SPB - Earnings call transcript Q1 2022 | Spectrum Brands Holdings, Inc.

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Operator

And thank you for standing by. Welcome to the Q1 2022 Spectrum Brands Holdings, Inc. Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator to during there to [Operator over Mr. are if the hand speaker any conference like And now questions call today, would Instructions] the your I Smeltser, Jeremy Officer. Vice Chief President Financial Executive and Mr. is Smeltser, yours. the floor

Jeremy Smeltser

morning, Spectrum to Spectrum Good To will event today's Brands, document XXXX and the ' page Brands placed website call. Jeremy the there I'm help Welcome slide and call. Investor call I conference follow webcast. everyone. section you in following our Smeltser, Chris. comments, Relations on Holdings the QX we have at Thanks, earnings presentation www. CFO of will our calendar of our spectrumbrands.com. This moderate remain

led myself, Maura, Executive the Turning a and Chief Randy by and opening Chairman conduct Q&A. to Operating X will David remarks, the Slide our Officer. Officer, of our presentation, Lewis, Chief our will After we be call

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

David Maura

Good and XXXX Global going the business morning. Jeremy. & attention give value results. with everyone, then everybody allocation update, everyone's is more and our that, into look, provide quarter will Randy Garden to higher we kick of us I turn Thanks, to now this Home to the these overview company. our evolution I'm operational an Hey. transformation. meaningful an performance growing, are Slide We've detailed update, Pet the X, off including Look, company's first to this on Thanks Jeremy After and times exciting create different update. with all joining a priorities. unit very morning, Spectrum our faster capital earnings a pure We play going could believe Brands. begun welcome financial margin come of and shareholder for for call and If can

expected, largely Our increases. top-line price with while exceeded continued inflation as first went margins quarter growth, costs contracted as input

We experiencing. pricing offset and have more currently inflation unprecedented targeted additional actions the place we're in to

EBITDA full and our growth. continue and our high positive. interest for to We adjusted single expect sales year categories single-digit growth the of low Consumer framework in to to earnings achieve net remain products digit and mid demand, retailer

that remain And also we're Hardware will end in our segment for to HHI's the of strong Improvement markets. the to to towards transaction persists Home billion. ASSA $X.X this year. of We close demand continue closing and sale We ABLOY that work pleased confident say this

our share combined Tristar business product believe help and margins We a offerings. us increased our slate faster expanding it appliances global leverage of The continued drive the of growth will value platform poised creates for talented ability independent that now announced this to and team Personal with space. the gains an acquisition, in to and scale The firmly Care this company profitability create for Tristar's us legacy enable will opportunity this further progress new create Moving look value of our which some the Home this segment. updating shareholders combined to and will market holding should X. of forward creation, this transformational Tristar business our progresses. company from separation and we the X, DRTV, and investors morning, model content - on of studio to to our business our tremendous for creation Slide direct-to of the Slide year be acquisitions enhance as consumer HPC brands and we and

paying this capital focus growth vitality allocation capital businesses. continue for to internally our all opportunities. has drive across us priorities been off as on allocating we product our Our strategy believe will to to return We continue highest through

and Secondly, we dividends opportunistic plan share to via shareholders cash repurchases. return to to continue

million million the During million, common of directors. the of plan $XXX we our approximately to we $XXX plan repurchased stock $X.X approved repurchase opportunistically repurchase by board At prior quarter, continue shares. we meeting concluded stock week, recently, common another million our of $XXX of the more the shares our as we for our board this quarter's buyback have recent as to authorized

the of our activity. transaction, As closer HHI to repurchase we the share closure get accelerate we may

Global of continue and multiple will lead Pet our separation should shareholder plans Pet value. strategic company an -- pure and drive the Brands create Tristar re-rating create independent tremendous M&A transactions a Spectrum we help and and and believe pursue of stock, this company. that term creation. long to both value common Garden synergistic of to Home and to We play the acquisition Today's disciplined resulting Third, the are appliance announcement accelerates

X.X sheet the to the sale. closure deleverage have of we balance to we upon As discussed HHI on calls, leverage previous approximately times gross expect our

long-term adjusted to net two ratio and net have more our two- conservative to X/X-times leverage. we leverage a Additionally,

the our over the impact turn of to call to supply and I helped Before minimize efforts consumers, Jeremy, chain whose have our teams overall. I to these retail acknowledge like partners, to global business would contributions of headwinds the the

like products model to globalized creative partners to and all our employee their found last has in the management continues adoption that thank our honestly tireless many and culture global model Our our years. efforts of over center-led our I'd team's me of to supply of operating chain deliver operating team successful teams overcome for enabled several customers. winning our by ways This the every demonstrate company's the and inspires our day. face success the challenges this to

Now you, you'll hear more from on Jeremy financials. Jeremy. Over the to

Jeremy Smeltser

Thanks, David.

declined EBITDA our operations, higher the operating decreased supply COVID Turning declines share disruptions and Gross exchange Adjusted of unfavorable and net QX by to in acquisition increased from decline excluding decrease driven $XX.X costs, costs of a productivity and the XX of Slide $XX.X Energizer by margin and of Adjusted were investments from inflation, from to sales to million loss lower the million and partially gross inflation, by distribution by and dollar primarily Organic by overall operating improved advertising The supply the and increased loss the net points diluted and review ago gross pacing adjustments offset continuing operating results GAAP and from foreign of sales I productivity. million, in declined investments. -related higher margin year basis SG&A distribution income increase million X.X% due of sales. of X.X%, and $XXX.X loss The and timing, mentioned. higher XXX XX% price and higher from with net with pacing to freight diluted $X.X income profit accelerated quarter, gross Net EPS of of SG&A. earnings declining previous a despite a partially and million million. input margin ahead net constraints. X.X% freight at accelerated $X.XX was the of SG&A common impact costs, expense increased due by marketing sales chain in improvements. ahead per $XX.X transportation increases driven prior-year $XX.X higher pricing gains beginning sales offset driven XX%, stock. and driven input was costs, of

decreased and continuing Turning were XX. quarter from Slide $XX.X decreased QX taxes the payments payments million Cash lower million Appreciation from year. year year. Restructuring $X.X expense amortization was this of of $XX.X $XX.X up year. debt. million, million $X.X year. separately, from from incentive-based million million versus million, the were than to prior were million $X.X last Cash share compensation to $XX.X and related lower and $X.X transactions during year. million $X.X to continuing for of last last $XX.X operations than operations due higher last of thousand cost $XXX And our million million interest $XX.X

draws, million million approximately notes, $X XX-month to a balance balance debt loans $XXX as our times million and billion, well X.X the compared we company the senior finance million Net at declined, EBITDA of disruptions, other leases, end revolver. quarter capital on cash X.X of share supply million was continued on billion Moving $XXX available consisting facility and trailing $XXX the as its cash balance revolver of previous working of obligations. an $XXX of had repurchases. leverage Total as and was increased support sheet, $X unsecured term outstanding and requirements outstanding from had to to flow $XXX times and revolver the of quarter-end the

million. During the to repurchase X.X the quarter, share a contract million, $XXX first a This approximately quarter. of million through repurchased total end as David million the $XXX.X XXbX-X of accumulates the mentioned, shares repurchase of for the $XXX company

mainly in were that since higher to due remaining purchase million investments our shares implementation. have completed year, under the QX $X.X SAP We expenditures of last versus the contract. million Capital in $XX.X

Turning expectations to on fiscal Slide 'XX. XX our for now

rates. reported with foreign slightly negative current upon to continue have mid-to-high impact sales net single-digit to based expect a growth expected We exchange

a between recent full-year and as through phasing expect intend the million includes single-digit eight year and of the maintained the $XXX adjusted GPIP of $XX half $XXX price results higher actions (ph) use of year, our offset EBITDA to substantially a the $XXX expect We million XXXX all federal portion benefits usable We offset total be productivity revenue. and ended capex pricing to HHI. framework and and inflation, needed. to annualization with million. NOLs comp low of of expected cost a a and sale $XX expect is of by and and last additional non-cash $XX months of the which pricing expected net million From to on during the current Full be up spending our growth. expense including be previous the them further we perspective, $XXX of increases, XX from basis. are inflation pressures million Restructuring of inflation XXX Despite and generated to $XXX approximately to This to Impact approximately $XXX million, expected XX actions, year planned and is management to impacted negatively additional program. range $XX $XX million between and cash to on be rejuvenate stock-based interest items. $X amortization and transaction-related inflation are to Depreciation be to million, we continued including of transaction, approximately million between in $XXX continue between about million. first from approximately million most from $XX of actions to are expected of gain

be are are taxes us Cash 'XX. $XX a million. be to We and taxpayer projecting in $XX fiscal to between million expected

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

a net the allocation our leverage after leverage of HHI to target. targeting long-term full X.X our X gross near term of strategy, targeting we target X.X Regarding the are the times HHI closure And after deployment of proceeds, capital for sale. times. We're

invest we of the at to Lastly, continue execution plan support our our the to higher brands rates strategy. behind to

considerations for compared everyone to HHI earnings complexity for of navigating Moving operations XX, of to some results to presentation modeling fiscal remind framework. in discontinued continuing 'XX in our of the the as financial operations our to Slide of like assist I'd

of plan, about for that actual allocate interest interest GAAP than 'XX operations expense while allow expense debt reduction our our on us full in interest the will 'XX, in an our to expect $XX else accounting higher basis discontinued year, First, million for operations operations million after fiscal reductions. we million fiscal will $XX carry equal, $XX expected is to as our all discontinued higher about continuing being than would only $XX about annual to

that of in are cash first progresses. cost essentially our the of the out. results compared And reduced in of the free will will expect results the and mentioned by continued capital I as fiscal effect normal the working be hitting taking impact new a of be year-over-year do year to not consumer expected S/X reported. in chain capital due -- global to our free items to to $XX year the flow XXXX, continuing the our in million still very inflation heavier operations of flow from to levels of any challenges CAPEX predict flow our $XX Next, be then about in difficult $XX supply second timing working million stronger investments half few due investments presented remained notable than for interest finally, given to the quarterly million. a opposite our HANA as period Continuing program we perspective, earlier. to in primarily operations and our and actions demand. pricing cash increasing cash point HHI's And half, And lines finally,

Now to it more I and at unit results. turn for will our detailed Randy a operations look business

Randy Lewis

Jeremy. Thanks, review for our performance. operations joining and quarter And all I'll results unit you us morning. thank first business this

operating play to provide of like a an few I would and cost macroeconomic that in. summarize the we're spend Before do minutes that, on to factors I update some at the environment

XX. slide to Moving

the chain and but the environment were we quarter. more remained Inflation issues than supply severe remained in high chain David in per supply challenging the cost As earlier very our overall the expectation, first presentation, anticipated. mentioned

stricter of some issues. negatively caused Pet suppliers agent Care business. impacted quarter the our in related Global our This availability First, and experienced shutdowns in especially shipments COVID

drove resulting Second, caused in costs inefficiencies that COVID labor some surges higher. our U.S. in distribution communities disruptions

issues to real demand And holiday led that our that overall outpacing ability This Third, to with chain material in pick high-traffic ordered demand. also especially shipping the to shipments shipments consumer And capacity, also based related remained months. on global global were supply the customers. strained receive are longer led quarter delays or in the up labor to impacting the and the customer's fiscal our period for ocean expectation of and to turn, This fiscal a freight in continued to ensure to increased our contributor required In rates supply is times for of make investments these costs remain expect the issues, for to continuity in inventory us higher 'XX. outlook a longer inflationary customers. for capacity [Indiscernible] of light lead shipment higher 'XX. we freight also longer

to putting to times. I'd to challenging like highlight the these we're succeed Moving various countermeasures very XX, Slide in in place

good with First and over customers fully pricing our actions price for news stages required the is foremost, of in our have to either our focus finalization. inflation projected implemented The earnings been marketplaces. in our cover communicated already with executing various for remains framework on that of the remaining the amounts increases XX% to

supply finding as extensions cases in enhancing alternative of our important supply This critical to resiliency Another to ensure facility availability. factor supply disruptions. shutdowns, is well contract avoid chain by focusing customer suppliers finally, volatile shipping on improving minimize to to product reducing includes sources continuity the by impact We're as of further of future customer ocean to our can freight focus optimizing rates. And react execution to and operational dynamics. we we to ensure inflation lanes our quickly changing collaboration spot exposure continue to simultaneously on

leveraging business one these chain transformation our towards of with across by are All actions our operating collaboration enabled and global regions. model supply units

today's demonstrating is earlier, manage consumer operating helping through continued demand David as for categories. and headwinds its our effective business actively durability proving us our enjoy is product strong our strategy outlined As and we

line the consistent another quarter organic another sales performance growth. positive continue to we long-term investments growth customers. strategies drive of These in period company levels, for as and our which improve and of delivery to top total service quarter commitment is operational efforts with reflected provide our helped combined feedback addition to our first to as work commercial earnings more The

availability product Lower other demand initiatives. investments comparison in and in distribution. And and was Personal actions Revenue Now regions. expanded Adjusted Care, by I'll COVID-related EBITDA accelerated sales decreased strong and performance issues year sales each product incremental and was Latin increases Reported prior region new season by let's to give and million. ahead Home driven business. by by partially American the quarter inflation and continued development holiday improvements which net growth respectively. of were them XX. productivity X.X% cost adjusted in margins offset freight this input increased the driven to EBITDA inorganic start specifics pricing tempered and with with for marketing Slide $XX.X X.X% and the is

our driven division. the care to Performance our - double-digit growth the top-line first of posted The the of COVID the recovery perfectly breakfast of is for strong category. cap continued products, growth throughout growth referred small the was The international year-over-year represented timed our availability season garment launch iron due Hobbs product XXth collection, appliance helping the in of segment, impacted recent driving Product growth the which in category. appliances. steamer kitchen helped quarter holiday important improved breakfast in was brand under by was in in strong quarter for overall. of garment demand quarter. Consumer to growth us quarter is new in two-in-one the as consecutive season, and later rebound Russell the that the which The markets, [Indiscernible] the delayed post holiday early launch achieve new shipments availability and a remains and

over last shelf in to strategic our grow Our consistent and commercial two in investments us give share and plans to space wins our years continue key markets. the confidence

we on we first our The offset of The timing to pricing actions ramp partially challenges address expected to inflation pricing actions waves second year. pricing increased the previous first Net additional first headwinds quarter. half are will better planned up outlined the the the that certain quarter in through delay these of been than of were the peak increased As margins for have increases. quarter actually pressure now cost was slightly by able supply only of in avoid as appliances supplier to and fiscal sales calls, were earlier disruption to quarter accordingly. input costs in inflationary inflation

offsetting while through availability inflation supply supplier partnerships. the improving be to continues XXXX and pricing in strategic input focus impact immediate costs, Our

quarter performance Slide The were which was continued all aquatics is growth in the strong. Higher regions organic fundamentals attributable net for in all growth to good Moving sales of business revenue to X.X% growth reported had business respectively. in and strong of our companion animal. sales business very growth and care remained XX, double-digit Care, had and X.X% an pet as a this net Global in categories product Pet

This the quarter record revenue a for represented for quarter XX business. growth consecutive

As Latin the organic growth we And increased channels, Tetra in-store the stayed import China. double-digit consumers strong, our in of as for by in double-digits begin secured The completed to business. number to amortized food to supply largely fully in A leveraging aided achieved the we're Asia our and availability return demand shopping. grew recently brick-and-mortar Canada products We've the accelerate U.K. pharmacologic the now to product environment. great continue in from in growth the license selling U.S. boy integration sales American brand very is improve growth region And challenging to as In region. that position fish Pet The Care a consumer in growth. into dog was example this of Global good brand the holds operating despite category our shoes. global now expertise one was

chain supply in These late on by resiliency impact had to these to faced actions availability shutdowns, sources. capacity the anticipate these enforced sources supplier a shutdown. our a product now due shifted with This first other material for temporary complete disruptions change, as which business well issues the XX% supply next have Asia products key resolve found quarter. for product of additional to have and as the volumes by significant the product supply government begun activities, to resolution -related over increased COVID before compared new available revenue. line and this First, We as have quarter we

and the longer times remained in continued challenges limited quarter as capacity chain freight first supply global remain lead normal. than Secondly,

reduced business. market shipping led labor labor competitive for to turnover our higher which and capacity the Lastly, inefficiency,

partially the to costs EBITDA EBITDA to maintained the turnover, costs. is to persist place quarter coverage pacing we the additional labor the marketing incremental we strategy Pricing drove Some the price in driven while for offset incremental ramp and short-term future. freight Despite was confident productivity second in should of inefficiencies the half operating third inflation, operational pet will Lower ahead offset investing challenges, the costs and Adjusted up that into expected of categories hobbyists Labor inflation, improvements. to seen of in actions. expected parents the aquatic challenges XXXX our past influx input years. incremental we've initiatives. we are pricing the over the near of in put reptile new in and in $XX.X these the was as by pricing associated improve remain actions and quarter, categories new This by product in increased quarter from and million. that beyond benefit the animal companion of new declined into and timing

to unique Sales and impacted they focus quarter global that of see introducing of know, the during very deliveries our challenges is to and a XX% to were on finally, for year, seasonal transportation & customer-related well the is ingredients, our Slide the & portfolio the supply have for some staging and shifted you order business, of up packaging Reported as and which chain supply. which first our The be for capitalize portfolio Home Our predominantly Organic about sales starts XX% the portfolio. remains executed quarter. by particularly quarter, bullish quarter-end. And represent in and product great in carry X.X%. Home declined demand decreased short net the record business did the our & which net brands. fiscal is in for what on chemicals, across of continued a actually products on execution second team excited is our our Garden critical our the active we in job sales growth category to in the to over long-term The securing why XX, this These the been innovation focus trends quarter. dynamics now Garden around components, past which strong Garden we necessary Home expect strong business. In ramp preparation highly very of drive preparation strategic demand focused quarter. remain full consumable’s this within is continued total revenue. These product strategy, to continued tend margins, centered leading team

year's organic by a quarter and of inventory 'XX. showed customers of end revenue fiscal net all retailer at an early inventories by first historically driven last sales 'XX was high, categories First fiscal as low product year-end decline quarter in across the the build

net actually organic by the increased was this quarter over compared sales first year increased a time increase categories. first XX% to demand fiscal growth This growth across quarter consumer organic and with normal Our period, repelling from driven of double-digit more and distribution 'XX. strong controls, household insecticides,

first While continue portion product activity EBITDA demand we the the as quarter this represents double-digit very a of driven consumer in POS in category. business, by offset experience was loss was million cost consumer annual marketing spring small and product a strong lower-margin Adjusted productivity growth inflations, to freight, by pricing actions improvements. volume, timing of shipment and and This displays. of development continued and investments, partially input was $X.X lower each

milestone the success business to a systems quarter. marketing And quarter. completed confident the second achieved of of rejuvenate increases and labor, we additional will To this are we is for go this higher costs see offset price this freight. and to well, and the materials, raw long-term the another be continue effect for quarter. integration progressing in first refresh up into will integration setting Brands. pressure, in are are as Spectrum we round part have of business we Integration product of rejuvenate Distribution implementing We in that business

gains. accounts. excited customer distribution new are the existing and We've secured about already We

and consumer tell in true our story and around to home and our We innovative EcoLogic, of solutions delivering in garden brands rejuvenate. cutter, to the Spectracide, hotshot invest continue business

We providing the nature's life. and to in recognized a convert leader that enjoying are investments further solutions strategic mission best to our be confident continued consumers our challenges market enhance will

development This our new in have product weed to one ready-to-use skews insights sprayer. grasping mix consumers new consumer killer These driven excited Go Flip spray, product. led hand new Our to operated, year portfolio. fiscal for an And who introduced own the product products. our drive easier our significant We've we've prefer we're by concentrate easy-to-use particularly distribution continues year, to gains innovations use XXXX. AccuMeasure introduced & their to in about

our a is far. million truly stronger, $XXX To progress end call executing excluding we've creating efficiency plan remain all Now home focused transformation. model Global approximately global thus David The to on be $XXX as to our on which target, I in Slide communicated on efforts to our turn our let's on we track, November, HHI, strategic XX. times Improvement in complete to which achieved better the operating been section, earlier, growth are and the over of a Brands. million and Program, said initiatives. employees the we in internal by living on my is GPIP cultural Spectrum Productivity global of our want at these has our as And and thank savings advancements, operating our faster model, made better, exciting as make continues

to Now you, David. back

David Maura

Thanks, everyone, Slide takeaways XX. the covered lot on Look, and we've the joining us today. that the me of much, news conclude in a you on call very And there with given here Randy. you, on a Jeremy. for today's Thank thank key lot let call, announcements, was

First and creating friends on at supporting HHI on our growing Spectrum teams of great make progress ASSA progressing strategic with our Brands. A higher business divestitures ABLOY reviews. the products. a all, Home well continue on The focused objective of focused consumable the to faster regulatory we & Pet margin, Garden Care with

powerful of announcement leading pure-play brands recent and towards our a objective with separate a taking appliance Personal step in portfolio creating the Tristar Care significant platform of acquisition, of global Home With a the we're the space.

categories. in Secondly, to be our our product business fundamentals remain consumer solid demand strong continuing with

innovations marketing post We in our sales investments despite as all in chain marketplace. challenges to growth the continue success supply translating new are into the and product

inflation with pacing our pricing, quarter improve we to a of first each expect pricing reflects our quarter. coverage temporary impact of Although sequential ahead EBITDA inflation, of

we headwinds, 'XX. to remain inflation for fiscal committed incremental the our framework despite earnings Third,

quarters. We are that delivering leverage playbook previous our has our Program efficiency us to over model on we few helped our continue operating exceed execute our Global commitments to Productivity winning Improvement targets, and the

now for throughout countermeasures by products now demand Although our year putting our and our have to We low consumer new the we impact the the we and of launches categories, projecting single-digit are growth pricing $XXX we EBITDA $XXX product the other of retail additional are brands, remain year. XX and for enthusiasm million, full encouraged million for in deliver higher actions year. inflation planned to partners

And to back for by want remain on business has saying the of navigating are Spectrum environment. the future employees questions. unprecedented supply call the Brands Company. better confident of in company over to Jeremy again mentioned fiscal proud close team discipline long-term at this the through previous times. to our are to and world. way the to now to the execute, who I come I make customers of to managing the the drive these you committed is to I'm chain around beyond. the team business company we that will As I together profitability the continue Thank better. want know I've living bright calls, our 'XX for and this through the continue for continue you. challenging And successfully make want success manage tremendous once home company we turn our our to thanks to to I we that of very with management

Jeremy Smeltser

please? Thanks, David. Can Hey, start queue that and the Chris Q&A. you let's go ahead up,

Operator

you, sir. Thank

Peter first of Grom comes to And UBS. reminder Instructions] from [Operator question ask a a question As our

open. line Your is

Peter Grom

Hey. Good morning, guys.

Jeremy Smeltser

Peter. Good morning,

Peter Grom

all? transaction, guess to HPC does context So you And determines maybe decision how more just the start thoughts HPC right in some background value timing? your maybe or provide then just structure How if new some on the the you're give is can to broadly, closing broadly, these the going that at How appliances more impact what deal? deal? you then timing you opinion on spending And decide I your around David, more HHI us of just -- what to on for business? can

David Maura

much Pet tend on And really XXx, private And margin much in appreciate two upon Look, valuations businesses. I about it's focused me I faster business, being holding stockholders. for in growing, when our got fiduciary I the And for Home value how stakeholders. to business. to be these similar to Global preyed questions. assets our creating think businesses of all and as we've Garden create this, value sector higher we're company, phenomenal Care our and to XXx, our our a EBITDA the behooving at look XXx think recently the for

there. are able our to job great going we a to for through than And there of and ABLOY where the better we stewards leapfrog it, so, be of to an good and employees managing next earnings and we've a a doing great it. look, ASSA and decided real in our And hey, and HHI the say, we at really in partnership cycle we this taken globally. bought to in We is each other friends or were from XXXX, look lot Tim remain make the can they're had markets The that we business, uplift think it's end exponential this eye the a take level team inflation robust it people.

industry. we believe up Pet Global Home and the we in So, hats value off the $X.X roll but & that door, deleveraging Garden very in sheet, want to lot that And that shareholders we I've once priority comes can balance fragmented past billion create one do is the we of for a what really to supply HHI. redeploy there. to believe is a said

off, really our in I have forma be if line think believe business Pet should I I at business times today, buying of HHI is Because spun business. pro do been that's why wealth the once that's trade, our seven so trying company for to have our the people do our re-rated today holding a & more aggressive trading Home EBITDA shares. where I And at to back stockholders. look create in Garden what believe much I'm multiple caliber with a and appliances can our about

business have some of group they've making talented revenue. XX% consolidate. is needs -Starr, about are And facilities. the an their over business built studios, a too They've They direct-to-consumer brands. and promotions, DRTV bunch higher-margin There electrics Keith grown the and direct-to-consumer innovation business, excellent business is the margins Appliance small third that amazing running a that they players. or terms about have In The real Tri at of last too production for years. the believe people a capability. are infomercials. of film team of kitchen true time, and and needs There’re thin to I, many few

-- IPO on We of another going with business $X.X, spin and months off. out going ink $XXX, is their excite in got but assets, And the hope investors legacy I the your fact, on of holding them merge our path later to critical in of situation. agreement. that specific million in But looking this dry to business believe back-office the growth then burden figure a Board to into just that unit. capabilities. the the a now that answers purchase to the are with proforma our couple business them, with most do of to get this questions. it what with Obviously, we it choose going EBITDA. of rates move what I our expeditiously with pathway really with of we're or gives and their But me $X.X either billion from update Directors, need to the valuation learned Company, $XXX frankly out year. Company, front we I And marriage hope I'm you will public gives higher, a existing office can't mass

Peter Grom

HHI. and like? the Last HHI, proceeds But quite bit or look use buyback it And for I know just the a be help that buybacks. And on you around gets us can big has as retreated accelerate you for call, like comment closer Jeremy that maybe program understand. will obviously the either the maybe Totally buybacks understand or may sounded here. following up what may stock mentioned timing you

David Maura

for XXX million is declining stock for to a the buying bought We good we're just we day. price Look, cheaper. And when like us. actually, the bucks the back stock of share be stock other

don't float. and that take if shrink believe to shares billion closer wants buy Garden our could the to market stock. value in use single believe transom, wealth your or continue our greatest to strategy, happy happen creation around coming are & XX-times we're of the do and company the to businesses over XX- EBITDA if our possibly So, and $X.X to you that get times, that Pet Look, clearly, Home I we I is to as seven continue worth

review. And a so, look, get there. regulatory in let's We're

But it's -- specific We the We to are to closing, this but de going very is can give deal to the -lever any close, you and it's to a have that lot our of on valuing day take there but how the us, don't proceeds confident and close, cash we to on will and we've work. where front. is doing what prices shares. the net plus somewhere clearly you the look, market a then we're there communicate is we of or about, -- more lot got billion stock around here will that say, want date We going on of day will depending buy yes, share will that we X.X I

Peter Grom

Got and much best so it. luck. Thanks of

David Maura

questions. Hey, thank your Appreciate you.

Operator

you. Thank

Labick Securities. comes of question Bob CJS next from Our

line Your open. is

Robert Labick

of exciting stuff Lots Thanks. morning. Good on. going

Jeremy Smeltser

Good morning, Bob.

Robert Labick

and into get you just think talk little decide call maybe you're highlighted prices your which dig on inflation slides, more you on a year, one I where detail. mitigating just in how a and through wanted we'll decide in how I the it how to planning you Maybe could start, of this you playbook, this about but more not does the channel, XX% been little competitors inflationary as well? them take reacting the response far Spectrum. It's increases on? macro to price the Obviously, pass competitive And it just to so the long can maybe pricing? what's a you the then lastly, of so are how staging? move where the and event, impacts to unique last How through for are products,

David Maura

summary do the specifics. then the Randy big top, and and the Look, I'll do Jeremy

living are an unprecedented time. through We

face it. just Let's

of incredible. they're input Some costs, these

instances have used be, and up XX where our it that costs some times We we freight input up have to is where from XX%.

we're to raise about And having not excited prices. so,

Our for would the retailers level consumer. at [Indiscernible] What still. this the and consumer we with is is cash appears to great be I inflation plus don't think say

still wish we than need But of to making margin our That's for going structure. we've any across to happen. to every and to is we're year. demand this improvement I'm margin with broken the it detail. left pass board chain. We're quite fiduciary show quarter unfortunately, continued us to to hell-bent be Randy and deal on fragmented got And I'll that restore to with duty. further you all to Jeremy our trying -- supply strong. fix. longer taking Our That's we a do what pricing And

Randy Lewis

taking to asked c, that thought. get thing right take for timing do to the are of and long the increased to really, there that's you Bob, with tail to asked has year than to we associated item as all analysis imply level of an about inflow what said, Yeah. in the going a profitability David new it's want it. costs, XX% that you mechanics the do increases costs, a price last are we there's last but thing want to the the XX%. visibility that necessary of on, about deeper business. the really time the environment the And to have the this pricing I to spend whereas time just we're to kind that don't et longer-term freight going fiscal our That's and with it's what we so simply to into extend

anticipate there executional increased I -- to So, be risk with don't any that. executional

As competitors of said, the we're right go and to partners, the thing boat it and most retail where relates of of for do a to and same David the is this buyers, playbook and so most along, this in categories most the out figuring brand-new competitive trying response we're as consumers. we as our our all are our

in We're our there. most dynamic to material anything where and there's regards don't So, with there's impacting response competitive depending following. positions of business I But businesses. that's really a big brand upon our there's our think not leading

Robert Labick

back turn it And helpful. in very That's more, I'll one queue. Great. Okay. and then just

to to of change? going the see of the think the know you segment Obviously, impacted What do -- the of for just and -- normalize What core of the by lot numbers core before a once combined HPC us try of there's just about kind margins earnings HPC the terms a forward In remind new Tristar what for we -- [Indiscernible] do been is entity? numbers. as calendar the XX inflation. gave Spectrum you power margins the normalized HPC were us margin

David Maura

Listen, XX% we used to business run margins. this

XX% at operate or should industry the think better. I

if our direction. under I the any in a right everything want on to business, We're give was XX% pressure but now, a think Jeremy, return more legacy we right you I color see margins EBITDA Our got that. we can't Randy, some XX% maybe don't to XX, margin. why going size when reason

Jeremy Smeltser

Yeah, I agree.

part year, the posted million Bob, of of -- that, an we for back basis we David's starting quarter. that us. point, to LTM Obviously, was hitting us hitting the you were inflation had $XXX getting low and on an us EBITDA think We last If go significant I LTM us to hit in double-digits. inflation's

of ups down mix. quarters and next we demand year, into seeing mid-single-digits. actions all kind current like I the But business you're year. the even in with it's the margin for and that inflation product low with double-digit, happens we'll a what feel to a get cycle, of higher low But see point, through the get into downs, So, the single-digits David's XX%, this place, and we have with couple in can I to think

Robert Labick

That Okay, back queue. get Thank much. that's sounds great. very you I'll in super.

David Maura

you. Thank

Jeremy Smeltser

Thanks, Bob.

Operator

Thank you.

comes next from Our Chris of Wells Carey Fargo question Securities.

Your is line open.

Christopher Carey

Hey, good morning.

David Maura

are Morning sir, you. how

Christopher Carey

exposure, talk to doesn't can and proforma tough Obviously bit closed HHI come a HHI I is your things but Am on if X are cash. the together for deal you some It's going your be just sheet next potentially X know do of but you Appliance disc months. about will, a it X these not a cash to as leverage? overview. will how we and don't the on Can not balance too this unfolding. how bad. all the view to lot there's leverage. Friday. Maybe over say like, delayed another just in if months that, little ops continuing does see be with with it's in Happy And of because like for There additional and

David Maura

balance on am where would I foot like. a the And lot And cure that the correct consumed going that, sheet. going working longer and the time, back supply I of leverage we're my on current down it's chain stock. of Look, putting the we're At going hitting much because an you're than action environment we're higher, to to Yeah. lot buying elongated in is forward. take points. been capital a on has

get because I CPG so chain attention space companies and think balance fill those solely has been pay focused rate, rate healthier to sheets supply lot of to the need fill in on the But have a rate, too. also been fill bad. we

And so that will be quarters. couple the a over next theme of

as and the to obviously think you're we much thing QX for into consideration severe then you take need which modeling other the I is in less anticipated QX. EBITDA drop,

an Our and earnings between start the QX in -- and every once covered pricing LTM a recover on basis large to inflation. all and should place is pretty QX quite uptick then we've have we frankly,

it, year but have we've in it to in in what a earlier of exact happened the period said confident the very ago. second be, -- and have as we're a the we half, happens very very inverse We pattern call, a strong fiscal

two on. And so, you've got things going

I very inflation. of You've But think better. question, got I point your the we have $XXX great almost year. inflection close, closes. hit because the Look, degree ticking RemainCo. up our that. would little somewhere leverage around leverage earnings think through high it turn to earnings personally June. exit we bit, gets fee. I -- the think the you've pressure look, have termination I point, will believe That's I paydown us generates To that of under I and to the debt it to got a debt certainty be to free a X.X a lot a And it's able of a then didn't life HHI uplift around a it's your And million on lot look, a business, times cash. about of pay to navigate if They think

Christopher Carey

incredibly That's helpful.

it -- Certainly, leakage is highly this some consolidated there's maybe to specific Can share. net spaces the that sense of me, not in with I'll on it technology, the go any deal the much. your the just if connect of stop. NOLs on deal just have? lot review, sense could a then in gap deals shares sets? gross second market maybe market market deal of of give that looking? is why so that regulatory entertain then have look. no perspective through stranger regulatory that confidence just Is big, additional and Thanks is retail? another you'll closing. besides deals might to closing pretty verse is like you shares Is If you on organization electro from [Indiscernible] that the of maybe just on Is the fact expand lot you if you the review, -mechanical is That's lock commercial channels where why is the it And the Can given regulators seeing a be mechanical set so at what I big? to

David Maura

So around to first, I'm regulatory, happy to not but your all entertain really you you. indulge on I anything, questions answer will

the them just want that high would In with get to closes. This diligently confidence you, GAAP, pass to ABLOY, at and we with working to for gaps you tell we Jeremy is I an amazing well of them. this a trade fills take look, their are a a to is have net. done deal part. strategic gross is This partners partner. the on working this ASSA financial with that for We're a terms we're of move not I'll in very ASSA and Jeremy. our It lot regulators the going ASSA.

Jeremy Smeltser

from just eyes in of Sure. add, deal this normal my a course I timeline is this Yeah. size.

been front. surprises not really any on our there's so, And

paid On everybody net, gross the ago. to XX for business we years remind the you that have to billion just $X.X

purchase So to that $X got just a deal on got gain price, with. you've you've billion

leakage you fees. So, pretty you the did math that you can in when get overall add quickly, if to

the So in have last of do that increase value achieved that's the shield that those over have challenge NOLs we But fortunately, huge some to there, Chris. decade. we

Christopher Carey

Well, thought thanks anyways. I'd for all that. And try I

I'll So, get Thanks. then. back

David Maura

Hey, happy good try, Friday. Good try.

Jeremy Smeltser

Thanks, Chris.

Operator

next, Thank of Powers Deutche have we Steve Bank. you. Up

Your line is open.

Steve Powers

just you the for today guidance reiterated it the this exists fiscal Thanks. business RemainCo morning. contemplate confirm I on good that 'XX if and Jeremy. solely contribution and can as remains missed Tristar? doesn't from Hey but focused Apologies Hey,

Jeremy Smeltser

Yeah. be it appropriate timing add closing closing or so, in That's right, have year so there's in Tristar. within next said bit But as certainty wouldn't little Steve. as days of time uncertainty of I We we more XX and -- the of on. anything a date, believe we still goes to there. the put we'll the progresses

Steve Powers

to you of tightening and and -- structural then terms better can of between you're in beyond, just the that remainder next in But just earlier. remarks, timeline that guess steps talked balance so prepared chain on to But of so about current you I'm XX little levers. year? all And because the back we curious think extrapolate the fiscal seems is get the productivity that over to material and the bit a you guidance is base inflation, build also belt XX productivity, have a bit getting balance a the to taking a the I Perfect. the need as that for price leaning you versus through productivity the next, spoke the or is that market, that extent you the the that pricing a sense we in think like half there to the year allow be supply on it and RemainCo to to pressure, year we can I then pricing -- through there reset incremental incremental the despite just maintain to given both

David Maura

take Thank you. will one. Randy that

Randy Lewis

that and portion coming the of you Steve, for the additional working most it half-and-half pricing productivity, question, is adjustment been there. With Good has it. team regards on is that the I so would a long of time actions. to And maybe through tell material nonstop again,

through related developed supply So, where Galileo the product we some doing appropriate response the of that's also some availability, on our it's we continuing are streams initiatives. work But chain in to productivity structural etc. to given temporary, stuff down that

Steve Powers

you you're putting while as maybe stack Randy, talking, on to initiatives an or share, levels, think sense place you does that through extent this supply gain chain competition. how going some you neck-neck helpful. status, advantages have those you That's help -- the you opportunity improve improve And stay if just see some is you fronts up competition to availability, to do in improve that outpace in product just and you're any service for think got you competition to be gain putting could relative what to place actually I that you with that distribution the some whether to Okay. can

Randy Lewis

a with number Yes, and of us help great working keep to experts that. a external question. track advisors We're on

we so, operate And believe tell but there in as pretty becoming But you to businesses situations, world, the variations various -- would good tightens I more regions supplier ourselves we the global the of we around up in relative the averages the that supply some down. economics as ourselves -- various I are position find find most efficient. and in

within And leverage for outliers so, the there's opportunity to less market. current

isn't of unforeseen definitely how I competition. is advantage next versus huge base that be to the you're chain we our a And the on able the for today handle up the see question respond that is will next manufacturing disruption, to to be the be There going move doesn't to last it's we're years. resiliency that Because a five that flexibility is but we this challenge. our feel as think happens. what feel going would don't and forward. to yet be real us and here doing something exists supply to I is, going that I networks else setting to certainty something think your negative address in are say

Steve Powers

you Okay. to Thanks Appreciate good. Very it. all.

Randy Lewis

the And Chris, we question we of Steve. hit have top Thanks, for hour. I one time the more before think

Operator

you. Thank

have Ian Oppenheimer, line Zaffino your we Next, of open. is

Ian Zaffino

of you longer-term you of Hi, HHI stuff about you going Good a if Are each maybe get right And do how How you. to think to color But I and [Indiscernible]. be give you forward? type with company going think we think and in are that? third that, I ask go Thanks. strategy? larger any wanted longer-term vertical a far vertical? of even to could continues about a know kind stuff Guys, vertical? other Do as great. have as it'll lot the David, on going us past to now we portfolio you today. thank obviously maybe two now and that back you thinking the larger

David Maura

there got first. I to look, man Yeah, get

day. nine the love shareholder assets. like portfolio as portfolio why That's consistency into believe work lifting type X%, we we months to a the good to more XX% next we space. very market here categories that I to in EBITDA believe we growth And knows more or We We come so. investor, happen like outpace. of space. So, do of fast believe can And recurring cash how brand. a really that it's building create But I I We innovation And an to look, every these that Pet are flows, believe have and got lot my a then job team and today's believe consumables. really wealth. I we've XX assets bring are to to times we the phenomenal

a team Garden So, going good XX% is lot to at margin of We pest-control R&D. XPAO. very in heavily Home bring think on has going retail the invested to of in that number get became similar, a plus But very EBITDA lot Spectracide. we one still we're We've business. XXXX. brand & built with innovation very, a pipeline We've out innovation very just the

where excellent phenomenal home you're free to garden trying a flow structure, envision company, you if so, debt-free multiples take very do margin down the can And are tokens conversion, buying you with good and And shareholder your growth can in synergies the industries really when revenue cost rate, value. both on going equity business a are basically with with pet terrific, because to that and cash end up you lot of create you fragmented. are where can we're side

company, that game public for mean happens mass don't from where I really a content, don't changer Maybe despite and able Maybe out, that's I I and be boat. just Marshalls. over to go Tristar independently. Take maybe drive at DRTV And it, create me the call to to spend we and dividends we consumer Similarly, we through time down take steering would Being we're it. the game the if IPO is so ad IPOs but to float changer appliances. of that show out, I've good. it to give that this accomplish get how We've done lot Omnichannel is a you sell drives believe our categories, done our XX% It's something excitement. trying Have news it been X most it trying I think and been about and to in retailers profitability lot. mortar of that HPC we've critical average to brick really you another been merger marketing take Spectrum. to can equity and retail business partners, able to do where happens, time. and a a think But and build and typically a spend company. But years with enough And have route.

phenomenal a shareholder that. doing amount You can create wealth of

up at. excited And the Garden build done our healthy land zero look, to some get what And go I'd call. I three, when a And so these going. really That's to really, about. very debt Home our And & should create are lot Pet question. that's that's I the think again, these focus business. stock be how the large intention But spent vision yes, things, actions to end I cleaning wealth and do third vertical. four higher. everyone of partners. a the and stick for and price and will after materially that's to genuinely do I we to of for I'm we we knitting, Thanks trying do, know be portfolio, believe have to our down look to want where We've a years And about company. how our what we're get

Ian Zaffino

answer. the Yeah, Have thank for great you a day.

Jeremy Smeltser

queue. I the weekend. Ian. thanks get we few call, Thanks and Thanks, joining Happy hosting in appreciate the Chris it the happy Thanks. on end to us. are still you for have reach me or and or didn't people a Hope out had we to we're really before you with We directly everybody we Apologies, please Friday. know for great have but all to Julian, get us. Faisal you. schedule to something a

Operator

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

may You Have weekend. a day enjoy now disconnect. and pleasant your

Spectrum Brands (SPB) 4 Feb 222022 Q1 Earnings call transcript