Good day. Thank you for standing by. Welcome to the Spectrum Brands Holdings, Inc, Second Quarter 2023 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 this session, you will need to press star one one on your telephone. You will hear an automated message advising you that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Faisal Qadir. Please go ahead. Thank you. Welcome to Spectrum Brands Holdings Q2 2023 Earnings Conference Call and Webcast. I'm Faisal Qadir, Vice President of Strategic Finance and Enterprise Reporting, and I will moderate today's call. To help you follow our comments, we've placed a slide presentation on the event calendar page in the investor relations sections of our website at www.spectrumbrands.com. This document will remain there following our call. Starting with Slide 2 of the presentation, our call will be led by David Maura, our Chairman and Chief Executive Officer, and Jeremy Smeltser, Chief Financial Officer. After opening remarks, we will conduct the Q&A. Turning to Slides 3 and 4, 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 May 12, 2023, our most recent SEC filings and Spectrum Brands Holdings' most recent annual reports on Form 10-K and quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statements. Please note that we will discuss certain non-GAAP financial measures in this call. Reconciliation 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. I'll turn the call over to David Maura. Over to you, David. Hey. Thank you, Faisal. Good morning, everyone, and thank you for joining us today for our second quarter earnings update. We appreciate everyone attending. I'll begin with an update of the company's strategic initiatives, followed by an overview of the operating environment. Jeremy, as usual, will then provide a more detailed financial and operational update, including a discussion of the specific business unit results. If I could get everyone to move to Slide 6. Let me first start with a positive achievement on the strategic front. As many of you know and you've already learned from our press release last week, we've agreed to a stipulation with the Department of Justice to settle their challenge of ASSA ABLOY's $4.3 billion acquisition of our Hardware and Home Improvement segment. We remain confident that the transaction will close on or before June 30, 2023. We are particularly pleased that our hardware asset and employees are going to such a great home in ASSA ABLOY. I have not only the utmost respect for them as a company, but their culture is excellent. They are a high-performance business with impeccable character. I am confident that our employees and brands will flourish in ASSA's hands as they take HHI to the next level operationally. This is the most significant strategic pivot likely in the history of Spectrum Brands, as the receipt of the HHI sale proceeds will materially strengthen our balance sheet, enhance our capital allocation strategy, and in fact will make us a net debt-free company. This transaction will also bring us closer to our long-term goal of becoming a faster growing, higher margin, pure play Global Pet Care and Home & Garden company. This will also allow the team to devote all of our resources to and to prioritize the long-term growth of the remaining businesses. We remain committed to finding a strategic and organic way to enhance the value of our Home & Personal Care business. As we have previously communicated, we will use the proceeds from this transaction to de-lever and to strengthen our balance sheet. We will start that process by paying off the term loan and the revolver facility immediately following the close of the HHI sale. We also plan to return cash to our shareholders through share repurchases. Our long-term leverage target remains to be between 2x- 2.5x on a net levered basis. Now, let's move to our operating environment and the financial results. I'd like to focus on two key messages today. First, our renewed focus on profitability, working capital management, and cost management continues to pay off despite a difficult and unpredictable market dynamic and the macroeconomic headwinds we and our peers have been facing. While these headwinds are challenging to manage, we remain confident in our long-term strategy and our ability to deliver value to our customers. Secondly, we continue to face short-term headwinds related to consumer inventory actions, particularly in our Home & Garden business, that are more severe than we expected, and that will impact our fiscal 2023 results more than we previously anticipated. Building on the first message, our focus on cash generation continues to pay off. We reduced inventory by another $170 million in the quarter, including our HHI business. Following a reduction of $170 million in the preceding six months. That means since turning our attention to running our business for cash and prioritizing cash flow and inventory reduction over earnings, we have now reduced our inventory by over $340 million, including HHI during the last nine months. We continue to focus our operating priorities to maximize cash over earnings and reduce our overall inventory levels. The strategy is clearly working as this effort has resulted in positive free cash flow so far in the current fiscal year. While we will continue to focus on working capital management and strengthening our balance sheet, our inventory is now approaching appropriate levels to support the demand in the marketplace, and further reductions will come from rebalancing our inventory profile to minimize excess inventory. On the cost side, we remain focused on simplifying our business model and reducing costs to operate as a leaner organization with a renewed financial discipline. To that end, we have made further fixed cost reductions and have eliminated additional headcount in certain focused areas of the organization. With all the cost actions in place, we believe we are well-positioned to face the short-term headwinds while still maintaining key capabilities necessary to continue to invest in the long-term growth of the businesses. Now, building on my second message regarding these short-term headwinds. As expected, the consumer demand environment remained challenging compared to the strong COVID-related demand growth over a year ago, especially for the hard goods categories, where demand is continuing to normalize to pre-pandemic levels. Our retail partners remained focused on inventory reductions in those categories. Our key retail partners in our Home & Garden business changed their strategy to reduce inventory in the quarter compared to a strong prior year pre-build ahead of the season. Our Global Pet Care and Home & Personal Care businesses performed in line or better than expectations, we were disappointed with the results in our Home & Garden business for this quarter, which were also impacted by adverse weather conditions in key markets late in the quarter. Our financial results obviously reflect these conditions as our total sales declined 9.7%, while organic sales declined 10.1%. Jeremy will provide more details by business unit in his comments. While this volume decrease was the main contributor of the EBITDA decline in the quarter, EBITDA was also pressured by unfavorable FX year-over-year, as well as the impact of selling down our higher cost inventory accumulated during the prior- year periods. As a reminder, we started this fiscal year with approximately $55 million in excess capitalized variances on our opening balance sheet, and we expected to roll through our income statement in the first half of fiscal 2023. We have now substantially sold all of that inventory, and we are seeing currently the expected profitability inflection point in our recent monthly results. If I can move your attention now to Slide 7 and our high-level fiscal 2023 earnings framework. We remain very pleased with the performance of our Global Pet Care business, and we continue to see improvements in our Home & Personal Care business, despite the anticipated headwinds in its end markets. We also remain very confident in the long-term strategy for our Home & Garden business. With the change in retailer inventory strategy that we experienced in the just completed quarter, we expect sales in that business to be well below the POS levels in the fiscal year and therefore below our previous expectations. With the additional sales pressure, we now expect the H&G business will not reach its full earnings potential during this fiscal year and will fall short of our previous EBITDA expectation for that business. Based on this additional revenue pre-pressure, we need to update our earnings framework. We now expect the top line for the year to decline by mid-single digits to last year. As a consequence of this sales decline, we expect our adjusted EBITDA to be down in the low- mid-single digits. Before I turn the call over to Jeremy, I would like to thank our teams around the world who've worked tirelessly throughout a period of uncertainty related to the almost two-year pending HHI transaction. while facing all the while the current market headwinds and making some very difficult short-term decisions to prepare our business for long-term success. Now you will hear more from Jeremy on the financials and our additional business unit results, and then we'll join you in the Q&A. I'll turn the call over to you, Jeremy. Thanks, David. Let's turn to Slide 9 for review of Q2 results from continuing operations. Net sales decreased 9.7%, excluding the impact of $19.4 million of unfavorable foreign exchange and acquisition sales of $22.1 million. Organic net sales decreased 10.1% from reduced customer replenishment orders as they maintain focus on inventory reduction, particularly in Home & Garden and kitchen appliances product categories, and from lower consumer demand for hard goods and consumer durables categories compared to last year. Gross profit decreased $41.1 million, and gross margin of 29.4% declined 220 basis points from a year ago. From the reduction in volume and from sales of higher cost inventory accumulated during the prior year, partially offset by positive pricing. Operating expenses of $291.5 million increased 10.5% at 40% of net sales, with the dollar increase driven by the recognition of intangible asset impairments on our Rejuvenate and PowerXL brands of $67 million combined, offset by the positive impact of fixed cost reduction efforts initiated in the prior year and that continued in the second quarter, along with overall spend management. The operating loss of $77 million was driven by the impact of the sales decline and the intangible asset impairment charge I mentioned. The GAAP net loss and decrease in diluted earnings per share were primarily driven by the increase in operating loss and higher interest expense. Adjusted EBITDA was $51 million, declining due to the decrease in volume and unfavorable foreign exchange impact, offset by favorable price and fixed cost reductions. Adjusted diluted EPS declined to a loss of $0.14 per share, driven by lower adjusted EBITDA and higher interest expense. Turning to Slide 10, Q2 interest expense from continuing operations of $31.6 million increased $6.9 million due to a higher interest rate on our variable rate debt. Cash taxes during the quarter of $5.7 million were $6.7 million lower than last year. Depreciation and amortization from continuing operations of $22.4 million was $3.3 million lower than the prior year. Separately, share and incentive-based compensation decreased $2.1 million. Capital expenditures were $15.9 million in Q2 versus $10.2 million last year. Cash payments towards strategic transactions, restructuring-related projects, and other unusual non-recurring adjustments were $22.5 million versus $28.7 million last year. Moving to the balance sheet, the company had a quarter-end cash balance of $328 million and $362 million available on its $1.1 billion cash flow revolver. Total debt outstanding was approximately $3.2 billion, consisting of $2 billion of senior unsecured notes, $1.1 billion of term loans and revolver draws, and $91 million of finance leases and other obligations. Additionally, pro forma net leverage was 6.3x compared to 6.2x at the end of the previous quarter, as the trailing 12-month EBITDA declined sequentially. Now let's get into the review of each business unit to provide details on the underlying performance drivers of our operational results. I'll start Global Pet Care, which is Slide 11. Reported net sales increased to 0.5%. Excluding unfavorable foreign currency impact of $7.6 million, organic sales increased 3.1%. Net sales improved in the second quarter as compared to the first quarter, which was pressured by customers' focus on inventory management, leading to lower replenishment orders. Organic sales in both the U.S. and internationally increased over last year as demand for companion animal categories remained strong, offsetting softness in the aquatics category occurring across all markets. Sales were also helped by new price increases in EMEA and by the impact of pricing actions taken globally throughout last year. Our EMEA sales were adversely impacted by unfavorable foreign exchange rates as the dollar strengthened against the British pound and the euro compared to last year. Adjusted for FX, sales increased in EMEA due to growth in the companion animal category, mainly driven by our dog and cat food sales, which offset declines in aquatics as we continue to compare to strong prior year aquatic environment and equipment sales. Most of the planned price increases in EMEA announced during the first quarter have been successfully implemented, with a few starting in the third quarter. The price increases are offsetting cost pressure from unfavorable FX and energy inflation that we continue to experience in our international business, which are in line with our expectations. Sales in the Americas also benefited from strong growth in our companion animal categories, offset by declines in aquatics due to challenging prior- year comps. However, while our overall aquatic sales declined, sales for aquatics nutrition products continued to show growth. On the cost side, we experienced inflation in line with our expectations and are encouraged by the fact that costs have either stabilized or in some cases are starting to retreat. That said, we will continue to closely monitor input costs and strategically price as necessary. Fueled by innovation, our global dog chews business recently achieved an exciting milestone by surpassing $1 billion in retail sales. Exciting innovation, unique form factors and flavors, seasonal offerings, and global expansion have fueled that growth. In Q2, we launched innovation in the highly digestible rawhide segment through the Good 'n' Fit brand in the U.S., which has already gained distribution in mass and drug channels. In Europe, earlier in the year, we launched the Tuff & Tasty line under the Good Boy brand and have seen success in both the U.K. and in Germany, which is a new market for the brand. Additionally, in Europe, we launched new flavors and sizes in the IAMS brand and have expanded the Eukanuba brand into the wet cat food segment. Both have been well received and are one of the catalysts behind the strong growth our dog and cat food business is experiencing. Adjusted EBITDA for GPC increased to $46.3 million. The increase of $5.7 million was primarily driven by favorable pricing, including the incremental pricing actions in the EMEA region and our continued focus on cost reduction measures, including the fixed cost restructuring we initiated last year and further cost action during the first half of this year. This was partially offset by lower volume, the unfavorable impact of FX, and the impact of capitalized variances as we continue to sell our high-cost inventory from last year. On a positive note, the unfavorable impact of capitalized variances from the prior year high-cost inventory is now behind us, and we are already seeing our margin profile improve. We expect to see the positive sales trend continue in the second half of the year. We remain cautious about performance of certain categories within the pet specialty channels, such as aquatic environments and hard goods within companion animal, as the rates of new entrants settle to pre-pandemic levels. We expect the positive trends in companion animal consumable categories to more than offset these pressures. Overall, the category fundamentals remain strong, especially within consumables. This is encouraging as our business is becoming more aligned to consumable products for your pet, which represents over 80% of our total revenues. The GPC team remains focused on the execution of our long-term strategy, which is centered around inspiring more trust through the delivery of unique and innovative products in order to drive demand for our portfolio of leading brands. Our pet business is a historically recession-resistant business with tremendous upside potential, which is why we remain bullish about the continued growth of this business. Moving now to Home & Garden, which is Slide 12, net sales decreased 22% in the second quarter, driven by a higher than expected reduction in retail inventory compared to a strong prior- year build ahead of the season. Adverse weather conditions late in the quarter also negatively impacted the pest controls category POS and resulted in lower replenishment orders. This was partially offset by the impact of price increases. Sales of cleaning and restoration products also decreased due to POS decline in our relevant categories, as well as comparison to last year inventory loads during the quarter. Slower start to the spring cleaning season also contributed to the POS decline in the quarter. The weather has been a mixed story so far this year, with some very positive POS weeks mixed in with negative POS weeks due to cooler weather. As I mentioned earlier, there is a shift in the retailer strategy. Our key retailers are maintaining significantly lower inventory levels compared to last year in the second quarter. We now expect this trend to continue, leading to further retail inventory decline in the third quarter to pre-COVID levels. This reduction will directly impact our sales expectations in the second half. That said, we still expect high single-digit POS growth in the second half of the year and believe that consumer demand will remain strong with the weather outlook pointing to a more normal season with higher temperatures and humidity. As a reminder, on average, around 70% of POS is achieved in the second half of our fiscal year. We continue to believe in our strong innovation that is reflected in new products that are now being rolled out to the marketplace. On our Spectracide brand, we now have available the new One-Shot platform, a program designed to bring to market new ingredient technologies and superior delivery systems across several categories. First product under this platform is One-Shot Premium Weed & Grass Killer, a product designed for a highly demanding consumer that is willing to pay a premium for superior results. Traditionally, Spectracide has focused on consumers looking for strong results at a great value. Our One-Shot platform allows consumers to find also a superior performance option with the brand they trust. In repellents, we now offer new Zone Mosquito Repellent devices, Cutter Eclipse and Repel Realm. Although our brands have a strong presence in area repellents, the device-driven outdoor diffusers is a new segment for us. We are excited to offer these new products as it allows us to enter a segment where we feel confident about bringing disruptive technologies and superior devices to protect and delight our consumers and their families. We are excited about this launch and the future for our brands in this area. We are carefully monitoring POS and coordinating with our retail partners to ensure we can appropriately supply the products to meet consumer demand. As I referenced earlier, we expect further retail inventory reduction actions in the second half. We have made strong progress driving agility and speed into the organization as it will be required to effectively ramp up production and meet the expected increase in retailer demand as the spring and summer season continues. Adjusted EBITDA for our H&G business was $15.1 million. EBITDA decrease was primarily driven by the sales decline and the impact of selling through prior- year high-cost inventory. This was partially offset by the benefits of fixed cost restructuring and operational cost reductions initiated during the second half of last year. We experienced higher product costs from raw materials, labor, and freight in line with our expectations. As we look forward to the balance of fiscal 2023, we still expect sales growth in the second half of the year, but not enough to make up for the first half performance. As a result, we expect sales to be down for the full year. Although we believe that the fundamentals of the consumer market remain strong, this will likely be a difficult year for the Home & Garden business because of the challenges posed by the retail channel inventory strategy. Finally, Home & Personal Care, which is Slide 13. Reported net sales decreased 11.7%. Excluding the unfavorable foreign exchange impact of $11.8 million and the impact of the Tristar acquisition, organic net sales decreased 14.9%. The organic net sales decrease was driven by category decline from lower consumer demand, particularly in kitchen appliances and continued retail inventory reductions. Sales were also lower in personal care appliances and garment categories. North America retail inventory is particularly high on our PowerXL air fryers as demand remains well below pandemic highs. We expect continued pressure for the remainder of the year for this product line as retailers work down inventory through suppressed replenishment orders. On the positive side, our hair care category grew in the second quarter. EMEA region sales also declined, primarily driven by FX and reduced consumer demand. Net of FX, personal care category registered growth in the EMEA region, while small kitchen appliances continue to see the most pressure from consumer demand. Despite the difficult market conditions in the small appliances space, we are having success with our new launch of Russell Hobbs air fryers, which is quickly becoming an important category in EMEA, growing significantly from its launch last year. We have also successfully launched PowerXL in EMEA, which is rapidly growing versus last year. Adjusted EBITDA decreased to a loss of $1.9 million. Lower adjusted EBITDA margin was driven by lower volumes, the impact of unfavorable foreign exchange rates, and higher cost of sales as we continue to sell our high cost inventory from last year. Some of this EBITDA pressure was offset by our continued focus on cost reduction measures, including the fixed cost restructuring we undertook during the second half of last year and additional restructuring actions initiated during the second quarter of this year. Looking forward to the second half of the fiscal year, we continue to expect softer consumer demand, particularly in the kitchen appliances category, and expect U.S. retailers to continue their focus on inventory reduction. As such, we've also maintained our internal focus on inventory reduction and have further slowed down, and in some cases, stopped incoming orders. This focus on inventory reduction has paid off and has already resulted in a substantial decrease in the inventory levels in the HPC business. We believe HPC inventory levels are now appropriate to support the demand in the marketplace, and we do not foresee further significant inventory reduction here. Commercially, our renewed focus remains on driving fewer, bigger, better consumer relevant innovations that enhance our current market position, simplify the operating model of the business. Turn now to Slide 14 and our expectations for 2023. Given the change in expectations for our H&G business, we now expect fiscal 20-23 net sales to decline by mid-single digits to last year. Foreign exchange expected to have a negative impact based upon current rates. We expect adjusted EBITDA to be down by low to mid-single digits, primarily due to additional sales pressure with inflation headwinds, offset by the annualization of prior year pricing actions and additional price increases already implemented during the current year, as well as additional productivity gains and the benefits of our cost reduction actions. On to Slide 15. Depreciation and amortization is expected to be between $105 million and $115 million, including stock-based compensation of approximately $7 million-$12 million. Full- year interest expense is expected to be between $120 million and $125 million, including approximately $5 million of non-cash items. Cash payments towards restructuring, optimization, and strategic transaction costs are expected to be between $55 million and $70 million. Capital expenditures are expected to be between $55 million and $65 million. Cash taxes, excluding any gain on the sale of the HHI business, are expected to be between $25 million and $35 million. For adjusted EPS, we use a tax rate of 25%, including state taxes. To end my section, I want to echo David and thank all of our global employees for their strong efforts during these challenging times and for staying committed to our long-term strategic initiatives. Now back to David. Thanks, Jeremy. Thanks everybody for joining us on today's call. Let me just take a couple of minutes here to recap the key takeaways on Slide 17. Look, first, the resolution of the DOJ challenge of ASSA ABLOY acquisition of our HHI unit, is our most significant achievement. You know, we're well on our way now to completing this transaction on or before June 30th. With the successful completion of this transaction, we will be able to meaningfully strengthen the balance sheet, and we will immediately start the process of deleveraging. This transaction will also bring us much closer to our long-term goal of becoming a faster-growing, higher margin, pure play pet and Home & Garden company. It will allow the team to now devote resources and prioritize long-term growth of the remaining businesses in the company. Second, while we're facing some headwinds in our Home & Garden business related to a change in retailer inventory strategy, and the fact that they were more severe than we anticipated, that's now gonna impact our fiscal 2023 results more than we originally planned. We remain confident in the long-term strategy and our ability to deliver value to our consumers and customers worldwide. Last, we have successfully pivoted the teams to focus on profitability, working capital discipline, and cost management, as evident from our inventory reduction and cash flow generation thus far in the fiscal year, as well as the positive results of our fixed cost reduction actions. I wanna close today by reiterating that I remain very optimistic about the future of our company, and I believe we are well-positioned to execute on our operational goals, generate cash flow in fiscal 2023. I'm very excited about the strategic pivot that we're on now, and we're going through as we sell HHI to ASSA. I want everyone to know the future of Spectrum Brands is brighter than ever. I'm gonna now turn the call back to Faisal, and we can begin Q&A. Thank you, David. Operator, we can go to the question queue now. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question comes from the line of Peter Grom with UBS. Your line is open. Please go ahead. Thanks, operator. Good morning, everyone. Morning, Peter. David, it's been a while since you really discussed the use of proceeds in detail, and I appreciate the commentary, you know, around targeting net leverage in the 2x-2.5x range, and that you plan to return cash to shareholders via, you know, via buyback. Have you given any consideration to the size of the buyback and what the program, you know, could look like at this point? Hey, Peter, thanks for the question. Look, I mean, I guess the lower the share price, the bigger the buyback is my answer. Look, at the end of the day, right, we still haven't closed. You know, we literally just got through, you know, DOJ last week. This week it's been, you know, the board and today's earnings calls. You know, we're very confident in closing this deal, you know, on or before June 30. You know, the last nine months has really been us trying to get the balance sheet healthy. You know, working off a bunch of inventory here has really hurt the P&L. I believe, look, we're gonna pivot this balance sheet pretty quickly here, and now we're gonna really focus on pivoting the P&L and getting the profits going in the right direction. Look, I would like to meaningfully shrink our flow. You know, depending on where the share price is when we close the HHI deal, you know, we'll communicate further. I don't want to, I don't wanna pigeonhole myself right now. I wanna get to a close. I wanna recapitalize the balance sheet, and then we'll communicate then. We will be buying in shares, yes. Okay. That's helpful. Then just on the deal, you know, it seems like the press release has said there was one regulatory approval outstanding in Mexico. Is that something we need to be worried about? Is it progressing in line with expectations? I guess, assuming that goes through, how quickly can you close, you know, after you get that approval? Yeah, I think we just gotta have to stick to the script here. I mean, yeah, Mexico needs to approve the deal. We think they will approve the deal. We don't expect any issues with it. We intend to close the deal on or before June 30. Great. Thanks so much. I'll pass it on. Thank you, sir. Thank you. One moment for our next question. Our next question comes from the line of Bob Labick with CJS Securities. Your line is open. Please go ahead. Good morning congratulations on the DOJ settlement. Hey, Bob. Thank you. Thanks, Bob. Long time coming. Absolutely. Yeah, no, it was, nice theater, but it's a good outcome obviously. I didn't enjoy the theater, but thank you. Fair enough. Fair enough. I wanted to just take a half step back and say, you know, we're talking about a lot of macro and, you know, near term inventory and all that kind of stuff right now. Any of the discussion on today's call, impacting the, you know, calendar 2024 outlook for the businesses, or, you know, are we just kinda caught up in a lot of noise 'cause we have to be, 'cause that's the world we live in? Yeah, look, I think I'd like to talk to investors directly, right? I think, look, there's clearly been a lot of arbs in the stock. You know, you buy stuff on the rumor, you sell on the news 'cause, you know, there's over $100 a share in cash coming into the company here in the next, you know, month or so, month or two. Look, at the end of the day, you know, a fundamental investor should zoom out and realize that, you know, COVID pandemic, the supply chain elongation, the spike in demand from our retail customers has caused a very large object to have to pass through the snake, right? We ballooned our balance sheet to help our retail customers through, you know, hopefully, you know, in my lifetime, a once in a lifetime event. You know, when you take your balance sheet up $400 million-$500 million to try to you know, satiate retailers demands, and then that, you know, supply chain snaps back and then demand drops off a cliff, you know, liquidating, you know, for us, a small company, you know, almost, you know, $350 million- $400 million of inventory, you know, you not gonna do that in the most gentle way. That really, you know, damages your P&L. It's very difficult— You know, look, I'm very upset about our Home & Garden performance in the quarter, but the reality, it's very difficult, you know, to anticipate a retail shift from if you traditionally build inventory going into a season where, you know, you sell everything in 90-120 days, to well, hey, you know, we're just not gonna pre-build this year. Oh, by the way, we're gonna just take the inventory level down to, you know, pre-COVID levels. That's a, that's a big change in strategy that's very hard to, you know, to I just can't dig out of it in the next six months, you know, given the seasonal nature of the business. I think if people can kind of look at the fundamentals, you know, we're gonna have a very clean balance sheet. We're gonna be net debt free, and then we're gonna get this P&L going in the right direction. I'm actually. Look, I'm disappointed that the quarter wasn't better, but, you know, I'm really excited about what we can deliver to you guys, you know, this summer in terms of cleaning up the balance sheet and showing a lot more clarity as we've gotten through the distortion, as you call it, you know, with the inventory balance sheet, P&L, distractions. Yeah. I'd just add, Bob, I think, you know, as I think towards, you know, first the second half, as we talked about on the call, you know, we have seen a margin inflection point of that basically the entire $55 million of cap variance as we entered the year with is gone at the end of Q2. There might be $1 million left in HPC in Q3, but that's it. You know, that's not only a second half tailwind, that's a 2024 tailwind. Then the other thing I would mention is that I don't know if we were completely explicit about it, but, you know, the reality is our sales in H&G in fiscal 2023 will basically be below POS as a body of work, as a body of consumer demand. I would not expect that to continue in F 2024. I think there's, you know, positive news ahead for H&G as we look to 2024. Agree with David. Unfortunate we are where we are this quarter. It would have been a really nice quarter had it been a more normal season for us. Okay. Great. Thanks. Just, again, taking us back from previous calls, we've talked about, I believe you've said you know, you believe the pet business is a $200 million EBITDA business, $200 million plus. The H&G is a $120 million plus. Are those still the right kind of starting points when things normalize? I won't pinpoint you to a time period for it. Just in general, has anything changed materially in those businesses, or are those the right, you know, sizes for those businesses as we normalize? In my mind, those are the right numbers still, Bob. Okay. Super. Nothing to add. All right. Thank you, sir. Fair enough. I'll get back in queue. Thanks. Thank you. One moment. Our next question comes from the line of Olivia Tong with Raymond James. Your line is open. Please go ahead. Great. Thanks. Good morning. Good morning, Olivia. I wanna ask first. Good morning. I wanted to ask first on lawn and garden, because I get that the weather was unfavorable. We've obviously seen that across other companies already. Your sales seem to have been hit more this quarter than they were. I always thought relative to some of your peers, that your portfolio was skewed a little bit later in the season, given the insect control focus. What's your view on how much of this is weather versus a new normal on inventory or other factors that might be playing like, you know, playing into that like, you know, buying closer to demand and normalization of demand? Thank you. Yeah, I don't attribute a ton of it to weather. I mean, I think we had some spotty weather that, you know, could have helped us a bit later in March. The second half of March wasn't great. POS, the first half was pretty good. It really is about a shift in retail strategy where, you know, we were really expecting to see retail inventories normalize to 2021 levels. The reality is, to David's point earlier, they're going back to pre-pandemic levels, think like 2019 levels. Inflation adjusted, that's even lower volumes, because, you know, we do have a lot of price there. That, you know, as I said in reaction to Bob's question, you know, that's led to really low retail orders on us despite POS that's fairly normal because they're taking their inventory down. Now, they've been largely successful with that in the first half of the fiscal year. They meeting our big three retailers, though there is still some pockets we see where it's higher. I agree with your comment that as compared to some of our public peers in this space, our season is a bit later, but the strategy specific to our categories is one that we just did not expect as we entered the year. Got it. Wanted to ask you about HPC and your view in terms of the timing of exploring strategic alternatives. You mentioned inventory is now right size and you're prepared to mark, but also that small appliances continue to be under pressure, especially in kitchen. It looks like margins will be down again this year. As you think about closing up, and I don't mean to immediately go into strategic alternatives on another business before HHI closes, but any color in terms of how you're thinking about eventual exit strategy of that business so that you can get towards your longer term goal of getting to be a two-category company. Thanks. Yeah, look, I think the, you know, post-pandemic kind of fallout in that industry, you know, it's definitely gonna take us a couple of quarters to nurse that back to a proper level of profitability and health. I think, you know, you shouldn't anticipate us, you know, spinning that off or merging that the day after we close HHI. I think that's gonna take, you know, multiple quarters. You know, we are very interested as a board of directors as into becoming a pure play pet Home & Garden company, and we'll be very actively pursuing that, you know, this summer going into the fall. You know, we wanna be responsible. We wanna nurture that business. We want to, we wanna build that EBITDA back up, and then, we'll see what's available. Thank you. Thank you. One moment, please. Our next question comes from the line of Chris Carey with Wells Fargo Securities. Your line is open. Please go ahead. Hey, everyone. Hey, Chris. Morning. Good morning. The debt pay down, right? Term loan and revolver. I don't think that puts you at your leverage target. I guess the first question is, do you anticipate getting to your longer-term leverage target immediately, or would that happen over time? You know, Jeremy, do you still expect $ 3.5 billion net cash from the deal? Well, let me back up. Your question is a little off. If I get $4.3 billion of cash in the door, I only have $3 billion of debt, and my leverage ratio is a net debt leverage ratio. I'm net debt-free. My net leverage when I close the deal is negative. Yeah, no. That's fine. The goal is still term loan revolver, and then the rest of the debt you'll assess and the residual cash will remain on the balance sheet for buybacks or other strategic initiatives. That would be the key idea here. Yeah. I mean, look, you know, when we signed this deal, interest rates were 0%, right? In terms of deposits. We have some bonds out there that, you know, are sub- 4%. You know, we got to look at the whole cap structure, but it's a pretty good situation to be in. We wanna stay liquid. We wanna have plenty of firepower to buy in shares. We wanna maintain a very low leverage profile as we restore our earnings power from this point on. Yeah, we're pretty excited to get this closed and then to be able to focus. Not trying to make excuses, but having a big asset dangling out there for sale for two years is, it's consumed a lot of calories. Yeah. That makes sense. Yeah. Yeah. Too, Chris. Go ahead. Yeah. Yeah, if you look at the bonds and the capital structure too, right? Our highest cost bond, I think, is our 2025. That has a step down to callable par in July. That's obviously something we'll take a look at. Then, you know, as the year progresses, we kinda have a 12-month window on reinvestment, with proceeds. We'll look at the whole portfolio and figure out the right strategy. To David's point, a lot more financial flexibility and timing flexibility given where interest rates on deposits are now, which I think is a good thing for us and for our shareholders that we have time and we could be thoughtful on this. Just on the net cash proceeds. Pardon? Oh, yeah. You had said, right. Yeah. $3.5 billion-$3.6 billion net proceeds is the ballpark. Okay. All right. Thanks. Then, you know, this, just a follow-up. The, you know, this conversation on earnings power, I think is well taken. You know, clearly you have, you know, cost headwinds in the front half. You're cycling high cost inventory and, you know, obviously the retailer dynamic is something we're seeing elsewhere. I guess I'm also looking at fiscal 2024 EBITDA consensus, which is gonna be 30% growth versus, you know, where you've effectively guiding today, which certainly seems like a high bar. You know, the recovery here, I mean, are you expecting a quick snap back in your margin structure and sales, or is it more appropriate and maybe prudent to think about a, you know, a progressive build here back to, you know, the earnings power that you had thought about for this portfolio? Yeah, I mean, I think, you know, to my comments on the cap variances that we experienced, right? You know, that $55 million, I think, rolled off 25 and 29, Q1 and Q2 respectively. That debit, that excess debit, the cost of goods sold effectively goes to zero in Q3. You know, I think you're gonna see a really nice sequential improvement, particularly in Global Pet Care, which doesn't really face the retail inventory strategy change that Home & Garden is facing. I think the second half looks really good there, and it moves pretty quickly. HPC is a bit of a different story to David's comments on what's happened in that category, so a little more cautious, but we still have that sequential improvement in margins that comes from those cap variances being gone. Then you have Home & Garden, and we've obviously talked that to death here. I think that gets better as we go into 2024. I like your word progressive. All right. I like your word progressive. We need to get our house in order. We need to really get refocused and start to execute consistently. I like the word progressive. We've got a very good outlook. Okay. And, you know, forgive me, I know that I'm kind of dominating here, but I get this question a lot, so I figure I'd just put it to you then I'll get back in the queue. You know, The cash flow conversion to EBITDA is actually, it's phenomenal year to date. I realize there's the working capital, you know, dynamic with working debt inventory. Do you have a sense of what your free cash conversion, you know, should be over time in a more normal environment? You know, I don't know if adjusted EBITDA, a percentage of adjusted EBITDA is a great way to think about that. But, you know, any comment there on, you know, cash flow being, you know, seemingly an even bigger focus for you now, but it's atypical this year. What's the medium-term dynamic looking like from a cash conversion standpoint? I usually model it at 50% of EBITDA, Chris, in our longer term models. I think that's a safe assumption to use. Really confident in our revamped supply chain team, the experience that we've had the last three quarters, taking inventory down $340 million. You know, I think we're gonna stay really tight on inventory. In a business like ours, with the, you know, large customers that we have, inventory's the real only wild card in free cash conversion from EBITDA. I think 50%'s a safe way to assume it. Okay. All right. Thanks so much. Thank you, and one moment for our next question. Our next question comes from the line of Ian Zaffino with Oppenheimer & Co. Your line is open. Please go ahead. Hi. Great. Thank you very much. Thank you. You know, How are you guys? Good. Good. When I think about your proceeds, how much do you think you need to pursue, let's just say, tuck-in M&A? How much do you think you need to invest in the business? You know, there's questions on the buybacks and stuff like that, but I'm kind of more looking at it from an M&A perspective and then also a, you know, just investment in the business. Thanks. Look, I think going forward, you know, we don't have anything we wanna acquire right now. Zero. You know, this last nine months, you know, has not been, has not been any fun. You know, getting this balance sheet right, shrinking this flow, and then getting some real consistent profit production, you know, I think it's job one, two, and three around here. I think that's gonna benefit shareholders tremendously. That's where we're going. That's the best answer to everybody on this phone. You know, Look, I think next quarter's call, you guys are gonna get a lot more color around, you know, balance sheet, capital allocation, and, you know, we'll be able to talk at more liberty, right? It's just we've gotta close this deal, look at the world around us, I don't wanna box myself into anything on this call. You know, like I said, if the share price is really low, we'll buy a lot of stock. If it's high, we'll buy less. You know, we wanna clean this balance sheet up, you know, I like the other— You know, Chris, you were asking about free cash flow, the earlier question. I mean, it's a different world when your net debt is, you know, you're in a net debt zero position. You know, I just think that's a real game changer, you know, we'll be able to talk a lot more about it, I think people will be able to model things very differently. We'll become more of an EPS-driven stock than an EBITDA stock. This is a big deal. I don't think a lot of companies take cash proceeds in greater than their share price too often. Okay, good. I know you've kinda reiterated that you've certain net proceeds. How are we thinking about the NOL exiting or after the close of the sale? Is it gonna be exhausted? Is there gonna be anything left? Maybe just an update on kinda like the fees that you've been facing now versus what you've been expecting. Thanks. Oh, yeah. Jeremy will take that. Yeah. Yeah. We'll essentially use the entire U.S. NOL to protect the gain. Yep. Okay. All right, We will become a constant U.S. taxpayer after this deal. Okay, good. Then the proceeds, I guess, are the same regardless of like all the inventory adjustments and inventory changes, right? You're asking about the net proceeds. We still think the net proceeds after taxes and fees will be in the $3.5 billion-$3.6 billion range. Okay, perfect. Thank you very much. Thanks, Ian. Have a good day. Thank you, one moment for our next question. Our next question comes from the line of Brian McNamara with Canaccord Genuity. Your line is open. Please go ahead. Hey, good morning. Thanks for taking our questions. Don't mean to beat a dead horse, but in terms of a potential board authorization of a buyback, is it as simple as that just can't be done until the proceeds come through the door? No, we already have a billion-dollar buyback, and I've got $750 million available to me right now this morning. I've just been levered with a very, very levered balance sheet, and I personally have a lot of equity at risk, and I wanna get this balance sheet de-levered and see where the share price is and, you know, we'll go from there. Got it. Secondly, you've had a very consistent message in terms of debt pay down and the fact that your shares are inexpensive. With the stock now trading below where it closed before the HHI settlement came out last Friday evening, I'd be curious your view on why the market is not giving you guys credit for this game changer for your capital structure. Thanks. Shareholder bases change over time, you know, today's world, it's very rare to find somebody that looks at stocks for more than three minutes, let alone three weeks. When you have a deal that gets as much press as this $4.3 billion sale to HHI, you attract a lot of quants and arbs, we love quants and arbs, you know, when they see a share price pop, they tend to sell into it. There's been a lot of volume on the tape, we're getting a lot of rotation, you know, that's just technical stuff, you know, it's. I can't do anything about it, nor can I worry about it. I can just focus on the fact that, you know, sitting here before the call talking to my IR team. I think we're gonna have a very different shareholder base when you look at You know, people don't like levered credits. You get leverage down to 2x and stay there consistently, you're gonna attract a different shareholder base. You start growing your EPS consistently, you're gonna attract a different shareholder base. That's, you know, that takes time. That's not a, you know, fix that in three days or a week. You know, that's kind of a three-,six-,nine-, 12-month journey, and I think that's the journey we're gonna be on. Great. Thank you. Best of luck, guys. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Stephen Powers with Deutsche Bank. Your line is open. Please go ahead. Yeah. Hey, thanks. Good morning. Most of my questions have already been addressed, so thank you. just on the 2x to 2.5x long-term net leverage ratio objective, I guess What does that mean in terms of timing? Like from your perspective, when do you wanna kind of be at that run rate if, you know, as you, as you contemplate the future? Is that kinda exiting fiscal 2024? Is that longer term than that? Just some parameters around what you mean by long-term objective will be helpful. You know, I As I sit here this morning, I don't have a time in mind. You know, we're simply trying to let you know we wanna run the business less levered, and we put a marker out there. You know, we don't have any acquisitions teed up. We really wanna get the earnings power of the company much healthier. Again, I'm not trying to make an excuse, but having a big asset held for sale is really, really disruptive and distracting. I think it'd be nice to just settle the business down and invest in some organic growth and really get a decent rhythm and cadence. We owe that to our investor base. You know, we owe that to ourselves. So, yeah, I mean, I don't know. Jeremy, you have any thoughts on that? No, I think that's right. It'll be dependent on, you know, what we see in the market from an acquisition perspective. It'll be dependent on economic conditions in our key markets. I think, you know, time is in our favor here. You know, we're excited to have a very different balance sheet to show our investors next quarter. We'll make good, smart decisions on capital allocation as this year and next year progress. Okay. Fair enough. Thank you. Thanks, Steve. Operator, I think we have time for one more. All right. One moment. Our last question is gonna come from the line of Michael O'Brien with Wolfe Research. Your line is open. Please go ahead. Hi, good morning, guys. Yeah, most of my questions are already answered. One quick one. You guys have talked about in the past of, you know, putting your price increases through. I just wanted to confirm if, you know, they're all through for the year or can we expect more, you know, in the quarters ahead. I just quickly noticed that, you know, your cost of goods sold is a little higher than normal. I was just wondering if when those margins would normalize. Thank you. Yeah, I would say I don't see any material additional price increases based on inputs where they are now, particularly for this year. I think everything we need to do is in place. On the cost of goods sold front, agreed, it's elevated, you know, in Q1 and in Q2, and that goes back to the capitalized variances that I talked about earlier. You know, that's an extra $25 million in Q1 and $29 million in Q2, I think, of cost of goods sold running through the RemainCo businesses that we would expect. It is essentially gone now. That will, you know, basically reduce and improve margins in Q3 and Q4. Okay, great. Thank you. Thank you. Thank you. I would like to turn the conference back over to Faisal Qadir for closing remarks. Thank you. With that, we will conclude our conference call. Thank you to David and Jeremy, and on behalf of Spectrum Brands, thank you all for your participation. This concludes today's conference call. Thank you for participating. You may now disconnect.