SPB - Earnings call transcript Q2 2019 | Spectrum Brands Holdings, Inc.

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Operator

Good morning. My name is Jetenia and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectrum Brands' Fiscal 2019 Second 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. reminder, Wednesday, gentlemen, May a being conference As today, recorded X. Instructions] ladies this and is [Operator Thank you. I would now like to introduce Mr. Spectrum David with Brands. Prichard Mr. Prichard, conference. you your may begin

David Prichard

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

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

turn Executive if see and Chief our and Officer. that session. presentation we they Doug today opening David go today projections These Actual that note based differ and will and Financial you'll to Q&A and and the call may beyond. then management's Chief X, statements X, If statements led be X and slide our by nature for are to XXXX assumptions Officer; So results materially. our Maura, we will outlook expectations, current forward-looking conduct risk, by remarks Martin, start our include Investor upon GAAP today's both our call. these and will Due this filing, you to to turn press basis Slide fiscal the we deliver our we Doug comments Also, and our are for David We Relations in with and Chairman our uncertain. that are that are statements Spectrum certain discuss measures please review statement. section. I assume financial and David risk now SEC our non-GAAP recent in to in Maura. outlined will over the on in will update and which cautionary XX-Q Reconciliations release and Brands and press most to any May call X-K Spectrum and no recent XX-K. Chairman website release you XXXX, CEO, most included encourages factors Brands note filings dated available on X, the forward-looking obligation measures Holdings' including a

David Maura

everybody generated and many thanks very we allocated for rapidly Dave In down of million and of $XXX debt, in ways sale billion dividends. to company. cash returning share under January, this a portion assets. shareholders to We of our from repurchases. billion million through on our shareholders $X a you, the will these we good the paid Thank proceeds today. just joining quarter the while And approximately form for this In proceeds call was of $X.XX $XX year distribute us of

As a XXXX Xx a at the a December approximately net of actions, these of of nearly end second which just our leverage quarter at has ago, been in while leverage result X.Xx. the short to reduced gross of peaked

to end year current We in growth they're Through period a our We flow material much these Home expect a second unit units and in contributing. grew were reported with at our now division are led leverage our focus. net EBITDA in These our quarter, our Garden XXXX importantly Similar all And Care X%, Hardware by with Adjusted the and growth resulted we're strong of completing both Appliance a grew very were more These organically. stability with sheet. revenue sales year and of been renewed and plan. growth were strong business HHI, stronger do transition with with seasonality in to accomplishments, a We last second and grew of our line with fiscal happy solid company X% Personal history. in significant to internal of business, position expect we growth X%, the stronger pleased positioning deliver the our and Pet free are a a these and larger we've half Brands right home business of XXXX liquidity stronger half period Home entering results to balance quarter approximately recent due have organic much and half for in flat a cash XX%; garden X.Xx. and our at year sales we results X% finish first way strongest with the paving in actions segment. four home back of Spectrum and typically half improvement the first first the was primarily hardware on larger EBITDA for expectations.

Additionally, business performance business a recent of quarter. include seasoned a experience both team new David experience. very and several care strong Albert. home These President, leadership general from is during this we new that appointment Dave the a with management regional businesses, we've and business changes also and difficult comparison leader first-half a lap that in in we benefits our improve and appliance personal installed expect sequential as we see in

also new business hired in CFO the Marketing both onboarding strategy. recently who well-respected outside a from completed unit consumer and financial with also in Spectrum We experience of a have appliance We the new a was appointed Brands. product corporate of divisional company of unit VP

new both to its I quarter. have that This our company, stepped-up our X $XXX creating and now. shareholder amplify care million and comments business is to earlier our chain to ground the my Additionally, about spend up were supply of We brands. home all $XXX slide streamline and development the has leadership target the on has appointed like functions. directing and spend behind hit on included friendly million. in setting marketing we If our you new stabilizing operations been I'd both towards our could in our remain lines. planting in in of marketing team quarter already business, increased in original to turn Across investments to the new seeds for our value completed actions second are launching It our EBITDA adjusted achieve unit we brands. personal goal products efforts And behind running. XXXX focusing new important are clients which this and product core growth,

major and debt eliminated improved our of capital all tenure debt structure. in non-revolver rapid liabilities. and our senior the corporate Our duration We've has reduction

We lowered have annual cost our pro the reduced And are borrowing. we interest forma materially significantly expense. cash of

also We with ended liquidity position of the second quarter million. a $XXX over strong

stock our opportunistically X.X% buybacks, Regarding we our count. or shares subsequent total quarter call, X.X roughly to first repurchase of million share

$XXX forward, to plan. slide Going capacity additional million on remaining could buyback our to turn up We have of three-year we an X.

before commercial of recently roadmap. a strongly our significant seeking the call. have on efficiency fit our stronger provide are roadmap efficiency gains purpose expected in right eliminating in shared I've opportunities these across Spectrum to at functions. we structures, the for performance organization study detailed manufacturing, As our more to intend recently duplicative Focus for distribution are to And new of in service conference. their embarked discussed future. and improvement many a Spectrum shareholders work ties and unneeded This procurement we're we and and It's a and We XXXX, work platform. the quarter settings details on identify the Spectrum to results CAGNY processes. way improving the global and Brands. for of the We deliver our operating our XXXX to on that excited our most and Brands accelerate on by Brands building Spectrum our our resourcing we third faster, activities include standardizing our transformation smarter, areas And

how and vision, going; focus, a Spectrum clarity, Our we execute. we what we XXXX where mindset. prioritize guiding pathway to driven our principles are This is are consumer

and that outstanding experienced our a and with increasing and driving much energized but new These nothing investments call with free marketing We leadership a quicker Doug. to let will culture provider innovation service as excellence actions team operational to an new accept talent refreshed position quality accountability, flow. company while our cash greater products. me turn are the we decision-making sustainable on over of behind low-cost delivering focused be With

Doug Martin

morning and everyone. good David Thanks,

with unchanged. profit due margin Gross SG&A net of inflation, slide a based points year of $XXX X.X% excluding sales expense operations of sales; product divestiture multi-currency from expense, XX% and units of operating by gross with was unfavorable expenses a to review sales $X.XX to FX versus delivered driven last related and a higher mix attributable business ago. foreign and coming increased lower improvement of On X.X% XX.X% acquisition, an offset $X associated reported of XX.X% grew XX.X% four due of decreased was losses now X.X% primarily diluted integration loans, earnings acquisition of year input partially decreased from million pricing. for XX.X% compared a and to larger by by net organic a per from based last costs loss Adjusted to a solid the share this QX to interest of tax a and basis Reported million. XXX XXX basis XX debt. year continuing points results increased Reported higher early charges income operating and exchange share a to All benefit. charges. Turning restructuring organic and integration and debt $XX.X per home extinguishment to sales unchanged cost beginning stock unfavorable a Reported garden. and one-time net basis, by compensation improved slightly growth at higher year in interest lower margin reported assumed partially $X.XX was restructuring HRG a due offset

$XX.X restructuring amortization result this care QX a back as primarily million the operations of the increased based to interest from acquisition debt, home early spend increased the last of year. to last HHI comparable primarily $X.X The driven and were reduced year our Turning last interest increased $XX.X and in expense Cash from million for year. Slide personal and operations. debt. payments and share by from $XX.X and operating unit driven into and share improved continuing operations Cash and cash million primarily assumed extinguishment depreciation by Depreciation, $XX.X distribution million of versus to taxes QX million $XX.X $XX.X year compensation for million charges were charges efficiencies of $XX.X HRG due million million from and million respectively the compensation center. amortization XX. and reported one-time operations including integration Kansas respectively of $XX continuing moving was continuing discontinued related of impact based

improvements, productivity hardware growth Now slide and and residential across results the excluding million product $XX.X hardware. or unfavorable the expansion fueled Organic XX, with of from expense growth, while this in HHI's security was introductions million. growth unit product net beginning margin effective reported of load-in builder's promotions and electronic plumbing home improvement. $X.X security, X.X% sales residential orders and basis Strong grew categories plumbing business was XXX to increases broad-based three higher primarily and with higher lock of XX.X% EBITDA segment sales. XX.X% from new drove volumes, controls. category Adjusted points FX

ahead, Touchscreen residential awareness Smart year re-key the and seconds control. in its innovation stream in grade apps increasing patented locks a expanding keys enhanced allows smart door especially deadbolt lines their maintain that product lock and HHI relatively of technology Touchscreen. cloud lock the Key of marketing US to also campaigns smart HHI access lost residential investment consumers Halo growth the consumer and innovation, leaving adoption mobile or obsolete. new smart Looking locks, fast-growing electronic Aura Baldwin Kwikset includes sees unreturned commercial back an in half and its given lock HHI and security rates. is Bluetooth smart business behind low To levers, is unique technology, continued Wi-Fi steady leadership, Highlighting in

Home to slide Care Personal XX. and Now HPC which is or

not Europe from streamlining, reduced X% with business QX net channel primarily with personal related personal the channels. grew half channel sales EBITDA and focus financial Latin than in the were the improvement initiatives and care and expanding softness fell organizational recovery seasonality. and mass primarily double UK garment from partly decrease increased with historical a the coupled foreign Lower Drug sales larger fell marketing hair in the organic last was to from lower unfavorable Europe care European heightened margin Food revenues reported HPC regions adjusted year unfavorable in food/drug offset in sales mass reported Lower excluding both simplification and softness. from of new Our lapped to This digits and million. coffeemakers in includes with distribution growth US drove decline. to in in improve care was introductions losses QX to personal US distribution attributable second segments the US, with product effects other the by gross consumer offsets from $XX.X exchange, region. higher revenues sales appliance input e-commerce mainly EBITDA consistent care and HPC higher X.X%; and attributed and partial rationalization care Small UK sales and mix, revenue core. appliances related to volumes, POS on The Brexit continues expect investments. costs and reduce margin America yet comparisons

As have brands cost fiscal in and prepare before HPC, to XXXX. its are structure for we said rebalancing behind we more its XXXX, growth resetting investing in

of EBITDA supported Global and Adjusted to European margin is materials and fell raw building Moving in margin working growing selective, manufacturing a drive is rapidly X.X%. to to marketing top-line by channel. of data-driven chews also XX.X% companion brands tariffs the the e-commerce primarily and as drove US QX for strong Pet trim grew distribution cost continue XX, organic XXX partially and long-term $XX.X growth animal basis by million, global the unfavorable product which occurring and region larger 'n' revenues, base expects launches Pets' SKUs Pet food with aquatics DreamBone, higher QX sales US Good result Tetra Nature's to improvement Important million lower including Pet X.X% $X.X in higher aimed Fun, chain large its solid cat X.X%, offset its net and increase and the FX sales slide higher half. SmartBones, manufacturing actions sales. FURminator, are unproductive solid reported supply US second a new lower on dog increased dog to investments excluding point in decline to performance a and primarily a structure. at digital pricing in and treats across Double-digit and GloFish Miracle, costs.

supported and control increase to is Turning weather category on was outdoor XX. EBITDA category and adjusted and Home the expansion XX.X% pricing much from Home strong Garden favorable outdoor expectations efficiencies slide early and attributable more and revenues. million from generally volumes Distribution this higher of given optimistic year category select in XX.X% to increases its drove manufacturing increased - larger seasonally Hot and weed other Roach which and net centers innovation home growth and success than spend in killer, basis XX The by off-shelf growth last in home in actions. $XX.X outdoor and distribution expanded remains EBITDA our about advertising higher to Garden revenues to margin insecticides, orders center in promotional programs. double-digit sales promotion XX% XXXX and half Ant, lawn sales growth. with wins strength Shot Adjusted second EBITDA Spider, all improved season points

the better and feature with in manufacturing channels along place continuous end-cap are in DIY both New mass and savings, efficiencies and space placements mix. improved improvement also

were Debt $XXX our was liquidity outstanding balance balance sheet completed a $XXX on repurchase $XXX expenditures we Moving million in million slide remaining a position in XXXX. the QX million $XXX $XXX at and of year. end down XX% million million. cash flow were X.X million versus of from million Capital last fiscal available $X.X and billion, $XX.X revolver, approximately repurchased share authorization. out per million Shares in XX, or of for $XX.XX solid $XX.X QX our cash on including there's three-year million $X.X the

our in XX slide to guidance. XXXX Turning

in be on from driven to XXXX than marketing million. million higher We by a and expected approximately of pricing with gains. based We have Depreciation EBITDA operations EBITDA QX net is $XXX QX. and million and $XXX between operations sales FX basis adjusted approximately We and million is between expect re-affirm sales be on investments, our rates. market share actions QX negative amortization XXX innovation, continuing seasonality continuing to continue stock-based Consistent from $XX of current million $XX prior $XXX in million impact guidance QX. of reported expected years, $XXX each in expect to to growth be with and including to increased points roughly now compensation

EPS, midpoint. million in $XX into is amortization For million. the depreciation, put stock continuing $XX and was compensation this the when million range for at we excluded, is based therefore, catch-up $XX HPC reference operations XXXX Fiscal QX back adjusted

restructuring and are be the million between Capital increasing million discussed and are performance $XX the cost $XX David $XX improvement We expected related to and increased expenditures restructuring million. million opportunities reduction spending funding, to earlier. with be $XX between cash and

tax have you reminder for now of asset you, We and NOLs EPS, of Dave, $X.X finally a as then we and to billion including use Federal usable taxes. for back the state a remaining post XX% questions. sales, rate adjusted Thank

David Prichard

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

Operator

first question with Tong Olivia Bank of You Instructions] the [Operator of line from comes America.

Olivia Tong

I way obviously that we've I know got actually quarter, start that a of want first about off through there is lot flow; of started base here thanks. half similarly a moving starting I are you. to start? is Great, just just cash free pieces puts last talk to takes to which usually year-over-year the different the so and can used, but you basis, Thank a you lower and on

David Maura

first let Doug that will one. I take

Doug Martin

of or loss two good the morning, through One but principally late in in are because what working now on one the the early we January. cash businesses run and year - want guiding Yes, the January; not this through would January on in run of capital the Olivia. traditionally time Hi, sale will sales. flow have at free transparency, not gain clarity because don't we

cash our against end of for lay on the can it's all pieces story tell I - all all a at we're you already numbers free we'll confusing at and sheet So, they're of this a internal and net that pieces expectations and track of balance those a in reflected you. the have our of - on point. the out obviously debt proceeds it's the cash little year have the bit on we flow captured of and

use elements look for So you like your to outside of - next modeling I and based think information out might then what this the I if about it, think were that can the as - coming like year I gave year. I we model you to of that I on have

that's pay still restructuring and adjusted taxes, on be is cash-- annual to forward. the expect $XX million between down for depreciation million $XX going that an CapEx, debt we cash that's So as basis a

Dave not, to if hopefully help. So, helpful, continue or out reach if that's to - can they Kevin that's and please

David Maura

I off over liquidity we the only the The cash will to the we've XX% is debt do this debt back did more some also the lot at collect our thus so, we future. position we build may generally a and retired of think we in out add, of do And free pay would we're the just finish you half I of starting year, so far company; thing cash now, look our as in and if year. the instruments of

reduced we'll to the next report I this time think benefit to going come you. results, we $XXX when see start third with $XXX talk the forward expense can million up of quickly you we quarter million, interest which bucks of

Olivia Tong

to shifts is? be you Got your it. pretty clearly Thanks, and you've broad across timing the better, made - And this view reinvigorate can go bit you Thank this sustainable so you. sales, talk expected appliances how in-store far over a How business better any levels of then of? then division to that inventory just What we changes the at quite can it? you should terms was so specific in we aware on point? about clearly based, divisions, than

David Maura

marketing focus report what obviously you're tried that push non-strategic think the Since am toward we've product so ship we want I we in A&P of getting want I spending, you seeds quarter are but just new is into put to the and money view steer top-line. and remember, could investment the clarity look, position you I spend earnings what would to on development build start seeds, & this I call and do stability - run we numbers, trying in over as activity then higher a - be R&D higher you and I short which it year is more look on to in company to hopefully strategic to Yes, we an to consistent and increase what a Again, clearly much reporting and means, marketing. I XXXX. those we we innovation took bottom the spending, for look XXXX, but returning you continuing get year drive in to to know, the don't as and are planting vision back eliminate across I XXXX, the of we had anything unfortunate and really over levels better is invest tell company to for the then. planting want and to a and dilutive ago really line, story. growth to promise

Doug Martin

management in a just team I the the profitable say got revenue. business call have Olivia, new - and the from next they're last of to Appliance would but on highly that a the progress we've beginning some improvement, and perspective, year on making, in they're lap some timing better saw place is focused a not are are they negatives we you we'll update but - revenue, from and probably the

and pretty would box between that strong forward & have going from surprises year generally any expect say the us. perspective, wouldn't of And has I Garden and is so particularly now front the season been coming channels Home POS there this of out still better weather's then. the been of far. So, then We big XX% in I in

So question, Garden a and lot seasonality. your to to yet, go year I last little Home to for timing relative would a better say & but

Operator

of line with Bob the CJS question securities. Labick next Your comes from

Bob Labick

nice up. Yes, it keep let's Good some on morning. Congratulations growth.

in drivers how longer-term wanted about a strategy shift you to as the key a So then talk mentioned about terms to one of or view shift merge online are you - maybe but a in little e-commerce kind two, on maybe PET, the medium the you growth so growth well, remarks bit about talk well? organic and talk as the focus and of a you of of bit as prepared segments online I in particularly for that the can over little potential, and strategy you then, each pushing there

David Maura

made think we we've key on the actually I digital I don't days, allocate that our marketing, capital in were them, do the just on the it some again get world talent are some that and we but on understands in a board people frankly, key hires we spend, doing spend, now algorithms, digital do our the we're focused got think done XX of so, content digital search, and digital - the kind that returns how on right in we're in early done last language better a of Yes, not months of good of the partners the pretty how we've getting we there. with much really good understands and speak good fix and very we that to other space, how a and Amazons I e-com we've there. really but think optimizing we're we the have job right of getting partnering with midst quite job return now

I migrate now Appliances my that capital of of part doing - get doing we years-- rapidly. to of So, external internal Clearly the side. to first we lot on want new Right a much role allocation. online allocation pretty question, ten spent I your continues to I capital and on rate - a of digital is think, was to kind we mean higher are much return a

in HHI We you is but our locks. that's the smaller e-com Any Garden like liquid bottle are get heavy & you've business and on like our Garden are a hardware time side, on meaningful and seeing is growth products small, & definitely component. as rates a got increase well. a strong; PET Home Home in -

low less particularly see doing low exponential. to one very rate penetration end We growth rate I a moment, to and on white Kevo with see typically massive continue digital I of adoption first the we investment products, with see just our market And step at there, the very online, and is but market space rate You were there, but lock the we the side. growth. up strong

times want maintain of we tailwind behind at I they've our to leadership so position. we recessionary not in they're we're our Doug to stay, want purchase. we've expansionary only think put explaining talk great really our here We them a think that'll confidence HHI digital here you've team customer. to we our a also whether locks and Forest of the better key the think, point got to do I've I and it. Lake revamping smart frankly, the want about the clarity and recently was there Because, continue quite the bring the times, job, leader out, some we technology grow And in given and be increase just tailwind at we're trying point-of-sale with market in to adoption to rate. heard, - customers But merchandise, to

news that further probably that summer with a and you'll see So more of see that coming to lot new products and release of you'll in lot out this activity. were a

Bob Labick

quick great, the just And for one. other then you color. thank one Okay,

were HPC obviously, at that to - don't to whole the the priorities it words mostly mentioned a what You in them talk Executive the I new given Could forward? mouth, or level. to new you've about and team you've your want priorities them? going team put you given Is charge

David Maura

things, too many product. We to to too do are be I off with at Look, many division. to got tried people too SKUs. we many just procuring that think blunt; very, in track we Listen very good

to kind got that the innovation get provider. right just some just brands. product got for to a with cost we've lost focus. we what are to And we've marry really have And - We the think and core. We low our a We've get and great the of at done right right prices decade. of we kind that's to we I customers back

we're on willing So the do us profitability ways just numbers that there's short-term that. to doing years out, and drive more innovation. have listen, to going was And in no could we sacrifice back and that question are it's on we future kind reporting moment, we theme; enterprise, purposes, have this in flow that cash for levers to ago that but Listen, sometimes growth. so, XX current better time quarter, I'm for the free are just there focus. expensive we just it's of to probably the new would there's - sustainable plant on complexity have seeds business of - it efficient doubled that's this some rob is My But restoring plant create pulling things mission marketing, would are from seeds. line those growth to a no to you the not been

side, why in experiences them those better or to you've on so on have know things the And to to and invest they you've help their innovation, convenience. - needs also a continue let a advertising. bring help about new people have smart got to consumers' beauty you've kitchen personal got mandate And products a them got - that answer behind that to let through know

you unit. expenses, that chain, being new tell vision, so streamlined to would focus main of but is dual kind they in are the is DNA team, in strategic that the in so, mandates DNA can brought have a of the that activity. more that we mandate, which it and also not to I And reinvest really are operating those supply clarity different of were this prior business team, the

Operator

Your with comes Faiza from Alwy the next question Bank. Deutsche of line

Faiza Alwy

good morning. Yes, hi,

there business question first about you HHI. my outlook slowing. your concern housing last about was remodeling now? to in Can about I talk do it has with we talked know when for and that some February; So

since improved. I have things then think

you're take updated wanted I about your how the thinking So on, market? just

David Maura

very I to market a pre-rapid I from real just you, deceleration market quite tell become events when had definitely we by think demand, and December macro it now and lowering was it in Clearly, the right. I rates. think so sluggish the it lower trading and has November X.X% partially is concerned low would given I you're I rates. XXXX the saw mortgage given headwind. and - Fed, first Look, the is it pivot Yes, And the a very think and tenure accustomed lower rates pushing was that through housing me the noticed

And see so which housing. And the sales, remain think of home again, you it space. will the dominant HHI XX% see division. about total top-line wanting there in a supply we we But we great, and now get affects in in player pent-up into issue. I think be the of right our a it's we pickup And is, It's right, see the to do remodel you're affordability demand. new builders with millennials actually still the lot a is

quite we - builds be extremely range. quite so, code Because the of of we and good partners us, our tend how could home that if to looking to now And adopters a early builder do are more $XXX,XXX be in that zip in frankly $XXX,XXX frankly locks. kind for they be lot new product also that the would see our of be digital create to

I'm get we're a on our to all units, want growth tough feet, investing about our - want as I in again, getting to right HHI you approach don't But for in don't the better today comp we're XXXX, lot We're stabilizing did a I billing months ago. QX take I XXXX. look the for So X better as - to HHI we skis, back than outlook we have we're the business to talk - we over now just unit. billing feeling for our it's long-term

Faiza Alwy

up EBITDA. a And Okay, just great. then follow like HHI on

last year, last to a still relative perspective. on a decelerated. accelerated from it's I very at it it was look basis, know if margin a comp X-year I year easy And So but

mix color is more So inflation, bit a little a talk it that Is compare investments? could about X So takes? is of issue, it just cost puts the around ago. to more if that some years EBITDA, you and the I

David Maura

pass one that's to going Doug, this I'm okay. if to

Doug Martin

generally we've a Primarily to bit input on but bit driven inflation, cost little pricing of related the cost the a on it's side our - some run. the of - little short across some in of categories tariffs, across gotten there, board,

talked initiatives and supply about in HHI. chain earlier And the his we remarks manufacturing of prepared see David some include improvement that in and some opportunities

Operator

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

Jim Chartier

question. Thanks guys. Hi for morning. taking Good my

this second we margins to on first more weighted color - was you impact was There should can EBITDA half? and year? investment less a how little much versus spend On of bit of the give half some more it first your on a weighted half first back - half the to see in

David Maura

varies by It division.

So to spending. season up garden going off ramp a reasonable actually I and can lawn we're we're tell you, to look with and XX% of start, the left,

we half wins of to it's Doug, on retailers, we appropriate customers. where marketing we supporting it's support know side add would would those Manchester amount not Plus, say more first be a and I situation but and inexpensive weighted was in that you the increase, I again some for distribution want actually more endeavors. have the our increasing, profitability United don't to appliance want things growth. see like the sales So probably are color? that

Doug Martin

given is ramp holiday year as into think that's think the which appliances committed some be spend but quarter, - of pet year, right. that half, business the year, happen the are perhaps, their time. a next I And heavier is And I up again we the will seasonality later then little bit in back a Now first will ahead the of headed stable our and the state. through HHI pretty in and quarter little they relatively bit steady on

Jim Chartier

line for plan into to flow the improvement the Great. continue to Do to opportunities. or growth And plan that about you efficiency talked you reinvest you in most to study bottom then through of your initiatives? detailed

David Maura

we kind do some more and broadly evidence before to we Yes. tangible Look, get wait talk this. more our excited in to you about and I to hands, quarter. I'm next intend that it very of want about actually

new I But the is We side. procedures should on it it - we if more spend you not procurement unturned. of too comprehensive will about to come become - or vitality, beyond. think product think of the it in line decent will healthier no deliver go development. and much innovation I growth It's ship reinvest I spend, to a I of as, balance or four added XXXX take is to lot towards investments redundancies there's study; much a in value think proportion draw a it, going XXXX We that us pretty lot to I'm think top We and with businesses. it much line. can companies we efficient. deserve in stone a CPG and a again, all underlying spend make I non-strategic manual want to in we the business. want and make want or must bent that is on there if marketing But bottom to more shareholders in of terms performing steering I sure get the

Operator

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

Sam Reid

years? my and taking sales the the proportion coming that existing for thanks innovation us see coming across maybe all and guys, to prior those online sense segments. compares to new it's Hey all your products exciting Look, are year your this a Could you question. of how across to what platform products give versus from

David Maura

hit want it? Doug never It's you to enough.

Doug Martin

is area across increasing provide will bit generally the little to in over a to the in I a they the and specifics Yes. last been X-year of businesses. years high in increase you, have because period and this teens is don't has our rate couple in general Sam, year. But to continue vitality vary

Sam Reid

you, now that's on here. helpful. I HHI then super one Got if And could sneak

across relatively years? us and to some lock in where what X Could you electric next could household there numbers though they and rates might be today deadbolts low prepared bolts mentioned penetration the that and lock rates or around the give guys smart smart remarks, You products. penetration X over be versus

Doug Martin

smart in is percent-ish sub US Penetration XX the on category. the lock

overall Our -

David Maura

narrow that's and X% XX%, as as between Use we go.

Doug Martin

which also under and it's TouchPad total our non-connected, business XX% and a connected business. And around, include non-smart, other non-connected, has around it so little XX% would then of both of our overall electronics

David Maura

it's want access or house to Just relative to whole deliver phone, something, phones. just used future the house, or first a have that be now the listen be somebody their to to And lock on just run is house to that you home, front. of and generation to their able let to on on their a they're customers living buying in let to we the

Operator

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

Joe Altobello

good Thanks. Hi guys, morning.

So a I few are the this making guys did investments year. questions have you around

EBITDA areas of case much your expense are including year-to-date, of of talked help at the if quantify Is of if that the so couple example that for how can R&D you're other year? us expecting step-up for selling flat is You marketing. like Both this investment and for morning. in marketing last this so, in you on I a about it look And quarters, seems to all expense. guide that going

Doug Martin

spend. of which you there are couple that the see, piece areas is Joe, actually to reprioritization and those of that don't gross net

are tell those or planned. we're are & increase the and we in those all Care in we investment planning driving, will that in spend in of & first So revenue focused Personal of activities. the business both the Garden did as we just We on came And Home and did to off. I Home as you planned, second quarter -

year-over-year upon what vary we they were as items, relates as the our it The business will, we'll about investment to reach by those depending year. best individual and way other in to planned throughout two consumer. go see the line flat is businesses think step-up to as we But

David Maura

the we innovation And have Doug's quarter, into wise we very in a challenge marketing, quarter mean lot being I units. of you'll there's could that and some to hear twice that our invest unit. of of we this phase getting a reported and to additional talk are parallel point, a we I unit get of spend we're at recycled Again, and detailed hadn't inside our think profitability non-productive stock shareholder kind comments more of in dollars in appliance profitability to so if at of you particularly some the QX of these vitality dashboard about undertaking. probably as could this you discipline initiatives enhancement of But theme, with that about the earlier

So we sticking with are discipline. a

Joe Altobello

Okay.

you for So would this it $XX full is the year? step to year, $XX the up million call million,

Doug Martin

area. unreasonable not high an unreasonable. that, is of end That's it The not an

Joe Altobello

recurring right? come doesn't that's That - And

Doug Martin

that obviously some productivity on on go reinvest will not That go these of in forever, some get that of savings as investment forever areas. we'd efficiency David those like only and would initiatives, mentioned, Yes. as growth. will these we go but - And future in to through

Joe Altobello

in half I this Okay. are Thanks. I you stock uses second cash quarter. you a as just for And given more squeeze in pay debt like of this already, well? ton the down M&A done of Could stock back guess sounds think thinking some down one, back you you it David. or one could year. of for how It in see debt last year? if more about about the re-purchases you paid bought And how you to want we that

David Maura

that. No. Listen, I appreciate

I single think buying cash is that on single greatest it back the use share. our return the of has greatest

kind has chop, direction. don't are starting look but I'll ago and we at skis, rhythm we and stable just still kind tuck-ins you stronger over I've However, wood out plenty went in moving every just - I cadence consistency, tremendous ago, Spectrum absolutely where, the is we am just we focus tell the wanting the three think committed real the two to just operations get it and have the about operationally more this transformed I to through get lived I to time We clarity, making of quarters of and look, in metric again. - - right of believe I XX-month as - I We Brands this we of divestitures quarters I in quarter smarter, period you, a progress. vision, want disruption deleveraging. at Spectrum company look to ends talked to future. through delivering underlying if and smarter, year a are faster, and we're that to XXXX, stronger Brands through mean from my

of going our tuck-in units, allocation very at if very, horizon, synergistic, own can but best single I anything we look acquisitions that fit accretive buying use at like are very, to on So make. do it's we probably to our is because are be I prices, and that. have accretive with don't that these see shares business capital and said, compelling, very But existing big the the we'll highly can

Operator

line of with comes Your Karru question next the Martinson Jefferies. from

Karru Martinson

coming On of of proceeds as morning, VARTA they're liability and Is that, they Energizer the there part that? dispositions any about that slightly being expected. the forced all Good from lower make talked for guys. yesterday's you call, to

David Maura

So billion. we sold battery $X - the that entire division for

million we $XXX possible that we've will when $XXX cap - We booked to true-up. no, see have of the that does disclosed million, million. needed. And $XXX and wait reserves a complete capped we should we've sale. But And it they that's

do what that but price. to And buyer the M&A to they better, see how progress and is - we'll so, they hopefully, discussion, wait have work who to we'll and at have

Karru Martinson

basis? And Okay. forward with in debt interest the about material pay on here. a we go pro think forma down annualized How should

Doug Martin

Q end the If you day the filing of today. be we the - will at

it it's basis. very in so now the there, You'll table debt be straightforward it's annualized on see calculate to able an you'll -

Karru Martinson

there sort lastly, space. Okay. And Home space in for any been in you talk the some guys Garden for roundup garden other wondering for equivalents. & and I some lift was gains there's if seeing lawn of a was just

David Maura

about it even there. distribution I lot I comments Monsanto product things. great at that our want I warned people for our expanded out to that We think that the sate. make and enough products point. price have it's value it's a efficacy, the glyph message continue get been against It's an benefits never But fact better there. better want want me, offering have think Spectracide we of a I Look, tell amazing and more, are to a superior more to a for product. great its we product, have products We is I about can think litigation

marketing. why investment our stepping that's are So we up

David Prichard

call. questioner, more Okay, operator. we'll It I that close and think looks like the then we so have one let's take down

Operator

line Morgan. comes the Casella question Carla final with JP Your of from

Carla Casella

if us changes if I of - if an could on expected tariffs, are made. any impact give Hi, are you they wondered update

David Maura

interest sides be They the would We consensus. best that'd of ourselves. a the Yes. both think prefer reach globe and

thank we know on, to going on pass check the ultimately States if the a standpoint for this we biggest so end things don't tariff write got you I fund yes, you doing in the majority retailers. where pay we how it and final fire we'll to increase on alone in this than lot we'll are up but consumer progress is. product demand of Treasury, January are United see a on know, extended we March look, we Obviously, drill it this week have problem to be, we would through we mean, I are. vertically if volatility; But X, think think But going us and I receive go side to if to enjoy situation it, we prepared pass to it that the don't know a we globe. for I our more were elasticity, the fall; would businesses we we any of to the demand from think and know, this, have I know, god, weekend, mechanical were through a pass don't went you last and Chinese injected and, with the but, of to on the here where is depending has then our are that that have have integrated this

Carla Casella

that's we cycle little started do you Was share, care then personal the something just appliance bit this mentioned that? And Appliance, when of a lost great. that Okay, quarter?

Doug Martin

and in the so the - No, getting will begin to of lap continue first comps last began it US. better but it year last should unfolds, the year thinks half as in year,

Carla Casella

your - initiatives? divestitures now term, look Is the of cost that the you've are Okay, good and business of savings the starting - to that you stool? Do you X.Xx. leg brought and And level? you at a to forward then completed with another just all long expect to on down it's think of to portfolio and and adding were investment and that go kind the leverage your maybe get

David Maura

the rhythm Yes, see company. of of to really cadence I think the earlier consistency underlying and in I want in the said earnings my remarks I look

tuck-ins are that are not move these the needle. anything small We but would at looking

of I is what the attractive value assets. very price to for think people private relative stock want our

about the to think as So but, hurdle it's want cetera of remaining excited more some balance to take - quarter. really of we sheet promised got a into keep program, advantage line, deliver like - down, buyback over detail, we going high we XXXX we we want start life would it's to then cash are drive we can lot We the what get If improves it deliver you free this to free you I cash in and EBITDA next think into to that year. to the to here, we'd and et I we can greater to it. get talk and the generate a obviously of talk flow

are a be of looking So is things continue - at - it's can opportunistic we best we'll just lot to and the I

Carla Casella

or to take that up be - come leverage X.Xx you leverage more? or And forward is that willing think need the on on the would you does go down to

David Maura

We see where given long-term happened like I on to run us would a that's X.Xx what year last basis. and

David Prichard

David Okay. Operator, to thank well and Doug.

We nearly the top reached of have questions the our and hour. exhausted

our morning all participating day. thank second call. Spectrum fiscal we conference we'll Have good want call. and behalf our ahead conclude So, Brands, quarter earnings you to of a go of this On for XXXX in

Operator

call. Thank today's you for participating in

disconnect. may You now

Spectrum Brands (SPB) 8 May 192019 Q2 Earnings call transcript