Q3 2021 Spectrum Brands Holdings Inc Earnings Call

August 6, 2021

Good day and thank you for standing by welcome to the Q3.2021 Spectrum Brands Holdings, Inc. Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need the press star 1 on your telephone.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like the hand the conference over to your Speaker today, Kevin Kim. Please go ahead.

Thank you so much Don welcome to the spectrum brands Holdings, Q3, 2021 earnings conference call and webcast.

To help you follow our comments, we placed the slide presentation on the event calendar page in the Investor Relations section of our website at Www Dot spectrum brands Dot Com. This document will remain there following our call.

Starting with slide 2 of the presentation, our call will be led by David Maura, Chairman and Chief Executive Officer, Jeremy Smelter, Chief Financial Officer, and Randy Lewis Chief Operating officer. After the opening remarks, we will conduct the Q&A.

Turning to slides 3 and 4 of our comments today include forward looking statements, which are based upon management's current expectations projections and assumptions and are by nature uncertain. Actual results may differ materially due to that risk spectrum brands encourages you to review the risk factors and cautionary statements.

Outlined in our press release dated August 6.2021, and our most recent SEC filings and the spectrum brands Holdings. Most recent annual report on form 10-K, and quarterly reports on form 10-Q, we assume no obligation to update any forward looking statement also please note we will discuss certain non <unk>.

GAAP financial measures in this call reconciliations on a GAAP basis for these measures are included in today's press release, and 8-K filing which are both available on our website in the Investor Relations section now I will turn the call over to David Maura.

Thank you Kevin.

Good morning, everyone and thanks, everyone for joining us on today's call.

As has become custom on these calls I'd like to start by thanking our 12000 plus employee partners around the globe.

You of all overcome a lot over these past 18 months and I'm very proud of you the management team and I appreciate each and every 1 of you.

We should all be proud of our progress which is further confirmation of the durability of our business and are winning playbook. Our teams have embraced both of our global operating model and the spirit of our servant leadership culture.

We have persevered through a global pandemic to deliver excellent and consistent financial performance for our stakeholders and our fourth quarter financial results reflect another quarter of top and bottom line growth and it reinforces that we are truly structured for growth and efficiency to serve our consumers customers and.

Our stakeholders.

On a year to date basis, our businesses of delivered 19% organic net sales growth and 36% EBITDA growth.

The new spectrum brands is in fact of more efficient focused productive and consistent operating company and we are confident in our ability to manage through the near term volatility, including the current inflationary headwinds and supply chain disruptions.

We have and we will manage through these challenges.

With the same discipline and collaboration that allows spectrum brands to navigate the tariff headwinds in 2019 and the pandemic restrictions of 2020, we will emerge a more durable company with a more resilient supply chain.

And we will continue to be driven by our values of trust.

Ability and collaboration to serve our mission, which is we make living better at home.

I want to thank you.

Now if I could have everyone turn to slide 6.

We again delivered top and bottom line growth in the quarter and we continued to plant seeds for future growth with our investments in innovation marketing and advertising across each of our businesses.

Our third quarter net sales grew 18, 1% driven by growth across all business units with standout performance from HHR.

This double digit top line performance also reflects 14% total company growth against our 2019 levels and reflects our actions over the last few years to reignite the flywheel of growth for our trusted brands.

Now turning to the bottom line.

Third quarter net income from continuing operations was $34.9 million.

And adjusted EBITDA was 167.4 million mainly.

Mainly driven by <unk> organic growth.

What I'm actually most proud of this quarter is the discipline exhibitor of exhibited by all 4 business units as our EBITDA. This quarter included an additional $19 million.

In innovation marketing and advertising spend versus the period of year ago. The.

Fact that our operators of our businesses continued to lean in and invest for long term future growth. Despite the current macro challenges.

Evidenced of me that our culture.

The culture of this company has changed and we are truly focused on sustainable growth I want to congratulate the team and thank them for continuing to invest in our businesses.

Adjusted EPS grew 15, 4% despite headwinds from inflation and incremental investments in marketing and advertising as our teams continued to focus on driving efficiencies from our global productivity improvement program and implementing pricing actions. We were also opportunistic.

This quarter with of share repurchase program buying back over $10 million worth of inspection brands shares.

Turning to slide 7.

Headwinds from inflationary pressures stepped up in the quarter as expected.

Driven by transportation and commodity costs.

Both Jeremy and Randy will provide additional details during their prepared remarks, but despite these continued headwinds we remain committed to delivering on our earnings framework with mid teens net sales and adjusted EBITDA growth and adjusted free cash flow of $260 million to $280 million.

We will continue to focus on the disciplined execution of our winning playbook by investing in our people continuing to drive a culture of servant leadership empowering and Resourcing our teams to win in the marketplace with news and excitement from new product introductions.

If I could ask you to please turn to slide 8.

Our balance sheet. This quarter remained strong with net leverage of 3.6 times and we have over $600 million in total liquidity.

We also successfully closed on the rejuvenate acquisition during the quarter for approximately $300 million.

Adding a fourth category to our ever expanding home and garden risks.

Turning to slide 9.

Going forward, our capital allocation priorities will continue to focus on 1 allocating capital internally to our highest return opportunities and this includes strengthening our brands through consumer insights innovation and advertising and promotion and marketing to drive the vitality of our business.

The drive profitable organic growth.

We plan to return cash to shareholders via dividends and opportunistic share repurchases.

And third.

We will continue with disciplined M&A with tuck in strategic acquisitions that are synergistic and help drive value creation.

I'm very pleased to report to all of our stakeholders that all of our recent acquisitions, including Omega Sea arbitrage and rejuvenate are performing at or above our original deal expectations.

We continue to target net leverage in the 3 to 4 times range now Youll hear more from Jeremy on the financials and Randy will update you with additional business unit insights I'll turn the call now over to you Jeremy.

Thanks, Dave and good morning, everyone.

Turning to slide 11, and a review of Q3 results from continuing operations.

Beginning with net sales net sales increased 18, 1% excluding the.

The impact of $25.9 million of favorable foreign exchange and acquisition sales of $34.3 million organic net sales increased 12%.

Net sales grew across all 4 business units.

Gross profit increased $58.5 million of gross margins of 35% declined just 40 basis points from a year ago.

Due to higher freight and input costs.

The offset by higher volumes improved efficiencies from our <unk> initiatives and favorable mix.

SG&A expense of $275.4 million increased 22, 5% at 23, 7% of net sales.

With the dollar increase driven by higher volumes higher advertising and marketing investments higher.

Higher distribution and incentive costs higher transaction related costs and SG&A from our recent acquisitions.

Operating income of $98 million was driven by higher volumes improved productivity and lower restructuring costs.

Partially offset by higher freight and input costs and marketing and advertising investments.

Declines in GAAP net income and diluted earnings per share were primarily driven by prior year gains from the Companys prior energizer common stock investments and gains from the extinguishment of salad CLO debt.

Adjusted diluted EPS improved to $1.57.

Driven by favorable volumes and improved productivity.

Adjusted EBITDA increased 1.8% from the prior year, primarily driven by HHS.

Turning to slide 12, Q3 interest expense from continuing operations of $31.4 million decreased $4.7 million due to a lower cost of debt.

Cash taxes during the quarter of $8.6 million were $4.4.8 million higher than last year.

Depreciation and amortization from continuing operations of $38.6 million was $3.6 million higher than the prior year.

Separately share in incentive based compensation decreased from $14.2 million last year to $7.5 million. This year, driven by the change to incentive compensation payout methodology.

Cash payments for transactions were $16 million up from $7.2 million last year.

In restructuring and related payments were $5.1 million versus $25.2 million last year.

Moving to the balance sheet the company had of quarter end cash balance of $130 million.

And $478 million available on its $600 million cash flow revolver.

Total debt outstanding was approximately $2.7 billion, consisting of $2.1 billion of senior unsecured notes.

$497 million of term loans, and revolver draws and $156 million of finance leases and other obligations.

Additionally, net leverage of 3.6 times.

And during the quarter of the company repurchased 115000 shares for $10.2 million.

Capex of $15.2 million in Q3 versus $12.9 million last year.

Turning to slide 13, and our earnings framework for 2021.

We are reiterating our earnings framework for the year as we continue to expect mid teens reported net sales growth in 2021 with foreign exchange expected to have a positive impact based on current rates.

Adjusted EBITDA is also expected to grow mid teens.

This includes benefits from higher volumes of <unk> efficiencies.

Approximately 11 months of results from the recent <unk> transaction in global Pet care and now includes approximately 4 months of rejuvenate for home and garden.

Offset by net tariff headwind of about 30% to $35 million driven by the exploration of previously disclosed retrospective tariff exclusions in 2020.

In addition, as David mentioned, we have factored in $120 million to $130 million of input cost inflation compared to a year ago, primarily in the second half of the fiscal year.

Fiscal 2021, adjusted free cash flow from continuing operations is expected to be between $260 million to $280 million.

This includes plans for incremental investments in inventory levels as well as the expected input cost inflation.

Depreciation and amortization is expected to be between 180% of $190 million.

Including stock based compensation of approximately 30% to $35 million.

Full year interest expense is expected to be between 130% of $135 million.

Both restructuring and transaction related cash spending as well as capital expenditures are expected to be between 70% and $80 million.

Cash taxes are expected to be between 35% of $40 million.

And we do not anticipate being a significant U S federal cash taxpayer during fiscal 2021.

As we continue to use net operating loss carryforwards.

We ended the prior year with approximately $800 million of it.

Usable federal Nols.

For adjusted EPS, we use the tax rate of 25%, which includes state taxes.

Regarding our capital allocation strategy, we continue to target of net leverage range of 3 times, the 4 times adjusted EBITDA.

Now as it relates to the 2021 earnings framework. Please keep in mind the few factors.

First we continue to plan for incremental brand support investments of approximately $45 million for the year as we continue to raise awareness consideration and purchase intent.

Second recall that Q4 results of this fiscal year will have 6 fewer selling days compared to the prior year and important to recognize this modeling nuance.

Third we continue to manage through inflationary pressures, which are still expected to be $120 million to $130 million higher than last year.

Fourth Q4 results. This fiscal year will include the change to our incentive compensation program that was enacted in Q4 last year positively impacting the comparability by about $12.7 million compared to the prior year in Q4.

And lastly, adjusted EBITDA is also expected to be negatively impacted by the absence of energizer dividend income.

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

Thanks, Jeremy and thank you all for joining US. This morning, My comments today will focus on reviewing each business unit to provide detail on the underlying performance drivers of our operating results I will also update you on the current overall cost environment and our global productivity improvement program.

Overall, we continue to see significant benefits from our operating model transformation as David outlined earlier, our business is demonstrating its durability and our operating strategy is proving effective in helping us actively manage through today's headwinds.

While the impacts of COVID-19 over the past year are creating extreme volatility in the year over year and quarter to quarter comparisons of our businesses. Overall, we continue to believe the consumer demand remains positive and our categories and the strong performance of our brands continues to drive long term growth.

Q3 of reflected another quarter of organic sales growth for the total company and despite industry supply chain challenges, we continue to work to improve our delivery performance and provide more consistent service levels to our customers, which is earning us positive feedback from those partners.

These efforts in addition to our continued commitment to long term commercial strategies operational investments helped drive another quarter of top and bottom line growth now.

Now, let's dive into the specifics for each business, starting with hardware and home improvement of slide 15.

Third quarter reported net sales increased 48, 8% and organic net sales increased 46, 7% topline performance was primarily driven by security sales growth over the prior year.

Last year, you will recall, we experienced COVID-19 related disruptions at our hardware and home improvement manufacturing locations in Mexico, and the Philippines due to temporary government ordered shutdowns. It's important to highlight that we had double digit growth across all <unk> categories, even in comparison to <unk>.

Results from the prior year in plumbing and builders' hardware.

EBIT increased 56%, primarily driven by volume growth and productivity improvements and partially offset by higher freight and input costs and higher advertising investments.

This represents our fourth consecutive quarter of strong double digit sales growth for <unk> as well as 18% growth compared to 2019 levels.

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

Additionally, fundamentals across both of the repair and remodel and the Newbuild channels continued to be strong.

As we turn to expectations for the next 2 quarters, we should look at last year's history if.

If you recall Q4 of last year started the strong rebound in sales as production of our security products recovered dramatically from the COVID-19 government shutdowns.

Our Hai teams across security plumbing, and builders' hardware continue to be focused on driving growth and taking share. We will continue to invest in innovation marketing and advertising.

And are seeing positive results in retail Pos and benefits from recent commercial wins with Clayton homes Shea homes and another in a number of other top 100 U S builders.

Additionally, our Baldwin brands the leader in luxury security products recently launched its quick ship program with a wide array of customized skus shipping within 5 business days to dramatically improve the customer experience in that category.

And quick set we remain focused on driving demand with our exciting halo of an halo touch smart lock product lines, which includes biometric and Wi Fi enabled technology, along with voice control capability through Alexa and Google Assistant.

Also contained smart key technology, which allows users to rekey their own locks to any quick set key in about 15 seconds.

Micro brands, which incorporates anti microbial technology on the surfaces of our hardware.

Now the home and personal care, which the slide 16.

Ported in organic net sales increased 9.5% and 4.2% respectively.

Adjusted EBITDA decreased 11 <unk>.

Decreased to $11.8 million.

Net sales were driven by continued strength in small kitchen appliances, and personal care categories with notable growth from hair care in garment care segments.

The U S continued to grow along with strong growth in Latin America as retail channels began reopening after shutdowns from COVID-19.

<unk> EBITDA was driven by increased freight expense substantial investments in marketing and advertising and input cost deflation. This.

This was partially offset by pricing actions higher volumes and productivity improvements.

Q3 represented the eighth consecutive quarter of year over year top line growth for our clients' business performance was driven by double digit growth in hair care and in garment care products as well as moderate continued growth in small kitchen appliances compared to the outstanding sales from last year.

Our consistent commercial wins over the last 2 years and continued investments gives us confidence in our plans to continue growing share and taking shelf space with our key retailers.

As we outlined on our last call inflationary headwinds as well as continued marketing investments in <unk> in Q3 and Q4.

Only the partially offset by our pricing and supplier partnership initiatives. This will put pressure on margins. However, we continue to work to mitigate the inflation impact as we enter fiscal 2022.

Our focus in 2021 and beyond we will remain in the consumer led insights driven new products with incremental sales opportunities as retailers continue to reopen and there is excitement for back to school, which was limited last year as well as for the upcoming holiday season.

Yeah.

Moving to global Pet care, which is slide 17.

Q3 represented another quarter of top line growth reported net sales grew 6.5% while organic sales declined 7.2% adjusted EBIT declined 2.8%.

Net sales was attributable to acquisition sales, which drove companion animal category growth.

Top line results this quarter were impacted by lower than desired fulfillment levels. During the June transition of <unk> providers at 1 of our major U S distribution centers. The fulfillment challenge was the transitional issue of customer shipment volume returned to pre transition levels by the end of the quarter.

Lower EBITDA was driven by the distribution center transition, resulting in lower customer shipment volumes and increased operating costs profits were also pressured by higher freight and input cost inflation and advertising investments, partially offset by productivity improvements and pricing actions.

The transition of service providers at the distribution center in the U S was the planned strategic move.

Our global Pet care business has been a very strong performer for several years with 11 consecutive quarters of sales growth.

We are very excited about the continued momentum of the business given the positive macro trends of the category and the strong performance of our brands, thus to better serve our customers currently and to support our strategic growth plan, we partnered with a new 3 PL provider and committed to significant increases in space and automation.

Our new partners of Fortune 500 World Class service provider with extensive experience working with some of the largest companies in the consumer product space.

Have the experienced scale systems and automation of processes to take our global pet care business to the next level of customer order fulfillment and supply chain efficiency.

The facility transition is now stable and we expect the benefits of the new capabilities to start showing up this quarter.

As we said before our global Pet care team remains confident of 2021 and beyond will benefit from the continued execution of our global strategies, coupled with the strong category growth fundamentals in particular, we anticipate sustained demand for our consumable products given all of the new pet parents in companion animal and all of the new hobbyists, who have entered the aquatics and reptiles.

Categories.

These are long term commitments in both very well from the future demand of our products.

In addition to operating of very strong business, our global Pet care unit is leading in another equally important area.

Giving back to society.

Through our long standing relationship with our Glo fish brand, we partnered with outstanding organization named well aware well aware of nonprofit organization headquartered in Austin, Texas that provides innovative and sustainable solutions to water scarcity and East Africa.

While our partnership goes back almost 10 years. This quarter, we completed 1 of our most successful fundraising campaigns ever through well aware as shower strike program.

These fundraising actions along with matching funds from spectrum brands will directly contribute to providing a lifetime of clean healthy water for thousands of people living in 2 communities in southern Kenya.

A huge thank you to all of our spectrum brands participants and to the many people who donated for this very worthy cause.

I want to thank well aware founder Sara Evans and her incredible staff are allowing us to play a very small part in the tremendously important work that they do.

And finally home and garden, which is slide 18.

Third quarter reported net sales increased just less of a 1% organic sales declined 3% and adjusted EBITDA decreased 3.8% the.

The net sales increase was driven by repellent category growth from distribution gains as well as contributions from the recently acquired rejuvenate cleaning business.

Of herbicides and insecticides were negatively impacted by unfavorable weather through much of the first 2 months of the quarter.

The EBIT decrease was driven by lower volumes and increased marketing investments and partially offset the pricing actions and productivity improvements.

Despite the challenging weather in Q3 of our business continues to outperform the category of POS performance, thus far in Q4.

It has been positive with more favorable weather patterns and continued strong retailer support despite ongoing challenges from raw materials and freight markets.

Given these on going challenges the home and garden team has announced another round of planned price increases at the end of last month.

With the successful close of the rejuvenate acquisition of the teams are also focused on capturing operational and revenue synergies with the business that has strong EBIT margins and good customer alignment with our existing channels recall that net sales for the business last year were over $60 million.

And just recently rejuvenate was named Hgtv's best multipurpose hardwood floor cleaner we.

We look forward to applying our strength in supplier partnerships manufacturing and marketing to further strengthen the rejuvenate brands, particularly within underpenetrated channels and retailers.

Our continued A&P investments in home and garden. This quarter are consistent with our strategy to invest more resources to tell our story around the brands such as spectrum, <unk> Kutter, hotshot Equallogic and now rejuvenate.

We believe these actions will further enhance our mission to be the recognized market leader in providing consumers the best solutions, the concrete nature of challenges and enjoy life.

Now, let's turn to our internal growth and efficiency efforts for global productivity improvement program on slide 19.

As David mentioned, we remain laser focused on execution of these key initiatives as Q3 delivered productivity improvements across all business units, we remain resolute on using the savings to invest back into the business to drive long term sustainable organic growth, especially during these challenging times.

This program continues to be our most important strategic initiatives as we transform our global operating model and we remain on track to deliver our total growth savings target of at least $200 million by the end of fiscal 2022.

Widespread inflationary headwinds stepped up this quarter and more meaningfully impacted our Q3 results.

As we said during our last quarter. We continue to expect these gross headwinds to be approximately of $120 million to $130 million higher than fiscal 2020 levels.

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

We are expecting we.

We are executing a coordinated and consistent strategy across the enterprise using the tools developed through our <unk> program and leveraging our operating model, we are partnering with suppliers to offset inflation implementing mitigation actions and driving productivity improvements throughout all businesses regions and functions.

As Jeremy alluded to earlier. These headwinds are currently included in our earnings framework for this year.

We implemented price increases with many of our retail partners in Q3, and we are taking additional pricing in Q4 and if the current cost environment holds we expect to be taking further pricing actions in fiscal 2022.

While we believe that some of these inflationary pressures are temporary in nature and may begin to moderate in fiscal 2022, we are preparing for higher levels of growth headwinds next year.

As a reminder of the inflation we are experiencing in fiscal 2021 is hitting us almost entirely in the second half of the year as we look forward to fiscal 2022 of these inflationary headwinds are expected to be first half weighted.

In my section I want to acknowledge another sensational quarter of progress on our operating model, our cultural advancements in our strategic initiatives and the thank our 12000 plus employees for all they are doing to truly make us a better faster stronger spectrum brands now.

Now back to David.

Thank you Randy and Jeremy Thanks, everyone for joining us today.

Look at this point, we've covered quite a bit on the call.

To conclude now with the key takeaways here on slide 21.

First our third quarter financial results reflect another excellent quarter of top line growth.

Driven by growth across every 1 of our business units. This top line performance. However, you analyze it reflects our actions over the last few years to reignite the flywheel of growth for our trusted brands.

Second our third quarter financial results reflect the adjusted EBITDA growth, despite inflationary headwinds, which stepped up in the quarter and continued challenges with our supply chain, but most importantly, the covered an incremental $19 million investment in innovation marketing and advertising.

Third our teams remain focused on managing with discipline and collaboration are winning playbook gives us confidence in reiterating our 2021 earnings framework and our GPO program and efficiency targets are helping us finish the year strong.

As I stated, we expect the strong finish to fiscal 2021, and we have great momentum heading into fiscal 2022, we remain encouraged by consumers' demands for our products and our retail partners' enthusiasm for our categories brands and our new product launches.

As I sit here today, I am excited and optimistic about the future of our businesses and our company as the whole as I mentioned earlier the company's culture has shifted we are no longer focused on running our business for short term results.

More efficient company today, and we are reinvesting much of the savings from our global productivity improvement program back into driving the growth of our 4 business units. Additionally.

Additionally, the backdrop of low interest rates the U S consumer with approximately $2.5 trillion dollars of liquid assets combined with the strong housing market and of permanent demand shift higher for our pet and home and garden product offerings paints the picture of a very strong macro demand environment.

<unk> for our company.

As we mentioned on this call. We also continue to see strong demand for our home cooking appliances, grooming shave and beauty care product lines, which should be further aided by an expected strong back to school selling season.

In summary, all of this adds up to a very favorable view of our prospects prospects as we enter our fiscal 2022 on October the <unk>.

The new energy of our teams and the investments we've made in innovation marketing and advertising leave me enthusiastic about our new product development pipeline.

And our expected new product launches in fiscal 2022 and 2023.

I expect our current challenges on the supply chain to be mostly transitory and I expect that we can overcome a lot of the headwinds that we're currently seeing on the inflation side.

The future of spectrum brands is genuinely Brian.

I want to again, thank all of our employees from our frontline workers in the factories and the distribution centers to the many other teams around the world that have been working from home.

I also wanted to give a special thanks to our supply chain team you all have done an amazing job securing containers and allowing us to continue to bring our products to market as we continue to win new business across our platform.

I am extremely grateful for all of the sacrifices of our spectrum brands employee partners that you've made to navigate our company successfully through these challenging times.

Thank you for your time and your continuing support I will turn the call now back over to Kevin for any questions.

Great.

John Let's just dive right into Q&A go ahead.

As a reminder to ask a question you any day.

Star 1 on your telephone.

Draw your question press the pound key please standby, while we compile the Q&A roster.

And your first question comes from the line of Nik Modi with RBC capital markets.

Thank you and good morning, everyone. So 2 questions.

From meeting on the global pad.

Is there any way you can help quantify the D C issue.

<unk> had on the quarter and what gives you the confidence in.

Should we expect some of the sales loss in the <unk> to kind of come back and forth. So any context on that would be super helpful. And then the second question was really around the.

The HPT business.

The Prime day move you.

Obviously, you had very good growth when it did fall short of expectations. So just wanted to get an understanding on what happened there. Thank you.

Nick I'll take a shot at it and then I'll, let Jeremy and Randy fill in but what gives US a lot of confidence is look the DC move was just the fact, we outgrew the old 1.

We are really planning for significant growth in our pet business, both organically and inorganically going forward and we needed a much bigger facility what gives us confidence to talk to you today about that being a temporary headwind in the current quarter with the move because we just finished the the biggest July.

Out of that new DC in past history in the month of July so.

We think thats very much behind us and we're looking forward to very nice growth out of our pet unit in the current quarter.

In regards to appliances.

Sorry that had missed the expectations, but it didnt Miss mine.

We continue to see very nice demand for our home appliances, which I think most people thought was just the COVID-19 pull forward.

But in fact, we see continued growth there.

And and we're having we're having a lot of success with our groom.

And our beauty products as people gear up to go back to school. The main thing for US is continuing its why we think of our supply of <unk> supply chain group.

It's just every day as the bottle to make sure we get these.

The supply on the water and then to the Dcs into the stores and so that's that remains our top focus at the moment I'll, let Randy and Jeremy chime in for additional color.

Yes, so back to Pat Nick.

I'm not going to quantify specifically what are shifting expectations were that were light due to the transition of what I will say is that we did we didn't experience any change in Pos sequentially. So <unk> has remained strong I will say that we would have seen nice organic growth of net sales in the quarter had we not.

Experienced that slowdown, but as David said July was a record for us up over last year up I think over 20% compared to 2019. So we're really pleased with where that's at R&D day.

Nick just reiterating the fact this is an investment in the future and the.

The demand on that business has been so strong for the last.

4 to 8 quarters. There was just never a great time for us to be able to take any downtime to move that over so we had to we had to do it on the slide and we're up where we need to be and we're going to of a lot more capability in the headroom to handle the growth going forward.

That facility saw 34% increase in output since 2018, and just needed some extra capability.

Thank you Bob.

Thanks, Nick.

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

Thanks, and good morning, everyone. I Hope you all are doing well so good morning, Peter I wanted to.

I wanted to ask the question David I'm not sure you can really provide much but.

I would love your view on strategic M&A in the context of the recent headlines around <unk> and I know, David you kind of discussed publicly the disappointment in valuation and I know M&A has long been part of the spectrum strategy.

We're kind of love to get your view on how you think about value creation in the context of M&A and whether kind of of your frustration with how the market values. The combined entity has.

Kind of changed your view of how you think about this business structure longer term.

Well look I think I'll start by saying, we're really excited about the the acquisitions of <unk> and Omega Sea and quite frankly.

Rejuvenate.

Been really great to get those.

Particularly rejuvenate the starting the integration process.

That business continues to perform above our expectations.

As do the other 2 I mean look I think at the end of the day, we're not going to comment on any strategic activity. It's just not the company's policy in.

But no I definitely been vocal about the fact, the I mean here we are today I mean the.

To think that.

We've got a company.

We're paying of 2% dividend, we're buying back stock.

And.

I think it's pretty amazing.

The year to date, we've been able to grow the business, 19% on the top line, 36% on the EBIT line we.

We're generating a lot of cash we're focused so look we're going to continue to execute but we definitely do not believe that the marketing the market valuing us below 9 times EBITDA is.

We have an issue of that so we will continue to execute we're looking forward to a strong finish to the year here with our fourth quarter and we think we're going to enter 22 with a lot of momentum, but yes I think.

My disappointment is more in the short term nature of the market and.

But we'll just we'll just continue to be consistent and we will continue to put up numbers and I'm sure of it.

1 day will be appreciated.

Got it and then maybe just following up on that last piece, David you sound pretty optimistic about fiscal 'twenty, 2 and the broader category of macro headlines Inc.

Not asking for fiscal 'twenty, 2 guidance, but youre clearly exiting this year with strong momentum in <unk>.

Long discussed street estimates being too conservative for next year. So how should investors think about growth from a category perspective.

Even as you kind of cycle of these difficult comps.

When I tried to hit that in my prepared remarks, I mean, we just drove a very good <unk>.

Macro backdrop.

That.

Creates a lot of consumer demand for our for our finished goods and.

You know I think that.

Ultimately over the next couple of quarters.

Wall Street, our retail investors whoever it is will figure out that pest demand is.

Materially higher level of aggregate demand and so as home and garden and.

So it sort.

A lot of things. So I think look it's the demand is there.

And it's our job now to just manage through some negative externalities with inflation and supply chain, but.

Yes look the.

The other thing I would tell you is R&D and innovation, they arent instant gratification payback methods.

We've been building an R&D team for example of <unk> in the home and Garden and we've put a lot of money in it and we've upgraded a lot of talent, but.

The.

Wish you guys could see what we see in terms of our pipeline and our new products, but the nature of being public.

That's not a possibility but we.

Those products take multiple years to create and then launch because of the the EPA regulatory environment, but.

As Randy and Jeremy and the team sit here today, we're really thrilled with what we see in our new product development pipeline and what we expect to be the the new product launch schedule and so look we think the macroeconomic backdrop is good but we think we're.

Developing capabilities with innovation, which will enhance our margin of our mix and vitality and we intend to take share and growth and so again, we just we wish people would take more than a 24 hour review of the company as an investment.

Thank you and I appreciate it best of luck. Thanks.

Thank you Peter.

Our next question comes from the line of Robert <unk> with CJS Securities.

Good morning, Thanks for taking the question.

You you touched on this obviously.

In your prepared remarks, when you talked about for quite some time I just wanted to dig back into the inflation that you're seeing a little bit obviously as you said it doesn't end at the end of your fiscal quarter.

So there should be some inflationary pressures in the first half of next year can you tell us kind of where you are in terms of pricing that you've realized or that is expected to be realized next year.

How that's being received by your end customers and how you plan to continue to offset future inflation with pricing.

So Bob this is Randy I'll jump on it to try and take that.

Obviously, we.

We don't comment about the specifics of pricing and I can tell you that it varies.

<unk> lead by business unit and region channel customer et cetera.

But the what we're doing is we're utilizing a lot of the capabilities from our enhancements through global productivity, where we've brought you've heard us talk in the past about our commercial operations functions and so we've got really top talent analysts that are helping us understand the drivers.

Also helping us to go into a retail customer partners and show them. The impacts of how we can work together to have the minimal impact on consumers, but also drive the necessary margins for both of our businesses.

And Theres also a backdrop, there thats really important where the transformation of the David talks about all the time when we're going in with consumer insights category insights of record of investing behind the categories and the brands and share gains in most of our positions that is a much stronger.

The backdrop to have those those discussions so.

Overall I'm pleased with the progress.

I'm very pleased with the approach with regards to how we continue to offset.

Again, a very.

<unk> approach from the start to finish working with the partners on supply side working with alternative options of designed product changes sourcing onshoring and then ultimately also don't forget about innovation as David mentioned higher vitality, when you bring vitality out of <unk>.

Tends to price at the market at the appropriate margin at the time, so we get benefits from that in that way also so overall I feel that we are.

Better prepared to deal with these headwinds than we ever have been in the past.

Okay, great. Thank you very helpful and insightful.

Obviously, a lot of this as you mentioned is enabled by the global productivity plan, which as you know.

Executed extremely well 1 of the things you are doing the same things you've mentioned is increased advertising and promotion innovation.

Can you, maybe just highlight a little bit more about the targeted spending of the.

The savings from from GE Pip and.

If you reach all of your growth. This year does that do you get the increase that spending further next year have you reached your targeted new spending level or where does the A&P and innovation spending that you were increased from Chi pepco in the future.

Yeah look I want to talk about because I think what I was trying to do with this morning's script in the earnings release was to let you know that.

It wasn't just complementing the operating leaders the complement them they've done an amazing job of staying steadfast.

And investing for the long term hopefully what the street configure out is even though we reported $1.67, and EBITDA, which I think be consensus.

That was burdened by $19 million of incremental spend.

In marketing and innovation and I mean, that's that's a real credit to the team for staying steadfast despite inflationary headwinds and supply chain and so look I think we made a lot of progress in this area.

Sure.

But I think that.

There's more to go but we're going to keep growing the earnings of this company as we invest so.

That is the flywheel, we talk about but Randy Jeremy anything to add yes, I'd say Bob over the last couple of years, we've increased that spending.

Kind of generally category categorizes brands support investment of.

About $70 million on an annual basis from 19% to 21.

Give or take.

As it relates to our targets I think.

It's a little bit different by business by category on kind of what level of spend is necessary I think we're still under where we would expect to be 2 or 3 years from now.

But we're doing it in a measured way as we build the talent and build the muscle around getting the right ROI on that spend.

We're gonna corner of where we're going to earn our way into it but again, what I'm trying to highlight for people of the quality of our earnings stream is really increased right I mean, if you if.

If you on burden of the 167 this quarter.

Could have been 187, and EBITDA right and that would've been impressive for today, but not necessarily good for the business 2 years from now so we're doing the right thing.

Super Thanks very much.

Thanks, Bob.

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

Okay.

Hi, good morning.

Hey, Chris.

So I was hoping to maybe just kind of level set how the quarter came in and this is kind of in the context of the sustainability going into next year right. So I mean.

Garden seems to be impacted by weather, but I'm curious your thoughts there in general just on relative market share Pat.

The strong underlying and you actually need to be expanding of the business Haj growth. The obviously phenomenal in HBC came it sounded like more or less lie with your expectations and I guess, if I kind of put all of that together do you buy garden has got a good shot at growing next year of pet has a good shot at growing next year on this revised base.

Maybe the question is is that fair and then and again, just maybe high level of concepts of like the sustainability of growth drivers and I think the set.

You know big debate amongst the investors.

And maybe just shy and again appreciate you already have commented on this a little bit by just shy of delivering such phenomenal growth of the things that youre seeing in that business that gives you some confidence that hey, even though that the <unk>.

Both of us being so strong. This year. These are these are sorts of things that can actually be sustainable over a 4 quarter of $6.8 quarter period.

So just any any sort of maybe like the incremental commentary on how this quarter came in and how that kind of makes you feel about just like the concept of sustainability going forward because I think thats, maybe 1 of 2 major based on all of the stock right now.

Look I'll start, but then I'm really going to hand, it over to the team.

So.

I am coming to work in 2022 to growth.

And we expect to grow our vessels.

So Jeremy Randy.

Yes, so Chris Hey.

Just to the comment on home and garden.

You asked about weather.

That's the <unk>.

Business that you just have to be very long term focused and we believe that the fundamentals in that category.

Continue to look attractive so there's a number of macro demographic changes with regards to.

The transition of the populations towards the south transitions of populations from the cities to the suburbs working from home.

The shift in how people view of their homes over the last 12 months to 18 months all of those things bode very well and we think the competitive environment is really great for us. We think it's our business that we were probably the least invested in several years ago. We think it's our business would probably has the most potential for ESCO.

<unk> as a result of the changes in our strategy. So.

The 1 thing I know from being associated with that business for over 2 decades is that.

The return to sort of lumpy quarter to quarter, not only because of weather, but also because of the retailer purchasing power and patterns and everything else.

You just have the backup and say, we're a strong player in an attractive category with really great margins and really high barriers to entry and we like that.

I think you answered your own question and Pat.

Looks to be strong we expect the the macro conditions to continue to be positive. We think it has the stickiest impacts from Covid.

Our globalization strategy or focus on.

On top brands in platinum products is really driving share throughout the day of that so Jeremy on with the top of the other 2 yes, certainly I mean I think.

If you look at <unk>, we've been we've been pleased with what we've seen in groom and hair care.

As the World has kind of reopened and Thats a great thing I think.

As the World Reopens.

Very short period of time, we saw demand decline in the kitchen appliances, which didn't surprise anybody but frankly, we were pleased with what we've been seeing most recently in overall demand. There then I think David talked about it with <unk>.

25 percentage of our business is exposed to new home.

Sales of construction here in North America, we like what we're seeing there we continue to win contracts of new builders.

Including in multifamily.

And then the retail environment for remodel the velocity of the existing home sales continues to be strong and that is usually a big driver for us. So we like that in the back to home and Garden I just.

I'd, just remind folks I mean, we had a blowout year last year right high single digit growth for a business that it was kind of of low single digit growth business for a while and here. We are sitting here 9 months into the year and we've got probably mid single digit organic growth for the year. So this is the kind of a 2 month weather period that we saw in the.

Quarter, but we shouldnt lose sight of of how much growth we've experienced some of that business over the 2 year period and the momentum of those brands have.

I appreciate you entertaining all of that I'll, just just 1 follow up would be I know theres, a prior conversation around inflation and pricing.

As far as inflation rolling into the FERC copier fiscal 'twenty 2.

I Wonder if you could just kind of talk to where what are the areas, where you're seeing the most impact say over the next few quarters.

Whether that's metals resins Ocean freight I know some of maybe said Bob contracts the.

Locked there are some of.

From.

The negotiated terms of your block there might be rolling off domestic transportation logistics labor, just just kind of maybe like a rock.

1 of the mill.

The key buckets of inflation that we should be mindful of over the next 3 of 4 quarters with the spectrum up <unk>.

Start and Randy could go from color I mean, great points of I should remind everybody. We said it earlier, but it was a little bit different being of September year end compared to the calendar year and that the situation given the timing of when all of this.

Hyper inflation kind of started so our first half will be tough because of the only experienced the inflation in the second half of this year. So that's kind of kind of 2 quarters of of lapping that inflation hitting our P&L versus if you were of calendar year ended probably only have 1 quarter. So just keep that in mind.

As it relates to where we're seeing it.

Given our operating model.

$55, 60% of it is really ocean freight so that's the biggest single driver.

Impacting the businesses, a little bit differently, but certainly you know HBC.

The global Pet care and Hai probably experienced in the larger share of ocean freight.

Materials, which would encompass metals resins et cetera, probably a quarter of the overall inflation.

<unk> on the metal side, it would certainly be taken a big hit there and the rest of you are pretty much labor and North American distribution after after things get to our Dcs.

Randy maybe you want to chat a little bit about ocean freight and kind of how we're approaching that spot versus contract et cetera.

Yes, so Chris 1 of the things we invested in back as part of our global productivity improvement program several years ago. It was 8.

Centralized global management of all transportation actually located in southern China, We built some tremendous capabilities there with folks that have excellent on the ground resources and connections.

And while this is a global commodity.

We've actually done quite well as we benchmark against competitors and as well as our suppliers on 2 things number 1 being able to be on contract rate versus spot rate, we have a pretty good ratio. There. The number 2 is just access to 2.

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

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

Thanks for all of that platform.

The next question comes from the line of Ian Zaffino with Oppenheimer.

Hi, great. Thank you.

I had 2 kind of follow ups and then I'll just ask right now and so I have another 1 after that.

First of all of the on H P. C. Just trying to understand a little bit more about the dynamics here you know I guess when we saw the reopening of kitchen declined a little bit of dengue some uptick.

So curious what drove that uptick and do you think these 2 businesses inside each PC could actually in tandem both improve.

Or are they going the offset when people return back to work.

And then the second question would be.

On the kind of the potential portfolio of rejiggering of I mean, if that was the happen to be significant proceeds.

Which can kind of begs. The question is how are you thinking about capital allocation now.

You know if you are potentially to come in discharge of proceeds.

But then maybe off of it just in general the AP don't come into those proceeds.

I'll take it backwards and then I'll, let the teams talk about the demand side of it.

The kitchen and personal care look you know we're here to run businesses in the growth businesses, and we think we're making great investments too.

Sales and earnings growth going forward.

Hypothetically to answer your question I mean, if we came into a bunch of cash today, but just fell out of the helicopter.

I would buy back a lot of stock.

I know everyone knows us and I know that I still look Ron in the short term, but I think our security is I think our stock price is materially undervalued.

And I think we are generating a lot of free cash flow.

The IPO market I see things go public at 17 times, EBITDA and I scratch My head why why we're trading at 9 but I do know the fundamentals when and I do know that staying the course.

The pays dividends and so we're going to continue to be the more efficient consistent operator that we've built over the last 2 years of we're going to we're going to take it up a notch in 'twenty 2 so stay tuned.

And on <unk> I mean.

You can't give guidance for F. 'twenty, 2 we're not there yet right but.

You know as we've said, we like the momentum in both of those categories right now.

I would venture to guess personally back to randy's comments that our abilities on the supply chain front of part of it probably helping us win share at this point, but.

While the categories are probably going to over time broadly kind of revert back to single digit growers are still there's still growth to be had I think of those categories.

Yeah. The another comment there on the HBC businesses that.

We grew in the U S and we grew quite.

Quite nicely in Latin America, there was a bit of a drag this quarter in Europe and net that's a direct reflection of Europe going back under Lockdown on retail in several countries where the.

People used to being back out in purchasing in person and that kind of shut down we expect that's going to trend. It back and then relative to the other comments the lumpiness of the year on year comparisons as sort of extreme but overall, we still see solid demand for small kitchen appliances, even as things open.

The back up it's just not as excessive as it was last year, the complement that with incredible growth in garment care as well as hair care and other categories and we feel good about going into next year.

Thank you very much.

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

Yeah.

Next question.

Now with that.

<unk> reached the top of our so we'll conclude our conference call today, Thank you to David Jeremy and Randy.

And on behalf of spectrum brands. Thank you for your participation.

Okay.

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

[music].

Good day and thank you for standing by welcome to the Q3.2021spectrum Brands Holdings, Inc. Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.

I ask a question during the session you will need the press star 1 on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like the hand the conference over to your Speaker today, Kevin Kim. Please go ahead.

Great. Thank you so much Don welcome to the spectrum brands Holdings, Q3, 2021 earnings conference call and webcast.

To help you follow our comments we've placed the slide presentation on the event calendar page in the Investor Relations section of our website at Www Dot spectrum brands Dot Com. This document will remain there following our call.

The slide 2 of the presentation, our call will be led by David Maura, Chairman and Chief Executive Officer, Jeremy Smelter, Chief Financial Officer, and Randy Lewis Chief Operating officer. After the opening remarks, we will conduct the Q&A.

Thank you Kevin.

Good morning, everyone and thanks, everyone for joining us on today's call.

As has become custom on these calls I'd like to start by thanking our 12000 plus employee partners around the globe.

You of all overcome a lot over these past 18 months and I'm very proud of you the management team and I appreciate each and every 1 of you.

We should all be proud of our progress which is further confirmation of the durability of our business and are winning playbook. Our teams have embraced both our global operating model and the spirit of our servant leadership culture.

Our stakeholders.

On a year to date basis, our businesses have delivered 19% organic net sales growth and 36% EBITDA growth.

We have and we will manage through these challenges with the same discipline and collaboration that allowed spectrum brands to navigate the tariff headwinds in 2019 and the pandemic restrictions of 2020, we will emerge a more durable company with a more resilient supply chain and we will.

Continued to be driven by our values of trust.

Countability.

And collaboration to serve our mission, which is we make living better at home again I want to thank you.

Now if I could have everyone turn to slide 6.

Our third quarter net sales grew 18, 1% driven by growth across all business units with standout performance from H H R.

This double digit top line performance also reflects 14% total company growth against our 2019 levels.

It reflects our actions over the last few years to reignite the flywheel of growth for our trusted brands.

Now turning to the bottom line.

Third quarter net income from continuing operations was $34.9 million and adjusted EBITDA was $167.4 million.

Mainly driven by <unk> organic growth.

What I'm actually most proud of this quarter is the discipline exhibitor of exhibited by all 4 business units as our EBITDA. This quarter included an additional $19 million and.

<unk> marketing and advertising spend versus the period of year ago. The.

Fact that our operators of our businesses continued to lean in and invest for long term future growth. Despite the current macro challenges is.

Evidence to me that our culture.

The culture of this company has changed and we are truly focused on sustainable growth.

I want to congratulate the team and thank them for continuing to invest in our businesses.

This quarter with of share repurchase program buying back over $10 million worth of inspection brands shares.

Turning to slide 7.

Headwinds from inflationary pressures stepped up in the quarter as expected.

Driven by transportation and commodity costs.

If I could ask you to please turn to slide 8.

Our balance sheet. This quarter remained strong with net leverage of 3.6 times and we have over $600 million in total liquidity.

We also successfully closed on the rejuvenate acquisition during the quarter for approximately $300 million.

Adding a fourth category to our ever expanding home and garden desks.

Turning to slide 9.

The drive profitable organic growth 2.

We plan to return cash to shareholders via dividends and opportunistic share repurchases.

Third.

We will continue with the disciplined M&A with tuck in strategic acquisitions that are synergistic and help drive value creation I am very pleased to report to all of our stakeholders that all of our recent acquisitions, including Omega Sea arbitrage and rejuvenate our performing.

At or above our original deal expectations, we continue to target net leverage in the 3 to 4 times range now Youll hear more from Jeremy on the financials and Randy will update you with additional business unit insights I'll turn the call now over to you Jeremy.

Thanks, Dave and good morning, everyone.

Turning to slide 11, and a review of Q3 results from continuing operations.

Beginning with net sales net sales increased 18, 1% exclude.

Excluding the impact of $25.9 million of favorable foreign exchange and acquisition sales of $34.3 million organic net sales increased 12%.

Net sales grew across all 4 business units.

Gross profit increased $58.5 million in gross margins of 35% declined just 40 basis points from a year ago due to higher freight and input costs, partially offset by higher volumes.

Proved efficiencies from our <unk> initiatives and favorable mix.

SG&A expense of $275.4 million increased 22, 5% at 23, 7% of net sales.

With the dollar increase driven by higher volumes higher advertising and marketing investments higher distribution and incentive costs higher transaction related costs and SG&A from our recent acquisitions.

Operating income of $98 million was driven by higher volumes improved productivity and lower restructuring costs.

We offset by higher freight and input costs and marketing and advertising investments.

Declines in GAAP net income and diluted earnings per share were primarily driven by prior year gains from the company's prior energizer common stock investments and gains from the extinguishment of salad CLO debt.

Adjusted diluted EPS improved to $1.57.

Driven by favorable volume and improved productivity.

Adjusted EBITDA increased 1.8% from the prior year, primarily driven by Hai.

Turning to slide 12, Q3 interest expense from continuing operations of $31.4 million decreased $4.7 million due to a lower cost of debt.

Cash taxes during the quarter of $8.6 million were $4.4.8 million higher than last year.

Depreciation and amortization from continuing operations of $38.6 million was.

It was $3.6 million higher than the prior year.

Separately share in incentive based compensation decreased from $14.2 million last year to $7.5 million. This year, driven by the change to incentive compensation payout methodology.

Cash payments for transactions were $16 million up from $7.2 million last year.

And restructuring and related payments were $5.1 million versus $25.2 million last year.

Moving to the balance sheet. The company had of quarter end cash balance of $130 million and $478 million available on at $600 million cash flow revolver.

Total debt outstanding was approximately $2.7 billion, consisting of $2.1 billion of senior unsecured notes for.

$497 million of term loans and revolver draws.

$156 million of finance leases and other obligations.

Additionally, net leverage of 3.6 times.

And during the quarter of the company repurchased 115000 shares for $10.2 million.

Capex was $15.2 million in Q3 versus $12.9 million last year.

Turning to slide 13, and our earnings framework for 2021, we are reiterating our earnings framework of the year as we continue to expect mid teens reported net sales growth in 2021 with foreign exchange expected to have a positive impact based on current rates.

Adjusted EBITDA is also expected to grow mid teens.

This includes benefits from higher volumes of <unk> efficiencies.

Approximately 11 months of results from the recent <unk> transaction in global Pet care and now includes approximately 4 months of rejuvenate for home and garden.

Offset by net tariff headwind of about 30% to $35 million driven by the exploration of previously disclosed retrospective tariff exclusions in 2020.

In addition, as David mentioned, we have factored in $120 million to $130 million of input cost inflation compared to a year ago, primarily in the second half of the fiscal year.

Fiscal 2021, adjusted free cash flow from continuing operations is expected to be between 260 and $280 million.

This includes plans for incremental investments in inventory levels as well as the expected input cost inflation.

Depreciation.

<unk> and amortization is expected to be between 180% of $190 million.

Including stock based compensation of approximately 30% to $35 million.

Full year interest expense is expected to be between 130 and $135 million.

Both restructuring and transaction related cash spending as well as capital expenditures are expected to be between 70% and $80 million.

Cash taxes are expected to be between $35 of $40 million.

And we do not anticipate being a significant U S. Federal cash taxpayer during fiscal 2021, as we continue to use net operating loss carryforwards.

We ended the prior year with approximately $800 million of of usable federal Nols.

For adjusted EPS, we use the tax rate of 25%, which includes state taxes.

Regarding our capital allocation strategy, we continue to target of net leverage range of 3 times, the 4 times adjusted EBITDA.

As it relates to the 2021 earnings framework. Please keep in mind the few factors.

First we continue to plan for incremental brand support investments of approximately $45 million for the year as we continue to raise awareness consideration and purchase intent.

Second recall that Q4 results. This fiscal year will have 6 fewer selling days compared to the prior year and important to recognize this modeling nuance.

Third we continue to manage through inflationary pressures, which are still expected to be $120 million to $130 million higher than last year.

And lastly, adjusted EBITDA is also expected to be negatively impacted by the absence of energizer dividend income.

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

While the impacts of COVID-19 over the past year of creating extreme volatility in the year over year and quarter to quarter comparisons of our businesses. Overall, we continue to believe the consumer demand remains positive and our categories and the strong performance of our brands continues to drive long term growth.

These efforts in addition to our continued commitment to long term commercial strategies operational investments helped drive another quarter of top and bottom line growth.

Now, let's dive into the specifics for each business, starting with hardware and home improvement on slide 15.

Third quarter reported net sales increased 48, 8% and organic net sales increased 46, 7% topline performance was primarily driven by security sales growth over the prior year.

Results from the prior year and plumbing and builders' hardware.

EBIT increased 56%, primarily driven by volume growth and productivity improvements and partially offset by higher freight and input costs and higher advertising investments.

This represents our fourth consecutive quarter of strong double digit sales growth for <unk> as well as 18% growth compared to 2019 levels.

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

Additionally, fundamentals across both of the repair and remodel and the Newbuild channels continued to be strong.

As we turn to expectations for the next 2 quarters, we should look at last year's history if.

If you recall Q4 of last year started the strong rebound in sales as production of our security products recovered dramatically from the COVID-19 government shutdowns.

Our Hai teams across security plumbing, and builders' hardware continue to be focused on driving growth and taking share. We will continue to invest in innovation marketing and advertising.

And are seeing positive results in retail Pos and benefits from recent commercial wins from Clayton homes, Shea homes and another in a number of other top 100 U S builders.

In quick set we remain focused on driving demand with our exciting halo of an Halo touch smart lock product lines, which includes biometric and Wi Fi enabled technology, along with voice control capability through Alexa and Google Assistant.

Also contained smart key technology, which allows users to rekey their own locks to any quick set of key in about 15 seconds.

Micro band, which incorporates anti microbial technology on the surfaces of our hardware.

Net of home and personal care, which the slide 16.

Ported in organic net sales increased 9.5% and 4.2% respectively.

Adjusted EBITDA decreased 11 decreased to $11.8 million net.

Net sales were driven by continued strength in small kitchen appliances, and personal care categories with notable growth from hair care in garment care segments.

The U S continued to grow along with strong growth in Latin America as retail channels began reopening after shutdowns from COVID-19.

Lower EBITDA was driven by increased freight expense substantial investments in marketing and advertising and input cost deflation. This was partially offset by pricing actions higher volumes and productivity improvements.

Q3 represented the eighth consecutive quarter of year over year top line growth for our clients' business performance was driven by double digit growth in hair care in garment care products as well as moderate continued growth in small kitchen appliances compared to the outstanding sales from last year.

Our consistent commercial wins over the last 2 years and continued investments gives us confidence in our plans to continue growing share and taking shelf space with our key retailers.

As we outlined on our last call inflationary headwinds as well as continued marketing investments of <unk> in Q3 and Q4.

Yes.

Moving to global Pet care, which is slide 17.

Q3 represented another quarter of top line growth reported net sales grew 6.5% while organic sales declined 7.2% adjusted EBIT declined 2.8%.

Higher net sales was attributable to acquisition sales, which drove companion animal category growth.

Top line results this quarter were impacted by lower than desired fulfillment levels. During the June transition of the <unk> providers at 1 of our major U S distribution centers the <unk>.

Fulfillment challenge was the transitional issue of customer shipment volume returned to pre transition levels by the end of the quarter.

The transition of service providers of the distribution center in the U S was the planned strategic move.

Our global Pet care business has been a very strong performer for several years with the 11th consecutive quarters of sales growth.

Our new partners of Fortune 500 World Class service provider with extensive experience working with some of the largest companies in the consumer product space.

Have the experienced scale systems and automation processes to take our global pet care business to the next level of customer order fulfillment and supply chain efficiency.

The facility transition is now stable and we expect the benefits of the new capabilities to start showing up this quarter.

Categories is.

The long term commitments and bodes very well from the future demand of our products.

In addition to operating of very strong business, our global Pet care unit is leading in another equally important area.

Moving back to society.

Through our long standing relationship with our Glo fish brand, we partner with outstanding organization named well aware.

<unk> is a nonprofit organization headquartered in Austin, Texas that provides innovative and sustainable solutions to water scarcity in East Africa.

While our partnership goes back almost 10 years. This quarter, we completed 1 of our most successful fundraising campaigns ever through well aware as shower strike program.

These fund raising actions along with matching funds from spectrum brands will directly contribute to providing a lifetime of clean healthy water for thousands of people living in 2 communities in southern Kenya of.

A huge thank you to all of our spectrum brands participants and to the many people who donated for this very worthy cause.

I want to thank well aware founder Sara Evans and her incredible staff for allowing us to play a very small part in the tremendously important work that they do.

And finally home and Garden, which is slide 18 third quarter reported net sales increased just less than 1% organic sales declined 3% and adjusted EBITDA decreased 3.8% the.

The net sales increase was driven by repellent category growth from distribution gains as well as contributions from the recently acquired rejuvenate cleaning business.

Of herbicides and insecticides were negatively impacted by unfavorable weather through much of the first 2 months of the quarter.

The EBIT of decrease was driven by lower volumes and increased marketing investments and partially offset the pricing actions and productivity improvements.

Despite the challenging weather in Q3, our business continues to outperform the category of POS performance, thus far in Q4.

It has been positive with more favorable weather patterns and continued strong retailer support despite ongoing challenges from raw materials and freight markets.

Given these on going challenges the home and garden team has announced another round of planned price increases at the end of last month.

And just recently rejuvenate was named Hgtv's best multipurpose hardwood floor cleaner.

We look forward to applying our strength in supplier partnerships manufacturing and marketing to further strengthen the rejuvenate brands, particularly within underpenetrated channels and retailers.

Our continued A&P investments in home and garden. This quarter are consistent with our strategy to invest more resources to tell our story around the brands such as spectrum side cutter Hotshot Equallogic and now rejuvenate.

We believe these actions will further enhance our mission to be the recognized market leader in providing consumers the best solutions to conquer natures challenges and enjoy life.

Now, let's turn to of our internal growth and efficiency efforts for global productivity improvement program on slide 19.

As David mentioned, we remain laser focused on execution of these key initiatives as Q3 delivered productivity improvements across all business units, we remain resolute on using these savings to invest back into the business to drive long term sustainable organic growth, especially during these challenging times.

Widespread inflationary headwinds stepped up this quarter and more meaningfully impacted our Q3 results.

As we said during our last quarter. We continue to expect these gross headwinds to be approximately of $120 million to $130 million higher than fiscal 2020 levels.

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

We are expecting we.

As Jeremy alluded to earlier. These headwinds are currently included in our earnings framework for this year.

While we believe that some of these inflationary pressures are temporary in nature and may begin to moderate in fiscal 2022, we are preparing for higher levels of growth headwinds next year.

As a reminder, the inflation we are experiencing in fiscal 2021 is hitting us almost entirely in the second half of the year as we look forward to fiscal 2022 of these inflationary headwinds are expected to be first half weighted.

In my section I want to acknowledge another sensational quarter of progress on our operating model, our cultural advancements in our strategic initiatives and the thank our 12000 plus employees for all of their doing to truly make us a better faster stronger spectrum brands now back to David.

Thank you Randy and Jeremy Thanks, everyone for joining us today.

Look at this point, we've covered quite a bit on the call.

I want to conclude now with the key takeaways here on slide 21.

First our third quarter financial results reflect another excellent quarter of top line growth.

As I stated, we expect a strong finish to fiscal 2021, and we have great momentum heading into fiscal 2022, we remain encouraged by consumers' demands for our products and our retail partners' enthusiasm for our categories brands and our new product launches.

As I sit here today, I am excited and optimistic about the future of our businesses and our company as a whole as I mentioned earlier the company's culture has shifted we are no longer focused on running our business for short term results. We are a more efficient company today and we are reinvesting much of the saved.

Earnings from our global productivity improvement program back into driving the growth of our 4 business units.

Additionally, the backdrop of low interest rates the U S consumer with approximately $2.5 trillion dollars in liquid assets combined with the strong housing market and of permanent demand shift higher for our pet and home and garden product offerings paints the picture of a very strong macro demand in.

Environment for our company.

As we mentioned on this call. We also continued to see strong demand for our home cooking appliances, grooming shave and beauty care product lines, which should be further aided by an expected strong back to school selling season.

In summary, all of this adds up to a very favorable view of our prospects prospects as we enter our fiscal 2022 on October the <unk>.

The new energy of our teams and the investments we've made in innovation marketing and advertising leave me enthusiastic about our new product development pipeline and our expected new product launches in fiscal 2022 and 2023.

I expect our current challenges on the supply chain to be mostly transitory.

I expect that we can overcome a lot of the headwinds that we're currently seeing on the inflation side.

The future of spectrum brands is genuinely Brian.

I want to again, thank all of our employees from our frontline workers in the factories and the distribution centers to the many other teams around the world that have been working from home.

I am extremely grateful for all of the sacrifices of our spectrum brands employee partners that you've made to navigate our company successfully through these challenging times.

Thank you for your time and your continuing support I'll turn the call now back over to Kevin for any questions.

Great.

Dan, Let's just dive right into Q&A go ahead.

Reminder, to ask a question you will need the press star 1 on your telephone to it.

Draw your question press the pound key please standby, while we compile the Q&A roster.

And your first question comes from the line of Nik Modi with RBC capital markets.

Yes, Thank you and good morning, everyone. So 2 questions.

From me on the global Pet.

Is there any way you can help quantify the the DC issue and the impact of had on the quarter and what gives you confidence in.

We expect some of the sales loss.

The kind of come back and forth. So any context on that would be super helpful. And then the second question was really around the.

The HDD business.

The Prime day move you.

Obviously had very good growth.

Fall short of expectations. So just wanted to get understanding of what happened there. Thank you.

The Nick I'll take a shot at it and then ill, let Jeremy and Randy fill in but what gives US a lot of confidence is look the DC move was just the fact, we outgrew the old 1.

Out of that new DC in pets history in the month of July so.

We think thats very much behind us and we're looking forward to very nice growth out of our pet unit in the current quarter.

In regards to appliances.

Sorry that had missed the expectations, but it didnt Miss mine.

We continue to see very nice demand for our home appliances, which I think most people thought was just the COVID-19 pull forward.

But in fact, we see continued growth there.

And.

We're having we're having a lot of success with our groom.

And our beauty products as people gear up to go back to school. The main thing for US is continuing its why I think our supply of <unk> supply chain group.

It's just every day as the bottle to make sure we get these.

The supply on the water and then to the Dcs into the stores and so that's that remains our top focus at the moment I'll, let Randy and Jeremy chime in for additional color.

Yes, so back to Pat Nick.

Going to quantify specifically.

Our shipping expectations were that were light due to the transition of what I will say is that we do.

We didn't experience any change in Pos sequentially. So.

Has remained strong I will say that we would have seen nice organic growth of net sales in the quarter had we not experienced that slowdown, but as David said July was a record for us up over last year up I think over 20% compared to 2019. So we're really pleased with where that's at R&D day.

Nick just reiterating the fact this is an investment in the future and the the.

The demand on that business has been so strong for the last.

4 to 8 quarters. There was just never a great time for us to be able to take any downtime to move that over so we had to we had to do it on the slide and we're up where we need to be and we're going to of a lot more capability of the headroom to handle the growth going forward.

That facility saw a 34% increase in output since 2018, and just needed some extra capability.

Thank you Bob.

Thanks, Nick.

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

Thanks, and good morning, everyone. I Hope you all are doing well so good morning, Peter I wanted to.

I wanted to ask a question David I'm not sure you can really provide much but.

I would love your view on strategic M&A in the context of the recent headlines around <unk> and I know what day did you.

Kind of discussed publicly the disappointment in valuation and I know M&A has long been part of the spectrum strategy.

What kind of love to get your view on how you think about value creation in the context of M&A and whether kind of of your frustration with how the market value of the combined.

The change your view of how you think about this business structure longer term.

Well look I think I'll start by saying, we're really excited about the.

The acquisitions of <unk>, and Omega Sea and quite frankly.

<unk>, it's been really great to get those.

The particularly rejuvenate the starting the integration process.

All of that business continues to perform above our expectations.

The other 2 I mean look I think at the end of the day, we're not going to comment on any strategic activity. It's just not the companys policy.

But no I definitely been vocal about the fact, the I mean here we are today I mean to think that.

We've got a company.

We're paying of 2% dividend, we're buying back stock.

And.

I think it's pretty amazing.

Year to date, we've been able to grow the business, 19% on the top line, 36% on the EBITDA line.

We're generating a lot of cash we're focused so look we're going to continue to execute but we definitely do not believe that the marketing of the market vowing us below 9 times EBITDA is.

We have an issue of that so we will continue to execute we're looking forward to a strong finish to the year here with our fourth quarter and we think we're going to enter 22 with a lot of momentum.

But yes I think.

My disappointment is more into the short term nature of the market and.

But we'll just we'll just continue to be consistent and we'll continue to put up numbers.

I am sure of that.

1 day will be appreciated.

Got it and then maybe just following up on that last piece, David you sound pretty optimistic about fiscal 'twenty, 2 and the broader category macro headlines Inc.

Not asking for fiscal 'twenty, 2 guidance, but youre clearly exiting this year with strong momentum in the long discussed Street estimates being too conservative for next year. So how should investors think about growth from a category perspective.

Even as you kind of cycle of these difficult comps.

When I tried to hit that in my prepared remarks, I mean, we just drove a very good.

The macro backdrop that.

It creates a lot of consumer demand for our finished goods and.

You know I think that.

Ultimately over the next couple of quarters.

Wall Street, our retail investors whoever it is will figure out the pest demand is.

Materially higher level of aggregate demand and so as home and garden and.

So a lot of things so I think look it's the demand is there.

And it's our job now to just manage through some negative externalities with inflation and supply chain, but.

Yes look the.

The other thing I would tell you is R&D and innovation, they arent instant gratification payback methods.

We've been building an R&D team for example in <unk> Holdings.

Garden, and we put a lot of money in it and we've upgraded a lot of talent, but yes.

I wish you guys could see what we see in terms of our pipeline and our new products, but.

Of the nature of being public.

That's not a possibility but the.

Those products take multiple years to create and then launch because of the EPA regulatory environment, but.

<unk> and we intend to take share and growth and so again, we just we wish people would take more than the 24 hour review of the company as an investment.

Thank you I appreciate it best of luck.

Thanks. Thank you. Thank you Peter.

Your next question comes from the line of Robert <unk> with CJS Securities.

Good morning, Thanks for taking the question.

You touched on this obviously.

In your prepared remarks, you talked about it for quite some time I just wanted to dig back into the inflation that youre seeing a little bit obviously as you said it doesn't end at the end of your fiscal quarter.

So there should be some inflationary pressures in the first half of next year can you tell us kind of where you are in terms of pricing that you realized or that is expected to be realized next year.

How thats being received by your end customers and how you plan to continue to offset future inflation with pricing.

So Bob this is Randy I'll jump on to try and take that.

Obviously, we.

We don't comment about the specifics of pricing and I can tell you that it varies significantly by business unit and region channel customer et cetera.

But the what we're doing is we're utilizing a lot of the capabilities from <unk>.

Our enhancements through global productivity, where we've brought you've heard us talk in the past about our commercial operations functions and so we've got real.

The top talent analysts that are helping us understand the drivers also helping us to go into our retail customer partners and show them. The impacts of how we can work together to have the minimal impact on consumers, but also drive the necessary margins for both of our businesses.

Backdrop to have those those discussions so.

Overall, I am pleased with the progress.

Im very pleased with the approach with regards to how we continue to offset and again a very thorough.

Thorough approach from the start to finish working with the partners on supply side working with alternative options of design product changes sourcing onshoring and then ultimately also don't forget about innovation as David mentioned higher vitality, when you bring vitality out of <unk>.

Tends to price at the market at the appropriate margin at the time, so we get benefits from that in that way also so overall I feel that we are.

Better prepared to deal with these headwinds than we ever have been in the past.

Okay, great. Thank you very helpful and insightful.

Obviously, a lot of this as you mentioned is enabled by the global productivity plan, which was.

Executed extremely well 1 of the things you are doing with the savings you've mentioned as increased advertising and promotion innovation.

Can you, maybe just highlight a little bit more about the targeted spending of the.

The savings from from GE Pip and.

If you reach all of your growth. This year does that do you get to the increase that spending further next year have you reached your targeted new spending level or where does the A&P in the innovation spending that youre increased from GPS go in the future.

Yes look I want to talk about because I think what I was trying to do with this morning's script in the earnings release was to let you know that.

It wasn't just complementing the operating leaders the complement them they've done an amazing job of staying steadfast.

And investing for the long term hopefully what the street can figure out is even though we reported 167 million EBITDA, which I think be consensus.

That was burdened by $19 million of incremental spend.

In marketing and innovation and I mean, that's that's a real.

Credit to the team for staying steadfast despite inflationary headwinds and supply chain and so look I think we made a lot of progress in this area.

But I think that.

There is more to go but we're going to keep growing the earnings of this company as we invest so.

That is the flywheel, we talk about but Randy Jeremy anything to add yes, I'd say Bob over the last couple of years, we've increased that spending.

Kind of generally category categorizes brands support investment.

About $70 million on an annual basis from 19% to 21.

Give or take.

As it relates to our targets I think it is.

A little bit different by business by category on kind of what level of spend is necessary. I think we are still under where we would expect to be 2 or 3 years from now.

But we're doing it in a measured way as we build the talent and build the muscle around getting the right ROI on that spend.

We're gonna corner of where we're going to earn our way into it but again, what I'm trying to highlight for people of the quality of our earnings stream is really increased right I mean, if you if.

If you unburden the 167 this quarter.

Could have been 187, and EBITDA right and that would have been impressive for today, but not necessarily good for the business 2 years from now so we're doing the right thing.

Super Thanks very much.

Thanks, Bob.

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

Okay.

Hi, good morning.

Hey, Chris.

So I was hoping to maybe just kind of level set how the.

The quarter came in and this is kind of in the context of sustainability going into next year right. So I mean.

Garden seems to be impacted by weather, but I'm curious your thoughts there in general just on relative market share Pat.

The strong underlying and you actually need to be expanding of the business Haj growth. The obviously phenomenal in HPT came it sounds like more or less allowed the expectations I guess, if I kind of put all of that together like garden kind of good shot at growing next year Pat has a good shot at growing next year on this revised base.

Maybe the question is is that fair and then and again, just maybe high level of concepts of like the sustainability of growth drivers because I think the set.

Big debate amongst the investors.

<unk> has been so strong. This year. These are these are starting to think that could actually be sustainable over a 4 quarter of 6 quarter 8 quarter period.

So just any any sort of maybe like the incremental commentary on how this quarter came in and how that kind of makes you feel about just like the concept of sustainability go forward because I think thats, maybe 1 of 2 major based on all of the stock right now.

Look I'll start it, but then I'm really going to hand, it over to the team.

I'm coming to work in 2022 to growth.

And we expect to grow our vessels.

So Jeremy Randy.

Yes, so Chris Hey.

Just to the comment on home and Garden you.

You asked about weather.

That's the business that.

You just have to be very long term focused and we believe that the fundamentals in that category.

Continue to look attractive so there's a number of macro demographic changes with regards to.

The transition of populations towards the south transitions of populations from cities to the suburbs working from home.

The shift in how people view of their homes over the last 12 months to 18 months all of those things bode very well and we think the competitive environment is really great for US. We think it is our business that we were probably the least invested in several years ago. We think it's our business. It probably has the most potential for.

<unk> as a result of the changes in our strategy. So.

The 1 thing I know from being associated with that business for over 2 decades is that.

The return to sort of lumpy quarter to quarter, not only because of weather, but also because of the retailer purchasing power and patterns and everything else.

You just have the backup and say, we're a strong player in an attractive category with really great margins and really high barriers to entry and we like that.

I think you answered your own question and Pat.

Looks to be strong we expect the the macro.

<unk> should continue to be positive we think it has the stickiest impacts from Covid and our globalization strategy or focus on.

Top brands in platinum products is really driving share throughout the day of that so Jeremy on the top of the attitude.

Yes, certainly I mean I think.

If you look at <unk>, we've been we've been.

Pleased with what we've seen in groom and hair care as the world has kind of reopened and Thats a great thing I think as the world Reopens.

A very short period of time, we saw demand decline in the kitchen appliances, which didn't surprise anybody but frankly, we were pleased with what we've been seeing most recently in overall demand there I think David talked about it with <unk>.

25 percentage of our business is exposed to new home.

Sales of construction here in North America, we like what we're seeing there we continue to win contracts of new builders.

Including in multifamily.

And then the retail environment for remodel the velocity of existing home sales continues to be strong and that is usually a big driver for us. So we like that in the back to home and garden I'd just I'd.

I would just remind folks I mean, we had a blowout year last year high single digit growth for a business that it was kind of of low single digit growth business for a while and here. We are sitting here 9 months into the year and we've got probably mid single digit organic growth for the year. So this is the kind of of 2 months.

Weather period that we saw in the quarter, but we shouldnt lose sight of.

Of how much growth, we've experienced and of that business over the 2 year period and the momentum of those brands have.

I appreciate you entertaining all of that just 1 follow up would be I know there is a.

The prior conversation around inflation and pricing.

As far as inflation rolling into the FERC copier fiscal 'twenty 2.

I Wonder if you could just kind of talk to where what are the areas, where you're seeing the most impact say over the next few quarters.

Whether that's metals resins ocean freight I know.

Some of maybe Simba.

The contract.

Locked there are.

From.

The negotiated terms of you've locked there might be rolling off domestic transportation logistics labor, just just kind of maybe like a rock.

Running the mill.

The key buckets of inflation that we should be mindful of over the next 3 of 4 quarters with spectrum.

Yes ill start and Randy can fill in with some color I mean, great points and I should remind everybody. We said it earlier, but it was a little bit different being of September year end compared to the calendar year end with the situation given the timing of when all of this.

Hyper inflation kind of started so our first half will be tough because of the only experiencing inflation in the second half of this year. So that's kind of kind of 2 quarters of of lapping that inflation hitting our P&L versus if you were of calendar year ended probably only have 1 quarter. So just keep that in mind.

As it relates to where we're seeing it.

Our operating model.

The $55, 60% of it is really ocean freight so thats the biggest single driver.

Impacting the businesses, a little bit differently, but certainly you know HBC.

The global Pet care and Hai kind of experiencing the larger share of ocean freight.

Materials, which would encompass metals resins et cetera, probably a quarter of the overall inflation.

John on the metal side, it would certainly be taken a big hit there and the rest of us pretty much labor in North American distribution after after things get to our Dcs.

Randy maybe you want to chat a little bit about ocean freight and kind of how we're approaching that spot versus contract et cetera.

Yes, so Chris 1 of the things we invested in back as part of our global productivity improvement program several years ago. It was 8.

And while this is a global commodity.

We've actually done quite well as we benchmark against competitors and as as well as our suppliers on 2 things number 1 being able to be on contract rate versus spot rate, we have a pretty good ratio. There. The number 2 is just access to 2 <unk>.

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

Thanks for all of that platform.

The next question comes from the line of Ian Zaffino with Oppenheimer.

Hi, great. Thank you.

I had 2 kind of follow ups and then I'll just ask right now and so I have another 1 after that.

First of all of the on <unk>, just trying to understand a little bit more about the dynamics here I guess, when we saw the reopening of kitchen declined a little bit of dengue some uptick.

So curious what drove that uptick and do you think these 2 businesses inside each PC could actually in tandem both improve.

Or are they going the offset when people return back to work.

And then the second question would be.

On the kind of the potential portfolio rejiggering I mean, if that was the happen to be significant proceeds.

Which can kind of begs. The question is how are you thinking about capital allocation now.

Hum.

If you are potentially to come in discharge proceeds.

But then maybe also just the general AP don't come into those proceeds.

I'll take it backwards and then I'll, let the teams talk about the demand side of it.

The kitchen and personal care look.

We're here to run businesses in the growth businesses, and we think we're making great investments too.

Sales and earnings growth going forward.

Hypothetically to answer your question I mean, if we came into a bunch of cash today of it just fell out of the helicopter.

I would buy back a lot of stock.

I know everyone knows us and I know that I still look wrong in the short term, but I think of our security I think our stock price is materially undervalued.

And I think we are generating a lot of free cash flow.

The IPO market I see things go public at 17 times, EBITDA and I scratch My head why where we're trading at 9 but I do know the fundamentals when and I do know that staying the course.

Pays dividends and so we're going to continue to be the more efficient consistent operator that we've built over the last 2 years and we're going to we're going to take it up a notch in 'twenty 2 so stay tuned.

On HBC.

You can't give guidance for F. 'twenty, 2 we're not there yet right but.

As we've said we like the momentum in both of those categories right now.

I would venture to guess personally back to randy's comments that our ability to on the supply chain front of party, probably helping us win share at this point, but.

While the categories are probably going to over time broadly kind of revert back to single digit growers are still there's still growth to be had I think of those categories.

Yes, the another comment there on the Hec business is that.

We grew in the U S and we grew quite.

Quite nicely in Latin America.

As a bit of a drag this quarter in Europe and net that's a direct reflection of Europe going back under Lockdown on retail in several countries where.

People used to being back out in purchasing in person and that kind of shut down we expect that's going to trend back and then relative to the other comments the lumpiness of the year on year comparisons as sort of extreme but overall, we still see solid demand for small kitchen appliances, even as things <unk>.

Going back up it's just not as excessive as it was last year, the complement that with incredible growth in garment care as well as hair care and other categories and we feel good about going into next year.

So thank you very much.

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

Next question.

Now with that.

<unk> reached the top of the hour. So we'll conclude our conference call today, Thank you to David Jeremy and Randy.

And on behalf of spectrum brands. Thank you for your participation.

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

Q3 2021 Spectrum Brands Holdings Inc Earnings Call

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