SPB - Earnings call transcript Q2 2022 | Spectrum Brands Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2022 Spectrum Brands Holdings, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. now to is over the It Mr. to Instructions] my turn pleasure call [Operator Smeltser. Jeremy ahead. go Please

Jeremy Smeltser

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

Slide the to Moving X of presentation.

conduct call Officer; Q&A. call the David us myself; by Maura, Also Operating my today be Lewis, with Executive is Randy will Chief Chief our and opening a Our and our will Officer. team. on our Qadir led from Faisal After Chairman we remarks,

of As will transition. do duties over quarters We're will past a two you to has appreciate IR to confident all. everyone's supporting continue going our great the that We Faisal departure. work pleased efforts as many full-time patience you been he IR the assuming I'm the we announce Kevin's through know, since forward. supporting job Today, be Faisal

Turning Slides and to X. X

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

David Maura

If Jeremy. capital including financial with provide availability and going a unit business And quarter, welcome to the everybody an Well, delivered joining of morning, update. and continued then quarter this kick I'm results. Good get growth allocation We you, Once this overview everyone update. Jeremy challenges. earnings thank to the to again, turn a the second priorities. an Randy will everybody, I top-line more we us despite product off operational call some our company's of morning. then to our reminder performance detailed could X. update, appreciate will provide Slide

increased organic of X%. another impact X%, I'm Our quarter, battling balance the year. difficult and the while actually sales, excluding Despite pressures, excited total about of FX very sales acquisition, the increased inflationary

continued actions. exceed As as expected, contracted versus cost year our to prior our input price inflation margins

first-quarter results the the as this current of action annualized quarter. in to was put planned million just inflation, $XXX to for can $XXX about expect fiscal operations middle increases take perspective continuing in in had the just our our However, versus past to XX price And and that restore basis, XXXX everyone, during basis over by we've our now if quarter. structure offset implemented XXX you improved to margins an margin we gross And points further months. EBITDA million. recall, the on We of

pleased. I'm So, extremely

improved this to it's truly for operating behind be first timeframe, in in a I navigating and environment. that much in great us the amount challenging more be of expected opinion, my half short team's proud And remarkable. teams to towards of have that the really inflationary second performance navigate honestly Our now ability is of to looking half. couldn't a out inflation

On goal Global the believe Care Garden excited we're evolving strategic I'm faster-growing, can this front, our of value transformation. we progress to & pure-play Pet meaningful higher-margin, a and into Home make share company. with shareholder continuing that to We create towards

$X.X the We this confident ABLOY Improvement we our continue will close to the to Hardware work segment toward remain year. sale closing of ASSA that our of and transaction Home and for billion,

separation completed We are into the the bring our swing. simultaneously work and cookware newly brands for organization HPC integrating for strategic of laying and closer us to Tristar of will during from categories Spectrum the is working the which second of quarter, HPC groundwork the appliance already the full Brands, vision was business company. on kitchen the eventual our acquisition acquired The in

and a of in expect quarter, an mid-to-high the closure growth acquisition during the provide earnings the We now sales would we adjusted Given to growth be framework. EBITDA mid-single-digit growth to Tristar second be updated in the of like teens range. range to

and negatively the our two the includes reminder, a to And war, outlook I the this to late mention need to chosen that core two, the acquisition season and the home that not garden are new As Russia-Ukraine and financial year. just potential developments to season benefit seven months holiday include our for One, over sales have peak call of does far the business affect units EBITDA. adverse 'XX. fiscal of it shipments Tristar weather full-year and we have suspend this this during and results impacting the There garden year home start so in this Russia. given to the are

the now turn down business If get could to of couple is I expected items, a With to EBITDA everyone core percentage flat two be X. to points. our of to Slide impact these

Our capital consistent. priorities allocation remain

We as paying focus to internally our us, has believe to for continue will growth opportunities. vitality We continue this on product capital our strategy across business to units. been through highest off we return drive allocating

recently, quarter's buyback we stock we million will continue activity repurchase plan. transaction HHI the share shareholders to cash More to plan dividends strategic we concluded and repurchases. M&A share sheet are we're moving via And significantly return and pending accelerate to expect is business. $XXX Further, care balance prior the the closed. creation. opportunistic we both closing help just once to In separate drive synergistic disciplined HHI to company, long-term and and recapitalizing looking divestiture, value a deleveraging transaction pursue personal our forward to summary, and home that our transactions our to Second,

invest publicly of shares. ever traded confident result of re-rating actions and and in more that markets Home looking should more We capital And & are Global allocate are Pet these to pure-play company. a public a to Garden the than our the valuation Care

over achieve to like like global and commercial and time to many also culture winning employee operating The our efforts has facing. our this this the been businesses global I necessary thank several pricing had Before that were call to to in Jeremy, overcome teams of our impact team's company past our successful the would thank to inflation face the for model. the helped of during team management to have us the -- headwinds continues to partners that and the efforts their operating I chain would demonstrate I minimize adoption the challenges have the tireless actions significant collaborative success turn supply unprecedented whose take global our years. of

Thanks. the to you, on more I'll hear Jeremy call turn over financials. the Jeremy. you'll Now, from

Jeremy Smeltser

Slide for from If review net QX our turn Thanks, continuing get start to I sales David. with sales. operations. could X a of Net to X.X%. everybody I'll results increased

X% a declined ahead million operating transactions the development. net income input restructuring pacing The cost by driven sales were SG&A of by share EBITDA comparable margin interest of price primarily the mentioned, per declines loss, $X product productivity. driven diluted Adjusted Excluding increased accelerated million, EPS $X.XX, decline with to profit I acquisition and and the offset and net pacing and basis product from and from million offset by points lower increased GAAP of of from prior-year and XX.X% lower in actions due and improvements. pricing increase transportation increasing of costs, distribution income partially marketing costs, margin higher inflation, operating spending. gross inflation, pricing due loss freight increases, by higher lower and by XX.X% driven gross ago partially the higher $XX unfavorable improved volumes sales, year the due freight decreased sales million impact SG&A to at earnings and and initiatives. accelerated freight expense The was from strategic organic declined in Adjusted availability gross $XX driven input XXX decrease higher margin and by $XXX of productivity operating and costs $XX and declining was stimulus of SG&A. to ahead million investment net issues to on with foreign much expense. dollar offset actions diluted of by exchange and Gross of $X.X input higher cost XX.X% distribution million, inflation and

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

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

and the our had net compared XX-month X.X trailing as previous Additionally, the end Tristar leverage the pro to increased times outstanding EBITDA revolver on the of facility balance acquisition. declined at forma was an we X.X fund quarter to times

company million, shares QX were $X million investments million the previously year, SAP the for due in $XXX Capital completing share implementation. versus the million $XX in to mainly announced our During XXX,XXX XXbX-X last plan. quarter, repurchase higher expenditures $XX.X approximately repurchased

and Turning to Slide XXXX. XX expectations for our

to have to the acquisition. Tristar foreign net exchange We we're As impact a based negative framework with our of on teens, expected the mid-to-high expect now current earnings of sales impact growth David rates. include updating reported mentioned,

we communicated the million and $XXX through inflation offset As call, last intend million actions. management cost and during the inflation on pricing of year $XXX to expect to the total

and million impact is phasing expected HHI. $XX addition $XX be we NOLs and million. expected We interruption spending amortization Tristar is improve by million. first adjusted XXXX Full-year expected million, the the $XXX expect of is between inflation $XXX Our mid-single digits, of to to which on perspective, second-half federal $XX approximately interest now margins on business. Capital of including between now transaction-related negatively million, usable non-cash of expect expense compensation includes expected business net million $XX to gain of and months our the items. Depreciation cash of and $XX sale in the to be ended the in offset be of EBITDA be $XX approximately to the is $XXX impacted and Restructuring impact as million a a million million. are the $X million of substantially seven-and-a-half stock-based Russia to was most to to and basis. in million expected pressures all and them including million a to now between $XXX portion between with grow From use expenditures of $XX half approximately to

million for taxes And $XX expected taxpayer Cash to 'XX. projecting a and state fiscal be be tax a adjusted of are $XX to between XX%, are EPS, including taxes. use we million. We U.S. in rate

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

detailed look at operations unit over more results. business to for Randy and a our Now,

Randy Lewis

I'll morning. -- all before operations Thanks, that, business But provide joining this overview first I'd thank I our operating results you and quarter unit of an performance. us our second do Jeremy, like review to environment. for again and

overall the continued chain improvement, high Inflation The environment cost XX. some in challenging showing quarter, and quarter. expectations. although Moving and in throughout the line persist our Slide remained chain the with supply to remained to issues, supply

supplier contract has sources call, includes future on been availability. improving to As we discussed supply previous enhancing team facility chains chain the to ensure chain as product our other extensions on suppliers well supply as of by in resiliency of avoid supply shutdowns our with continuity finding focused cases disruptions. This alternative critical

inventory in from our these suppliers higher-volume Asia. All shipments to of efforts led

result of New categories to continue safety levels. ocean low stock as availability of demand outpace and However, inventory in Lunar a delayed our previously freight product Year post shipments many

supply beginning decline. to As ocean I showing as and freight mentioned earlier, are starting chain lead some rates stabilize the and global times well improvement, show is to signs of as

are promising But inflation rates we lead term. fiscal in these not improvement Although changed. materially a anticipate ocean not change the either freight freight times or has developments, year our outlook step do the short for in

'XX. our to previously war we in pressure of during is in also costs driving most mentioned the Russia, in starting led suspension in material P&L, As to starting fiscal materialize anticipate war further business the cost the that of to of the call, but has inflation, QX. incremental Ukraine on middle the The

actions would challenges. address we to Slide I XX. the to taking are highlight to Moving various that like these

like First, the customers by secure expect of completed fiscal increases increases marketplace. we our acknowledging year. all the improvement drive the accepted and in teams to all quarter. mid-third start XX% implemented am of that half This planned by second of channels across our to margin price I to by by the increases to will of share I now price fully planned over be sequential work hard our commercial the price in have many would significant been our our pleased

have We on call. the later updates business-specific will pricing in

predictability our to our contracted more securing dynamics. contracts can quickly execution the we and process cost carrier Second, finally, freight ocean more in to collaboration carrier continue operational are on we of capacity. customer of focus and the goal we And changing freight renegotiating to customer with react ensure

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

and challenging levels, continue We while environment. delivery performance operating a our to service through improve managing

Reported specifics dive declined X.X% by COVID-related to decreased Care, decreased stimulus which let's is for and driven prior-year EBITDA demand increased Now, XX. into sales and historically, sales Organic business. net Personal sales I'll million. were spending. supported start organic Slide the Adjusted each the with Home sales net $XX.X by X.X%. as

portfolio our expanded sales to strong our the and performance, HPC acquired potential American Latin the We've higher and growth. distribution, prospect again and initiated the declined team kitchen small an performance. direct-to-consumer products, which capabilities was of continues Organic despite the of sales is our portfolio. excited of to integrating already great Reported However, strong of by unleashing in posted brands these combined care about business region post appliances very the brands. teams growth aided demand, legacy by continued driven expanded garment sales two addition with newly consumer leveraging Tristar of double-digit the process Tristar and momentum

to year. of softening as consumer Small which Overall, on second our categories is due environment. overall challenges, consumers Despite to also to demand competitors. return well we war product inflation further our the with the during the the sales care posted in We is share care kitchen garment perform build category continue relative in to kitchen and accelerated last to softening the appliances in Consumer U.S. is experienced declines quarter personal normal in demand these for products Ukraine. by increased consumer in continue Europe these number-one position category. U.S. had pressure, appliances demand as our macroeconomic for more

in now and campaign media with consumer the excited It achieve power-excel includes launch sealer. collections and one grew our just the dual segment, is leadership us furthering markets in TV international category. growth and We iron our in the growth driving is helping great product -- with double-seal an products innovative handheld the was are sealer very direct-to-consumer extremely two Hobbs patented Russell launch in attentive of care breakfast vacuum a through social recent Genie, of It's doing pipeline, there. is The neutral steamer new The the well. our steam about garment strong and new FoodSaver launched marketing which like technology.

space adjusted key improvements. confidence our inflation initiatives, last new commercial input continued strategic development and in plans over was grow of investments and by and years Lower Our consistent accelerated ahead markets. and actions, cost and the in driven share give pricing shelf wins offset in product freight to margin two partially investments by EBITDA marketing our incremental us productivity

our that we the headwinds of is -- previous The inflationary offset all year now be waves planned on for during the current call, of actions forecasted good and will outlined fully the that As news offsetting only are pricing are most pricing by implemented to by year. earlier in quarter. were half the accepted partially offset 'XX fiscal inflation first

consequence of to in and profit margin As a quarter throughout we the our the even gross improve fourth quarter. expect actions, pricing so more

Moving to strong value. aquatics. respectively. be delivered with growth to product growth Care growth which remain categories also challenges, revenue across Global Care, quarter X% for deliver ability Higher in Slide challenged. organic to geographies. were of to secured net of contributed and an animal, in the demand represented by growth business attributable the QX QX XX. in these strong, companion reported softness X.X% sales offset in XXth for Pet sales business, net but our our a all Pricing Consumer consecutive to sales Care Pet Pet growth is continued Despite

to availability times impacts Our above Asian experience pre-COVID into as suppliers have recovery to ramped the inventory now warehouses. we shipment levels, longer continue prolong production up but product our

efforts in companion high-margin rates Russia, despite increases being appropriate aquatic by EMEA growth will levels and safety and cat year. these was this and of by the impacted in balance supply affected impacted decline further in re-establish products. Canadian to fill negatively and throughout lead dog mainly improvement chain categories Product the and including was stock Sales sales hard supply to working are from expect animal availability driven disruptions markets. food We that U.S. by product

and see we and We including believe segments, These the segments long-term our for cat exist dog these of that strong the representative and continue demand food feeding to chews represent and treats of stickiness significant Nutrition in portion categories. portfolio Europe. a our other business in

While our and fundamentals of areas food, the from U.S., the category the filtration, to year we of war live lapping the quarter remain in and fish. overall stimulus multiple due in the impact aquatics last focus business core declined by events our the specialty during encouraged within Europe of impacts

of previously We quarter. is Our completely good input live incremental we and for that the by health in fish to the of pacing long-term cost planned inflation EBITDA call royalty $XX.X pricing and actions, the driven of had pricing fish-keeping the EBITDA increased by in being effect revenues quarter, declined accepted which hobby. process take to planned within all of now anticipate of overall Adjusted has indication and ahead the Lower the and as businesses discussed a well Almost aquatics previous performed had commercial outlook the the implemented. freight middle pricing million. our in been of our all quarter on communicated. the was is we customers business third

price coverage margins to and a third as result. expect We improve the quarter in

coverage in We quarter. the levels will achieve inflation our margin full and target fourth

business that we of will on consecutive level growth. fourth and pricing of remain the year we in additional optimistic place secured actions the and being bottom-line our the top- both With implemented, deliver fundamentals and bullish

inventory order centered quarter. and which to demand brands. and of most unfavorable increased Slide sales delivered the the due remains the trust respectively portfolio for key despite and impact products innovative both the during customers builds. adverse in and pause control an The around XX.X% led We organic U.S., retail on to caused sales leading short-term weather consumer demand, weather strategy, to the customers, with at second focus growth by finally, of the to garden, POS foot reduced X.X% increases. and turn weather more sales net and we challenges, organic long-term cleaning is which which which is delivery And on strong continue of categories. in XX. category customer drive to in pace quarter Reported our favorable. our across of Our execution inspiring unique had home sales helped slower-than-expected as the pest Net price category Despite expect and conditions traffic was

country to for as specifically us. weeks. the South strong are we beginning the to in the full over selling still regions this see ahead couple for fact, weather, of on In outlook We of response the Central the of POS of year warmer Southeast the season business remain most and is already past positive

solutions We to today's in with of around our and a and continue also recently EqualLogic to and brands completed These brand Spectracide is refresh Cutter, extremely and Hot refreshes tell this tested our brands, Rejuvenate. modern invest to brand We've deliver changing EqualLogic consumers. the truly the story of distinct positively consumer Cutter business families. needs lives Shot, for innovative which meet

significant Spectrum complete inflation for year. success for the is Brands. we planned labor pressure, now distribution continued higher we second of go-to-market The to driven to that season. offset Adjusted innovations driven drive and the confident Our price in These by and into particularly set and Go one-hand up market. went round half The products; garden to Consequently, implemented and additional into are materials, higher concentrate led X.X%, This We costs pricing products 'XX. effect that portfolio. development. the the are this excited in integration as we is cover part insights, we offset Rejuvenate now have freight, fiscal now we sprayers product by product have expectations. killer and year, to second grass line the for see improve the are another anticipated implemented margins product week continues new of increased strategy with consumer during in AccuMeasure long-term about news & our EBITDA marketing of raw all development, great our expect and this the sales, our of Flip quarter. operated shipping lawn from current investments business that increases product and gains To in by our

starting the quarter realize from start confident in remain the weather, the we despite fundamentals strong. will third also feel with synergy All will all, integration, results. benefits the challenging to of the with category this We

the in and but very Home not our is also bring to the Garden for in will only to marketing And and years. thank employees the category of initiatives. business we've cultural users, you. current future within Our all overall operating new category. back that global David. our success investments to And our well to end positioned on To on progress advancements continue brands, my I strategic now, made want Thank our section, our to model, and

David Maura

Randy. Thanks, covered Jeremy. Thanks, the call today. right. We've Thanks, All everyone, for joining us of today. lot ground on a

So, my with give key do try It's the our on here to Slide you me let summary best and to takeaways. XX.

to And to Garden Home supporting our strategic business progress & with Brands. faster-growing review. the products. HHI objectives to going on continue be ASSA focused we Care a consumable of the creating First, teams with and make focused well Spectrum is ABLOY higher-margin, The regulatory continue Pet progress that divestiture on on

a pure-play the recent Tristar step we're With space. taking of platform, on the our separate in appliances to a significant personal create the forward of brands leading the portfolio acquisition global business, and home objectives of care completion powerful a

we in marketing fundamentals post-sales and as despite product into all remain marketplace. challenges our Second, success the supply to in our innovations business solid. generally And are translating chain the new growth investments continue

improve our supply expected place in product the resiliency enhance by is is We quarter. Most ocean supply with actions of further situation. in to taking warehousing capacity. to improve and sequential contracting and our our each pricing our chain will actions to capacity now are increasing margins believe continue coverage inflation for increased pricing We these

selling fiscal and evaluate place countermeasures we Home and additional Thirdly, of The headwinds late earnings most to in acquisition updating and continue on business impact are season. of framework Russia-Ukraine a cost ensure framework. the include earnings 'XX we we the from some are will the actions to now to start deliver of pressures. the for additional And our Garden of updated the war the our pricing our Tristar to inflationary impact majority to offset

long-term to company and model this leverage come remain the confident execute the our to we our operating businesses to want our want to winning will way to in execute beyond. I with fiscal to And 'XX remain launches. categories, team drive saying the through We unprecedented our I our remains reiterate am living our our of on to enthusiasm our management to our make for product you we manage company continue the our through close encouraged continue these bright, continue managing and again successfully times. home. that retail I I challenging at want for are by who to know of better new very brands playbook and partners' commitment discipline employees, proud the of to thanks teams these that success. Brands Spectrum to I future as times. will together by inflationary profitability navigating

Now, I'll turn it back to Jeremy for any questions.

Jeremy Smeltser

ahead Q&A process, our and please? Thanks, you kick go to want David. off Randy,

Randy Lewis

Apologies, folks. there? Operator? are you Rain,

give minute. me a Just

Operator

Instructions] was Your from from Securities. I question CJS Bob Labick [Operator on mute. next comes Sorry,

Bob Labick

your you I kind of the take how will where help able a where issues. some was we you offset inventory or the for terms to I to Hi, Randy. certainly in about for? us bit, thanks chain high spoke to about think little -- a wondering little you all I I guess, talk inventory this be call, buffer strategically like On the to -- the detail. little to building or last spoke But areas? And should just maybe you supply I'd think you can and about ability help as helped stand that summarize of your how you has in demand wanted, and build inventory think stand of certain a deeper for bit

Randy Lewis

made talked And the quarter Global our course for treats Pet driven the as better that's of by, with fill both the in and as for continue and a the while, in that our on we demand material couple be have pockets still do been week. biggest and to for we've in linger are to quarters. overall, having again, the as supply the continued over investment we've issues. there say, improvements we're is us rates would to issue the is But Vietnam well about I battling of Bob, inventory. but See, aggregate getting supply acute going some where And the predominantly in last Care it's have Cambodia us where chews business, discrete issues, -- every and

in inventory closer happy timing days with areas And them to in are getting in into and amounts. so, in get recover to those ocean freight general to while want say, take XXX those the have they're inventory where that system the we would is I solutions but our solutions, to a to of XXX other problem us place, place, the most the to once levels allow the But -- be. they we're businesses,

Bob Labick

it. Got

trend then everyone and for parity? lack with to is of great. outlook timing full of And if understands you of how parity, a pressures Tristar? you then of once HPC, the kind do once back margin what's just margin get price better price inflationary of historically you sense a you should the And versus Okay, remind margins kind term, there? get give also on us integrated And the Tristar obviously, us and Can recovery stuff. fully

David Maura

take I'll Yes, that. Bob,

the quarter. turning corner, inflation. believe quarter the - to in got of at we're when at we fix hey, I - I accomplished trying to the that I'm structure, margin it's that you tough think six now the think if spent fighting the we've the look of and third But we overall, report super you months here said outset business last are happy kind of I another kind call,

margin margin all think move a into to HPC, different I expansion -- look, but expands current at forward we not -- And expansion see pretty and so, basically business just for it's see should it's units, and I'm of then And you some our fourth. here. the it start as a I lot numbers significant we quarter HPC internal get our into in as the looking the more the

out. we HPC the And kind of of I Look, expect EBITDA digits on then -- us the so, could low-double margin And back as of think -- kind fall EBITDA year. the the to I toward line, digit return you think should get kind is margin number half where think high-single the I of to

just you product is we've save launching revenues can teen, gone in to it to, dealers I sealer. give tell to to and that a some zero product particularly product zero some would significant. them, tell there legacy kind actually taking give that, of you from to it. put lot of gate. I Tristar a with you a not spent tremendous about build excited of I'd we're there a color we kind is I traction. of that super marketing those that legs foods allows our share and in you you have business It's And opening further spokespersons acquisition in a content this of already we is a think in think, -- something the neutral food flavor market This has I lot I'm mentioned around it. make to remarks, want infomercials to that with money a there, call that it, and we studios, we our that, mid kind I current And out finding of right the leftovers. environment, Randy's used

current situation dollars well I for be and And XXs the prices, profitable of revenue. business very so, food that's of inflation millions think with this and a of economic XXs that, of I can new timed is think, particularly

unit production, it. just want We spend some were additional able about Brand the blade is it excited behind I felt the some results innings revenue put win PowerXL commercial replacement with do and a re-brand to see in seeing PowerXL it's significant under know production legacy content limited here to recurring DRTV give early situation already. pretty it exciting on the of of kind to the in takeaway. portfolio. current We we've and and integration. pretty already going to put a the do razor some blender new tangible brand a also some bag that launch were So, had the that and of and facility, we're that the take We've Truly got ability the it. we and to legacy consumer able we success, to had and blender trademarks again, you take it, with there exciting under a kind stream this our out, business, exciting, I'm I got business it which but a content the of color,

parcel to in promising that very the there those increasing to And be next margins actions and outlook. looking see that couple So, I'm looking about the to are part I think I'm talking manifest to you're going and quarters. of

Bob Labick

Okay, great. exciting. That's super and

give I thank the market pullback, And hundreds and can you and a us the in. to a volatility for plate. also outlook? to you too you little given that. things sense jump have you maybe But So, going know cash. And suspect But then have last back of one it one, recent. close M&A I have of on your you're of tons ASSA I'll

for outlook how is more tuck-in or become you about are brands reasonable And and of so, that? the what thinking potential valuations the

David Maura

see don't a whole valuations yet. come lot I have in

I pretty think expectations high. still seller are

to to I I better like I of that think, know view risks calls, our record currency obviously, acquire. platform kind as these would acquire than I cheapest and I'm on a business of starting our risks I is look sound the but we thing in a broken out, again, know the the

our so, And that priorities particularly it's we is we our and valuation big would share current would comments if be accelerate at times the I repurchase the it in numerous that and mentioned again, pay think stays down does. close the currently activity, a has debt the stock levels it day

with will you & and back be, So, stock. the attention Pet our I going turning might years spend kind also buying this and probably look navigate our the lot $X to be in billion -- kind of team of to is re-underwriting company. because here. we puck a really the four deep my three can looking to be I'm tell and dives from consultants three where of billion-ish Home management of set, comfortable I'm outside need home to my where what out with much want five to organically, a try November opportunities, garden business, where to summer more it That's some where figure that going to present looking I a competitive would That's fill prudent Garden, numerous at to accomplish then threats blind the us strengths, the building -- spend at the trying weaknesses, to really revenue now, Board to of are to months, spots back in kind to hockey where think really outlook pet And do really kind for ship we inorganically. of some kind for holes we're quarter we plus pure-play EBITDA

that. on smart get just Let's

currency Our cheap. is

in. getting the moves think to would And down don't then XXXX. even big question right want hopefully, we're buy super November on now. and call that to me get balance I to want your the I come make the early to I maybe pertinent that. any more Let's be or would to answer be my sellers' healthy, flow while shrink expectations sheet smarter want

Operator

from question Steve next Bank. Your from comes Deutsche Powers

Steve Powers

morning. Good

question parts bit expectations to be color fiscal one. year. So, CapEx first But is of little cash as what it, to Question I items those number think is? cleanups. well. for number the an That'd just Maybe have 'XX as it; expectation you the do EBITDA more the be some two the a mentioned great. That'd moving is, restructuring for and did you made on contribution tweaks you you I couple to missed and if don't I apologize. Tristar's a

Jeremy Smeltser

that his all restructurings question. little Sure. Yes, in cash Bob come mentioned things in a bit given the heavier,

of timing that's timing separate on activities SAP planning going of planning CapEx, our things on really We have just in business; HPC. have lot shifted investment. as And HHI, to in a the on

really million shifting into that's million And year. So, $X to next I think... $XX

David Maura

Yes.

I money, to to want It's cash. break it. going that's EBITDA. piece, Look, a cost against going I to spend and spend On the out. new first to of don't We're spend of product -- launches integrating want very to Tristar that me to lot I want heavily really going the burn year a lot

dividends truly 'XX, the but it, the 'XX. will you 'XX, looking So, some fiscal and much company term, spend EBITDA we than synergy of think tell launches, on right really kind of to current get contributor profitable Tristar I but environment it would dampen their the which we'll day the market one pay I out short And for to really want integrated, tell just very higher a I'm fully going expectations bought in product that be to not new in gate. based the it. this business I underwrote you significant are to in fully think heavily wonderful meaningful I new very I want that we current how against operational, profitability will super I it's us my

Steve Powers

Okay.

capture at pretty quickly 'XX? look synergies, can you the So, think, you you as

David Maura

Well, for the be was of look, lifting. heavy going all I to would I We've Middleton a tell two business. global week. months you, is And got that just next lot the this over a globe. is in big teams

investing as in look streams. there's and my heavily XX lifting It's next years. business stream becomes independent entity so, the And Look, lot earnings stronger it And better of separate a as a create heavy a entity, future in an served, to opinion, just pretty -- the standalone much work I out days now is here. create to

say. really what to that's So, I'm trying

Steve Powers

enough. Okay. That's fair

exiting the also so, But you probably my you then pressures more of mentioned be, your some then impact question at post impacting And 'XX fluctuations start are talked to Russia-Ukraine Okay. top-line demand cost of another macro headwinds 'XX. would building that that the you sort of the consumer businesses. about some and into

incremental you you accruing for your timing headwinds And what So, what's those in about see what making or decisions? you as that think you process out-year? be would the as like, counter taking that, the pricing to have the actions, to thought cost

David Maura

on people take Look, I I think what call. away this hope -- really

power company do XX last mean, through to about replace be I'm had what we've we because kind RemainCo a has Look, accomplished a is of to down This company And I'm I elevated. are EBITDA excluding They've little freight rates the half months. the in earnings still of million. thrilled need bit. for It. come And had there. had the is, first what telling to believe you re-underline $XXX $XXX I'll we've last year. HHI, I to entire that, of bucks that over million the So, price

transparent It's be to base trying trying EBITDA recently. we're it Russia-Ukraine what we're you unfortunate. I super to, tell our on core. think to thing, This the of completely happened

I XX tried unfortunately, And our have if steward to possible guess people probably and a cut out a stop dividend of year. had we've want And on there Russia. land to $XX to But I I of don't I months don't to hit going -- million kind make we've ability with make want go. kind in I current as up that And fiscal just it, it's of marketing somewhere to certainly the tune capital good number. this EBITDA to spend to don't less see Ukraine. -- to moved, be of as keep a into put We sales of just think, in five human the I had than to to

a hurt still so, see And electrics income I would have six of the discretionary small think situation during to that's and -- those to look, there. we people bucks kitchen gallon I you, bought start tell Look, you're is But COVID. products where going a lot

I so, situation. the headwind And sales economic in developing the you think where most current see that's the

side pet I'm outlook and are & with their is going that happy to pets inelastic. people homes, a confirms continue going believe But and stronger equation that power and Garden in Pet -- that I'm of to demand is enjoy completely to are recent pretty keep tell POS not I supplies Home to their believe stay think around here pricing that. that the I our we people you and

there. And so, bullish we're pretty

trying Randy's remains I our really, global think, think we're really you say high. supply to what is, I about chain on, to Pet comments demand

the with our this It's in struggled here inventory DCs. sit now, that is in of and hitting we ports. our have We as call, few suppliers conference a

but there customers, rates getting so, on our they're we're to up half stock the inventory. very, any the in sort And low still safety fill very of back

the for both, were in balance Pet And so, demand the know year. Those pretty we of that let if see me a but helped. good picture

Steve Powers

gives No, context. me -- that helps some

So, appreciate I it. you you. Thank both. Thank

Jeremy Smeltser

Steve. Thanks,

Operator

Your Grom question UBS. Peter next from from comes

open. is line Your

Peter Grom

doing Good well. Hope you're morning, everyone.

about just HHI and separation. the I to both HPC ask the So, wanted transaction

year, able in do So, position or still specific first, you to I since which could But you the December. when is a a know this deal close you provide bit -- you uptick to you know expect be said pretty more be may maybe as the consistent about eight I'm HPC the the HPC, release heavily comments wide -- then of is business those today. of pretty separation. just thinking on just And in around mentioned you window. an groundwork layering in timeline? investing months Just to going they kind for a in with

stage, Just any either you to joint a intend Thanks. through updated thoughts this kind separate that the of around IPO kind business at way sale, of venture? or

David Maura

I crystal and have can a I look, conference a don't call into would should you tell have there. I that I one. pretty ball, expect exciting August you, but mean, I to have a more I'm hoping dial lot clarity

Peter Grom

Okay.

I if of perhaps weakness we're I you organic maybe from lower allowing and outlook kind to And does of and wanted kind it the as an impact offsets the mentioned slightly maybe so, what the there, outlook, a to is meaningful the sales reasons core mis-modeling first, sales that guidance provided for to organic And are that's primary sales EBITDA -- I last super Home Garden outlook? just guess Tristar. helpful. But update one And the that Now, imply seem So, you outlook. change quarter? really then around the know of positive right? the you updated maintain

Randy Lewis

to growth couple down single-digit low From right? large, points the of a real isn't core move the mean, business. I Yes. to on flat

to say not have a relates I'd net there. is level we it business impact in as profitability legacy And a sales. Pet decent of a it Russian our of sales So, lot

really of change a seeing there. not much So, why we're that's

quarter, look product discussed, issues would I less the at that certainly think and table David sales on you higher availability that and X.X% Randy for with driven as which have the organic. than the GPC

performance have original quarter, in we on business expectations retailer actually start have growth we the recall, would quarter, lightest based GPC. would Garden, this in while towards sentiment that's say, some expected Home for I the If QX, our and we you growth, had X.X% to organic did And that then that versus this season.

usually had our in issues. had then had they our those DCs and the at pick say, we time customers challenges were wet And a way in additional that Midwest, in here, some purchases. the the later would So, including delay I the with some just experienced retailers transportation. product They April. quarter, recovered in quarter, retail March, the early season, pretty through by up cold and And all

the QX, across Louis still we in inventory St. a with see the certainly POS the through pull like the customers it's excited in on and that QX. going Looks see XXs in and country we appropriately, So, the picks be our And excited next good weather in up. invested week. retail QX have here to to carries all partnering having Hopefully, right right up places. about and pick

Operator

Fargo. Wells question next from Your comes Carey from Chris

Chris Carey

just that you're It's a just dimensionalize how challenging down. a thinking just you guide cadence question to what to QX. -- frame trying prevented the of I'm remain improvement So, trying of have the year of PET, in retailers to the you garden, then are remainder bit on question, wanted to supply your embedding or the have So, some build work outlook, achieving is POS Is inventory that I but aquatics was I'm bit don't appreciate it's some these I'm are I a little and we embedding that perspective, to are for from to as QX to one. the way, coming I that or which being from basically the versus that business? providing understand other the and we ask of of the on about what That's similar to know important a catch-up have just into -- trying just And going more you're of underlying upside QX. to rest down know what going chain right? and going the going kind through and some improvement specifically headwinds well? you or little less year in up. frame picking more on

David Maura

to I'll take a expect then can -- the further the add meaningful really top Look, line recovery on that, we guys and add Pet. value color.

flowing DCs sit we as inventories here into lot into that ports our doing inventory We conference the this a are call. getting of

QX. improved to fill are QX, rates looking get We there our materially really

And bottleneck so, revenue we're unclogging earnings inhibited that that that materially has chain business. supply the and of power

here, a -- looking is May, February. if month we we call. very we great finish in could as so, really and a Home it to so week entire for forward impact up back are half I'm And excited of make this conference look the why big seasonal it up Garden and that's that to have would had

that Okay? our So, we literally pronounced. it's original And could make guidance.

Okay? over-promise and and outside. don't We're just to under and saying sitting want to here -- And it's you we're hey, we wet deliver. cold

so know have we call, our a And it start garden everything a that little today, this plan. potentially on late think to be season, home will we conference given original having to I based and soft

in got way opposed all communicate. what we're make So, to as bag, in back? But the Yes. you that's Could to tell when trying it that rather I'd we August, I now. it the

outlook. this hey, - you the is - So, current hedging. I'm not just I'm giving

As love our best weather the I of guess, tell today, this. to the this pattern. is position. shelf given you start will our But I late

our consumers I Spectracide We've The think share. channels. control brands. in pest number-one to we're product the taking turned market love our

got a of teams Our R&D excited comment. are lot hell and we've

and that's for bullish me it'd think what you. little a I to yes, bit irresponsible again, a for we is very that the weather trying fundamentals. see to So, be the flag we're say, we're not start of on to issue But

Jeremy Smeltser

Chris. I to Hey, on just clarify want Pet.

doing actually fine. is aquatics So,

consumer are And It's after there, in of most Cambodia. year's in come some surge and is vertically consumers. we're by really our integrated but chews know, aquatics. treats last down aquatics bit you Vietnam our As demand inventory just has that of fine frankly, of a out coming outsourced and spending little

had of of -- some fiscal down that end to As the towards I you shut four guess And our recall, the suppliers around are moving three products have. we year, we last months. fastest for some the that were those

have And back factors pretty good so, online starts two safety Randy, quickly. The news the for, months? those into to last three been cutting is,

Randy Lewis

ramped added up QX fiscal into we've incremental -- over QX, and we've substantial capacity. we've where fiscal Yes, the been

just now, could while So at get faster producing produced XXX%, rate XXX% actually a but have a we're taking about year that in. it's a than to we ago, right

Chris Carey

helpful. Yes, Okay. Yes. that just great. one follow-up all quick -- on... very And That's That was just

Randy Lewis

to we and on large hard from environments, the we tanks see solid look very little of and equipment. That A And goods a course, the we're we most consumables, a the category, the we're like plus demand. year to softness about related clarity the because at things excited which aquatics ago that's seeing stimulus spike had me. is in spending. continue that is, When where holding

So, And that's the last over that have in. not category years but into staying be people couple the the gotten for may expanding lot, they're of great us. a

Chris Carey

Okay. right lot right dimensionalize can business a other the a wonder separation that much. there and make And environment on to of around kind are going quick is or business. doing, standpoint that that an actually systems So, investment into -- seems a work an where it one Because kind there sounds David, that business activities the understood. some from very does like be investing you're organization that the other separated focus lot a me if Yes, -- going outright? of of to maybe offensive the then working now. follow-up. just re-accelerate is you sense? kind there separate said can It appliances. just so little of is Can of the fully bit? create you unpack of to post of you're you like I But on can creating the separation just investments, now Thanks is other

David Maura

carve-out out The that you. be company will have spin a you're what right separate summer. the That points. for of both early on completely or merger or the this No, financials, to done ability

this So, we integration we'll to company right. it's It's that -- set imperative get up I ready. that be imperative just this succeed. would we

integrated next And actions we're taking as homing We new couple the disrupted. of get being tired Look, that's really months become why to one in this to over the we're disruptor. want of so, thing the company.

the on news possible marketplace, take on of in to business that in lot put going not it we it ready get and we to sure so up that You're a markets yes, win, HPC out also hear make to can the this footing own. potentially. public its the exciting stand in want just best But it as we but it

Operator

comes Your Oppenheimer. next from from Zaffino question Nick

Nick Zaffino

if I'll you give but it guys don't a I this, know answer can shot.

can just what are going in assumptions to out side, inflation the On is? or I'm us what your year-to-date is run ferret you increases trying as now, like give maybe right like forward, inflation. inflation inflation far maybe as what inflation rate the

helpful. So, I you you know that, if don't how be that'd could answer could, but

Jeremy Smeltser

way, Yes. it's Depending quarter, home $XX we as think, I And give or per obviously, in have run in the it because in million on in seasonality year. the quarter, and volume HPC rate little in garden, million the should and the half we've kind take. second but the to of of $XX remain a discussed, that

Nick Zaffino

Okay.

every is year assumes before? you're the an So, million just that that quarter going going versus $XX to basically incremental that there or sort see flat inflation forward,

Jeremy Smeltser

David our it, is touched Randy inputs seen the on Pet we Care. Yes, the that in potential commodity have some only of increases, area and both to consumables Global on

are these of lot So, chews Asia. in it produced mostly a and treats,

imagine, will can all an that's And be this next but you there's what's it P&L process with impact coming. and to we're year the there it an impact as lead so that first increases we that ability positive the we much, Ukraine of need looks is to is for impact doesn't in from make. what, have next a in remind on the why comes we there see negotiate margins happening should the But expecting year. So, with second times earlier and year people half of suppliers. an we first the like, have Russia- to say probably additional we're that improvement that pricing the price and any, the which also But half half, we fiscal we what in in didn't that evaluating question, incremental to if

And some freight massive positioned expectations that have we lower while think the so, don't we right into And I rates some 'XX like a getting think we rates, carriers, move and feel market, I do see including now, for well. we're indications in ocean see 'XX. pretty

despite be So, to with things seem decent challenges Russia-Ukraine. the

Nick Zaffino

mean, businesses mean, of as you perform -- might downturn Okay. been of the just about then kind Great. a And you maybe how a a in think downturn? talk can a may in follow-up, the I much can the kind in to historically -- I has economic of replacement product. very an how the you or about and since portfolio perform? changed how but to a framework purchase Thanks. last think business recession, maybe what give us

Jeremy Smeltser

Yes, I The has a right. changed portfolio mean, lot. you're

everybody for So, I think think that's important to through.

essentially obviously pandemic, business form replacement kitchen a separation, on So, it side, the side. some is we've the of appliance the after going about HPC talked through but on especially

a garden, and quickly. Garden. that Pet we dynamics personal spend now thing & actually a expect customer world the they good base And there their side, The defensive, I I pets but concept people Global Pet most I think, to longer us moving in to of Care do Home macro move to of bit approach on have where is we're outsourcing we yards the continue And think HOAs And on garment think trends consumers. important Care things to the care a reopens, seasons, and better little for the businesses right a home South Global and their it's then right? care to can will tell very is combined the pretty those trade and in the that's what, as look our of do are down to focus have more products costly that nice in living on XX% frankly, and some and consumables globally.

really So, how positioned. I we're like

Nick Zaffino

color. Great. Thanks for the

Jeremy Smeltser

Nick. Thanks,

we'll more think, one call. Rain, take I

Operator

Sure.

from last Your Casella JPMorgan. Carla comes from question

Carla Casella

there? running run Is questions. the of the by the you did made in kind I Great. just it the pyre. at rate cutback on below driven of CapEx. projects any delay One, fact that Couple end you're or that of year-to-date,

Jeremy Smeltser

but we Yes. investments bit the where in declines timing We're I that talked cut of XXXX. our couple a into is areas little mean, see we've small really projects. a on about volume SAP the we call, of just shifting predominant

Carla Casella

about freight anything do there? Are and contracting the great. two ocean can spill side, you the levels? above to rates inflation. you're lock more hedge, to side? three can Is you cost or Okay, mentioned, As you capacity. the times have those on And seeing your you on thoughts there in, those times then additional what's talk or on And you XXXX

Randy Lewis

Randy. freight, freight from I is bit. all in dramatically you, years ocean year come three years down of different. course, that in contract But now, rates from I two should tell now, rates peaks a off have would think Yes. agree from the Carla, the of earlier ocean little on this the opportunity is, we be spot calendar

for us current option in is predictability -- to So, spot us we're an immediate almost locking a evaluating. for but to rates benefit attractive the

Carla Casella

Okay. hedge other like, how you say, items, most are And are COGS items of or inflationary Pet or items? the other the that that any defensive? can you I'm much of there key any can Like, your guessing,

Randy Lewis

kind we us. there don't we it more contractual of can market But -- there's third not with that's lot perspective, is party. that Yes. a do approach hedging a for agreements through of possible. things hedge -- suppliers really buy where Look, from that we We our

David Maura

where And pretty have Look, pricing I the I'm where think, quarters inflation I Carla, day, end at of is, standpoint. an the the last that of unprecedented the couple sit truly done -- side. I we've sit on been today Dave. I from it's thrilled is,

super freight, here. They've as I As that think think I look -- has But like. not got given think I coming frothy. we'd price bit. stable a -- down at much as think off I destruction come little of going. I They're cost what of see money there's through economy, the as on a summer with where durable I and go we we be think the prices of gasoline -- amount demand decent to going I side They're the the

are And come as to view. 'XX. get going my freight significantly, so, you personal into That's down I actually rates think

these of responsible like, contract to take some because we're we're capacity for we've recently going they're excessive. to think players, going contracts offered we not but so, And with been

is pricing in when think Garden of than business at have demand tends the reason I those be in we are that and categories portfolio. to power other more consumable look parts some inelastic the terms in hedging, significant portfolio Pet repositioning we I the and of Home and our to

part and all pretty excited that's that again, been that team super a -- just rough the And for I'm reshaping has of of sea. with And navigating through -- choppy really doing. we're this the so, and proud the Look, parcel water is just portfolio we're kind of

going think now. plane I that a right I and off gotten we've to really running remain pretty like it's boat choppy, we're the but good

half. about excited back I'm So, the

Carla Casella

one That's have great. up I And Okay. just follow them. on

little put that love you times, target today times five leverage or I'd So, a your X.X pro target to that over X forma. out leverage holding

take HHI you get how the for that sale get that pay Or it Tristar timeframe take does to HHI and this sell you will -- have it do might So, debt? and a And you long there you take? down what pay is after synergies? down right

Jeremy Smeltser

we'll I pretty get think of the quickly there HHI. closing after sale

David Maura

after. hours XX Like

Carla Casella

or billion. you I'm number, Have have the Is paydown? I given mean, $X.X that number you modeling different that? given a in debt of

Jeremy Smeltser

haven't Yes, we yet.

So, the that of we're on able of good gross and And head think callable that -- years' have bonds. term. think And look, now I there slug worth was So, prepayable direction. of I to being couple a a pretty we debt in flexible near have in we out a

near we more closing. So, we'll once actually get have color

Carla Casella

We Great. Okay. look forward that. to

Jeremy Smeltser

Carla. Thanks,

David Maura

Carla. Thanks,

Jeremy Smeltser

help great Thank you. follow-ups. a available day. [indiscernible] in as you of We're appreciate I or well e-mail thank call. you. Faisal both We Have and Rain, your and everybody week free today. us Please and we'll the joining to to us. going appreciate feel will today conclude either We as next the for be get queue.

Operator

concludes call. all joining. this conference And you. for Thank Thank you today's

now disconnect. You may

Spectrum Brands (SPB) 6 May 222022 Q2 Earnings call transcript