SPB - Earnings call transcript Q2 2020 | Spectrum Brands Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Spectrum Brands Holdings Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions] [Operator

like Kevin conference Relations. Kim, Please ahead now speaker to Thank hand go to today DVP sir. to would over the your you. I of Investor

Kevin Kim

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

This there To help the we of Calendar our in page comments, website Event of with Relations our a Slide section remain placed the you have follow document at Starting call. presentation. www.spectrumbrands.com. the following our on slide will Investor two presentation

Maura, Our Chief and call will Lewis their be led and conduct Officer; we Executive by Chief Smeltser, David the Jeremy remarks, Officer. session. After Chairman opening Officer; Randy Operating Chief Financial will Q&A

X X. and slides Turning to

statements, Spectrum based expectations, are to today encourages Our press results upon and are cautionary nature XX-K forward-looking risk, comments and to forward-looking and Form statements and review projections on no risk differ and outlined uncertain. include in that Brands current We Form Annual Report may assume to by Actual and assumptions SEC statement. release factors you dated most the Due management's materially. XX-Q. any recent our obligation April Reports filings on XXXX Quarterly update XX, today our which

are discuss Also, today's on in available included section. in this X-K please press GAAP Relations the financial both non-GAAP these in release will note, are which measures call. filings, basis we measures certain our Reconciliations for Investor on and website a

to Now, let Maura. David over call the me turn

David Maura

safe I certainly you call appreciate joining Good I this everybody all during morning. you, times. finds Kevin. Thank Hey. this these for morning, well and everybody. hope us

protect associates of me very over all our to employees. in important and huge it's it's say not to way communities our call our Brands of I to and come earnings a our the am proactive but I Brands response, to feel the company, quite not I'm only start family the and to our conference of taken collaboration steps consumers we extremely of steps that serve hard the the globally. around call, proud proud would this team our Spectrum demonstrated. frankly amazing has really remiss I all employees gratitude the people, really be globe. and thanks to convey Spectrum extremely Spectrum toward the Before the retail customers Brands an together me called and also has everybody for

see team cohesive world -- united the we We just have a and ever servant the in leadership inspiring as and and empowering perhaps I'm thrilled acted evidence more to than Europe, I'm teams more U.S., of before. And have honestly our over. encouraging

Brands. my So you. of associates thank Thank couldn't Spectrum me you our from a really I heart partners from big proud. in bottom to all employee and more be of the

to to fortunate the position. quarter. Now Spectrum extremely turn we Brands, At an are in

We diversified with our units, four four companies but all been only are have time. essential deemed operating business during this not different of

business. for are We open

We are producing.

time of We of The essential have this crisis. also deemed majority selling customers are been customers. in our our to

four units all the around business So revolve our home. of center and frankly

but the about through look you crisis. coming citizens of our been remarks, together three in of have name not it and my in the only at if I our fact In helping been fellow earlier home they've them I'm of the four have business really adding units home to as the They Care talked names thinking division. Pet

securing businesses in hardware locks et George residences up our cetera. it's They're Foreman care helped Weiser and people Kwikset homes of DreamBone, & with enjoying their Canada. appliances Black personal Miracle, SmartBones, cook and their their in They've and and Decker whether meals Baldwin, their They're kitchen. taking with pets our Nature's

they're And of yards their Cutter products. and homes their and protecting Repel line our of few. name insects ridding to They're a family weeds from with with Spectracide

we that we vision believe that have is past purpose much six weeks over a of demonstrate to employees the team serving motivating is here way it's all and together greater that are to having actually and this our that the inspired really come realization perform. a in I empowered of our

impressive they the Our Operating adjusted second Organic quarter income X% line and least. our strong exceeded XX% numbers. bottom was results, the the EBITDA reflect of top very over just growth quarter. over growth XX% fact. to and is say That's growth in

important throughout that to strong quarter. growth this driven recognize is results was by It the

$X.X in profit retrospective Our a relates results tariff in our of HHI detail. that section little more EBITDA will also his in segment include a line benefit and Jeremy more to operating bit exclusion in the the that a million small operating cover to

Let real quick balance to me turn sheet. the

end $XX revolver on our liquidity. on March our million revolving moved more our that As facilities we quickly crisis became and credit undrawn. and account. home to a accelerated. million We very quarter, with to our million and real down of our entered to and sheet tranche Since increase COVID-XX balance We had to the ended the the checking we've lot strengthen we of remains response the the in added amount also quarter cash close cash $XXX we drew $XXX that an of to currently additional

of and business Omega portfolio tuck-in and portfolio another manufacturing aquatic manufacturing our the We closed cash. obviously of During million is Global cat and complements our which acquisition made to fish Tetra our Sea, Care over and close dog facility added food food that did our Pet the US$XX for we Cambodia quarter, assets we've sale brands. small a of we European also rawhide

and accomplishments the All strong execution. demonstrate consistent importance further of these of

supply a and from the some factories shipments position. the by chain with external hurt to our is full quarter that actually at/or second our you the And results our slide in China. sales end will. our turn also approach near a disruptions Operationally in and delayed me -- quarter, sorry, demonstrated experienced quarter of disciplined during China were Operationally while chain second if this were capacity similar X to supply

our At this situation by current quarter. in current we the end some the we'll in we in but the recovered of point, believe of position quarter holds, supply substantially expect half a if the first of shortages be third

From both Philippines perspective, business the into currently results. HHI factory give in and and more our disruptions the he have I'll Randy Mexico as gets a supply does have much details you operating

one This this in in company, March. represents that in of to there countless this the we part quarter the and the started example Within of to and couple leadership really producing and Spectrum operational best facility and a demonstrates ingenuity. just specific team's around a are of examples While the occurred do of with are of servant COVID-XX current repurposed and assist I weeks, sanitizer highlight Blacksburg, our hand Global Pet there Brands against drive the our team want spread combat Virginia who disease accomplishment pandemic. excellence in fight Care this

the across various available brand. Cutter for selling line to product we've workers As et to cetera. is the front recently the our now health now been organization, And we've facilities, Amazon hospitals, on use nationally donating under charities local it product started

pleased mental find moving headlines be and a Spectrum fear, not and the and see forward. more to give attitude be but in not negative the ways positive together could of keep give part to to come in family to the I to instead not take solution

pet world-renowned producing sanitizer Blacksburg fact, that you Home facility, products our makes our under if in which business. brand, and now it's hand & typically In Cutter Garden looked belongs

So here fantastic. the collaboration just is

turn me let slide to Anyway your now attention X.

remain the which is adopted seeds that and XXXX Spectrum producing frankly a Vision while vision. be striving now a core guiding to principles streamline that ago which reporting. our insights, the excellence XXXX, Spectrum with our simplify marketed our They Our of strategy we become and company. remain continued the efficient much is to results and supported is quite is strong products, this by more our great businesses is consumer is go-to-market to innovator of productive a clarity, and and business

think I lift that margins. margin and and the the in can operating lift both cash in flow you expenses gross obviously the EBITDA reduction to this line, the to quarter's see margins

innovation now. our continuing to our Focus. to increase is This business. customer on nothing, a pathway relentlessly increasing brands consumer-driven Focus. marketing but quality investments focus We mindset. drive while and We our service and accept service outstanding and to best-in-class

Clearly, to work more much be done. there's

the doing commitments over been this of fiscal effects of I'm to the to that one, half of months XXXX last work on financial we COVID-XX, you. back combat XX we've year the the to deliver As extremely to all business; enter our pleased secondly, the with stabilize

asset in sales of time. this $X have We completed billion

operating income our our as but down over XX% in frame. throughout time have net four have these our line we results, growth And trajectory, you company can impressively paid not of this at more to our a revenue debt on during quarterly We see returned businesses. only lines our

a better the demand strongest it is year, was our foreseeable COVID-XX it's in realigning fact pandemic pandemic not new and clearly chains half the entering fiscal we of Brands this most Spectrum by reflect unwelcome weather and While back in seek a challenge this will event over our the next is to decade. patterns. in In been position accommodate supply to

least embrace a savings to we new We will operations of continue it ops. group continue our run global and continue $XXX increase our comm to productivity on as plan million in with more investments mindset improvement teams our rate at to our execute will we commercial consumer-driven call

economic changing and and currently the not year. guidance disruptions we to related financial we conditions And supply manufacturing actively morning. both fiscal forecast it's impact withdrawn well the to for this impacted this rapidly impossible the as fairly may which demand, XXXX our results experiencing, as fiscal the have Given such, be our of currently balance to difficult if are as degree

us that best absolutely being and long-term to growth sustainable value days to all our stakeholders believe to work as going are forward. our said, creation we continue ahead I produce significant that deliver of With

and business turn the Jeremy I insights to granularity over to will Lewis to take And Randy call At financials. then this more you different on through greater point, you want on update our units. give the you Smeltser

over at call the this Jeremy point. to turn I'll So,

Jeremy Smeltser

Good David. morning everyone. Thanks,

QX sales turn you continuing of HHI. please exchange Organic and Home X.X% increased Global operations of & increased million offset HPC a in with in Pet decline slight XX acquisition excluding $X.X and $XXX,XXX. unfavorable sales. of foreign a results beginning Care, sales If growth the review net X.X% slide of by could from Net to net impact with and our Garden sales

increased essentially profit with expiring David being months the and over related XX HHI exclusion back a $XX.X tariffs to $X.X granted this SKUs mentioned million. August. and months of XX certain Gross paid This going temporary benefit last recovery business, in products of the February largest our a the tariff-related in million as driver was is coming

benefit is cash over five in note that and it have a past should margins resulted the would quarters. You higher

the and to expenses. at this related margin and driven XXX XX.X% primarily driven cat by Gross XX% manufacturing benefit. net year of by the of addition costs. GPIP recognition $X was profit of of the increased offsetting increase European SG&A XX% final in increased just a the Operating disposition expense to operating dog sales million gross compared lower there million X% of and was tariff income over gain on higher restructuring adjustment points, basis a $XXX.X food operations ago, sales year in

share shares up the Net and expense operating interest EPS improved shares outstanding. per lower earnings our was increase and in to loss despite were expense driven lower on and loss outstanding. holding, stock attributable diluted by lower income, operating Energizer a income, an common Adjusted XXX% diluted interest

Care XX% nearly a by EBITDA increased & Pet XXX offset year-over-year. driven Adjusted lower profit and Garden Adjusted growth improved and margin decline in Home slight points HPC operating HHI, Global expenses. in increased EBITDA by gross

the the the quarter estimate of net line. overall EBITDA we the line that company negative negative on was total, revenue in COVID-XX million to on impact and $X.X In a $X.X million adjusted the

our repurchased repurchases also shares shares. an through stock X.X for plan million common market settled for accelerated share open million $XXX.X additional repurchase XXX,XXX We of and

and expense in of with taxes now million Turning operations was higher quarter by $XX.X line Depreciation than Cash for million XX. decreased interest during the to year. million debt prior operations $XX.X Slide million $XX.X $X.X last $XX.X were of continuing lower amortization from levels. QX continuing the year. driven of million

program. transaction-related $XX were for Separately, million last share million for spend million driven charges by compensation payments and from down QX GPIP to million and $XX.X year. year related year. million year. cash incentive-based $X decreased Restructuring were was $XX last last versus $XX.X higher million from charges $X.X The this the Cash

as into position into Moving cash by now quarter to the balance the the liquidity sheet, $XXX with quarter cash pulled programs million. second back including completed cash our major factoring entering balance of strong $XXX we million balance offered a result of customers. accounts the includes of our This a receivable

a was result revolver. billion and $X as right up drawing of Debt our at down outstanding

second delays to COVID-XX limited improved quarter As demonstrated year, our $XXX around inventory the two was we as the lower prior million associated quarters discipline supply demand and compared with inventory with our management, ending increased and past investment. in inventory process enhanced by the combined

to pleased X, flow by invest in consumer capital with On the year. $XX automation we manage strengthened adding the our this are really our and to continue multicurrency our tranche to We April better and million liquidity insights capacity, working million cash $XXX revolver. progress

second expect half liquidity position as seasonality year. year. meaningful substantial we based on second generate provide Our flow capital, And the our flexibility strong balance half the to enter sheet of cash financial and of substantial positive working the of we the in the

of held the Energizer quarter under in X.X during last million shares at $XX Additionally, million stock just CapEx million shares we versus was the million year. approximately quarter and sold quarter $XX.X one end.

to XX Now and XXXX our we'll turn guidance. Slide

time expect we our than lower that to result, did as XXXX conditions. results a will our spend market want current discussing we our While, financial today issued that and withdrawn be have guidance guidance previously

delay we and alluded expenditures David spend QX, implement capital projects hiring in be includes to This bans. down control. nonessential slow As earlier, travel around actions on decisions continue increases to and halt disciplined XXXX to merit

also share temporarily are activity. We suspending repurchase

to share. we change with of liquidity With $X.XX expect strong regard approach to our We currently shareholders quarterly positions believe us not dividends, payout the of our do per a rewarding to recession conservative weather a a near-term social the a and to and environment. of plan variability more and We to approach supply. until expected in we continue return demand economic storm normalized

and have April, Pet strong orders a new continued of channels. HPC Home have to begun in particularly HHI home From Garden areas & demand we in slowing, retail certain far in closed see construction so and perspective experienced while and

at turn it Now operations. our for a Randy I'll to over detailed more look

Randy Lewis

of you thank Thanks, us. morning comments QX, Good impacts My performance everyone operational Jeremy. COVID-XX. today in around joining will focus and all the for our including

on progress more performances. provide The unit to And of drivers detail, we've the on the a Improvement of our made review you each underlying Program. business Global Productivity

all have QX areas a aspects business David our have challenging the to represented So incredibly how mentioned, all as of crisis. managing of our with COVID in very I environment for organization responded. been response pleased

on that small impact result heard impacts as both a back QX you and In year the half of financial vary to our do the relatively And from the from COVID-XX of performance fiscal as by business demand expect were will unit. Jeremy. we more see supply

for in in in in base This and New attacks the government many Early create and coronavirus Year delays our finished stocks quarter safety Chinese down this Lunar response operations. But extended the the us supply China. did shut on mainly our components. to goods

country Chinese near as factories to that returned that However at we capacity, are quarter our were Chinese supply partners report, or to end pleased the and by full of the our work.

transit holds near-term the believe while current largely for the are those third may in that create situation products While manageable. if are we quarter this issues delays

March Towards the HHI early facilities our and Mexico. in government and the restrictions April we Philippines end of saw into impact

These orders suspend another or in Mexico one us limit to while Philippines Mexican limited to us production requiring and factory at our temporarily of required us facility. our capabilities, operations, factories, in

third-party be to and including locations reduced responded manufacturing these to work partners has work ramping team more quickly where limitations Our production, redesigning staffing possible. to with other up efficient at moving

to return capacity we these output remain the will situation does constrained Notwithstanding, to we full manufacturing our very and while be measures continues uncertain. soon hope

confirmed towards manufacturing cases St. our shut Missouri of Louis employees. temporarily end COVID-XX because Home of own & our amongst March in Additionally, the Garden facility we of down

cleaning plant able days downtime. reacted reopen environments work few were to close with and to additional training. perform deep teams quickly Our the for employee of redesigning We a total only

The facility in slightly expand staffing a at reduced level a is we way. currently operating while measured very production

locations our situation protect preventive have that in is our continuing We to and all primary of other and concern. employees, the place health to monitor that we feel measures are the which

sites vigilant safety It's have operational that open to of processes this essential our consistently other as all are at and out the remain for in reviewing measures latest important in disease. our all We against protocols of facilities the and around data and place businesses. extensive globe our part point

supply that continue manufacture products and And remain that center, distribute orders We we shelter-in-place to government based under the around upon home. open qualifier.

in constraints However, to limit HHI. products facilities until impacted the these some for expect we security operational fully do output are

products And Home some in & Garden. control

cross-regional actions cross-functional have We events to benefit are response our is due practices where COVID-XX businesses and all able team. our experiences we the to global quickly been combined. a best collectively team, to respond harnessing these the to This of

team of involved This impact our and employees from across of consistent great there's for has our facilities everyone prepared and work provide this a to been the our approach virus aspects enterprise. all

a slide from in COVID-XX. the to quickly market teams to to changes are XX, perspective Turning reacting due commercial our

operations make caring our of Our it to sure and commercial the and messaging groups appropriate adjusted that have authentic consumer-facing context today's reality. marketing is in

highlighting haircut in live products & a in we've Decker of our includes seen including with help enjoyable our new products many reality more kits people and Remington the In life better products at particular Hobbs kitchen. Black how Russell brand, this This men's home. interest

to period environment. increase aquatic in of pet products, a elevated create to the more a home Companion experiencing appear even care as consumers as investing rates for dog demand and systems, rewarding we're a adoption strong be

consumer to of perspective, same overall are few weeks. positioned GDP The products we demand difficult recovery well for while over And the time, significantly past levels believe from predict. the very our macro the future. level a is At declined have

teams to content more now shopping care in appeals products other consumers improvement, home that our create last personal our to digital online, allocating the quickly have time over for to month, who line-up. Additionally are and moved

This pandemic growing our accelerated has channel. already fastest

our growth our in grew XX%. was e-commerce year QX Last in over business QX, XX%. year This almost e-commerce

While milestone. so these in the just we we long-term changes near-term, societal for believe this implications will the for but lasting impact, consumer have planning are behavior not of

to newly-formed behaving commercial home. business this in operations adjusting team to future the from the mentioned new life our consumers by are gathering very David that towards Led insights are we pandemic strategies and and our rapidly that today at to ways dedicated improve to pivot

operations Program. on to our to Productivity Now, present update turning our Improvement want we focus back slide XX, provide Global on the an

aspects this new us is drive and initiative service together and one to collective create a to with of important brand team resources. our company brings one as and the that and of As individual of insights to product businesses an reminder, consumer efficient data from leverage capabilities power our harness strategies

current In ways, in across this COVID-XX of plan the partnership units promoting collaboration the spirit accelerated business and many the challenge functions. regions and has

strategic I've organic for continues and initiative each our be As program growth R&D before, focused more processes. aligned our long-term this said consumer focus driving relevant enhanced as and important on and quicker product more of and delivering most we analytics to globally within innovation sustainable businesses decision-making

the be to within front on growth. full businesses annually to run program, savings marketing forward and of the to On our growth organic the the the million program annualized of into sustainable of rate future the on we to at across next calls. long-term is Much to details will GPIP invested insights initiatives provide being months. least XX We look cost savings more $XXX back the GPIP consumer continue savings each to these continuing R&D and the ensure and gross XX at that deliver expect

four of into of Starting & the let's each on Improvement with Home more XX. slide performance Now, details Hardware dive on the businesses.

impact organic million customers believe quarter. the reported nearly than to sales quarter in have more in orders second quarter challenges, revenue $X Second was supply and sales X.X%. net COVID-XX which in due The decreased loss pulled offset of net may into the we

Adjusted but the mix $X.X from partly also exclusions, improvements favorable productivity benefit catch-up and EBITDA retrospective by increased tariff XX.X% million of driven offset expense. by tariff

The multiple the the successfully January. HHI of new convenience Halo which Wi-Fi very unveiled, technology Consumer in the the Electronics Touch Lock, remote biometric at Show well quarter received product product functionality. won with was awards and integrates Smart In

and popular wholesale a and XXXX. retailer includes driven the awarded retail successful deliver and HHI and listings builder This summer at Clayton Early signs plumbing level design homes of success styles a partnership in the value the of launch scale show to of of capabilities the Kwikset new and and the and new intent States distribution very modular by high has United continues ability In in expanding strong been design in pricing. to consumer a leverages Homes, to with strong see business a pointing segment, together. consumer-relevant the top Pfister new manufactured that innovation of site-built in

demand related HHI COVID-XX of mitigate HHI channels in Mexico COVID-XX both wholesale actions to in continues in supply the and the half back expects impact Philippines. the to to The disruptions take chain year. of and team in retail due disruptions to in facilities the our

capabilities teams impact reduced to our expect are residential to capacities shifting negatively we other results. security output half While for and second facilities do

sales Now, growth & is driven from the quarter. mass temporary respectively. $X.X net few X% department growth Care in net by and Reported the million Strong the slide was last appliances. closures small XX. of Net Personal store increased and many by during impact sales declines channels and sales EBITDA regions of in specialty U.S. across X.X% million the both all increase. channels, $X throughout care were inorganic XX% Adjusted and or which the driven to stores personal quarter of despite and online improved days Home

behind fewer by better sales. helped line foreign drive top lower our driven improvements, operating on headwinds exchange expenses tariff by and and investing bigger higher volumes, productivity team's brands products costs. The and supporting offset renewed was and partially focus growth EBITDA

drive customer ops of content. online partnership comm example engagement increased growth strong improved and team growth with included the sales One the with to digital

be time which without where found. Smokeless when preparing Foreman George meals home. more In appliances mid-March, stovetop series George Smokeless smoke a will at the meal cooking, introduced at preparation most for Foreman we The and consumers the small Walmart the mess perfect Grill months from Grill healthier available at coming retailers is enabling in are convenient and are

its leadership and success products hair Straight growth bolstered the Confidence Multi-Styler of & In like and Remington care in America, XX% continues to in both Europe and by Curl with Twist collection. appliances Curl the addition, over North the advance

few the placements, were teams at our digital respond haircut, cooking marketing DIY coffee home months, ranging quick to last Over from with baking and home content solutions. home

factory our back capabilities While China-based largely levels. are pre-pandemic to

results some Our be world. supply in disruptions the the closure demand second half in impacted volatility quarter current of non-essential by will patterns, retailers from the previous gaps, continued production from and around

Pet Moving slide is XX. to Global Care which

strong net was occurring reported in growth net increased productivity quarter growth, driven Second XX%. throughout costs. the Higher the and sales aquatics EBITDA by tariff by volume EBITDA and sales by Adjusted to respectively. with the organic higher companion and animal increased both categories quarter. were XX.X% offset attributable partially positive and Higher XX.X% adjusted pricing, growth improvements,

productivity Pet the major team completed initiatives. quarter the successfully in Also three Care

facility our of remaining Cambodia was exit operated, manufacturing of Cambodia First, this was continuation the last and action the closure rawhide the non-core we facility. assets. a strategy to manufacturing rawhide The that location manufacturing

addressing team also to demonstrates bring scale facility and European while assets. team's the with underutilized a The strategy sale arrangement of and to manufacturing new entering volume supply into needed food multi-year the simultaneously the the Second, manufacturing has again owner. owner of the this new facility the cat to dog the commitment the finalized

Sea into the positioning Omega Omega pet aquatic through team and strong leader portfolio the Sea And company. of nutrition independent frozen channels. freshly Omega One the the acquisition added also with share the in in third, is in the specialty U.S. pet and premium market brand the

highly revenue with portfolio our untapped small execute business acquisition we our is relatively strategies. as growth existing to this from a future opportunities the is perspective, While tuck-in complementary

QX consecutive this represented for and year-over-year of bottom quarter growth fourth unit. the business line quarter sixth of consecutive line top

As pet by pet in four and investing leader brands. focusing products of the to dog on and grooming, stain are which platinum in creation the categories, aquatics, team growth drive odor, growth the continue by market our will chews,

And is finally which XX. & Garden, slide Home

were X.X%. difficult as in Second net the year essentially adjusted and with comps despite prior POS this sales transportation strong COVID-XX-related quarter increased early and reported season EBITDA decreased X.X% ago sales year generated Net orders. year quarter the shortages flat

growth a and our COVID-XX-related revenue sales label by brands decrease primarily was decline driven private of was EBITDA offset brand impact. in by captive sales. Net The the

new orders open we has increased items, the in our U.S. strong product favorable as across much partners, continued which and placement essential enter the early Our weather, including our vast quarter. by retail largest primarily U.S. remain majority our largest retailers season were as of of driven three The

Our we but in capacity as and operational, do safety. main of ensure some facility remains processes manufacturing to constraints open expect employee QX result a implementing

through that to are supply chain products We these the seeing working demand our strong in order we continue for go are constraints meet as we into April.

team enabling the incremental continues with which solid barriers high The from efficiencies GPIP to are to to support our The fundamentals growth strong investments drive profitability of this entry. and and remain business strategies. program,

accelerate growth and that and We marketing long-term are rates. brands product our strong investments confident development will in

culture employees make to to on all and am us want So doing we've our thank initiatives, with operating to reiterate days. these to wrap-up my and XX,XXX-plus for are our section, pleased I our progress made that strategic the how proud they I

that now to So back with David.

David Maura

Thanks very bit today. quite much Jeremy. Randy. Thanks the on we've covered you, Thank Look call. everyone a

I'd And conclude is, to if takeaways to of just so like what could the do I my mind. key kind like in I'd with

we the are in remain performance are XX direct program, our the of the began business in of believe Global strong a for result foundation just over months that off just First that we really XX the planting over they absolutely growth reported long-term which no of ago. this company. reported. committed seeds we've performance investment is reflected Program to action and Make our last paying we it. We the is Improvement months and our we taken the The that Productivity mistake about

that of COVID-XX expectations. at Second, I of I during the growth our quarter, in of first and our terms ahead tracking pleased financial performance am and both the that second before earlier the had bottom pandemic. this we we very top am quarter part line the of are end thrilled

teams not demonstrated runs strong us the pause fantastic, COVID-XX the fantastic and operational including excellence and group, global job. it's board response Third, Rebeckah in the pandemic. who to our HR global COVID-XX Long, script, thank here I across really have response done for to our a need really I to our but

amazing. Thank So indebted for extremely all personally to hats help to I'm over it's you. six last of of you. been proud off weeks your you. the of all you I'm

further Fourth, should we perspective well-positioned dislocations they are market very, the in very occur. balance for from sheet a

increased We revolver. liquidity We've significantly have our upsized our position.

make As I'm on in generate we're about $X.X of And things. of other was go over the I We do And post the the strategic liquidity. feel balance secured asset today, a from sources to through year. cash than we sheet, next asset how had the and we It so those we of intent cash we mine have quarters. structure of the a to liquidity over of for capital side of sales you in of billion to entire the couple very balance lot positioned multiple with free revolver sure build additional senior good sales our the no got talking we've going as debt operations ourselves bank. on that levers balance cash

Fifth, themselves our consumers at and believe great units are to going Brands, brands. four Spectrum that and we innovative going our product our the essential to look with us, around home in to find our continue on do despite business what's world

With the and we're reasons, that next really to to those can three think the to financially storm. months. future you going six think said, really look I what operationally like don't over tell well-positioned anybody is I all For the weather

and uncertainty volatility disruption, where know demand where discretionary going tremendous general. already. economy, are We seen down GDP levels to supply disruption going The not in certainly in go do of to the have be. is degree income to We

And time our for so unprecedented company. us all this and an is of

shareholder great operations, be. the employees to and So continue thing one just around laser are that's can our guidance. definitely the It's the The our where and value on long-term. new where focused the say reflected currently over may we uncertainty be we our company, is creating of I in withdrawal our normal

I morning. I time as with everyone So well. I for to say safe. that, and ones loved stay your your Stay your like remain Appreciate support. to you this And just thank hope positive. continuing want

turn I'll back any questions. Kevin it to So for

Kevin Kim

dive Dalam, into Thank David. you, right just Great. Q&A. let's

Operator

our sir. ahead. Thank Tong comes from of America. go Bank first show [Operator Instructions] Olivia Please you, I from question

Olivia Tong

Hi, thank a dramatically you. start Good sales morning. I with accelerated of guess, pretty they as this let's obviously quarter. questions couple around

So catch much up talk potential you How Any changes? the pull-forward? was can about there? just

near-term objective these in once some business Thank re-jigger past get changes about the demand the the transitory? organization areas of of how you. understand due Just we to you're volatility? categories? trying this the and other challenges just lasting in sort current think Just term maybe potentially about you importantly to expectations the phase changes to how potentially demand thinking balancing could as those then more supply that quarantine weathering bit versus chain here are how versus given the longer And longer to given structural environment the be the is implications a what

David Maura

lot just four quarter on just tell tell in you I are going said home income about remarks of fourth them. that there, for them me great there's to businesses no GDP But our to are to the whole all going build There's our it. this no levels four really have you as discretionary to so I'm for way to over essential, -- to is way have September. opening a of tell our where me be would where name listen in in we businesses I going And all you hand the be. Randy of to There's to feel in it's

turned I and And little I sort around innovation think fact And some new economic like investments get this downturn. think you pet Home making and real extremely continue in to we've & Garden during we're I I was a chain supply & pipelines. Home and business. resilient any with invest took had to tell pet us think strategic with of R&D very Home is going is issues our in while with an Garden we're & Frankly, there while just build. -- flattish that there resilient to it Garden business quarter would

in our this chipping this more on & to And Garden. foot anytime pet we're spring, and soon advertisements take off gas think so ever division produce Home with don't hand actually summer the frankly than the may seen. Quite Cutter you see going you've helping sanitizer

So and we're more Clearly, our in if businesses. stays our bleak place very and everyone this. in shelters spots that cyclical pick to going through to activity continue aggressive be their home, the hurts economic is

there disruptions. supply in value great we're cheap, a product Not of So now. great But a at more had price but even chain Appliances fixing We're suffer. price. HHI point. that would we've

So we'll see.

I at power stock amazing an you too a that personally from But of investment months. while foresee of work price bought can a and I'm me, very lot that we forecast. Randy the in and over I and cash. this a going can't shares main pandemic of much rest I of it over have fundamental We my thought again, be I takeaway And year a thrilled. we our to before was just is and give are get the there. towards look now out hard really going didn't to I see we'll $XX water last again, long it free results seeing of actually the But in just the – XX of a not ago $X the were timing earnings steering your share intact still all you ship blow think to lot And but is the turn we're

give color? So Randy build on more to you want that

Randy Lewis

good Olivia. morning So,

was drag the when was again, net that your in Jeremy not whether negative. positivity the COVID we the or businesses results. that a was the to or look think original had the thinking back the And driver three as on of that four QX as was there had and Just actually actually a far businesses quarter COVID of impact question we the said, the We we of how situation across the as were result revenue quarter. for

a see was slight quarter it on to benefit board part believe a business of But the across revenue. couple a the for we the pet us. did Our million negative most dollars maybe in

be all can process and little uncertain. there talk as we asked forward-looking simply to disciplined regards that because we're it's And a be try go to as I questions going the to can maybe employing. that bit we're With you about not the

not into all within get this and the by managing the long-term. independent divided the attention discrete the we've immediate don't so that that we've And we separate situation led current ensured the and environment across groups and tunnel So to that businesses longer-term. vision intermediate teams we and are pay and have collective they're

the quickly as So businesses as adopting able sure to make just new we're being trying we our as from consumers and possibly example going are we trying to adjust all that see as an watching we're to in inventories, our orders, interjecting POS can. can information such fast market as daily, possibly processes that to our we're where react

able changes to believe could We crisis of feel go make GPIP our XX in really that said, feel the to making we've all about good the through forward. we ago. David been how And cultural as have the to ability a about been that never changes most and also we've we this we months good way the respond program

that helps. hope So I

Olivia Tong

to perhaps Super you that some the implemented on that of hit like you we build just both you talked about, over But shutdowns, these the you distancing of saw. time Can trying about but do that's government restrictions kind can the $XXX you can David target. actions sticking your sounds talk million need there's you and you're about understand provided that ability that to had talk than – mentioned GPIP? that operation given flex It to frame helpful. to target. you just you Maybe before greater as

projects to year or to the pushed out right I retail intended that get to need feasible. I quite in frankly – because it this mean had of that imagine even you do maybe with whether if have some some there that requires it's Are that now virus manufacturing there just partnering isn't were

Randy Lewis

Great question, Olivia.

and it's overall that But make just minor you are are happening would the I being that, tell the we're where risk can case having adjustments absolutely in to So very tell of or those the scope to there execution. I reduce that project. prudent are that you impacts things executional

And bare made quite we've because couple anticipate of no frankly million to continued is minimum we've target last publicly endangering delivering. in that we way that the $XXX of commitments that quarters, say the as the

Olivia Tong

well. so Thanks Stay much.

Randy Lewis

Olivia. Thanks,

Operator

Thank you.

question comes next from Faiza ahead. Bank. Go Alwy Our from Deutsche

Faiza Alwy

morning. Good hi. Yes,

of terms But relates could I project it first sales in my is if it's month guess difficult I some the of in been you in was segments ahead. April? on question know wondering I various as going So what's that to trends share to the and look

David Maura

it. Yes. be to I – I again don't mean about listen try to disciplined we're going

all lawyers have around is I think we different businesses. Everything remove and we pretty variables. want guidance the the we've us told to a home. because durable you And do in there's of reason

want So up. mess to that we don't

in disclosed I prepared frankly But Home Randy And was kitchen in in products growth a demand, stability today. and some being and and of demand I & in lot remarks seen we've in Pet Garden. about think resilience what the some actually Remington talked we've is quite haircut said think being kits

sanitizer and defensive businesses germs. We're new of about see our have lot as you'll look in on times And a offense think people sensitive continue Brands but play go – Kwikset Microban handles. And adjust door forward. us can And There's ways to there. we and starting I here. unprecedented like hand things we'll and took are locks advertise posture. do very we Spectrum we're a

But I deep hit. expect be through I to demand would our we recession, is clear. we don't It's want pretty if be go earnings to think jeopardized. just at power all a

want given want you. build – stab it why take from And it? at you to we've you a or so what detract you we've it Randy do to on that's take given Randy

Randy Lewis

expected April's period. across Faiza businesses – long internally with. we're think No. and going to much said stick been We've it's a in I that's month David just we is what our what as one pretty

Faiza Alwy

is where if uncertainty? can the more you HHI like of certainty costs? uncertainty or of demand think segments the most variable guess and cyclical. But or HPC of I is – of dynamics overall, more going ask Like the I in I'm are supply terms biggest just Okay. just wondering, see do in already amount more forward? that demand I said terms there you

David Maura

with was a puts six air But February. bubble got the of chain bit out we of initially think water China. of the I That issues little hit there. supply kind in in weeks January,

so SKUs that we're high that. of a in demand to trying And we exceedingly are look, frankly lot have fill quite and

supply the talk I costs then And air so seen think – things about this you have you out we've good blessed. Garden. the And But again, Mexico in All after Pet are now it's water of I at HHI, right depths solve continued material. & when little would bit And of retail thing, we we've and have our the we've the a Philippines. look to versus that of basically but in like of even told open. got freight disruption Home to partners not – yes, in results you and very our the majority say we're

shopping. have are consumers We and outlets

Faiza Alwy

you. All right. Thank

Operator

Thank you.

Please Securities. ahead. Our next question comes Bob go Labick from CJS from

Bob Labick

to supply wanted first. morning. my Thanks Good chain I for taking questions. with stick

segment? about mentioned And on of of other running you're are maybe diversify the there are how then at give about to the much part supply level maybe out China making you we You it supply versus question to versus timing capacity Could rough is, further? constraints of remind the the your just us elsewhere? thinking When of out chain the can products ask, of you obviously you're longer-term a any changes you're thinking this coming come maybe in And overall? how us a chain air sea. by a

David Maura

actually our competitive competitors. advantages some versus Look think I some we have of

in open footprint is of that pretty in have majority HHI We the global chain and a vast today. supply

and our that primary the again, robust. source In terms it. reopened supply of is is But appliance source China, big business. that's clearly of of a It's chain

like the you Randy And I'll the so matter getting this retail on But product a it's to just if Randy. of partner. build let

Randy Lewis

pandemic short reliable out in interesting the couple a issue the in we're period consequently the over later, of for a sourcing of situation when bad It's Chinese thing. transpired where the China. suppliers, of a coming that morning, between. on just And the one thing supply Bob, course of in materials months early swallowing world very is just matter the that most and sources of actually Good a was China was this is of transportation now of right manufacturers

-- said the of But roughly now, solve out all for portion -- we're least the my mean but and change, yes, combined. most come that's of that's can of least as look I to everything before at stable So think And along. because sourced are to we're that's China two-thirds under issues businesses we I that now, we've concerns across our right control. things continuing the right now as continue other they

Bob Labick

as then about Great. essential selling quarters pivoting you've little your And you're be And retailers products approach. Obviously bit. it. for fortunate at in we've shopping. online a Got online just large several increase mentioned, a but to very talked obviously essential mostly, there's also

how it's your and of today how purchases pandemic? online as wondering, result the and for if capabilities a that's evolving Just stand accelerating

David Maura

it? the about Randy, talk you not them the and Give comm don't take the some there. Hey, digital? why ops, some the you but don't flavor And marketing videos of just why of

Randy Lewis

Yes.

we in in management four call what investments Bob, we've across very back, space made of months the top businesses So XX all you discrete if that and strategic of omni-channel go about ago. our starting

were from find any at space same it's more share we've task partners fair minds some that we the and made out and putting and well And And disadvantage. can brick-and-mortar into of of brightest there that retailer our while others. time the of we headquartered e-commerce, the so from a the transition built team. weren't than any as Austin up getting our sort It's the best as ensuring scientists data of at of brick-and-mortar we to ensure was e-commerce

just And so that performed fantastically. team has

issues whether side creation that and And to it search side dealt interface so but also the be the it the customer, be need sales with, optimization the on whether video of with all analog the of content. of the be

separated content this from approach. marketing science created as commercial approach data we've from out operations creation we've and the team the so And

all on our businesses optimize a we e-commerce. now very And have so to procedural how approach of to

of businesses impact positive our And to in so believe brick-and-mortar share net a most our from transition e-comm on has position. we that that

Bob Labick

helpful. Very Great. very much. Okay. Thanks

Operator

you. Thank

question next from comes Please go from Zaffino ahead. Oppenheimer. Our Ian

Mark Zhang

Mark Ian. is on Thanks This guys. Hey, for my taking for question.

So M&A. active guys are it's interesting on you still

forward? the targeting? give that changed So Thanks. guys guys given current And there most which business any at of sense the a your the can of pipeline see investment And Are all lines environment? you do has philosophy opportunities? areas you going specific they're

David Maura

we've allocation to quite open But we're the now pandemic The of us right shares look a temporarily of thought been we cheapest and business hit was the we for our capital mean shares. for I buying find. And represented I Look could suspend lot think that. prudent do to M&A. frankly, thing

there's think of a dislocation the I lot market. look But in

debt cash to very, us where wanted we could our that. now if between that the expect fits of at of shouldn't and to core anything the position trade so all. own I'm we would pay do with it's planning portfolio you at XX. build asset And end a cheaper could shares large-scale But off third accretive a September and than we we don't and very I our out year buy something so almost it if large -- of a

I it's is in the again cash undervalued. and for today think if it a highly, our is it's we highly year. of earnings strategic reassess it tuck where small are open. materially to But balance But accretive generating even fundamental to lot our of And it's the So, then. power we're we'll relative stock yes

We income discretionary we just get make the any prudent next where before see demand be of understanding couple and capital and over is of allocations. stability consumption to the material aggregate want some quarters more is

Mark Zhang

you Thank great. Okay very much.

Operator

Thank you.

Securities. William from Please ahead. go next comes BofA from question Our Reuter

William Reuter

morning. Good

or Just to the at with the guess percent what follow-up the Mexico St. you a there? are and on those operational Louis down? little Are facility capacity shut I And Philippines in currently of are in bit just facilities the manufacturing. one

David Maura

Yes.

protect it Philippines ramp as safe operating as reduced So, look people it back our deem first. reduction. in staffing we the facility we're a situation we just up. And we is operating. levels, at It's the had And we're temporary but this we --

one facilities of a We we Mexico. it our is shut of similar as situation then and facilities have in And currently in in reopened working speak. down the and one Mexico we're getting

William Reuter

customers they final some then customer? And rates. growth your to those sales or those gave direct-to-consumer from Okay. e-commerce sell as you the Were were

David Maura

whether data Yes. to No, we Amazon dot-coms it's partner relates with walmart.com the that homedepot.com those.

William Reuter

That's you all Thank for me. Great.

Operator

comes Thank go you. from Karru question from Please And last our Martinson ahead. Jefferies.

Karru Martinson

morning. Good

sale. Just that essential those still we open? look at the trending when for to of distribution retailers point are at is And How inventory has them chain get how been supply? supply

David Maura

light. mean I the let I'll we but I almost inventory across mean add mean get Randy them to I board. we're need color,

should takeaway. I be we we again will don't in GDP income mean so where know don't where And six know be definitely discretionary will you months.

reduction in certain to now. selective and our looking in more we SKUs our are more But appliances. reduce retailers -- a in reducing right Garden Home pet a for for temporary they're production got looking -- looking product They're of And because of replenish. & we've lot products now. HHI for we -- there lot much safety right They're inventory we're

that Randy But hope feel. for I to So, gives good the buck a you pass further color. I'll

Randy Lewis

it net of in most channel, cetera. retailer Now, same varies a period by versus But Karru by in ago. say would that just et situations overall, year product, I our inventory a region, are reduction

the the quarter Spectrum a there of over net So, was enterprise the for across of Brands. de-loading course inventory

Karru Martinson

have you in sale coming was levels? those up do we grass seeds everything sale won't that you Okay. -- if get and feel in something are that build you don't this that not normal supplies fertilizer & to fertilizer Or particularly the And then seasonal Garden, Home now products the these as get but will that else that through?

Randy Lewis

which categories understand it's or participate of grass to don't fertilizer or that, So in we to season seed potting categories. soil important tend the earlier be

at And the our timeframe. is and peak June demand so retail in July

Garden business week. & always POS Home experiences almost largest first of week our its the July. So

So side. still prebuild in we're the

business very And to our strong. that continue POS be numbers on

XX% still we're what believe our we material peak a because this be running retail. probably seasonal that at losing POS at not will do of sales rate at XX% point to we're retail So

Karru Martinson

much very you Thank Appreciate guys. it.

Randy Lewis

Thanks.

Operator

This the to concludes to call this like session. back Q&A Chairman time CEO you. and our Maura, closing Thank for turn remarks. David At Mr. I'd Executive

David Maura

appreciate and buy attendance. I your said my Actually our Really appreciate closing guys sanitizer. I nothing out you I - for there hand Cutter and wish your get We Thank remarks, you us. think safety support. We it's new of your have health but joining not? and time some

updating So future. and Look thanks very you you to soon. much talk for attendance in we'll your to forward the

Operator

call. Ladies concludes you Thank and conference gentlemen participating. this for today's

may disconnect. You now

Spectrum Brands (SPB) 30 Apr 202020 Q2 Earnings call transcript