SPB - Earnings call 4 2023 | Spectrum Brands Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2023 Spectrum Brands Holdings, Inc. Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. to Qadir. conference like speaker to now Faisal today, would hand over the your I ahead. go Please

Faisal Qadir

Welcome to Qadir, Holdings I Call Strategic Spectrum Brands and will and Earnings Year Finance Webcast. Conference moderate XXXX today's I'm reporting, Faisal Enterprise Vice call. of QX President and and Full

of call. slide there Officer; www.spectrumbrands.com. the X call we section Investor Financial Starting be Smeltser, Before a of Slide we our following our This Events the our we comments, on with the follow Chairman at will remarks, Chief led presentation, our will Maura, document Relations and our Q&A. remain conduct will Officer. opening by and Calendar our David After placed website have Chief presentation the page in Executive Jeremy

X X. Slides to and Turning

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

Investor available both which the -- are on our are website section. We Relations in

X-K Spectrum release is filed to our you today, our encourage on alongside with Form and with to it Brands reading today remarks SEC. the once reports annual Finally, and XX-K listen press issued we

Now to the I'll call over David. turn

David Maura

thank everybody, joining you, Faisal. guys, us you, and Good for morning, Thank today.

start in this very and our to year past business navigate gratitude my our regulatory and fiscal call our wrap like to operational also to through as I'd battle challenges. challenging by of and helping through trust every company, and a our difficult like very As base for would rewarding member expressing some up for their times we team M&A investor 'XX. confidence over we the overcame X for I years thank global

environment Slide Moving demand started declining fiscal to the X. the driving volatility. demand our with with strategies heights from macroeconomic 'XX retail customers' challenging a We pandemic, inventory of significant consumer

In our the our sale business. not successfully not challenges, legal navigated was under also in with capital structure and from turn leverage acquired margin just challenges these DOJ ratio the corner. our has inflation We that -- borrow the HHI and time. our pressure facing was face was we We these significantly but was were fiscal very of very just 'XX. were same at also inventory company beginning of a the high we're to now Our still hangover high commitments of to facing trying working that the the in EBITDA has obstacles, -- declining

successfully billion the defended for against deal challenge, in HHI the and $X.X have We legal closed cash. we

investments close year position the the of with net ended $X.X now as company. debt With we and cash we $X.X billion. a this of have of debt-free become short-term billion a transaction, against total

inventory our our the improving importantly, made year, while beginning since we side, capital fiscal working great rates and across the by million over the of $XXX progress, all On we reduced fill businesses. also

pay across early factoring and been now programs $XXX year. during America. the used unwinding any It's North of our also approximately million have We cash

impact remaining 'XX. into in this the North quarter early those all with America year, completed now flow fiscal cash of first fiscal have paying extending We of from programs the the exits exit factoring

have back started and We have in our brands. our also improved to the of invest businesses margin structure

most in and the us balance now against fiscal presented 'XX various Our the present we for that leaning to to headwinds quarter improving a marks margins as were defending strong that of fiscal sheet our from enter us beginning pivot into 'XX. strategic recent the opportunities

partners Our about partnership enthusiastic future, the reality. the new embrace energized in and to is are retail the potential this team

have to turn chats We deteriorating for of a teams attention globe aggressively marketing quick have to to your be reenergize we results. context, Slide 'XX's sales relaunches of recently to hosted ahead global meetings conditions. With fireside and that our what product and around perceive the you more I'll now #X overview fiscal and macroeconomic play

the focus We on was a headwinds, environment compared year and X.X% reduction our across 'XX. declined by excess board, the of variety fiscal the this a challenging difficult to results business. consumer net impacted inventory earlier, mentioned faced I retailers sales for As and our

We the were in reduction fourth well headwinds. fixed cost-out in continue countermeasures the of proactive actions fourth a considerably and our some down we through various from 'XX as of with half experience second following decline permanently with we The pressures reduction during initiated to the savings, of EBITDA decline in our and sales were advertising salaried some these elimination cost but spend. the earlier quarter, the head pace economic by fiscal fiscal decreasing All mitigating of promotional the further these including actions X.X%. count as just cost the slowed has Fortunately, the sales year, net quarter

businesses transaction started investment fiscal expect 'XX. this HHI fourth quarter, closed have invest we continue and our in the and to our balance sheet throughout to now during we back the With strengthened,

saw will more in fourth Our quarter including performance his renewed results, OpEx our fourth unit business in section. spend. Jeremy the detail driven by promotional quarter in increases advertising cover and

X. taken this us position put fiscal actions a Slide we've 'XX Moving in have in great for The now fiscal to year.

strength are operating We better now a much and inventory profile. balance margins a sheet, strong of position from with a healthier

of efficiencies very growth time. business quarter, we pivot this the driving started all our to During driving our on of from of managing operational cash company fourth the focusing same business our have for units, now long-term at

will the talent. market. sales a our better are cost. Starting Three, investing innovations efficiency first to as operations our and drive element. investing leaning marketing and on in this and hires investing focus we reduce a on people, new senior of but as roles fiscal behind are bigger culture into shift our strategic our of plan key capabilities 'XX positions maps build the in investing the Our fewer and bringing two, brands with made key we one, upgrading our people to we're to to continue commercial We drive we're accountability; elements: recently X road to and and focus in across our product we company behind on our for and improve number

a and making commercial marketing conscious are operations, bolster to We our materially effort innovation, capabilities. sales

and area post are mindset one of offense. our we key investing Coming our intentional with We second of products. being shifting in the are our people invest of to our our HHI culture, the defense of to organization from of goal the behind one to sale and of focus, brands

our during recently into spend We as have we're behind marketing and adjacent as Spectracide week shop to advertising [indiscernible] and our increased global launched done quarter, fiscal as going Remington includes invest forward. innovative first new with and X continue the was Good fourth categories materially patented range Expanding we've and demonstrated City products [indiscernible] done our This have earlier our this with getting expanding York in new to platform, in ever innovations of and and across 'XX. with our innovations we Remington products. just Tasty One launch several big new in behind going New products, with way our a brands

come is efficiencies. to Third, in we investing supply want equipment, lower competitive and we're drive in reduce speed can our manufacturing of cost to today. operations. automation better form in investments goal the of the new focus that and us on our drive simple, The will allow improved tools with continue efficiencies to marketplace remain and and These chain so we will capabilities to costs. a

Moving to X our Slide framework. high-level fiscal 'XX earnings and

suppressed expect particularly We our kitchen continued and personal appliances. within home in appliance care demand segment,

brands, digits. With perspective, and for from From decision line the outlook increased our our our to our earlier, we to we portfolio, to EBITDA high single 'XX increased in operating people driven help lower growth an by as to described investments cost as us expect appliances company. in growth the offset however, -- well in us fiscal inventory targeting higher digits, as primarily bring compared I as to faster, home decline build investments top stronger, single rationalize are a the low product

somewhat We other by lower costs, expect including offset labor, inputs, ease the inflation mainly to cost these environment to material FX. but are and ocean from continue freight

and some to also remain for pressure is We in care space fierce. as personal pricing the going there competition expect home shelf the space

on deliver a 'XX of aware economic provides to and for our we fiscal the As but goals believe regain need investor We we challenging the time of as our earnings 'XX, keenly achievable confidence into to uncertainty. head set framework are commitments. financial framework for greater earnings fiscal we

Now hear for from more updates, the to be financials remarks. Jeremy on and back business closing the I'll Jeremy. unit you, and you'll Over

Jeremy Smeltser

Thanks, David. everyone. Good morning,

to and and prior and business. essentially basis by improvement in declined sales $XX.X at increased favorable impact $XX.X exit driven driven Care transaction at by impact the gross Gross SG&A due our flat Organic to profit points increased appliances disruptions. Operating foreign beginning and cost our distribution the lower nonstrategic sales SKUs of at by of offset flat excluding million to XXX Pet X.X%. income look consumer was sales increased X.X%, the $XXX reduction in Slide advertising sales, exchange, primarily categories of impact year marketing to Global lower million to unfavorable for and margins and the favorable our related category XX demand were results. costs decision net XX% net several business. by net compared of partially kitchen sales. expense XX% $X.X net turn was investment of million. QX decreased of last in Let's with organic year Net pricing offset actions, favorable FX. million the of

interest tax Our the EPS income profit EBITDA, due lower lower diluted the and GAAP count. driven adjusted benefit due income. income increased share costs, diluted lower by interest share net interest Adjusted increased EBITDA expense to and XX% share a to improvements higher XXX% count. lower and income, gross earnings interest and Adjusted increased per

year. was million compensation and restructuring, XX. $X during million and nearly lower higher million $XX.X down than million, Slide strategic Cash And $XX the were of interest last Cash payments million expense year. million decreased costs $XX.X QX to increased $XX.X than $XXX,XXX from Depreciation transaction of share-based $X.X million. by $X.X year. separately, million. $X Turning towards quarter amortization of were last optimization last taxes

approximately sheet. $X.X $XXX our unsecured on available of was plus million Debt and $XXX balance of million investments short-term $XX to million Moving flow a cash approximately outstanding of billion other had of billion The $X.X finance the cash $X.X $XXX revolver. senior million balance and of leases billion, company approximately notes and consisting obligations.

total as to we earlier, position. were the once cash Capital October, size net extended revolver, ended the sale, last $XXX to versus smaller $XX.X year. company in we maturity refinanced HHI after the million million we in our reflect again quarter to $XX.X million our the of reducing Additionally, facility the the mentioned a and expenditures positive In XXXX. quarter

full Let's our results. of turn to now X.X%. sales Slide XX Net decreased an overview for year

million Personal of the Excluding kitchen and lower margins appliances while lower on as acquisition was another orders unfavorable to slightly only X.X%. & category pandemic continued performance reduction softness replenishment exit retailers leading showed organic decision sales was and inventory companion inventory certain demand post the & our and business of million million, business, for SKUs continued foreign declines despite impact actions by category reduction decreased growth. Full our $XX.X Pet Garden our gross The and year by XX profit focus as of by decreased sales points. increased of Home driven Home to $XX posted Global Care The impacted net well Aquatics by XX.X% in basis were aggressive $XX Care as animals sales year resilience gross sales of in unproductive retailers. exchange and

by basis XXX margin half structure second margin businesses. gross a gross year, improve operating X% by our margin the Adjusted XX.X% the improvement income, across and decline, of the last While in driven compared sale despite to of as to points all we EBITDA continue increased primarily year reduction expenses. interest of increased

each of to results. the drivers performance into review provide on business get of the detail unit underlying our operational let's Now

increased continued exit sales portfolio to category net consumables, As we demand sales at particularly offset offset categories as XX, last year The sales, unit impact from aquatics categories you animal turn X.X%, net Companion to slowing sales Pet remained The look continues of challenged X.X%. pricing as more we'll as show in aquatics. core to demand. in growth from softness nonstrategic Global Slide our as reset well compared category due favorable pandemic Higher Reported companion than sales organic declines as while animal to rationalization highs. to by Care. decreased the were consumer

quarter new growth chewy.com from the the this patented are products these However, Tasty came above quarter: coming the Amazon an and and region still ] trends. Growth launched continued EMEA [indiscernible] From and recent to on business. Good perspective, and months the new aquatics dog We by in consumers Cat cat providing category expanded then driven in with from compared food quarter. and category some pressure in the more performing during positive third Treats has first, to our companion reduced distribution [ grew innovation fourth well. sequentially historic on inflation EMEA grew momentum. Sales is but from double-digit animal our despite

Our strong the in child. market we our with and subscription garnered and of the than aquarium XX% STEM had aquariums U.S. as consumer already a aquatic TETRA launched in are adults Spoonables the More space, an truly reviews uptake. In have unique Savory kit

driving favorable in them also in are kits to the plan region a mix consumers products young pricing EBITDA lifelong aquatics low-margin exit from EBITDA SKUs by capitalize and helping XX.X% of in the the year. business investments engage to and evidenced the on Adjusted educational restructuring million the on about on impact business continued consecutive the STEM benefited introduce the succeed of become by business, feel the a a million year. QX for STEM including growth. the reduction in the the additional price, We net actions of enthusiasts. due coming long-term that believe of positive EBITDA half into great of the including to bringing from and We by was months. focus way to cost measures, segment hopefully driven $XX.X partially $XX our the them and in focused So volume to by the the adjusted earlier margin as perfect incremental EMEA second the primarily the increased is category, cost first advertising quarter. This over fixed short- profile position offset strong

impact improve XXXX, as the first However, our low health and inventory we preparing SKU at the have for of to efforts the continue our a run are we sales rationalization overall we EBITDA in as growth off in and inventory continued and discount. aging of discontinued short half sell and other

consumer it our structure patterns behavior about Although brands. we space, confident remain of we monitoring to the position spending the market as improved are and in and trends, discretionary strength pet relates our margin with the closely particularly within

about the We consumers trade increase and are consumables investing at pet shifting new we specialty such categories more cautious rate focus remain and top growth our settle at below of in engage and or share. and within expect categories to Overall, certain advertising levels. albeit the pre-pandemic aquatic animal entrants environments line to channels, as as drive in growth promotion positive rates to slower companion continue, to strategically consumption even trends our a the

and With target slow Pet Care. the impact unproductive exit lower be SKUs long-term aquatics to for continued than fiscal and growth the 'XX line expect carryover at our top additional of Global categories, a of we recovery

gain as double-digit & sales repellent XX. on last and with Home categories year advertising showed by increased and growth Spectracide Garden, the at declined weather quarter. POS both look Slide the the personal a growth in along take share. category experienced quarter driven and Controls we'll conditions. continued POS household category investment reported Fourth while during for marketing, repent to net Now versus POS which favorable and outpaced controls is X.X%

utilized Shot the tactics Hot Our POS. We posted quarter. targeted during drive brand increased also double-digit and our growth POS investment to conversion advertising help highly

category. and as continues below increased POS did sequentially spend expectations COVID. on in We we of remained advertising decline restoration investment demand Spectracide. Floor our for increased products the last to Some focused the promotional year and post cleaning and see improvement Care was as below

momentum we of and our consumers brands to the our the value continue We in will positive efficacy products. as strong recognize leverage see

invest higher to engagement, drive We expect to consumer expanded POS to behind listings. continue and Rejuvenate brand eventually the

in shift retailer play be maintain more strategy with orders levels much during retailer retailer that As the to behind earlier, lower is 'XX. XXXX, we line fiscal out compared in we to mentioned results. inventory of in continued We expect POS and believe significantly impact to inventory reduction our us, to the largely

and significantly gain innovations In Repel investment base We our strong and will repellent are of as in brands. with well Eclipse our innovations controls, and core as mosquito consumers. to our Realm our innovation zone our commercialization products promoting increase continuing Cutter devices, traction recent support to new continue repellents, our with behind investment plan this the Spectracide. In

a year the set fourth consumer with that the of in retailer due the mainly and margin pleased performance H&G on strategy fixed business benefits experienced success distribution absorption and increased focus channels quarter. the for strong 'XX multiple pricing We EBITDA and Adjusted led inventory cost across expect improvement able Despite that We impact, the line higher for to expand product year. to is related we positive $XX our up of and and fixed was volume well initiatives expectations. Fiscal and driven in future. higher market to earlier were the challenging line million. in available in with was are XX% the increase by quarter disappointing remains the costs from performance. labor business, significantly margin to restructuring in undertaken to raw these believe and a We make in fundamentals the H&G top improvement it which XXXX. EBITDA the cost headwinds, cost materials

we we later have our to forward 'XX, that support manufacturing expect season, and we quarter later right quarter will confident which build. second As to that the fiscal build retailers in we that inventory look possibly our the pressure are inventory sales to strategy first

how and our consumer We and working into shipment to understand translates our demand production partners closely expectations are with retail it plans.

Now sales which XX. net & finally, Reported Home Care, Personal on X.X%. decreased Slide is

Excluding kitchen from sales $X.X The in mainly by organic net impact decline decreased decrease driven was million, X.X%. category foreign sales favorable net exchange demand, lower consumer the appliances. organic of

challenging, to by savings undertook offset various over cost remains restructuring X the America million years. was overall lower be air demand were by offset Although of Adjusted sales of past which consumer in pandemic and Personal the double double-digit in of transaction ocean the exception for market care APAC fixed excess reductions declines Overall, continues to growth inventory appliances growth Latin grew impact decline macroeconomic partially with in freight FX. kitchen profitability to due a behind in for initiatives, lower environment of rates the with and XL brand expansion the are the is growth $XX.X experienced but e-commerce This up were sales. Sales results. with majority volume we declines but the EBITDA retail all in and XX.X% business significant improvement appliance and garment Care retailer our there U.S. of inventory highs. decreased and garment EMEA, impacted XL and fryer Personal partially North double-digit us, care. significantly from The Power sales unfavorable categories to the are fryers showing Care, in efforts digits strong the fix kitchen cost air appliance from kitchen in the internationally. American Power by the including quarter.

week, collection event first Remington from York exposure significant our basis gross influencers increased The first ZXXX radio the and welcomed year. Earlier branded room reach City launch the and in multi-style In tools the hosted we multipurpose delivered curler includes XXX a a that campaign, multi-tool. New our a of brand and half a launch both celebrities, a performance. half iron flat media. partners, Times innovative ADC The Square, and second taxis engagement by fleet in global iHeartRadio margin X fiscal culminated the ever on social support Talent, and Remington filing business fact, the of and the generated Super and deliver to to range convenience dryer we on profit sign X-in-X media where this for retail points a the shaving of and

expect a look toaster categories consumer and softer fiscal air environment we continued North fryer and demand, the As forward in expect particularly to to America. 'XX, continue oven in challenging we competitive

fiscal We products, of SKUs. HPC half other consumer in these have Due quality risks 'XX also and exit distribution to be to among business environment we support associated down things, the performance difficult exited in the certain with and the assessing 'XX, standards sales and multiple fiscal continued of the expect the SKUs Tri-Star year. first particularly and the of after in

top improvement prior However, line improvement inventory. cost continued benefit we initiatives we various as despite higher from year cost to expect profitability challenges, in in the comparison

Turning to Slide XX and our expectations for XXXX.

EBITDA, sales by decline expected with grow a net cost from expected single expect based Adjusted and current compared exchange fiscal brands primarily investment offset in investments digits to lower digits, excluding HPC in We driven is single 'XX, rates. the inventory impact to driven high foreign and to to income our as people. negative by on low have

lower input expect inflation to remains mainly we relatively earlier, the other continue ocean from environment to ease while mentioned freight, As cost mild.

Home in competition Personal demand shelf perspective, and We more expect Care the is space first a as and particularly in some we and expected be fierce. From pressure care fiscal phasing segment the in pressure home also of expect 'XX. space in remain the personal the the impact first to for to of pricing pronounced quarter the half

business preparation in for pet global to product year the line Our These first the the care the & spring top in with center comparisons customers until last factors, take Garden wait to along on portfolio in will rationalization Home half. to pressure are season. for impact summer also business home inventory expected the

be $XX $XX million compensation million be taxes. and million to is rate are from to of $XXX Turning million, expected million. approximately between and expected Slide of XX%, $XX in approximately to for towards between million $XXX are and $XX be EPS, to transaction million. $XX $XX expenditures Cash including amortization using costs we're 'XX. expected payments adjusted be are optimization including taxes to fiscal $XX Capital XX. restructuring, tax stock-based strategic between and a expected million, to Depreciation down million. $XX Cash And million state and

efforts a our As opening for be my projecting in reminder, am all during a during are and strong in we their some global year to taxpayer of end fiscal actions have I section, right to to 'XX. To David's very fiscal team fiscal challenging for 'XX. the times a want Brands the echo place for Spectrum make we members comments successful that I confident U.S. 'XX thank us.

years our David, to call [indiscernible], the to [indiscernible] enjoyed Treasury. as great Before last the company. to investment responsibilities community have in done know Relations opportunity. talent know for of our a like to our our Senior Vice Tax Joanne community for Faisal leaders the let our would a transitioning the doing us. we've going great X as turn President meet getting to same And all Faisal for that do guys been from is we well he's see you our investment job. Investor that I get are finance has we It's and IR Joanne back to to I and

of So thanks to both them.

next business. Over And to will reporting, our quarter Faisal back not ] this anywhere. a to the day going over on get Pet to He's [ next week, shadowing. calls quarter, lead reverse. you, Faisal finance be we will job Global Care going enterprise supporting and So David. and is strategic of your will Joanne

David Maura

us the and of let's couple Thank a point, At you, recap thanks Jeremy, and some takeaways. of just this joining everyone, minutes again. take key for

that you'll XX. Slide think on find I

First, saw our inventory drove 'XX. goods line actions, which quarter for challenging and a from very pressure demand us. financial for We consumer customer expanding significant fiscal continued inventory fourth results top conclude pressure sales declining

now and took However, believe implemented we reduce balance with strengthened beginning we're We controls action through times. our swift our costs spending the margin proactively profile a sheet to to get leaner and turn strict to corner. improved,

and Secondly, to to back right business growth business our in investing engine. well positioned, is our is time up the fire the start

marketing sales are we're our in investing We operations, upgrading our and innovation, commercial focused and people capabilities, our and talent. on leaning bolstering into

launching also behind truly fewer, commercialization. and the initiatives for We successful fueling initiatives focused them better remain on investing bigger, by resources

driving Third, efficiencies we're operations, investing in and costs. reducing our

supply remain in capabilities product to chain in cost today's competitive to We our lower will our invest and our marketplace. facilities

expect we sales for digits However, during EBITDA in net we income. year expect decline single considering fiscal Lastly, single-digit our the high low impact to investment do 'XX, without adjusted of grow the the

got in believe We strategies 'XX fiscal to a ahead. to times be challenging continue succeed we expect environment, right we've the to the in

balance Although in tough people we our our of 'XX. believe and I with of operating fiscal we're our are brands years, our our goal to now was positioned couple we've the reinvesting had improve Today, a in all Fiscal recapitalizing our P&L. sheet. 'XX well performance very about repelling rebuilding legal and challenges

very our accelerate company optimistic fiscal and fiscal operating We performance on are remain investments, 'XX. that returns show we into our future believe optimistic these the our goals, deliver operational of value should significant go now deliver and well about of execute on for 'XX will all I to back I positioned Faisal to performance improved questions. our business believe we can to are stakeholders. We

Faisal Qadir

you, Thank queue can to the David. now. questions go we Operator,

Operator

Nik with And Modi from our going is Instructions]. of the question RBC. [Operator line to first come

Nik Modi

So, have wondering if in handle pretty the the on a good macro. Dave, was I you big picture usually

you right, the if take how exited think things love any just evolve we that Can how XXXX. shape and business at And believe XXXX? and business I And least year? have products context Do impacted lot customer just to it's discontinued about stated the then when a lap I a would through pieces XXXX. I So first union your I that And the know granular. do will it half in today. little retail there's that the should will moving think of that of on of just right? have Aquatics more in has get wanted we your very the a just and how much the during bit give you on us uncertain, but

David Maura

Yes.

So I'll go reverse. in

exiting was than a went that there discussion some think I slower customer retail think planned. about aquatics I

let the I think than of then there I'll wanted yes, had Look, planned. correct bunch that. any healthy 'XX, amount in they business you Faisal in a Jeremy And of we very challenges longer numerous really into a piece dealt if and operational I'm X of stayed in get wrong and discontinuing is, 'XX with SKUs. we're me manner. a I to on

get themselves And certain through moves deliberate on of being improve those inventory don't things. And so achieved, quality A I up just the stuff tail if capital to piece inventory anything new of QX we and we've 'XX. fiscal certain with I me we of year. that's is margin into our of being want let any And over we to ago, been in tell and X,XXX I made, and pressured very had we all that our made us. that of behind part that us. with vitality, we team SKUs 'XX Pet. if processes put there's going a and And wrong, if business of year it's hires But working it's sins suffered think, we into this S&OP it's past we're got that. again, and And retail, the good go bleeding I'll want turns bring to B good at as thresholds significant I wanting just that with the to carry in parcel was sure exit making Inventory heavy units super stuff continue clean we margins, really then fast, to and got weren't the exited, the inventory kind weren't a to

and breaks our businesses Europe consumer in economist. well. I'm the X% In been the terms much of exited not now. thought macroeconomic wrong, to getting in continued things slower X% me, I actions an fall resulted amazingly confidence an appreciate U.S. as definitely your the in would well the cost here had up I've I Nick. thought by we U.S., would that I stuff, have mortgages do really really summer resilient Mortgage dead a X.X%, and the as of to being here put in in on economy and the we've rates, into but that Fed's have the

our tourists roots when really us. Quite hot that a a summer So number in definitely investing frankly, that has summer won't of unit off. heavily be look, products value. in are personal many in were And time benefit a is American things And -- shot of that we're I great get some history the We're great back I this areas where at travel of hopefully, in expenditure [indiscernible] to costs got to trying down. as come make those off. certainly there will in cool experience there to making at company think sure maybe in as 'XX. the next view will productivity now my of

and bit more the And a home they that I in on optically consumers worse next look to next into we in want months. benefits it's bit so people calendar And of see definitely and prudent us. be get little around as consumer 'XX just are the we value continuing I the than maybe XX as that little plan and were out in a we and market. to think over obvious to get But spring for the a weakening 'XX choice year hopefully,

Jeremy Smeltser

granular it at and that That's the 'XX QX level. about first half HPC is the QX, in in per GPC is with Nick, of QX Yes. a then on And of similar consistent will kind about rationalization I'd modeling to headwind get the skew hit the quarter line QX question, should half. million in $XX probably And the just to in level top down. circa add, and first continue wind

Operator

with from question going line our come to next the of Labick Robert Securities. Bob is CJS And

Bob Labick

So investment in to sense investment? was I difference 'XX in people, through wanted in fiscal do increase got the How you to be fiscal 'XX. fiscal et 'XX? of start, the much us brands poised to in a brands in described And the you obviously, rebound fiscal how expected you investment 'XX difficult year, in investment view cetera. we a this the give Can what's and in is as

Jeremy Smeltser

go and of year I by and the I Yes. as by you depending to in absolute business you give how brand. would dollars turns it's out on areas. incremental between rapid we more advertising, million in million $XX on between and going those down an a the we're probably hole, spend some not marketing, from tell and line will brand top investments $XX external R&D perspective, IT But mean that kind investments

Bob Labick

And then expected spend? what's be this is you fiscal higher Is Or right on year Okay. investment the form that the and right? fiscal of do is to going 'XX ROI amount Great. higher? that? how to so 'XX the And determine

David Maura

Garden. ] go markets the it to brand-new in the of it's hit HHI. get mean capital pressure team. that of to I got out history, checking new just of the $X.X of didn't Look, But Two DOJ -- brand-new lot think billion the business and [ a a we account got and businesses, X.Xx, in Xx, we've business business points. a lead mean, was to of into couple just because running the let are recent fixed & got took of of I marketing And challenging a talking leverage We've going from sale business. about the closed We from deteriorate. I new year you're the Home ago, We taken a want situation of a and only day. replaced very I Bob, put the just there. lot a some play We've of brand-new product that's me start And with year. lot June hired in cash. I bring to into there I liquid to and a over the and I company. people, North sustainable And a and best leverage after a earnings base that's X noise is remaining way we leaders. a broad it's a here think growable just this the real is deal it consumers that make we and running salesperson the the this of think cost a thing appliance really the recently a right? the offense. get mean, started the to person president brands, that great want Europe. create jump just We leadership investments entire American talent, just got for in future.

to a doing putting a the partners, you we of we're we and to doing and healthier compound dot-com get in accelerate marketing. say get would want call lot from Chewy think these a and to it, going 'XX name it. be here money to way money all And a we investments in level then the to drive business then going really There's of to today. the lot going try I what of e-com, we're into lot healthy Amazon, much able Look, we're in healthy. I from as on there learn, it's and So that with with we're 'XX, walmart.com, real-time test testing,

Operator

going next the our Brian And is question McNamara Genuity. come line Canaccord with to from of

Brian McNamara

rest this tough is market. XXXX, be HPC My industry differently in terms the that competitor is with kitchen to went large is doing that in be first first of the recently the your the space appears increased in exception struggling what question top in line -- to this the pressure outlook appears appliances, of question my for I regarding with? of the public business. regarding the particularly growing a rule There's player guess, and in

David Maura

Yes.

think do we that just that thesis or particular dollars. new of with we part what we're hundreds do here don't DTC amounts with of And to that spending size got of clearly kind the we're New we're large York XX, behind the scale. have has that here money fewer, the But at and here advertising. --, trying in bets. City trying very of was particularly entity then what that's launch did to I Remington part it's good with been do Monday. and millions bigger, studio we with innovating, what of XXX through of DRTV TriStar better on And to but trying

So to we it that -- a by playbook product, worked it. definitely and think fatter where insight it's behind for try to can consumer put test get real product, a for has we're work that money And it and that's that it's driven going pitch us. and try strategy then it's make them,

Bob Labick

Great. this That's priorities particularly target net then helpful. Xx you as X.Xx. buybacks to your year, are And allocation secondly, ratio your of what capital leverage move towards share

David Maura

week. things will happen, can off shrink of and you consistently. Yes. repurchase wrap to our We're soon. float can in the that to call and where world a to program think completing grow And see up good that I this now, the But earnings, and if next get going continue million $XXX if think I our is tend middle we do we're

there. in outstanding, -- year obligation do think I So there's to June, if we we've we there's some an obviously If and never. next an And organic really some bonds got don't But businesses. acquisition. never our invest But earnings now, July that say get tuck-in shares to dunk want stream probably a buy & are Garden, undervalued. it. continue Home for is to slam I look out at just think growing. that our there want And in Pet I right and we

Operator

of come with Securities. going Wells from question to Fargo is Chris Our line the next Carey

Christopher Carey

Garden, on Can I start please.

that had inventories you've retailers by in the based outlook QX, the -- later QX for with season with in year. what's of continuing of and And lot I'm the late so weather in pressure So there's uncertainty sorts on retailers two. a conservatism being these that level a into comment. visibility point, build conversations in into this calendar the of is trying year, to this that that to given happened is the the and Or balance things. category on these

Jeremy Smeltser

Yes.

bit a of Chris. little it's think both, I

this differently X expected. customers think seasons, obviously, coming I than particularly I we where retailer last behave of tough year, off think, our we're

and So do year than it of ago. understanding is was our much better a connectivity I their think strategies

think strategies, I frankly, their have stabilized.

I last think strategy as year a progressed year. lot their the has changed

manufacturing them. knowledge so that's a from of bit have a for limited it's So understand that business They seasonal. we

they So consumer to the to sure make have product. they have be to that arrives. when us very the communicative

because really it than does So both QX, it by really years. one to and QX. thought those I late to that outperformed season levels sense be and the replenishment of also make season be immediately partnership. But a inventory couple now, really to POS stronger of continued where kind conservatively a tight a we That given encouraged start we has past of longer we the year said, think we're where lower because expected have we in retailers saw the they of and would orders

So is right into strategy that we XXXX. I good head as think that's our sign a

Christopher Carey

inventories inventory It's inventories excess organic just or a of retailers given think X sales a tighter are one going into what load is would growth this next specifically POS this decline, cleaner point, so done? was than typically by and managing years better, much they've year

Jeremy Smeltser

think Yes. a that's outcome. I Honestly -- possible no,

and it it bit it business I season. do during could to a couple years the we're can we start of we and bit like about that can thinking cautious on sure years, David's changed earlier it strong of past satisfy pandemic being point, know making again, changed our that of forecast numbers year, sense be a achieve much has over prudently the shareholders. we have makes better think to the we think But recognizing the we can putting and that out I if a the couple

as that start to 'XX. right thing do we fiscal is think the I

Christopher Carey

Okay. That makes sense.

that sales back line then volume, just any additional hop expectations year, outlook give on there disclose some The I can context don't you your Maybe for I'll helpful. for maybe context would relative given be this one, Just but pricing, in. volume imagine one last item? down, you

Jeremy Smeltser

Yes.

going 'XX look businesses you be as regions, actually think we're pricing to that of across I think and flat. the at kind I for relatively

there's I situation think revenue we think a to going year. some to going neutral little the think be areas can And where areas I net-net, I in require there's going give take management, strategic to price. to a of But be be some where growth will competitive it's some us bit price.

single-digit the really coming we're low again, we're predominantly sales that business. decline And volume HPC So predominantly the for calling. looking at from

Operator

UBS. line next Grom question Peter And going from of the with our come is to

Peter Grom

the and outlook? phasing agent of to that the what David, to patterns ordering confidence half, duty, in will a half weaker terms half tough it's in ] GPC, think building of and be in improvement can about maybe put following then perspective? suggest first [ how to a show should second Maybe Jeremy, half full first year, the intended we would tough finer that the you start, going conservatism despite of just just on guess that, lot commentary tough one And what in characterize the point seems degree HPC, from Jeremy, retail pretty be drives confidence just an how a the I to And you year. EBITDA a in start

Jeremy Smeltser

our think What from Yes. from we we markets hearing off came start are What consumers? I with The first, see we in are where mean, I do quarter just we QX. of. hearing we environment an think our retail expectation customers. 'XX, that of And I for conservatism think into we level what with essentially, based additional we on probably have we an baked that have.

than fiscal As of a been but last the in quarters likely U.S. in worse will little David in conditions the couple earlier, get that 'XX. particularly said bit globally, economic they've

take forecast. into built we really all That's So those things how our account. we

first don't that what first situational think to some specific issues, out expectations businesses specific have we year, point necessarily the the our want we impact But comments step you half. plays to as are for macro categories function change demand in how in the look versus half I to issues very this will quarter-to-quarter half our that is second margins. and not around consumer and/or just

have years. worry And to of We up deflation expect we've it inflation what down couple coaster the roller going about. to significant experienced going than be the of more ride and don't steady last we

back think from in way a a years, year of earlier, has what X which into last stability, done sequentially material we've in the been I investing as So start brands the a to David year about quite low. it's talked

and will those year do great that, X economic better us track for hopefully a to it EBITDA growth a 'XX. think on be the all deliver to I well businesses to into return situation in in to investments springboard

Operator

to Ian question going the Oppenheimer. next with Zaffino from our line of And come is

Ian Zaffino

guess, get I business. a I talked obviously, potential there. in just that. about [indiscernible] to you you're maybe little know of a had that kind wanted see back the do to I well? ask And that are fundamentals, you past, What on thinking but about have you bit HPC. know How you any in need but as as I didn't about of talked wanted kind HPC, bit a you a to separation as on separation little then M&A, squaring far Because mention I track. so how you of M&A area changed

David Maura

I'm optimistic to trying basis I there. now, half a And half. a I the think business. think competition Yes. think just some it up out in too, continue relaunched the that And we're We've to to going build -- about. just We some we've do globally. versus stand point rationalization separate back making bankruptcy got that in it the we're we work We're of there's we the But in think got Look, profitability I there. lot Remington improvements the while appliance new first talent that XXX to to get be health. of remains back expansion I seen fierce, a and a business And to want some in space. right

that product. going have preparing have We they'll value price I think want watch they'll spending, I tighter value to typically for are fewer, think we're their better innovations. bigger, look to people them, point that retailers spending are to what brands goods, price that probably on which good is points with going durable as be give

I've road and of been like scale us shy combination. allows of to upside a not expressing quarters It's behooves our that better idea that we to of think then the my just We've get real and about accomplishing our momentum And And put and But so couple shareholders. as and certainly to state of thing in unsuccessfully. together, a I and think if synergistic owners I been get better operating can us we'll current do the view I operating to improves additional bring the some odds improve. goals. in under business, available see us get of earnings the however, growth it I to it that think how out. and down financial past, that plays that should a have momentum options

Ian Zaffino

mean But environment, you've you on of like business? think the I think out lines about about I potential earnings or business, of Is anything recently? something Just $XXX along the how the when that given you kind put then And lines. you feel still that to spot million Has Okay. something those don't you threw seen what there? of changed that along here.

David Maura

Yes, great look, $XX had a spot & on. on [indiscernible] over on season all seen very ] X saw EBITDA put at & $XXX now, in Look, just head business Look, million to let reported. selling hit all. the Pet Home Home [ going our quarter. me right? years. haven't the quarter. Garden But is run rating a in We you me a we a Garden good You

don't to get that. our over we So want on skis

how and out. April see Let's March plays

maybe awesome, lot space dedicate We earlier the big of back some get not of to a space equipment. One had there. landscape that questions retailer, I'm battery-operated electronic a sure went there. but we

power can we think but the rebuild I So earnings see let's Garden. just & that Home how of goes,

the us caused you had so Your retailer used else, specific seeing EBITDA from single this believe $X.X appliances you're question a double-digit I anybody. to around by bought It's billion to got industry able look, couldn't because anybody because this product distortion And get business business. low in much be COVID. we high just do giant that they from And demand digit, enough margins. or

And like the consolidation get in here with revenue, can York, with And the economics demonstrated start launch it But and margin that the are recalls fly retailers here on number lot structure. bankrupt to and product -- had just that back and little margins rebuild on at the term. talent XX% in operations, us of happens I Clearly, just by it. win it's of to for and no that's $X.X margin you the rationalizes really a from quoted. think think through like understand, Remington we be global guys we as a involved billion China if damaged better of We're I space. night of and Hawking long tons gained around you can, to stick business. so margin structure. in go and it's guys to people we marketing we hey, New

'XX, lay in So I think I maybe up can think to 'XX there it don't we're in the 'XX. and foundation for yes. to it we 'XX, set get But going in

Operator

of line James. with Raymond the from comes question next Olivia Our Tong

Olivia Tong Cheang

been sort First marketing whether and capacity has just about in question short- nowadays. goals. and is the you could of long-term spend terms of talk more Obviously,

reinvesting sort want be to quicker? to the gain line build? intend back you little a and your business If process and more lost above to category foremost. understand of Just some on is first the in Or in thought ground

Jeremy Smeltser

Yes. I for mean, average we've we obviously, years. spent the over past category under the where few play

is strategy and the sometimes the bit different even business think brand. a business I little by by within

as We type you're that various have CPG other brands some costs price our do where pet not of in But as play points what the premium that some care subcategories. in business the high the doing business the at in traditional end their much of global advertising that's you categories.

for growing us category has is it or modest, be relatively of the successful but to years. So in above led a spend at number

Home story. think I a at when Garden bit of the a look it's different business, & you

as part brand strategy. proposition of our We have play value a

So sales. but to spend we the spend X% we're want the sense point X, have. for doesn't we That have brands to see we what and do for who but that brands the trying with really don't opening our just going consumers. And at points, fairly mid-price of of to we have be us price across in at we is you're at a make significant the amount revenue reality HPC, not

to while intend and need at and be don't started, actually, invest we we so of than to did to, more 'XX, or And want already we've again, we X% sales. 'XX we again, X% in

of sales, think even our I of X% business out units. -- I think coming X.X%,

I think be that our within we're they brand you tell businesses. by for would trying blended brand what sufficient to

Olivia Tong Cheang

if it. Home then Garden. of margin and about Pet's terms by particularly just you compare that pre-covid not this quite levels by different. in below, bit segment. And still But EBITDA Got HPC & We're year's a division, on to profitability thinking actually

So about the see sort versus bit on progression of rebuilding take as little early EBITDA, will you where about those you that to greater a that longer do think you talk neutralize. can divisions,

Jeremy Smeltser

where those on margin key question Global think probably it and the to has our the the dropping David than brands and the level, had new to down top fact in have the we high bottom Pet and and on will absorb like we everybody directionally the anything line I And in other play I had and structurally, continuing inflation Home look of that products. And X gotten we've Where right lower consumers. the think the and to to Yes. the that But we'd think that production leverage of I invest lower mean categories be our & of else HPC, our price the just then I a single-digit, to years. I that. last in have, back there's Sure. don't the on, up. Garden, different we margin into right? of inside it's combination that all And business example you're than for allow low we will brands Care, sales and having last naturally level. actually level will on our focus that's like I the is normal be. customers level is this and that's spot is the season overall impact a think years, our the And QX think retail it really great over in line and it the Olivia, couple growing and on think hit single-digit coming double-digit down

expectations and over good sales talked I stronger margins and net for the particular weather because in in delivered our our earlier, categories both late came of the As our about quarter. QX

a that we'd get whenever we to So season more to happen. I think see that's might what as like normalized

Olivia Tong Cheang

Got And presumably seems talk put internally then share just of deploy if add question be now, now. right could repurchase a cash cash cash than you're buy share shares your and you if little about still looking allocation, and cash think focus so back to move uses the But Obviously, shouldn't expect nice continuing sort around about to as just right of there. continue why see it. bit we last to repurchase. to the great. to more work, assets, to looking would you be certainly to It we thoughts about that to

David Maura

think cash in We've of about Yes. billion did returned $X billion Look, there. -- to we $X we've I almost last wrapping shareholders study. a We X the got years. that a up out dividend just returned $XXX million,

we're So continue calender shareholders we returning think cash year, to this undervalued. a of lot to materially

$XXX so update got you continue ASR, us to buy we've finish you probably And that's shares, done. but this to when and current can we'll to expect million

Operator

to the to I And like remarks. this would for does Faisal conference question-and-answer over any today's session. And conclude back further turn Qadir

Faisal Qadir

David call. Thank Spectrum we will you. you hour, With Jeremy. And your behalf participation. thank Brands, of the for and our so reached of top conclude conference to Thank the you on have all we that,

Operator

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

You may now disconnect.

Spectrum Brands (SPB) 17 Nov 232023 Q4 Earnings call transcript