn't four I I P&L look listen, have take about grow the the days think in a sheet. healthy it but discount, us feel multiple I I going now calls said back want on could to market ago business and I balance think outlook. company balance kind the to the our But stability at the a it Again, weeks a at year want conditions. and more know this we've mean standpoint of is bought got to I XXXX, I’ve good position reinvest to and till three very to I XX XX, us from I (inaudible) things conservatively sheet run next give you and can't.

for my returns me, again. to shareholders want I know maximize You background.

things where when and reassess do. them we’ll let’s us, around are, make we’ll we communicate environment the at look decisions some let's So

Karru Martinson

Thank much your for it. I you very appreciate time. guys

Dave Prichard

And Karru. the the that with reached have you, of top Thank we hour.

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

Operator

your This participation. Thank call. conference for you concludes today’s earnings

You may now disconnect.

Spectrum Brands (SPB) 7 Feb 192019 Q1 Earnings call transcript