SPB - Earnings call transcript Q3 2021 | Spectrum Brands Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2021 Spectrum Brands Holdings, Inc. Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Kevin Kim. ahead. go Please

Kevin Kim

on so www.spectrumbrands.com. QX you X help Welcome Spectrum following of Starting slide to follow the call. page Great. Relations our document Investor earnings much, the will conference of Holdings section presentation a placed XXXX comments, website To Slide Events call Brands presentation. Calendar our in at Thank our we've Dawn. the This and with you there webcast. remain

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

Turning to and Slides X. X

Actual today projections factors materially. press X, Due results management's Holdings' forward-looking include Investor Brands release are Form which report to current that Spectrum comments on and in discuss risk, Also, August both measures today's our note and based non-GAAP the you risk Reconciliations filings X-K are, which most call. on will annual and expectations, on in and filing, assume included in on the update measures We Spectrum to review upon are forward-looking outlined section. available this quarterly financial our Form and for dated please website we uncertain. recent and Brands obligation SEC reports GAAP a may Our statement. basis Relations certain the XX-K any are no assumptions encourages most and recent differ to statements XX-Q. nature, statements cautionary XXXX, by in these press release our

over call turn will I to David the Maura. Now

David Maura

for morning, on everyone, Thank call. us you, joining today's Kevin, and thanks, good everyone, and

to thanking these partners become calls, XX,XXX-plus As globe. I'd on employee this start custom by like around the our has

XX I'm is progress, be and We appreciate of and further have one and the all durability proud over of and winning The you. business our team which of each proud a you. playbook. should months, very all I of management our these past every overcome lot You of confirmation our

operating XX% our fact, both the deliver supply embraced focused, our our and global growth growth of another customers delivered The financial and stakeholders. it On the ability year-to-date culture. have productive manage businesses efficient, consumers, financial current through confident and EBITDA a of to and pandemic and the new reinforces serve in structured fourth model headwinds We've including and our near-term our top volatility, a consistent organic spirit consistent more truly our basis, and and teams reflect inflationary operating And and quarter chain leadership for Our sales for to performance excellent global quarter bottom line efficiency results stakeholders. in our persevered through is, and we Brands our to XX% are a that growth. company, servant net disruptions. are have Spectrum we growth,

have pandemic and these challenges headwinds XXXX. the and restrictions tariff We Brands that navigate of collaboration XXXX in the and Spectrum with allowed same discipline will the to through manage

chain, and thank better living supply will driven trust, at emerge of our is, company we by mission, I resilient to our collaboration values with want we home. a and a to durable We continue Again, will make serve more to which more be accountability, you.

the Now future seeds and quarter, top to advertising marketing with I plant our each across line businesses. in innovation, for we again turn bottom if our have delivered to could and We of X. growth continued Slide everyone investments and in growth

and total actions our to few our growth flywheel business XX.X%, driven grew reflects line sales the years XXXX last against company also over units, performance for our performance net top with by quarter levels growth third across This HHI. standout XX% reignite from Our all double-digit trusted reflects the brands. growth

line. to turning the bottom Now

I has in XX.X% to the continuing was to team operations despite of congratulate thank adjusted discipline the million, and continuing from I'm truly quarter our by EBITDA Adjusted investments -- this company driven was proud exhibited What EPS and HHI's marketing is income $XX.X net opportunistic and we included quarter actions. EBITDA four also program, actually this mainly from this organic repurchase teams all inflation in Program from over most $XX quarter share $XXX.X of versus worth growth. $XX our a of million, quarter million Productivity an Brands and growth grew the headwinds back focused growth. on our units, advertising Improvement as Global invest incremental this lean and the changed as them culture million by are and our want and Third year for ago. for our long-term that and culture continue The evidence sustainable buying our innovation, businesses fact pricing a to me is Spectrum to spend shares. our businesses. efficiencies in macro current were in invest period marketing operators the despite to of future with We additional continue advertising, focus that business driving challenges on implementing

their to pressures driven Turning the quarter, remarks. additional expected, stepped Slide X. by up as provide delivering remain adjusted and million Both transportation details net will to costs. and inflationary $XXX Headwinds growth Randy prepared cash our in despite Jeremy sales committed framework million. But during commodity we free mid-teens and on of earnings flow these EBITDA and headwinds, $XXX adjusted continued with from to

teams I could in of excitement product from winning to disciplined introductions. our continue turn to to empowering will new ask If a on focus of drive in the marketplace continuing to Slide X. by our win and resourcing leadership, the news people, please you to execution investing servant culture with playbook We and our

strong this in sheet have remained we quarter X.Xx, million and $XXX Our net leverage balance with total liquidity. of over

on closed & a also approximately our Garden category for the adding the Rejuvenate We to $XXX ever-expanding million, acquisition during quarter fourth successfully Home business.

Turning to X. Slide

repurchases; organic our and very one, opportunities, to disciplined that allocating internally drive to capital brands and we recent promotion our tuck-in consumer growth; our or advertising the our focus including capital above profitable Sea, expectations. highest marketing and through of share vitality will drive plan I'm our and third, help return Rejuvenate M&A, Omega two, original dividends and value with to continue insights, innovation performing strengthening on: Going creation. return this all synergistic acquisitions to we shareholders are to our all cash forward, allocation are strategic deal continue of to opportunistic report business via drive and pleased that our with at includes priorities to and will stakeholders and of acquisitions, Armitage and

range. the Xx Xx We continue to target net leverage in to

Jeremy and call will I'll Randy with now you financials, additional hear more you, business unit from on to update you'll insights. over the Jeremy. Now turn the

Jeremy Smeltser

morning, David. Thanks, everyone. Good

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

from grew investments. million, recent year Excluding from of volumes increased and income sales gains debt. and the improved and input and dollar higher distribution in $XX.X by prior from higher XX.X% common advertising CLO X.X% of to gross foreign and prior costs marketing increased favorable restructuring initiative year improved was higher and to prior volumes, business input transaction-related costs from and net partially profit XX SG&A extinguishment XX%. GPIP of higher just all GAAP a points impact XX% of incentive of by investments stock million and were $X.XX, offset units. expense million Declines costs, Net primarily freight ago primarily Adjusted higher from basis improved Energizer by increase the XX.X% of productivity. declined from of costs, Adjusted by $XX.X $XXX.X margins organic driven favorable income Operating acquisition marketing million diluted SG&A driven HHI. our increased by Gross productivity and and sales earnings higher four favorable sales across year, exchange million share efficiencies the $XX.X with lower due net our advertising gains at improved volumes, freight higher the net mix. and sales, investments, company's acquisitions. $XX offset by driven EPS and per partially and increased of the driven by Salus driven higher diluted EBITDA and costs, volumes,

interest compensation decreased $X.X $X.X million this change our of prior operations $XX.X of million, million $X.X million last year. compensation million Cash share QX payments higher Cash higher $X.X were quarter by XX. $X.X to incentive-based methodology. than expense related continuing $X.X and to payments the year. payout year from Separately, for million last $XX.X And and from continuing from $XX.X incentive year, decreased of restructuring to were the million up Slide versus million last cost million during $XX million last year. driven taxes million $X.X transactions debt. $XX.X million from to were of due lower amortization Turning year. was operations the and Depreciation than

its finance quarter-end sheet. Revolver. The Moving balance and consisting loans million million draws $XXX and cash and obligations. of million available was of a the $XXX to million on outstanding revolver leases senior billion Cash and of Total unsecured $XXX billion, debt approximately $X.X balance $XXX notes, $X.X of Flow term had company million other $XXX of

QX CapEx X.Xx. is $XX.X leverage in company versus the million repurchased $XX.X last XXX,XXX net for $XX.X shares million Additionally, during year. was million. And the quarter,

our Turning XXXX. framework to XX earnings for and Slide

of EBITDA impact exchange the is We continue by months in $XX a the and the offset sales as expected previously based now months $XX net X are higher This reported million by efficiencies, of recent foreign XX growth reiterating driven includes & we to Armitage in with expiration framework also expected Rejuvenate current Pet mid-teens retrospective have to tariff for rates. includes headwinds exclusions mid-teens. Global of in tariff benefits GPIP expect disclosed approximately on our Home of for results about Care Garden, to volumes, our positive Adjusted from earnings XXXX. approximately million year XXXX, net from grow transaction to

as is million includes expected amortization the operations year inflation. from $XXX million In primarily of in million we million inventory Depreciation flow input inflation are for million transaction-related year $XX million. $XXX and between and second be expected $XX expected the $XX as Full adjusted be of as we a and including to and is well $XXX interest $XXX million. as stock-based NOLs. $XXX with between $XXX year cost This prior anticipate as to operating approximately between between XXXX approximately do in we Fiscal as taxpayer significant being $XXX U.S. the expected $XX investments loss expected federal usable use to $XXX XXXX mentioned, million ended million to and plans $XXX cost continue not is to federal the in compared free capital expense factored fiscal be million, a to million. input net are cash to and cash between have incremental fiscal restructuring- during We $XX addition, levels spending expected year. million million. taxes continuing and cash and of $XX compensation half ago Both carryforwards. David be Cash million be to to well expenditures million of

EPS, of rate adjusted XX%, a state we For taxes. use which tax includes

of continue range capital adjusted to our a allocation Xx Regarding leverage to target Xx net strategy, we EBITDA.

XXXX mind it relates as keep Now few the earnings a in framework, factors. please to

brand we investments as year we raise for First, incremental and the consideration $XX to of support continue approximately intent. awareness, continue plan to purchase million for

Second, QX It's days new fiscal reselling prior to odds. this modeling compared to recognize have important this year the an recall will XX the results year.

results include manage last which Incentive was Energizer QX by will EBITDA to this $XXX about impacted is also higher than Compensation still expected to the the continue QX. we by Third, $XXX in million year. enacted positively in year, to be to pressures fiscal our impacting expected of Change Program year to dividend change last lastly, And million be the $XX.X million to negatively are inflationary Fourth, QX year income. compared adjusted absence comparability that prior through

operations. to Now look a detailed Randy for more our at over

Randal Lewis

improvement joining and will our continue from will the cost Jeremy, on benefits us program. current I operating to with you morning. and provide global underlying today comments our we also overall unit performance on business detail for Thanks, transformation. significant of our Overall, My operating in all results. this environment see productivity the thank to update focus on you model each drivers

David actively earlier, durability its business As operating outlined through strategy and us our today's is our headwinds. proving in helping demonstrating manage is effective

performance addition more consistent comparisons operational long-term over the and to drive to and another commitment to are that us the in believe long-term bottom of work and in brands overall, These those industry quarter-to-quarter partners. delivery impacts strong performance growth. continues in organic continue and our company. of drive businesses, which year While to levels remains continued positive our our commercial demand for QX COVID-XX year-over-year consumer to past volatility continue extreme supply line growth earning another feedback the challenges, customers, top service we quarter efforts, we our And creating categories is the total of quarter reflected improve of sales the despite chain provide investments helped to our from of positive our strategies, growth. to

specifics into Slide Hardware Now the Home let's Improvement with for Starting each dive on XX. & business.

costs builders from COVID-XX-related and increased driven and growth driven hardware. growth productivity was and growth over strong freight to for Top comparison HHI double-digit compared higher experienced primarily Third and It's organic improvements as year. net levels. the and as our had we quarter plumbing temporary, Improvement This volume that well prior the by Home of increased increased to investments. security even & due locations growth quarter at line Mexico input disruptions all year highlight growth reported sales in partially primarily we and performance sales government-ordered XX.X%. XX% offset higher our XX.X% sales Hardware the EBITDA will fourth Last in represents advertising and Philippines XX%, year, you important double-digit consecutive recall, to net by prior categories, shutdowns. in manufacturing by across to sales HHI, results strong XXXX

We advertising by and investments. introductions driven continue our product be to to new increased expect demand

Additionally, both to build fundamentals the and be remodel strong. the and channels across continue repair new

expectations we next last we two As year's at history. should turn for the to quarters, look

our sales security dramatically recovered year shutdowns. recall, you the strong of products as in started If production last government of from COVID-XX the rebound QX

to across and taking HHI builder's teams focused on be share. security, Our continue plumbing driving hardware and growth

XXX We seeing benefits will another advertising a Clayton and continue and to top and of positive number and from commercial wins invest in Shea innovation, POS marketing builders. Homes are with other in results recent -- Homes, retail U.S. and

recently shipping within the with with the improve in Halo launched Baldwin to on driving Halo we that Ship focused five experience customer Kwikset, exciting products, demand Quick array business in days, leader its Additionally, our brand, wide luxury security a Program customized and SKUs, of In category. Microban, Also technology Touch dramatically remain users voice lines, WiFi-enabled along to Google Kwikset in product which technology, key incorporates about rekey and biometric includes their Assistant. contains Alexa our hardware. capability own seconds. and allows the which technology Lock any through surfaces control Smart locks to SmartKey antimicrobial on with which And XX of our

productivity Reported by Now EBITDA $XX.X Personal America with kitchen strong along inorganic XX which The Care, were million. and haircare retail compared X.X% reopening the higher outstanding and business. eighth moderate consecutive advertising EBITDA was our inflation. in driven driven continued of garment volumes by investments growth actions, by expense, Performance in line offset and pricing by sales growth substantial Net appliances after U.S. in from and Home strength care respectively. & Slide sales year-over-year net segments. marketing year. Latin XX. Lower and partially to quarter cost X.X%, is QX growth increased improvements. haircare driven in personal the small decreased well Adjusted was in This continued and increased garment freight as to care from began to double-digit with input -- decreased care to products shutdowns as continued categories as and COVID-XX. was growth for from kitchen small channels top appliances grow notable last growth sales appliance represented

and in commercial continued to our investments Our our last growing share give and retailers. over consistent shelf continue two plans key with wins space confidence the taking years us

put by on and investments as initiatives. last well call, outlined inflationary our continued in QX supplier As and partially marketing partnership pressure in pricing only This margins. HPC on offset as QX our will headwinds be we

mitigate to impact we inflation However, fiscal as work we the XXXX. enter continue to

is and will XXXX continue as reopen. the in as remain which new focus opportunities excitement insights-driven with Our in beyond as there last for limited season. to was holiday consumer-led, products year, for back-to-school, retailers sales well upcoming incremental And

QX partially results declined our animal distribution XX. X.X%, at acquisition category major a growth. increased resulting top is transitional returned attributable net driven costs. end fulfillment issue and The centers. and pressured EBITDA declined a companion The distribution in shipment drove lower-than-desired the Care, planned and providers customer which U.S. volumes Lower was Top transition volume sales grew net improvements Pet by Moving X.X%. fulfillment shipment levels move. the service the to a growth. center during quarter sales to the XPL center distribution were by customer quarter. of Higher which sales and was productivity X.X%. freight higher actions. U.S. strategic of transition, challenge impacted while organic by also cost pre-transition were inflation was sales, June of the was another to providers levels at Global quarter Profits of Slide Reported and represented by operating line pricing investments, line advertising of this by transition EBITDA one input Adjusted in lower offset

Global quarters a strong with performer for growth. of Care Our very XX business consecutive sales years, several has Pet been

momentum the and space macro and We customers are the increases significant committed and our partnered currently provider support better category performance of serve XPL trends very with a growth automation. excited to of strong given the the new in strategic our plan, brands. about and we continued Thus, our positive of the business to to

quarter. efficiency. order benefits and and up service facility new largest now product companies Our provider new next the to of capabilities with automation the business fulfillment chain showing experience, in to to the processes customer transition Care our partner is start stable, is this the level of expect of some Pet we Fortune They have Global a systems and working The supply consumer extensive the with space. take world-class XXX experience the scale,

beyond parents our who will very of execution the animal future demand our categories. demand the remains before, fundamentals. coupled and Care for said new continued for anticipate that These of consumable have with global sustained the our from hobbies confident growth products, well in particular, all Global the entered pet benefit Pet and given are strong category we all products. strategies, XXXX the companion In acquired long-term we commitments team [indiscernible] our bode and new the As

unit Aware to giving in Well relationship business, Africa. and important Glofish organization in East society. In another innovative organization solutions we to an strong that headquartered back a long-standing Through water in named very is Care our with with Global Aware. brand, scarcity our Texas addition nonprofit Austin, provides Well area, equally sustainable Pet a outstanding operating partner is to a leading

While our Spectrum providing our partnership I of in goes Aware's back all play important allowing most to These two for Slide her cause. our a Well Brands A water this incredible one successful Shower part work is staff that ever the clean, Strike of huge fundraising participants Home us directly through Aware thousands which finally, want tremendously many very contribute almost Brands, worthy XX matching completed Sarah donated funds to we a to for and Southern founder, this Program. people and Garden, Evans, quarter, for you living actions, very along with to years, Spectrum small thank will Well Kenya. also the in healthy do. thank communities from And people who lifetime to fundraising of campaigns XX. & they in

partially challenges challenging support business markets. volumes growth actions performance Organic raw patterns gains was the and weather herbicides sales and net cleaning declined as was by by decrease pricing marketing improvements. negatively from increased in thus sales the of from the EBITDA QX to sales has quarter. our well more lower much Rejuvenate of with continued recently repellent contributions unfavorable insecticides Sales distribution than QX, despite of and impacted EBITDA X.X%. investments just Third less outperform the decreased by and weather first months adjusted ongoing continues and The Despite reported as freight X%. strong business. from category, positive, and and favorable through retailer weather far the and in been driven acquired offset were materials productivity POS increase quarter X% The by increased category net two driven

Home price of Given end team the these & ongoing announced round the another Garden challenges, has increases at month. of planned last

focused in EBITDA Recall operational $XX a underpenetrated million. to brand, teams business HGTV's supplier multipurpose further close recently, named net and With manufacturing that retailers. the existing alignment over acquisition, the and strong within Rejuvenate to customer strengthen the particularly that has best last our just of capturing and margins also channels sales Rejuvenate revenue the applying forward business And were are on good for with cleaner. synergies channels. hardwood was strengths with look and year We successful floor Rejuvenate marketing partnerships, our our

strategy these brand, & our more Spectracide, Shock, Garden around consumers EcoLogic such and continued further investments consistent recognized and with to to solutions actions mission as our market believe be enjoy We quarter will best the this Home tell resources the to Our are providing A&P our in now invest Cutter, leader the challenges Hot to story enhance Rejuvenate. life. in nature's counter

efforts to for and growth efficiency XX. Now let's our Productivity turn Improvement on Program Slide Global internal

we've mentioned, initiatives. key on remained execution David of these As laser-focused

more As times. business remain these be sustainable, we business program track initiative impacted invest challenging up of fiscal savings important across Widespread units. at our least on end total organic resolute meaningfully into transform most to deliver XXXX. QX $XXX especially on to long-term, strategic This the continues all remain to QX of we this during productivity savings model, as our growth these delivered global quarter by drive gross improvements our using our headwinds and operating results. target the million to back We stepped and inflationary

fiscal than continue during approximately levels. said quarter, $XXX expect million to headwinds we As to million our last these gross XXXX $XXX to be higher we

and these impacts. control, address these industry-wide actions of quarter outside While our many this our results our headwinds reflect are often of to

model. consistent executing our we -- tools through the developed We our are operating using across enterprise the and are strategy a coordinating GPIP program expecting leveraging and

and improvements with functions. partnering to inflation, suppliers regions mitigation offset productivity businesses, and are driving all actions throughout implementing We

of for are if retail included to XXXX. with this taking in QX. be headwinds in in pricing framework further taking holds, increases additional are in expect fiscal pricing As cost our earnings our actions currently many We implemented current partners environment Jeremy to and year. we the alluded QX, these price we earlier, And

temporary some higher preparing fiscal XXXX, believe of are in inflationary headwinds for these begin year. pressures While in we nature we that levels and moderate of gross are may next to

As reminder, the is almost we fiscal inflation hitting a the us in entirely in second of are experiencing the half year. XXXX

As forward another In XXXX, these our to are headwinds cultural strategic be expected quarter doing half-weighted. XX,XXX-plus section, are our advancements sensational to my Spectrum they we faster thank a initiatives inflationary first model, look make to of fiscal and our stronger Brands. us truly I acknowledge to operating want all to on and employees and progress better, for our

Now back David. to

David Maura

Thank Look, you, joining XX. quite a bit I point, takeaways at for Slide today. call. on with Thanks, we've us want here on key Randy to everyone, and Jeremy. this the now covered conclude the

our units. another reflect last of excellent driven of top third for top reignite our growth across reflects one to analyze the however line business results you few years growth line it, trusted our brands. growth of over actions by financial our This quarter every quarter First, the flywheel performance,

covered despite, most chain, and with marketing Second, innovation, million adjusted continued reflect quarter results EBITDA but investment incremental which our it inflationary importantly, financial up in headwinds $XX and supply stepped in advertising. our quarter growth the an third challenges

collaboration. and Third, remain with managing our teams on discipline focused

program us strong. gives are earnings year helping our targets reiterating efficiency us in the finish and framework, confidence our XXXX and playbook winning Our GPIP

launches. encouraged As and XXXX, retail our partners' I momentum a stated, categories, and finish great for our consumers' product heading our remain enthusiasm into our fiscal we have expect by We we fiscal XXXX. for and products brands strong to new demands

and the whole. future about As our as excited our businesses of I a sit company and here today, optimistic I'm

As I mentioned shifted. has earlier, the company's culture

on We for are short-term results. no business our longer running focused

a and reinvesting growth are our back into more company savings the program units. four driving the we today improvement of productivity We of from our much are business efficient global

in approximately a liquid & rates, picture with housing the combined low $X.X our with very strong U.S. product consumer assets, offerings higher macro backdrop Garden and for Pet a and the for environment Home a Additionally, company. of strong paints shift trillion permanent demand of the demand market our interest

on all home further shave and mentioned product to our our call demand we any to over we frontline times. many challenging successfully the amazing team, an grooming, your and which to have time other to all workers appliances, a beauty continue aided working questions. As continuing expected to fiscal our care world continue energy of supply want cooking that an favorable by give have of our I see this strong for we our of back-to-school summary, lines back been should XXXX Spectrum platform. selling also also I special you to strong am a call, view season. again market X. this we of be thank prospects on new enter October up bring us to business grateful our adds now your I products as extremely The In very as the to continue XXXX XXXX. and our in we've you made launches to to our the product across you've leaves expect our enthusiastic and factories and in support. new distribution advertising Spectrum thanks expected win me through teams investments our made in job sacrifices product Kevin and the development to of for about marketing containers and new our pipeline innovation, turn fiscal and I the for our to partners current I'll new around allowing transitory, chain the overcome challenges company for on side. can currently to from Brands securing from that The of home. our I these teams a we we're I inflation on the the the that supply Brands that and all expect seeing chain be employee of future mostly lot all headwinds navigate employees want genuinely bright. is thank the centers, our done

Kevin Kim

let's ahead. into Q&A. Dawn, Great. dive right just Go

Operator

you Capital Modi of line And Instructions]. with first from comes RBC Markets. the Nik [Operator question

Sunil Modi

me. for questions two So

some can the any -- on be helpful. expect back context to help you come HPC of impact quantify the really the should you that and super we On what quarter? sales kind any loss the in issue way business. Global the would Pet, And on then in XQ around And had XQ? and the of gives is the confidence second there So question is the it DC then

obviously did moved, Day good very of Prime it Given short had but you expectations. growth, fall

So just some on what to understanding happened wanted I get there.

David Maura

inorganically But the take a to and facility. What out of just I'll confidence significant is to is both the headwind of we shot we confidence going July in. that current Jeremy month planning we our are in needed temporary growth I'll in one, and in let really DC a it, quarter old that Nik, fact us of business, fill move bigger and you move what the and biggest being at the a for was just with organically new today So we Randy gives Pet the DC talk the then about forward a Pet's in lot outgrew history that July. finished gives much the us

appliances, in that missed to that's it didn't think out and very Pet behind nice we're miss expectations, our I'm unit In growth but So very us, current mine. quarter. it much we regards to the looking of forward sorry

a demand people of success we a continued people having as nice most see pull there. is a products continuing. group. supply We But to the the get and beauty why DCs every on school. main the forward. appliances, growth thing is was up It's just make and think gear water The to And which sure I continue just go our very to It's stores. supply this COVID see with to the then for -- thanked our in lot groom back to home fact, our -- for we're battle our just chain into it's I thought us we day

so And our let color. chime moment. I'll and at for that top Jeremy remains the focus Randy additional in

Jeremy Smeltser

Yes.

Nik, expectations due what didn't we shipping I any back to I were So that What mean not Pet, will experience in quantify change that I'm to is light say the to POS sequentially. our specifically were going transition.

growth for organic would slowdown. year. to I will I on was in But Pet over compared as last we experienced sales up So XX% have record say July nice had POS think, XXXX. that David over the has remained quarter said, a that us, seen Up, not we strong.

So add? really Randy, pleased to with we're at. anything where that's

Randal Lewis

Yes.

is in the fact has downtime for time on that X to and able over. the been quarters. move strong last to great for so There this an And Just us business investment the never take reiterating a just future. X any that be was the demand to

have a That more do capabilities. and up capability So just extra and to some the it going since where facility growth going output we we be, And XX% need saw to had the lot to and on fly. forward. increase needed handle headroom XXXX to we're we're a in

Operator

the Your comes question from Peter next line of with UBS. Grom

Peter Grom

in of valuation. I'm publicly to long I Spectrum context view a can discussed love the are you all your ask of provide has really I well. doing know, the on much, hope the of you've M&A not know disappointment wanted And in question, I M&A recent you I And the strategic I David. headlines strategy. David, sure part been would but kind HHI. around

of think creation your structure business love this whether values context kind how your longer and about has view kind to about entity of the market on the would with of your you frustration the get view of kind value term? how combined you M&A think So changed how on in

David Maura

I got company's business mean, We're the policy. dividend, back EBITDA it's here think Year-to-date, to we grow of line, And -- perform day, get the Rejuvenate vocal end we're I'll two.. expectations, activity. the that top strategic to focused. Look, amazing. we're the pretty those, on Sea but definitely no, X% look, been XX% It's about paying not been mean, that, our quite of line. particularly XX% mean, by business other That stock. I the Rejuvenate. do just It's we're to we're to not And really any start I today. company, and generating are the and, the think going we've at continues comment starting Armitage the a acquisitions I excited on I a fact about the lot integration We're been I've great Omega think process. able we've cash. on think to a the saying frankly, above as of I really buying

below going marketing is execute, valuing look, not that. So believe us -- we we're we market but issue with the to EBITDA to continue that -- Xx have definitely do an

forward And numbers. we be put lot short-term to continue is So one to a execute. continue I with we'll more yes, of enter going consistent. to finish will sure disappointment just be day of fourth our We're quarter. but -- a And looking strong continue here the market. I'm with to nature to And But the in year 'XX we're we to we'll And momentum. we'll the appreciated. my up that think think

Peter Grom

just up maybe that And it. David. last Got piece, then on following

broader fiscal Estimates You the guidance, momentum next strong category being I'm too you've sound discussed And 'XX conservative macro and with not clearly headwinds. for fiscal year of for you're asking optimistic exiting about pretty and but Street long year. 'XX this

growth So perspective even these difficult how should about category of from investors a think as cycle kind you comps?

David Maura

I so the hit that backdrop quarters, creates for a finished prepared lot demand remarks. whoever of demand in that, that over Garden. figure macro my that just to a out goods. tried a aggregate Street, consumer think mean is will of Pet I higher we good And is, I it Wall very Home of couple level investors, our next materially demand.And retail is & our ultimately, have

things. So are a of lot

to H&G with And the yes, job it's thing just in think, is been R&D upgraded and our But you is would negative put in We've to inflation team, talent. Garden, the money to years being of regulatory thrilled there. supply But I expect manage building what and methods. demand innovation, not launch see product new and EPA example, payback see and possibility. then create today, environment. multiple new what in products team could in we the schedule. Randy our sit Jeremy We've be take through wish development of product products. an But lot and lot look, a see we here new the for really a and it. of we our those in of with gratification and we Home public, instant you some -- look, But that's chain. it's tell the externalities I nature as pipeline our So But terms aren't guys -- what of now a launch R&D other they I & pipeline because and we're

look, mix we're to will and our backdrop grow. we intend vitality, margin with so and and the And is share which take macroeconomic think good, but innovation capabilities developing our and enhance we we think

again, we would company view XX-hour so just we take -- And than investment. the wish people as a an more of

Operator

CJS Labick next of Your question Securities. line comes with from the Robert

Robert Labick

back in want touched doesn't your some dig on quite talked you've and it this, obviously, you it remarks, just at little seeing as the a time. you're the that inflation quarter. end You end fiscal about to for said, I prepared bit. your into of Obviously,

next offset received that in to with and tell should there you pricing be continue year. terms to first by next inflation year? that's of be in is are realized to So inflationary expected realized where end the plan future or of us customers some pricing. that you how half of pressures Can you kind you've your being How

Randal Lewis

try we've the tell about past commercial this by Bob, region, capabilities on -- through unit, doing it lot I'll specifics of is don't from global the enhancements functions. varies we're about us you channel, a what But jump our we we're utilizing of Obviously, you've heard that operations And the can business cetera. So is et comment take that. talk and I Randy. productivity brought significantly our and where pricing. customer, in

impacts There's about also analysts record insights, where on really the gains that And the how of investing important, going all backdrop share insights, the can a together the a work minimal the our in with talks discussions. so much and us understand drivers, transformation consumers behind have but partners brands of impact is helping helping we've margins into that the our also also and really us are we stronger backdrop consumer in a for there have those both most necessary customer positions, talent to David the go retail our that's the got time, category of top we're that to and to businesses. to drive categories show when of them

of also, and don't forget the So product the changes, about with pleased ultimately, With a onshoring. design, very again, working from side, overall, to I'm with sourcing, on the options start And supply offset, how approach to we progress very partners the thorough innovation. approach. continue with pleased regards finish, with working to then alternative

margin to David the vitality at As at appropriate tends vitality. price higher When you out, mentioned, market it time. the at the bring

get So that benefits from we way also. in that

that to past. been feel I headwinds these overall, deal have better prepared are So than ever we we in the with

Robert Labick

this, Okay. extremely Plan, Very as lot helpful Productivity is And on by you've well. is Great. and a enabled mentioned, the insightful. executed you obviously, of which Global

to if One where new this next of the innovation those your you a does of more goals reached future? from from get with maybe further that GPIP. you And promotion, the year? innovation. And highlight spending the targeted that little you've go savings, increased mentioned, -- Have increased just spending in and targeted level? bit savings the and GPIP other things advertising is the increase doing you've about reach you spending you're spending year, your A&P that do Or all does

David Maura

chain. think what despite burdened steadfast Look, consensus, the is inflationary was was marketing steadfast reported we mean the term. of The amazing for want long innovation. with earnings was can Yes. I to team supply morning's script incremental even that's release I them, staying this the job I that that in done wasn't to trying [indiscernible] you spend leaders for in talk credit million to $XXX do I let million and EBITDA, out what figure in think a operating know in because Street by the to $XX staying investing they've though complimenting I Hopefully, the headwinds real compliment And of and just I an which

keep earnings a I lot we invest. And think in we of that have think progress as we're so, area. But the more go. there's made growing of But company this I going look, to this to

Randy, But talk we that to -- flywheel about. add? anything the Jeremy, it's is So

Jeremy Smeltser

brand say, investment the years, to we've $XX support on 'XX, Yes. million I annual I mean basis spending, last an from generally over what of of couple that or kind I'd categorizes increased Bob, take. give 'XX about

I a targets, think of our of bit what and little business, different is to spend by level relates necessary. it it's by category As kind

build where under be to muscle the the still but we're years think ROI spend. a as would on now, we from three way or we I two talent expect that build doing in it and around measured getting the right we're

David Maura

million it. that been our the way right? unburden again, earn this We're today, into mean but million going And $XXX our right? earnings now. really quality impressive I for not $XXX from would of quarter, to have could been is for two if stream you good But EBITDA, to increased, have in the highlight what people trying the business for necessarily has I'm years

doing we're So right thing. the

Operator

Your comes the from of with Chris next line Fargo. question Carey Wells

Christopher Carey

Maybe the good growth. fair? growth sustainability because is on in the already year -- this next on context concepts again, I'm seems share. curious I on in, I So thoughts amongst drivers, your and this I is, this think underlying And I growing it into sustainability of shot is just level maybe maybe you appreciate seems to less, And commented at good kind investors. And of need by of base. kind revised big again, and that expanding just is this actually you a HHI. So came And year, high-level has expectations. then question the Pet quarter next debate and have was general, like market growing hoping you the came right? shot HHI just is growth just X-quarter this of seeing is weather, at sustainable are business. could got X-quarter, But things impacted to going so period. phenomenal X-quarter, Pet year, but your relative be more the that just sorts confidence of I been maybe year. I to like these strong are how in And HHI the to Garden's over even a set be guess Garden kind there mean, has mean delivering bit. together, that a next phenomenal. business HPC give actually growth be if such a all that things hey, the you're that obviously aligned in, sounds though strong some put in like that of I little sounds or that, with of

So debates quarter just one sustainability came I on feel just of commentary makes incremental maybe on of major any sort of stock about and the maybe how that concepts in that's like go because how this of you like think right kind to two forward, now. the

David Maura

over our start I'm I'll to coming business. grow it And really expect but the it, hand work going Look, then to team. to to grow. in we I'm XXXX to

Jeremy Randy? So or

Randal Lewis

Yes.

So fundamentals we look on continue weather. category That's that believe and Chris, focused & about be in Home long-term a that very hey, just the you that to just comment to attractive. to Garden, asked business the you have

it's as business were escalation we in years think invested several of least well. We competitive business is for has a really changes result the ago. that the potential think our that to probably for environment all we our transition probably in us. a And from the think great We regards from number last changes bode over just homes shift the people XX home, with very how to transitions it's most our things of suburbs, macro populations cities populations working there's XX demographic towards the and of of view So their those in months, South, the to strategy.

being of business the kept else. associated you and the that entry retailer and returns really category over lumpy in two we're and thing purchasing not just attractive only with up really with an it and high decades also is of are So weather, barriers like a say, strong back and And great player to everything we that. margins power know I because because for but quarter-to-quarter, that one from patterns

you answered to be in think strong. I your Pet, looks own question

really and tie positive. focus -- share throughout driving We globalization from brands platinum We the stickiest to to be products COVID. our that. our strategy, macro is of it expect conditions think has to on And impacts the the continue

other want if So you to don't I know Jeremy, talk about two? the

Jeremy Smeltser

what we've haircare of has thing. and seen world great think a the as at mean, with I groom and reopened, kind if we've pleased you I look been HPC, certainly. Yes, in that's

And we're and new I a North XX% overall seeing the we've demand we been in of didn't demand as with what short frankly, time, think exposed there. world like America. mean We reopens, construction about But David recently think which very we're talked home I I period anybody. there. is HHI. for sales, of here business kitchen seeing saw most surprise in to decline what our pleased appliances,

strong, environment driver that new existing with for We usually in including continues to And the then win contracts us. velocity continue home retail builders, is the sales multifamily. remodel, of be a and for to big

year, the a we year got So kind And last back single-digit are Home we High I'd a like sitting year, And here that business just remind probably Garden, here of a the to was X into we for business low right? mean single-digit while. growth and I & then had growth growth that. a for we've months blowout organic mid-single-digit for year. folks,

sight a kind period we shouldn't we've the is of business momentum this experienced have. the in and growth brands X-month over that period weather that the lose saw in of but that we those how X-year So much quarter,

Christopher Carey

all entertaining that. you appreciate I

be, there's know would conversation around pricing. follow-up I inflation one a Just prior and

some of areas fiscal metals, few you where be might negotiated you're the say, over kind if impact, off, Just most logistics, rolling half where some -- labor. to the freight. as contracts just there inflation and or terms maybe could of first 'XX, what some far resins, talk quarters, are that I that you've next your as I there rolling locked of -- transportation locked have whether ocean the you that's know into domestic wonder the seeing

maybe should Just mindful next that the like we key kind inflation be four over of of quarters. run three the to of buckets a of

Jeremy Smeltser

started. Yes, when some kind being little the situation, of but we said different points, a remind mean earlier, could and with start, a hyperinflation should year-end Randy with in given and fill this to it great compared it I bit year-end I'll color. all calendar of everybody, timing a I was this September

will second experienced only this year. inflation half half we've because first our tough in So be of the

lapping our So that inflation two we quarters a probably quarter. calendar hitting of year-end, of if kind P&L were that's versus one have you only

that mind. So in just keep

ocean seeing to relates freight. our As XX% model, is of given it really XX%, it, we're it where operating

our impacting metals, bit Materials, inflation. biggest experiencing which And of Randy, DCs. distribution a versus freight Global certainly X/X HHI and to cetera. get the little probably et overall be bit the single Pet HPC, resins, share that taking side a differently, spot rest et much encompass little the a that's of So and want big hit HHI cetera, and driver kind but North ocean approaching the chat metal businesses after about freight. would pretty probably of there. on larger Care maybe the how is things you labor certainly, American contract, would we're ocean to a

Randal Lewis

Yes.

two China. located actually Global So was a transportation we in global contract years back Program Chris, on of invested excellent we being connections. global And competitors on as management Productivity capabilities actually things. all and Southern built of Improvement on-the-ground able a well some suppliers folks versus things we've ago in and one done of to that the as part well is with this there several against have while resources commodity, spot our as We've quite one, be our rate. Number rate as benchmark tremendous centralized

ratio good And just two access pretty is to a containers. have number there. We

are to able them relieve that -- supply materially get are that of out smooth to getting chain capacity the them because we're and suppliers believe we we So them, we that from cash inventory.

headwind our managing very year. into So It's it's And we're well. it our we that good biggest biggest headwind next currently. feel

Operator

Zaffino Next from line with Ian comes question Oppenheimer. the of

Ian Zaffino

that have now, another after I'll ask two I that. follow-ups and had of kind one so just I right

be would HPC. First on one

I uptick. a an understand about little little the guess kitchen dynamics bit bit, to then when we here. a saw reopening, more trying but declined the Just saw you

then you there'd But mean also was those what are do to So you uptick? proceeds. about businesses happen, offset if begs which you tandem, question work? then when proceeds? question to inside portfolio going rejiggering. potential in general, I the how return the significant capital the now that two these thinking the curious if would kind actually, Or don't HPC come come of are kind potentially they into think to proceeds, both in people is, just And back on of large allocation were you be that second to And could improve? if maybe be into drove

David Maura

I that scratch that that our have run lot I free we -- flow. and forward. Hypothetically, if of are the short But to I it personal wrong know public think go we team dividends. earnings I trading look think price staying I'll demand we stock. EBITDA, IPO and think do cash lot we're sales side I to Look, of just market, I do bunch our see generating I'll your answer making know a would nine. materially grow I helicopter, and why a out investments a here backwards, and I take of kitchen the about course we're mean, the I The and question, term, in if growth of this, businesses win. the I think buy we're a is it know stock came talk but fell businesses, I the back and knows to care. fundamentals undervalued. and to cash And security great let know XXx And going into things pays my of everyone today, at I at head still

notch to years. going we're it a And consistent in the efficient, the to operator to we've so take more built that over 'XX. up going continue last And we're be two

stay tuned. So

Jeremy Smeltser

over supply win But probably this guess We're F kind back broadly helping as categories categories. we guidance not comments, Yes. can't both And growth give personally, those I Randy's had, 'XX. there's on momentum would abilities probably the are HPC, we the at right? said, in point. venture to those our single-digit right I revert still yet, there to for like of I in growers, to time, be going share while categories chain mean But now. on that think, these us front to, back to are we

Randal Lewis

the of the Yes. we quite we grew that And drag in a is a another of America. business HPC nicely of was in in grew person, and U.S. Europe quarter in on bit countries used back There under Latin being reflection there direct back this that a comment retail down. out lockdown and on that's and where and Europe, in several people to purchasing going kind shut

lumpiness to for back that the the year-on-year And in feel complement small it other and up, extreme. with good solid as as growth so excessive of year. We as to garment going it's then was But into just open still well expect We haircare year. kitchen next as comments, last overall, not other we we categories, going comparisons about the is trend appliances relative even incredible that's back. see as demand care things and

David Maura

the nicely team for on business of them just because winning congratulate me won to I'd and piece Listen, business, they staying just call recently. it a and HPC let the chunk nice of give out like a shout on

question. Next

Kevin Kim

our Randy. hour, David, conference for so Jeremy call reached Brands, top of Thank Spectrum you the conclude on Now to participation. have with of we we'll the your that, thank and And you behalf today.

Operator

call. This Thank participating. concludes you for today's conference

You may now disconnect.

Spectrum Brands (SPB) 6 Aug 212021 Q3 Earnings call transcript