SPB - Earnings call transcript Q4 2019 | Spectrum Brands Holdings, Inc.

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Operator

Good morning. My name is Zetania, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectrum Brands’ Fiscal 2019 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ prepared remarks, there will be a question-and-answer period. Instructions]. [Operator

ladies XX. conference Thank reminder, today, being gentlemen, November Wednesday, you. and a is this recorded As

I would your now with Spectrum like to introduce Mr. you Mr. Kim, may begin conference. Brands. Kevin Kim

Kevin Kim

Spectrum Thank you, conference and for Investor I’m webcast. today’s Holdings of XXXX Kim, VP and QX call Divisional Brands Kevin Relations Zetania. earnings fiscal call. to Welcome moderator

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

will of Starting with Chief presentation, Slide Chief Lewis, opening be will conduct led Doug we Officer. Officer; David X Financial and the the Chairman Q&A Operating our and Randy the Chief call session. Maura, Officer; Martin, by After Executive remarks,

Reconciliations on press call. a basis measures our and GAAP the filings forward-looking XX-Q in obligation on X-K are site. Brands X to and X, statements are that will and certain release beyond. materially. non-GAAP These today release include today’s slides outlook XXXX fiscal dated management’s statement. we discuss by most nature and to press measures upon recent assumptions outlined our uncertain. update projections, filing, both XX, to based comments and risk included Web Also, in We assume current financial and the to XXXX forward-looking cautionary Actual in for our SEC Holdings’ Brands for recent any differ these XX-K. our most expectations, statements factors today, results Due and Spectrum and statements and our you no review which encourages please are note available including risk, Turning may November are Spectrum

the I to call will Maura. now David turn over

David Maura

morning. much, Kevin. to extremely our pleased I’m everyone Good the joining very today. progress. today on Thanks on update Thanks phones us who’s everybody

we the for goal are stabilize in XXXX, months XX our today it position is and growth in XXXX As and we to confirming stated ago, company that.

our growth stabilized are and to have in business XXXX, we returning profitable We XXXX. in

very a year-over-year note. quarterly in of XXXX. top reflecting We momentum fact the line us the bottom strong entire given quarter, fourth The enter we growth as ended on fiscal best year, has significant XXXX and

significantly We liquidity, tremendous delivered adjusted stronger EBITDA have amount our a sheet, of full have on and balance we expectations. we also year

stability and management on rose Our importance the to the added emphasize team XXXX to Home business. business, our the and the focused season and delivering appliance that overcame the Care were execution, our and is all Home in 'XX, investment, challenges focused stability we delivering in the teams in tariffs, Despite XXXX. challenge for Garden on headwinds – us of of and our Personal resetting presented difficult selling external we

benefited and XX full Home team at was Garden Pet profitability year their line healthy top from the deliver posting had while year, on a fantastic EBITDA growth. basis were and expanding HHI revenues below able in goals shelf somewhat and space HHI's gains, points. for bottom both margin fact by expectation, the to

Auto Care XX rate run global and off Improvement savings worked Productivity multi-year $XXX divestiture businesses, a generate next and now to we Global of XX million in team which our importantly the Additionally, very the the of expect Battery to over through kicked Plan months.

growth The we pressures Brands new to significant taken over businesses we enable forward. and base be fiscal the majority long-term which going of sustainable growth creation cost set XXXX. deliver us with further will have believe as Spectrum months, value foundation XX actions and past offset in will to vast these our the tariff the produce of reinvest to enter additional redirected savings We to future foster

not team commitment Productivity and future. a Global These Spectrum helping their Improvement with only Plan completely opportunity passion helped thank faster, and our the build world that to an be mentioned, all the divestitures maintained employees associates our the take we’ve XX,XXX Brands and of previously and of remiss to not would me implemented senior globally. I around to also smarter, pause Brands but the stronger, Spectrum

businesses at have been able complete not in business pay sales XX TSAs billion our from relentless our the on focus commitments and on X behind asset our deliver would just our to the while the We of plan to execute our past all over the turnaround investing phenomenal everyone team. on months, same Energizer, the operating units to over half off with under stability in divestitures, time debt restore a

I'm you associated our you parterns that one very, thank I efforts have to sincerely want heart. from -- partners employee 'XX. all of be bottom so and for in, honored very with of each my the you to much Thank your in all proud and for dialed

accomplishments, I XXXX X; your as If could turn going to plans Slide attention forward follows. are

and 'XX, tariffs, of headwinds market, weather First delivered from FX. million we housing adjusted U.S. softer we EBITDA and of all, a in challenging overcame fiscal $XXX

Secondly, improved we our structure. materially capital

reduction X.Xx which Our net business target, net of today. which over this accomplished was of and debt hit $X.X the our the from debt our [ph]. declined end units EBITDA At divestiture X.Xx to with here sit for as we of two XXXX, allowed to was billion debt X.Xx

and the duration rates lowering and X.XXX% average paper XX-year for we our cost capital. most our majority Third, extending our million $XXX by borrowing our tendering recently of duration and of the of notes issuing at of extended new X% liabilities decreased

are relative of our we worth. of repurchases intrinsic materially Fourth, believe XXX through and Board our dividends share million. $XXX million and $XX The returned to that Directors of undervalued currently million shares I

to morning additional we our to an million this of shares. up are announcing repurchase plans $XXX such, As

generate in year. XXX continue prudent as expect of cash approximately leverage fiscal to maintain will we to We current flow million free the

drive firm. As remains we enter new for vision, and our clarity, year, the focus

XXXX, EBITDA we plan and I only grow grow and in company that report to XXXX stabilizing Our very to pleased to all the business our greater passion of all company you our to four We simplify and am beyond. expect in much in organic returns and to After owners units increased. sales XXXX. business like our higher to with run true model both efficiency has

Our remain principles taking execute. a we where vision, is how company; prioritize; pathway we consumer-driven Spectrum This focus, mindset. and we’re to what XXXX our the clarity, guiding

and nothing will service increasing and innovation outstanding but accept behind We quality while marketing brands. investments our

talent a These much actions excellence. of quicker greater are and experienced and focused operational accountability, an driving refreshed culture energized on with and team with leadership decision-making, new

for improved earnings, We’re sustainable free growth. cash positioning and company our flow sales,

hear units. Doug. you, Over Doug Now and the Randy from business update the financials, on you'll give to more an on you will

Doug Martin

and Thanks, David, good morning, everyone.

with results X.X%. increased operations a Net beginning and sales to QX net Turning sales. from Slide continuing X of review

Excluding being sales the with decline Care, foreign growth offset grew $XX.X in exchange, and and HPC million impact Home unfavorable in of Garden. Pet a by HHI, partially of organic Global net X.X%

Gross costs, profit the input fell end decision tariffs certain a productivity. Gross to to offset as America partially X.X%. and positive year plants of close higher accelerated XX.X% pricing by were depreciation Latin margin at – close relating of XXX basis and decreased points the a

to and million, Plan. depreciation input of Home costs this and Global SG&A of Personal Operating about tariffs, higher higher a by expense driven and of costs was ago, efforts. $XXX XX.X% charges the compared HRG sales or the Care $XXX amortization, lower X.X% by Productivity and year higher impairment intangible of Improvement other loss related driven other merger-related and cost-control and year million XX.X% to decreased goodwill assets net restructuring

loss due Net tax smaller stock, were offset expense on interest loss by a and income Adjusted from and EPS interest driven and of diluted lower the our increased adjusted to gain partially shares expense common loss XX.X% operating the lower outstanding. average by diluted operations. per lower share loss, $X.XX unrealized an benefit, Energizer discontinued

$XX.X XX. debt levels. fiscal driven by million year Cash from expense interest million, approximately to operations Turning to of last taxes during Slide lower $XX were QX $XX.X continuing year. comparable million decreased the

million operations increased result to share-based primarily moving of compensation continuing last and $XX.X HPC a unit amortization share-based amortization as and from operations. year continuing this higher the Depreciation, back due year from impact of million into and the $XX.X compensation depreciation of

versus and divestiture $X.X was related million respectively, million, HHI respectively, DC Higher were $XX.X Cash and payments the and for primarily QX charges and last and year for last from $X.X restructuring by transaction $XX.X cash activity. driven million consolidation year. million,

Slide to QX including XX, liquidity on million we $XXX balance $XXX our cash sheet on of $XXX completed million. position, in million flow the cash a a strong available balance Moving and revolver

a the $X.X our outstanding divestiture Capital we from XXXX million week. Debt we’ll billion, of versus was $XX.X last and as remaining to plan disclosed with quarter a million $XXX the million expenditures down $XXX Varta year. previously course the Energizer And connection XX% were complete reminder, last redemption of $XX in the in of X.XXX% million to repay over of year. this bonds business the

current exchange and negative impact reported includes that guidance. XX of sales low Adjusted and currently net a to expected Slide be slightly expected guidance Global $XXX million have our with in growth to Now benefits and turning is based and tariffs Improvement the million, expects EBITDA Productivity rates. place. Brands this foreign are $XXX Spectrum Plan on between single-digits XXXX to impact

QX negatively the cost of phasing related stranded tariffs divestitures. a from Now to and by to perspective, we be expect impacted annualization the

quarters in We of remaining growth three the the expect year.

million $XXX is is XXXX and million between million $XX versus from million, million be between free in expected be million. amortization and adjusted Fiscal stock-based of expected Depreciation to continuing to and operations XX and million cash $XX flow $XXX $XXX between including XXXX. compensation $XXX

expense expenditures improvement year productivity of $XXX Full between and including million, and to approximately also Restructuring be between capital investments. million $XX is $XX million, are be transaction-related including expected to capability expected between non-cash million expected million. million to And million items. be is interest plan enabling $XXX $XX spending $XXX and $XXX and

And XXXX $XX rate use federal anticipate the are during million year net tax carryovers. taxes. $XXX just approximately we not $XX we payer significant use with usable of for million EPS as U.S. ended be we reminder, adjusted loss and And to taxes expected as tax operating state fiscal including We million. NOLs. Cash a a do being federal continue XX%, of a between to

I’ll at over more unit Now for detailed it business performance. a turn look to Randy the

Randal Lewis

us everyone, that XXXX you face David’s the morning, are accomplishments all for we of joining Good combined our during by of the in headwinds. I fiscal today. will year Doug. very comments reiterating material and Thanks, open thank proud

Improvement the Program our We’re Productivity from start excited execution. of future deliver the benefits Global about as platform to outlook

walk to of you the of each Now business units. the results through

and products as Turning while innovations offerings reported X.X% Improvement. EBITDA adjusted from features sales technology. respectively, to Slide both Smartkey and benefited U.S. and The security softer remodeled new product the our Despite electronics housing X.X%. organic as well and residential sales and slowing mechanical Hardware improved net increased quarter activity, fourth on Home X.X%, from XX sales market

will system were anywhere quarter, platform, proprietary cloud security projects that successful pleased with connected be we the have a it to new Internet a the future In crucial new the making control our of to access the has market very connectivity. easier app. real-time mobile lockset in for of consumer launch and This

of new ecosystem. recent that is just lock leading examples The will Aura, within Kwikset sit several this of brand launch new our industry under Bluetooth-enabled of the products one

excited Looking forward, adoption deadbolt given rates. we the in low residential U.S. are locks smart and outlook fast-growing XXXX, very on about the but electronic relatively

the More and innovations ecosystem XXXX are roadmap beyond. importantly, we to in our add we excited and product that will electronics about our new

markets. and forward, we grow to levels, brands, in repair in leading are we product ability build quality this remodel both our but market expect going construction service new nonetheless to our our and and Similar activity moderate excellent the year with new confident

Now the to quarters Sales a losses care net improvements net by of solid mid-single Home from first XX. sales Personal had EBITDA that while prior X.X%, sales year hair is year the been grew reflected adjusted U.S. distribution in reported to Fourth Care, X%; the XX.X%. and increased growth sequential three organic digit declines which Slide declined the quarter driven

The of of undergone business. of rebalancing We has comprehensive have of new in accelerating guiding installed team cost February leadership strategy. division’s review growth structure a an job, this with XXXX year year excellent the platform communicated previously to its done resetting objective as a have and this

innovative summarized be George and in Hobbs, benefit support as products brands being Black&Decker, short, everyday cost that renewed Russell our commitment of producer our to of a effective Remington, In consumers’ global sense a lives. can forward and way trusted compelling by a Foreman

great around Manchester partner confidence Additionally, And already our innovation product forward. accelerated United pipeline global investment a official us which biggest sales driven as Remington markets is the in our brand the of will ever styling that world. insights have enhancing drive roadmap the established growth going we gives

consumers styler indoor excitement Remington straight For Also straighten our that to is grill new series. features hair plates one example, of leading investing device. the market internationally drive around and unique the twisted George building team Foreman team to enabling awareness the with or is innovative curl curl

have the received we by an scale focus, XXXX advertising XXXX new and and so this much fiscal renewed has new to to on product products bigger, which As new behind in supported half anticipated already growth and be in example, launching will of a investing campaign. beyond. back There’s fewer, is will a wide brands dedicated much distribution We leadership believe supporting lead more our better committed come.

Moving Pet Care, X.X% EBITDA increased XX. Slide reported sales to adjusted Global is quarter Fourth which XX.X%. increased and by net

processes growth sales by impacts, full we driven a all the year solid basis, regions. On and growth global saw the quarter X.X% the in currency globalization continued business our delivered teams’ grew in Excluding of strategy. regions five strong top

on with our core year-on-year basis. brands XX% strongest 'XX, portfolio growing fiscal strategic In growth collectively the across a came our

to share our channels, up category. across are globe. the and chews chews is dog largest picked our as growth business Our as twice In the taking as overall points continues POS was which market, brands X we we’ve share perform strong in which track experienced the double-digit U.S., well,

structure. to continue work brands optimize manufacturing, margin and global supply reduce the we Pet, improve our SKUs and optimize cost chain to Across to market

caregiver and pet top participation pet unproductive the help projections of Our team more into everywhere. time invest and resources This assets passion owners committed focusing Care giving growth increasing and position category business to to our base is Pet well to our future will and shedding growth due rates brands. the activities

repellents share and the Home grew Despite with these to adjusted insecticide to category results, and full due which again less X.X% reported customers weather is and decreased categories. in Garden, Slide Fourth XX. X.X% EBITDA improved to was year herbicides growth we our due decreased strong net sales quarter X%, and Turning and largely primarily sales that alignment to sales. in conducive strategic

products In will marketing XXXX, entering will targeted the our and that growth by by newly category. be new consumers support driven convert

We continue in consumers, that rates proposition value marketing to our equities increasing and entry high with Home investments strongly growth believe product development our and continue Garden will growth. barriers market in and and the remain accelerate to business this strong brand and to share

XX. Slide to Turning

businesses, at efforts, centralizing more more and to model We also with our innovation standardizing enablement. update on processes, point. Global technology efficiency within to an decision focus are and our focused product Though driving this changing process wanted each commercial and enhanced strong be to those our with support a aligned strategic program Plan. This our Improvement its continues of Productivity and functions relevant provide consumer R&D analytics but important operations very we initiative also quicker, globally operating that most we’re making on the allow

to enhancements. levels creating new Savings center-led technology our Since will that $XX million expected from with have work stream X with is in benefits XXXX, completed further these call, fiscal X of future. along from wave of are more the we changes processes in phase last deliver initiated over and run sourcing during savings funding reinvest even we’ve strategic higher significant wave marketing that sourcing in our we to rate and of savings

changes other million have to of cost the Productivity full will and manufacturing Global our Global Care the XX and improvements sourcing annualized at within through structures now from savings rates we expect at run begun to be least be we’re rate plants. months. Additionally, $XXX the savings XX gross international improving business gross Improvement these and next Program that American closure in executing in We our commercial Latin margin Pet

incremental estimated the be tariff help to XXXX. forward benefits short the to XX look offset our million in the headwinds on provide We million term, calls. details fiscal benefits these continue future to XX more also used In to of will on GPIP

David. back Now to

David Maura

thank just him steady I’ve TSAs best Thanks, this without to divestitures able years have and five moment got to Randy. publicly I great execution hand want been Doug next the his Spectrum wish the wouldn’t Doug his endeavors. Thanks, Brands the implemented. say, to and thanks partner for got take for Doug. Look, and Doug great a before served have a I business Q&A to been Doug very, hey, in five going to a very done, years player, Martin. has has to at just team year, his in us

sorry, want been for here has joined is also is Brands. really I Prichard us to the The at many with you – big knee the thank Galileo just Prichard was and to onboard to has Dave again team running so welcome Programs in Also, already all to thank October and transition I and welcome Jeremy nine ground hit about his December and that’s and Global he X. smooth, years retiring Jeremy. Improvement exceedingly contributions Jeremy in Spectrum Productivity Smeltser who’s deep we also want both Dave us for Doug a who

So at Dave, Doug, all from Spectrum Jeremy Brands thank you. us of

And I’ll over Kevin for turn questions. follow-up to it

Kevin Kim

Q&A. let’s just dive Zetania, right into Great.

Operator

[Operator Instructions].

line Your comes with first Labick Bob the of from Securities. question CJS

Bob Labick

nice Good and on their to a pending next ventures. morning and congratulations Doug on 'XX Dave and and retirements fiscal also

Doug Martin

Bob. Thanks,

Bob Labick

some So, future little you other will they I to you’re progressing incremental for the and company are start just wanted talk a very plan back maybe Can savings things? marketing reinvestment Where the could into you have and bit. the how R&D ultimately very going well, you expand savings. balance to about in with big the versus growth? versus drive how you and GPIP expectations Obviously,

David Maura

the that through balance then to out I details. R&D, productivity Look, get wanted Look, product cut about was to into about Randy innovation, new initial initially the our I’ll of and development, $XXX to our we big more half and and to million P&L, at and marketing. of for shareholders flowing drop this wanted the I’ll reinvest strokes over lay turn it

been endeavor, think and of sales I’ve drive as months XX it’s a and new I So, organic get the focus towards company to on I this places. and really since seeing, better more been I really organization to want growth took and marketing

but doing really through Smeltser to be frankly, going really mindset has are He’s shift. IT about go It’s enablement. it’s of of really that before. so, business, bringing fantastic actually the a background. quite waves new Bob, automation And to going Jeremy way this a couple a got we’re done next

analyze quicker, and data, our us to faster, ability slice so, and Those get make bring decisions data, that’s to of the all the a to is where strokes. And lot prosperity broad kind the quickly, data going. the stakeholders, we’re going of better are

reported to be in tariff blunt we’ll if look, nonetheless think but these XXXX a honest I tell we situation, we’re global productivity less the of we are be using way. headwinds, with improvements you, given offset affecting just unfortunately going is our to be unfortunate tariff view negative earnings which the lot didn’t in to a really they you than transitory

so, we’d those And more to than like offset savings we’re of using temporarily those.

if be I I’d only expand? it. to think that would want give you Randy, the commentary around

Randal Lewis

I would Bob, just efficient for key us with this thing is reinvestment. we’re say Yes, that the

heavily is capability positive for to we development to of So, all put the the we’re on have us. that within going focusing business very can choosing are that the that organization into ensure money a back so we return

the being the consumers that the effectively then efficient companies, being based broad that ensuring last are upon from that traditional and it engage and process, are of varies not it’s from and focused approaches the stages the right that more real development, we’re So, in upon of different and most within consumers insights storytelling and but retailers we business data to we from and chasing innovation. with innovation one able around to the another on based then based where kind CPG

full to run to measured the into don’t rate fiscal it’s seeing be benefits investment going from we those of We pace. be So, expect until are well but already beginning reinvestments. next the the a at year,

Bob Labick

online but little growth helpful and 'XX bit It’s you’re this targeting you talked very beyond? and the then on great. talk penetration fiscal strategy we’ve previous how can And bit in calls, Okay, incremental about online a a about little and color.

Randal Lewis

within one we Global operations, it’s omni-channel the Yes, as Bob, key and mortar. separate Program different Improvement work of that’s online and brick Productivity the out streams than that is don’t really key being

our that overall mindset the omni encompassing of which is opportunities change with interface And having here we strategy. talk aspects so, one engage consumers, to all in is

with different And across in forward, space as so, one are of forward but go will building be we that capabilities businesses scientist data the analytics driving areas center-led us that are this very behaviors that’s that into four we year. key the

Bob Labick

queue. pet and terrific Okay. from last me, in Super. Then side. I’ll on year back a Obviously the one get

fiscal One some tolling things European was also that discussed that’s operations on businesses. the beyond the or update of the guess where of efficiencies those in improving I previously stands? been operating or Any at 'XX

Randal Lewis

kept we’ve prepared part decision substantial done strategy remarks a of of better on We the in So and businesses. making that earlier or XX course across talked from tied matrix the of us about up previous 'XX. the the we European aligned in so fiscal kind of businesses, strategies. months globalizing that’s amount work with business, being the of It’s streamlining over our structure within ago had that my

result European effective business of amount so, a our driven that in a that. within seen as out of we’ve of rates business improvements substantial And of and the Pet cost substantial

margin European So, is a good and main driver really the overall, going see to of in that’s expansion we’re that restructuring. it business,

Bob Labick

much. very Thanks Great.

David Maura

Thanks, Bob.

Operator

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

Olivia Tong

Thanks. Good congrats and Dave. morning Great. and to Doug

actually on tariffs. First and the the question savings is

coming million it XX anticipated. next the you a million savings a in had in originally two of years; it’s million XXX incremental tariffs, higher got you’ve half and than So, XX one to little call to

on to you are to understand coming to make or I’m the Thank that. are the that what push, the and have process maybe on equally to savings, trying like your how pricing the reinvestment dropping as to a less to versus view going you these flows sure what’s that? bottom those extent you your – just they thought if bottom line deployment about is So, you. from think reinvestment there’s you the of savings, protect and contributing much And pull line?

David Maura

and/or I let as the do plus in you Yes, proud our XXXX, will do a we’re be going another the not XX to right EBITDA XX term. we’re by are Look, Randy of way marketing up take left rate of million to the yet half balance least of we the by from tariffs of in XXX staring million run step rate, investment there me of in XXXX, not spend probably at wave million the of another headline. to at away run long the wildly that backing usual. for we hit am gave box details what’s 'XX, numbers is doing to of what team company

number Another XXXX state EBITDA the We $XXX it do another and run manufacture to want could words this way. like want long invest is We business to we owners continue to all we to impress million wanted haul. Street. me – if the let in for

that and get we will prioritize to top there and let line of. I in up And mistakes innovation results stop marketing is company any until R&D, so reinvestment the I’ll we this clean I’ll continue made. capable Randy

Randal Lewis

morning, Good Olivia.

But have tariff upon of I unit the of of largest by pricing that pricing tell and you of the and competition to positioning the overall the to are the business on So the with we would varying based offsets headwinds. strength think channels kind offsets portion brands.

at remaining of out exactly the And so we you’re Global when savings Productivity look coming right. Program, the

the be We we going be we’re which been and concerned three to months, the as much stakeholders, those where committed changing said focus last balance of protect in that across XX have the and reinvestments. where giving in to are two we highly to years more to going and want messaging David a but the have that about is strong obviously quarter. all to we’ve we’re We our to be next we’re bias

Olivia Tong

to improvement That to next I the nice it then on appreciate But relative And a makes bit that see stabilized to expectations. and that you’re that. flow, a year. cash for it was low sense. bit it expecting little Thanks. our was see

of should go as fiscal commentary? primarily didn’t relative first, beyond or what in So, second more you program? expect to big loaded? half will fiscal anticipated the it particularly be improvement still half what the in given And last the for quite first half And 'XX, savings 'XX improvement drivers are comps the then quarter’s versus second we

David Maura

Just clarify mean flow, that. what free you about? are cash EBITDA, Cash talking flow, you

Olivia Tong

cash flow. Free

Doug Martin

Free earlier, that’s some expect programs when we are structure cash. a end Because which of overall. were of in. difficult weren’t was cost and to balance the operations about we in working cash the Olivia, you know in allocation in the we much kind dial but through really the come this impact to you interest factoring from the cash back though, given don’t which two, much it discount divestitures really perspective where we effective on It the where as in pretty across flow, on if we at and we of done – capital management to actually expense it think XXXX see and year to, so sheet had sitting have not capital When necessary discontinued came know have and you have expected I two. [ph], visibility we

So one than was have any there different expectations, our thing was if been that it that. would

David Maura

million from mean is seat, think restructuring as get my of savings I that’s capital in If that’s I paid generate right, savings less $XXX understatement not it of than the million for cash look, right? trying we’re Also, of spending payback, we’re to bad a to $XXX but it, $XXX good paid you allocation of organically. obviously. – that XX months, probably million an a perpetuity it for itself in and productivity

going cash clearly charges that free are cash I XXX of embedded those flow, capital. of think restructuring midpoint good allocation in off. of roll that’s to But really they our are

obviously into pretty get you nice have left. as flow And free you cash XXXX, a so

free only flow the I’m not that helps. cash So cash growth on if free but forward for bullish XXXX going pretty the flow

Olivia Tong

Yes. you. Thank

Operator

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

Sam Reid

wanted so Pet especially on it well? to segment? U.S. Thanks walk quarter. mature Doug question underlying the shelf category, let somewhat Awesome. seem be to well. get strong gains to and add in does questions much guys you I A given product this space any taking could those as the might because underlying my there sense same and how Thanks. my then again to compares Global of quick Dave us you along really lines, And here growth as a me getting the for the congrats as nature this through

David Maura

Look, business I know our is years. as number mismanaged of think for Pet you a

of Pet collection I think our just business doing acquisitions. me a was

under taken got last John’s last two the a vision innovation. that’s to passion years I got over think team over that year incredible JP, three for – business. under actually and He’s

I but Orlando. I you – development. to was Pet I spoken of to a little that’s just talking real I the and going to Most think XX tell at months about was the how you product Pet longer was it really walking down past got turn, early. comes turn talk would when I’ve took a publicly it the team we’ve to R&D, I at new Show Expo real was

previous real I three we new of mentioned with roadmap product product really public stuff. a I call had on worth and think this years a offering, innovative

the to we the we customer the outperform to are look, wants. because category we’re have outperforming continue category absolutely going what and So,

innovation and we’re and started. and We’re bringing getting just excitement news

So John the and entire congrats Pet division. to

and out them come proud details. can We the Pet. to best are of add extremely to forward looking Randy yet of

Randal Lewis

at where to two our X.X% on that’s very have we’re CAGR we we all above Obviously, range. think that. said quarters that to X% we’re and indicative going to compete been trying it and U.S. you that Sam, about. would category David get last well We well, category. ahead clear there starting the have talked the there and are the And I a of David. in we just look the expect deliver strategy to of that efforts

Sam Reid

so maybe the helpful. to much Awesome. quickly Thanks one It’s color. guys in for really Wanted another just HHI. on sneak

that specifically? Just volumes so Thanks the reflective how as that? growth of kind of segment impacting is quarter take this in during of may was how much pricing the your much. And be you pricing

David Maura

take and pricing to listen in Look, on public. pricing the and that that competitors that we going did right. rest division, be We’re careful fun in stuff have of we we’re because all

We’re number share market one position.

We’re dominant brands.

this We to you tell leader. not an I place are the inelastic play. is that clear would

be really market. you so very a And interest have got housing cut. Clearly, sensitive we to rate

which guys you housing I a was I ago spooked a think slowdown, on think this it time seeing did remember, we was I saying year experience. everybody As I

thank working we’re with retail better want to think I partners. partners. I our much our retail

have seen and we own offering. have are which and us a very recently our digital We out we’re some lock coming our programs allowing uplift ubiquitous due some some excited the new cloud, pricing to of of we with about POS basically is offerings launched to

is one think the we at growth focus want bringing is. really forward in going I the to clarity on of are Digital where just of HHI things sale. locks point

leader. continue that want chips Bluetooth. still it’s to a We and a there. a leader the go to But be table. WiFi, on to confusing the they need for Z-Wave, We’re a We Google, to more there put Apple, want Zigbee, know DIYer HomeKit, whether

customer But was the help clarity we to another bring continue so better. expect solid and need we of there point wish sale. out And of HHI. little bit a the We housing year at to

where slowing household kind behind multifamily invest year employment rates But Clearly remain last to that full interest going space continue single and we to formation. opposed see We number think to kind okay. the very supportive that’s down. of and with business. doing of one of they family we’re are, As we is

Sam Reid

much. Awesome. really it. I Thanks so appreciate

Operator

next Ian of Your the Oppenheimer. comes question from Zaffino line with

Ian Zaffino

speaking the there much. what’s and for follow then I And undervalued. up. key or have maybe Hi. have want David, out of about broadly forward? of a the the I expect should just you buyback we for in that stock the there sort Thank comments Is kind pace what to a sort you going of your very of being on just target buybacks

David Maura

call consumer at the stocks. the calls what is. companies at people value The about the X% X% in delta deltas. the and Look, stocks and growth price, a in valued I’ve years. a I discrepancy XXx, we this The view between have in lower ridiculous buy. have what for reporting negative the between X%, my It’s the somebody are – we space, lot XXx what it’s product mind. EBITDA or growth of Board XX And the higher seen buy. never intrinsic and value more less our the we’ll been price, I’ve on space

look I float portfolio I so brands, the And I think our I sense look cash free assets that our at at at we and makes look business, the look flow, at our shrinking we of at have levels. these

I think or mine. HP-XXC at look yield, as we anybody where free cash good that would trade their a hopefully on works EBITDA multiple as flow

Ian Zaffino

we hair recoup that backfill think out also new some losses maybe those that launching you losses – just do just year, of products to of that last to about distribution care of are --? then you of the how going losses, on you’re And or experienced maybe those kind there touching or some Thanks. there be some Okay.

David Maura

won just we kind back a retail category We the partner. captain of had after We shelf at that. didn’t fantastic love space Absolutely. even

Remington brutally United of We’ve been our now much our complete – Randy teams European enter new insights money, the new with have a a with our hair new consumer we be that Europe. tell the States – didn’t are product a experienced of running But into We one leadership you’re better portfolio – a February, in since our conversations. is team lot job insights. a completely you got consumer and couple of to just can best we putting of those to for with that going brand we’re see care exciting launches honest doing and excited Remington in Foreman April. team we’ve And explosive of Manchester where It’s that’s having about a re-launch brands almost and have coming has marketing. just new months. we’re known United and XXX% George We’re been plethora agreement entire out. growth women’s an got

Randal Lewis

we’ve ensure to Ian, Very that product conversations the wanting to either was our in team is for direction for well. but the and follow-up been in not but with company. position very figure we while, get relationship that digging with managing we right extremely our development or point consumer current in as it insights how to new that customers I a what far to a haven’t what capabilities David’s strategically Randy. and very proud capability not of the retailers would our say to with to how to key fantastic in difficult with also weren’t with were I’m they’ve capability regards conversations feel playing able the out partners in only had necessarily quite regards been we history having the right in very that tough still a do portfolio Yes. retail very and to my we’ve strong across now our pointing today’s this while. the comments, world, we as the strong in quite been space but we’re and was partnership like

in over so then business, XX approaching We’ve X David about going got just it’s United far. products, category also and far the it’s we it’s So consumer well different relationships, has that as analytics about the as talked the in that. also data And optimize activations the bringing extremely that about successful million do XXX engagements. to we’re with Manchester to to talked their and countries that how them partnership phenomenally been with Remington

to and buy positive very seeing as response a perception returns intent We’re to that. with

that. So we’re happy with very

Ian Zaffino

you Thank right. very much. All

Operator

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

Faiza Alwy

and and to morning retirement. congratulations Dave’s me Good Hi. Doug from

interesting there if I of Spectrum, question if change going a sort and it of my just going things on I wondered So XX, are a -- is lot like feels look on lot of at at Slide

David Maura

an understatement. That’s

Faiza Alwy

run you, those of Yes, so that again? ensuring so problems how a maybe into you a types are execution issues a you little hear and Randy ensuring from had Dave, of lot couple from of years of bit that you are to wanted in I terms how ago, you don’t

David Maura

most rearview Look, going once. in Look, I are – make lot forward this in I think just going mirror. cut sure those guys look the the measure would twice, of a say of let’s I hate to we – forward. room mistakes we looking

partner We with Kearney. are this fantastic a doing within A.T.

using any simple reduce looking XX are no is force. XX a on from given what in by We management they to FTEs ATK. to call reduction that longer cost issuing team This day is

best to employees help educate looking We they themselves to them the versions become our of are can.

data front drive We’re be efficient. them them in put to of looking much IT, more to help automation, big to decisions

could hold party missteps working and owe locked Zargar dot and it’s you so that Jeremy honestly have for you, check, outside just change with business. It’s cross the best new honestly a every third an Ehsan opposed a of of to partnering way be oneself. achieve underwritten I to It’s that’s hand-to-hand, in arms the It’s and past exceedingly as very approach outside that I a but an t, to And with Randy new being us being mindset. to doing leaders gratitude go debt way that the of i, the hard and double this Doug way helps accountable. think everyday lot referenced. it’s every would the goal a team of beneficial different operational a to Yes, and it’s I well and describe extremely all and taken

Randal Lewis

this years ago two think than I I company This exactly but great a is right. Faiza, a and a spoke and you this and a way. half question. were very completely maybe undertaken. this back is believe transformation it a is an it’s doing few projects we’re different about collaborative previous Randy. those weeks And internally I in when David’s executed

it doing fantastic We’re partner. a with

got completely. oversight. with just businesses. and each leadership individual along corporate leadership the four it three doing net substantial of so new in confident ability amount to environment We’ve do of different results We’re with way. execute tremendous it’s people new new these got I’m the And our our senior positive highly within businesses. of our We’ve talent to a enhancements of initiatives. leading got We’ve the in initiatives

of an done change. this to with has been right this environment type of All on creating foster eye the

Faiza Alwy

Great. Thank luck. you good and

David Maura

you Thank it. so much. appreciate I

Randal Lewis

Thanks.

Operator

William the Bank Your comes from America. Reuter line of of next question with

William Reuter

morning. Good

the year you out rate you’re target the Global Productivity what what fiscal so laid know Improvements. will 'XX, Do for achieving You P&L? run the be in in basis 'XX fiscal going two-year year to be for

David Maura

year. the end and of out just the find us to That’s at you know for

William Reuter

good. sounds Okay,

David Maura

And good question. the with job

William Reuter

and about et talked to of that continue locks, you guys deadbolt, can a couple the type those years? products better rates either year you the or segment going little are I You talk bit of cetera. about expectations products guess of maybe you’re electronic what have in – the next percentage have over of what a lot the to growth your HHA growth smart are expect this

David Maura

know I it’s But don’t out it. is if wants to I or too small. not enough. not. give we’re trying still denominator any grow don’t big That’s detail. we’re break if Will, to to know that The why going Randy

Randal Lewis

Yes. both within fastest that really clearly for and the segment ourselves. the break that is for out space category don’t growing it We but

the about this that the so backend. really technology cloud supports about and talked excited we’re I on that And that

be that got simple I the doing an be lock think the gives we’ll as already in very launched easy in to the within space, for four to make couple extremely we six consumers next really that another one David mentioned, and it. all opportunity in and to new this happy that and reliable through months make and Bluetooth a to it clipping It’s of major has potential. of at us lock confusion cut a We’ve new ago. even space months weeks more Aura and of well, rate revenue that first and along with launching million choice just this the few $X

our strongest biggest, focus. it’s fastest segment, So growing our

William Reuter

pretty right And for terms out of then you about going year thinking both lastly, your things? you job are of more that leverage guys share you Is where this would that less your to as guess are it free target is you are I around what how or laying repurchases. in imply flow cash good expectations as did a do well guys now?

Doug Martin

fact Doug. then add this of half about repurchase, later in is make million year To this of the do and up back share a to we’d payment – probably there. we a that extent the To William, execute do leverage Energizer the extent turn $XXX

William Reuter

you. Okay. for Thank That’s me. all

Operator

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

Carla Casella

last should for One that of Any impact store the on since into quarter. holiday? number closures holiday have the think Thanks looking year-over-year just questions. we Hi. gone question department the from taking

David Maura

us about worry Don’t end. on No. the department store

are very our hurt on divot the frontend quarter. fine. we do to of think us XXXX. mostly want that they’re expect a is in What be we’re impacting to open us first I we going Tariffs and about fiscal

in So a we divot QX. expect

it up QX. QX, to We QX, make expect

to big understand not and will of the that’s So the more productivity you. pacing of a then gave I’m Tariffs to a but again, in full do we and the back how get the you fan our the we’ll frontend year. will guidance lot year want us in hurt flow guidance savings we

Carla Casella

Okay, impacted you a great. color at segments the can be most little more part then in give just those which year? looking tariffs, by us And of beginning the will segment, like

David Maura

I boat, the pay think off frankly unit right and this in now we’re our stuff coming having HHI. quite maybe both tariffs to appliance is higher on

Carla Casella

inventory mentioned, completed of could quarter? or safety kind then And we that other you or the as the stock any go expect into great. coming it plant we closure Okay, is

Doug Martin

rawhide and this are planning been for supply no and fact, new all. while. low at small inventory shifted has have These to and here It’s issues they’re – –relatively been they’ve we plants in production closed a relatively been

Carla Casella

M&A front, on last the great. you mentioned – Okay, versus asset then one M&A And one sales. just

a Pet. would shedding or what are on products? in What category it the certain timing could brands be be and assets mentioned exit exiting or You some categories – most unproductive just certain

Randal Lewis

is Randy. facilities my those to assets to prepared referring manufacturing And America. there Well, alluding Latin productive what I on you’re I throughout was probably were think comments. This

Carla Casella

great. Oh,

for That’s have. all Thanks. Okay. Thank you clarifying. I

David Maura

Thanks, Carla.

Operator

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

Karru Martinson

Good morning.

clear, the of XXX, XX adjusted year? to million tariffs builds that the million XX of expected this you that be EBITDA Just in XXX to guidance to

David Maura

does. it Yes,

Karru Martinson

Okay. And then --

David Maura

We’re not ashamed [ph].

Karru Martinson

Yes. would that? List be and above beyond that Xb,

David Maura

correct. That’s

Karru Martinson

out these --? wanted how is talk quarter, about Okay. And the a the what’s here, stranded all so in I or get of getting just sense the dividend P&L those – when it of And first to remain? the of pace we much costs

Doug Martin

not disclose huge it. Karru, against a It’s us a Sure. and we that headwind also it’s we’ve been but number. for is won’t working It’s a this number Doug. publicly,

Global we only As but Productivity deals world. before it governor with started us, also exited around And is we being this have on our on the timing well the Improvement work by different across exited some TSAs the And the were with is TSAs this markets the closed. the Energizer, Program. addressed Energizer exits has

So addressed. being it’s in guidance. in It’s there. It’s the

and thought important phasing Just to impact on it of was of mention the our the it timing the quarter.

Karru Martinson

roundup? it when Okay. at And when seeing just and are gains look share – comes Garden, you Home shelf lastly shelf guys you to

Randal Lewis

Randy. is This

that that’s relationships very the to and some seeing can gains driver necessarily relationships innovation anything in our brands but it’s were centers behind brands with we’re the products Product our I else, well main with you and with customers again strong. the pipeline think as home those and We more working putting investments the our and especially and our I are gains key with tell I there. think as is channel, strengthening well of mass we’re do

Karru Martinson

add and my Okay. to And thanks I’d like Dave you. Doug just to here service. their for Thank

Doug Martin

Thank you.

David Maura

Thanks, Karru.

Kevin Kim

reached Thank – you. operator. go With that, ahead, we’ve

Operator

There are time. at this further no questions

Kevin Kim

With hour. you, that, reached top the the Zetania. Thank we’ve of

you call. our to Doug Brands, QX conclude for we’ll XXXX Randy. our Thank call. you David, On thank and earnings conference of Spectrum participating So in behalf

Operator

call. today’s concludes This conference

now may disconnect. You

Spectrum Brands (SPB) 13 Nov 192019 Q4 Earnings call transcript