Spectrum Brands Holdings, Inc.

Good day, and thank you for standing by. Welcome to the Q2 2022 Spectrum Brands Holdings, Inc. Earnings Conference Call. At this time, all participants are in 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 to press star 1 on your telephone. Please note that today's call is being recorded. If you require any further assistance, please press star zero. It is now my pleasure to turn the call over to Mr. Jeremy Smeltzer. Please go ahead.

Thanks, Rain. Good morning, everyone. Thank you for joining us. Welcome to Spectrum Brand Holdings Q2 2022 Earnings Conference Call and Webcast. I'm Jeremy Smeltzer, CFO of Spectrum Brands, and I will moderate today's call. To help you follow our comments, we have placed a slide presentation on the event calendar page in the investor relations section of our website at SpectrumBrands.com. This document will remain there following our call. Moving to slide two of the presentation, our call will be led by David Marra, our chairman and chief executive officer, myself, and Randy Lewis, our chief operating officer. After our opening remarks, we will conduct the Q&A. Also on the call with us today is Fessel Cutter from my team, As many of you know, FESSL has been supporting our IR efforts over the past two quarters since Kevin's departure. Today I'm pleased to announce that FESSL will be assuming the full-time IR duties going forward. We're confident he will do a great job supporting you all. We appreciate everyone's patience as we continue to work through the transition. Turning to slides three and four, 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 6, 2022, and our most recent SEC filings and 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 statements. Also, please note we will discuss certain non-GAAP financial measures in this call. Reconciliations on a GAAP basis for these measures are included in today's press release and 8K filing, which are both available on our website in the investor relations section. I will now turn the call over to David Morrow.

Well, thank you, Jeremy. Good morning, everybody, and welcome to our second quarter earnings update. We appreciate everybody joining us this morning. I'm going to kick the call off with an overview of the company's performance. and a reminder of our capital allocation priorities. Jeremy will then provide a more detailed financial update, and then Randy will provide an operational update, including the business unit results. If I could get everyone to turn to slide six. Once again, we delivered top-line growth this quarter, despite some continued product availability challenges. Our total sales increased 6%, while organic sales, excluding the impact of FX and acquisition, increased 2%. Despite another difficult quarter battling inflationary pressures, I'm actually very excited about the balance of the year. As expected, our margins contracted versus prior year as input cost inflation continued to exceed our price actions. However, our gross margins improved 260 basis points versus the first quarter results, and as we implemented further planned price increases during the quarter. We now expect to restore our margin structure by the middle of this current quarter. And just to put that in perspective for everyone, if you can recall, our continuing operations EBITDA in fiscal 2021 was about $390 million. And on an annualized basis, we've had to take action to offset over $400 million of inflation just in the past 18 months. So I'm extremely pleased. Our team's ability to navigate that amount of inflation in that short of a time frame, in my opinion, is truly remarkable. And it's honestly great to have a challenging first half behind us and now to be looking out towards much improved expected performance in the second half. I really couldn't be more proud of the operating teams for navigating this inflationary environment. On the strategic front, I'm excited to share that we're continuing to make progress towards our goal of evolving into a faster growing, higher margin, pure play, global pet care and home and garden company. We believe we can create meaningful shareholder value with this transformation. We continue to work toward the closing of our sale of our hardware and home improvement segment to Assa Abloy for $4.3 billion, and we remain confident that the transaction will close this year. We are simultaneously working on laying the groundwork for the eventual HPC separation from Spectrum Brands, which will bring us closer to our strategic vision for the company. The acquisition of the kitchen appliance and cookware categories of TriStar Brands was completed during the second quarter, and the work of integrating the newly acquired business into our HPC organization is already in full swing. Given the closure of the TriStar acquisition during the second quarter, we would like to provide an updated earnings framework. We now expect sales growth to be in the range of mid to high teens growth and adjusted EBITDA growth to be in the mid single digit range. As a reminder, this outlook includes just over seven months of the TriStar acquisition and it does not include the benefit of the peak holiday season for fiscal 22. There are two new developments that I need to mention during this call that are impacting our financial results in our core business units this year. One, given the Russia-Ukraine war, we have chosen to suspend shipments to Russia. And two, the adverse weather and the late start to the home and garden season so far this year have the potential to negatively affect full-year home and garden sales and EBITDA. With the impact of these two items, our core business EBITDA is now expected to be flat to down a couple percentage points. If I could get everyone to turn to slide seven. Our capital allocation priorities remain consistent. We will continue to focus on allocating capital internally to our highest return opportunities. We believe this strategy has been paying off for us as we continue to drive growth through product vitality across our business units. we plan to return cash to shareholders via dividends and opportunistic share repurchases. More recently, we just concluded the prior quarter's $150 million stock buyback plan, and we expect to significantly accelerate share repurchase activity once the HHI transaction is closed. Further, we will continue to pursue disciplined and strategic M&A transactions that are both synergistic and help drive long-term value creation. In summary, we're looking forward to closing the pending HHI divestiture, recapitalizing our company, deleveraging our balance sheet, and moving to a transaction to separate our home and personal care business. We are more confident than ever that the public markets are looking to invest and allocate capital to a more pure play global pet care and home and garden company. And these actions should result in a re-rating of the valuation of our publicly traded shares. Before I turn the call over to Jeremy, I would like to take this time to thank our global commercial and supply chain teams whose collaborative efforts have helped us achieve significant pricing actions that were necessary to minimize the impact of the unprecedented inflation headwinds that our businesses have been facing. I would also like to thank our global employee partners and the management team for their tireless efforts in the face of the many challenges this company's had to overcome during the past several years. The team's success continues to demonstrate our winning culture and the successful adoption of our global operating model. Now you hear more from Jeremy on the financials. I'll turn the call over to you, Jeremy. Thanks.