Spectrum Brands Holdings, Inc.

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. Now I'll turn the call over to David Mora. David?

Hey, thanks Joanne. Good morning everybody and welcome to our third quarter earnings update. We appreciate everybody joining us today. Like usual, I'm going to start this call with an update on our operating performance and our strategic initiatives. Jeremy will then provide a more detailed financial and operational update, including a discussion on specific business unit results. During our first quarter and second quarter calls, we talked about how the actions we've taken in fiscal 23 put us in a position to start on our journey back to winning this year. Our teams have worked extremely hard over the past years to put us in a position of competitive strength. Through years of asset sales, we have deleveraged our company returned capital to our shareholders, and turned our operations around. We are now focused on driving top line growth through our commercial investments. In fact, over the past five or six years, we have reduced our gross debt by approximately $5 billion. We are now the lowest levered company in our peer group. During that time, we also returned $2 billion to our equity shareholders through share repurchases while also maintaining our quarterly dividend. Our balance sheet is the fuel that has been providing us the financial flexibility to make meaningful improvements in our operations. We have now developed a strong S&OP process, reduced our inventory levels, and meaningfully increased our fill rates. With our operational house now in order, we have the confidence to pivot toward making meaningful investments in our brand-focused advertising, marketing, and innovation. Our flywheel, starting with our strong balance sheet, the strongest in the history of our company, is now in motion. We now have the right leadership and talent in our operations team to deliver improving performance. From supply chain to working capital management, inventory management, fill rates, all of these are now being used to fuel commercial growth aspirations we have for our company. Today, I'm happy to let you know that this quarter, marks another mile marker on our winning journey. As I've said, the playbook to winning is to consistently do what we say we are going to do and deliver for all of our stakeholders. And this third quarter is an incremental step forward on that journey. In these times of economic and geopolitical uncertainty, we are controlling what we can control. And we are setting ourselves up for the future through incremental investments into our brands, and our momentum is continuing. If I could now ask everyone to please turn to slide six, and let's go over the financial performance for the quarter. During the first half of this year, you'll recall that our top line was suffering from the headwinds of SKU exit decisions that we made during fiscal 23, and this has negatively impacted our net sales number this year. Our gross and adjusted EBITDA margins have been realizing the tailwind benefit of selling lower-cost inventory as compared to the prior year. As I told you last quarter, the effect of these factors on our comparables are largely behind us, and we expect to now see sales growth in the second half of the year. Our team's, in fact, delivered on that commitment, with net sales growth of 6%, and organic sales growth of 7.1% this quarter. Across the company, volume was the primary driver of this quarter's top line growth, and each business unit grew its top line, with our home and garden business delivering an impressive 13.1% top line growth as compared to last year. The weather conditions in key regions improved over the course of the quarter, with more ideal temperatures and precipitation levels, especially compared to those we've seen in the prior two selling seasons. Also, inventory at our retail partners is healthier than last year and our sales were much more closely aligned with point of sale than in the prior year. We actually saw spikes in retail orders in regions where weather conditions were expected to result in increased foot traffic. Importantly, Once the consumer was in the store, we won its shelf with our full funnel marketing investments driving sales and supporting our brands with Spectracide taking market share in the controls category. We have one more quarter to go in the home and garden season with about 40% of the POS still ahead of us in Q4, which is a strong quarter for consumer demand for household and the repellent categories. Our global pet care business grew organic sales by 4.1%, and our home and personal care business grew organic sales 6.1%. I am particularly pleased that the organic sales in both our North American home appliance business and our global aquatics business stabilized this quarter. Both of these categories have been facing major headwinds, and while we are cautious about the future, we're very encouraged to see demand improving. Our growth momentum in e-commerce continued with another quarter of over 20% growth compared to last year. E-commerce sales represented over 21% of this quarter's total net sales, while HPC is leading the way with e-commerce sales growth of over 33%. Each business realized double-digit growth in e-commerce sales this quarter. Including investment income, our adjusted EBITDA was $106.3 million, up from $99 million the period a year ago, with strong improvement across all three business units. Excluding investment income, our adjusted EBITDA was $93.6 million, our gross profit margin of 38.9% increased 310 basis points compared to the prior year. We delivered this growth in spite of investing almost $23 million more in brand advertising and innovation this quarter compared to last year. The improved gross margin was driven by our team's focus on driving continuous improvements within our operations and through operational efficiencies, cost savings, and plant productivity improvements. We remain disciplined with our cost structure to ensure that we stay lean and do not add back the fixed cost that we took out of the business in the past. This was a pivotal quarter also for our balance sheet. Since the close of the HHI divestiture, we have been carrying a significant amount of cash. maintaining our options for redeploying these proceeds. As we approached the one-year anniversary of that transaction's close, we launched and closed a debt tender across our existing bond portfolio to satisfy our covenant requirements to our bondholders. Through a combination of tenders and calls, we retired $1.174 billion of our bonds. and we have no remaining obligations for the HHI proceeds. To improve and simplify our capital structure with new capital, we also issued $350 million of a five-year unsecured convertible security with a coupon rate of 3.375%. These bonds are exchangeable into our shares upon certain events at an original strike price of approximately $122 a share. As is common with these types of bonds, we entered into a cap call structure to increase the economic conversion price for the company to approximately $159 per share. Taking the cost of the cap call into account, the effective borrowing rate on these new bonds is approximately 4.8%. We closed this quarter with cash and short-term investments of $307 million and with our net debt at $271.6 million, and our total liquidity position is close to $800 million. With our cash balance and capital structure reset to support our business, we will now no longer reference EBITDA excluding investment income as a metric going forward. If I could now ask you all to turn to slide seven, and we can go over the strategic priorities of the company going forward. While our operations team continued to deliver for our company, our fill rates are now in the mid to high 90s in each business with inventory levels that are over 45% below our peak amounts. We are staying very disciplined on our inventory levels and we've taken $375 million of inventory out of the system compared to our peak levels. Compared to last year's quarter, our inventory is $88 million lower. Inventory turns are up to 4.2 times, and they've improved 40 basis points. We intend now to actually build inventory levels this quarter to support our home and personal care holiday season, and we will increase safety stock now to support our global pet cures, global growth strategies. We continue to realize the benefit of having less inventory on the balance sheet, which is helping contribute to our improved gross margins and adjusted EBITDA by reducing the costs that come with carrying higher inventory levels and low fill rates. We're also now investing behind our people to improve our commercial capabilities and drive a high performance culture with accountability. Our new talent additions across our sales and marketing functions are beginning to have a positive impact on our financial results. Our stepped-up investments in our brands and new product roadmaps accelerated this quarter. Our sales growth is now a testament that they are working. In this quarter alone, we made almost $23 million more in brand advertising and innovation-focused investments just compared to a year ago. And we're on track to invest approximately $50 million more for the full year. The increased investment is the largest contributor to our EBITDA margin, declining to 12% this quarter, excluding investment income, compared to last year's 12.7%. The most significant increase this quarter was in advertising spend, especially in our home and garden business, driving consumer demand during our peak season toward our brands, by communing not only the efficacy of our products, but the tremendous value proposition that our products offer the consumer. And this created consumer excitement in the marketplace. Our HPC business continues to improve its performance, exceeding last year on every key metric and reinforcing our confidence that the time is right to separate that business via a sale, merger, or spin Our global personal care business grew organic sales mid-double digits, and our global home appliance business had modest organic sales growth. We continue to win new listings now in brick and mortar across the personal care and home appliances categories. HPC's investment in digital marketing and activation drove the highest Amazon Prime Day sales ever for this business unit. This business is consistently meeting and exceeding expectations now, and it's not only stabilized, but it's back to winning. This quarter, our internal teams and advisors continued the dual track process of the separation of our HPC business, preparing this unit for a sale, merger, or spinoff transaction. The process is progressing as anticipated, Our bankers are working actively with potential buyers on the M&A track, and we filed a Form 10 initial registration statement in early July to begin the SEC registration process for a spinoff. Our teams are focused on separation readiness, doing the pre-work required for transactions of this nature, and we continue to believe that the separation of HPC will allow both Spectrum Brands Holding Company as a pure play patent home and garden business and then the separate HPC business to flourish independently focusing on the unique needs of each business. We will provide an update on our next earnings call or sooner if there's news to share. If we could now please turn to slide eight and we have an update here on our share repurchase program. We repurchased 1.6 million shares this quarter And since the close of the HHI transaction, we've returned over $1 billion to our shareholders through our various share repurchase programs. Our share count is now approximately 32% lower than it was prior to the HHI close. We have approximately $400 million remaining on our recently refreshed share repurchase authorization program. And with leverage still well below our long-term target range of 2.0 to 2.5 times, we have plenty of capacity to fund investments into our company and to continue to return value to our shareholders through quarterly dividends and opportunistic share repurchases. Now turning to page nine. Based on our results for the year to date and the trends in our retailer and consumer behavior, we are updating our earnings framework. While we continue to expect net sales to be relatively flat compared to the prior year, however, including investment income, adjusted EBITDA is now expected to grow approximately 20%. This framework assumes that the favorable weather trends we've experienced this season continue as we head into a peak POS quarter for our household and repellent product segments. We are also assuming that e-commerce sales across the businesses continue to be strong, and that the sales recovery in small kitchen appliances and global aquatics continue. Our businesses have performed well this year, as we have leaned in to the competitive advantages that our strong balance sheet and improved operating cadence have provided. But we remain cautious about the remainder of the year and headwinds heading into fiscal 25 from the geopolitical and macroeconomic uncertainties. As we head into the holiday quarters, we're closely watching the health of the consumer as interest rates, food, and housing costs remain high. Consumer health is uncertain and volatile, not only in the U.S., but across our global economies. Recently, ocean freight rates have risen as the geopolitical challenges stemming from the Red Sea crisis, coupled with peak season volume, have caused vessel and equipment shortages. While we continue to shift the predominance of our product under contracted rates, demand has caused us to shift some volume at spot rates, which is creating headwinds for future quarters that we will now seek to offset with cost improvement and plant productivity. In spite of these uncertainties and headwinds, we intend to continue to invest behind our businesses, meaningfully increasing our brand focused investments in the fourth quarter to set us up to drive sales in fiscal 25. Each quarter that we deliver on our commitments reinforces our belief that we are on the journey to winning. Now, before I turn the call over to Jeremy, I want to take a moment to thank each and every one of our global employees who are all on this journey together. and for their roles in contributing to our collective and mutual success. Now you're going to hear a little bit more from Jeremy on the financials, and he'll give you updated business unit insights, and then we'll come back to you for some Q&A here at the end. At this time, I'd like to turn the call over to you, Jeremy.

Thanks, David. Good morning, everybody. Let's turn to slide 11 for a review of Q3 results from continuing operations. I'll start with net sales, which increased 6%. Excluding the impact of $8.5 million of unfavorable foreign exchange, organic net sales increased 7.1%, primarily due to favorable weather conditions and improved retailer inventory health in our home and garden business, along with continued growth in e-commerce across all segments. Gross profit increased $39.3 million, And gross margins of 38.9% increased 310 basis points, largely driven by increased volume, lower freight costs and inventory related expenses, and impacts from cost improvement actions. Operating expenses of $255.1 million decreased 34.3% due to the absence of goodwill and intangible asset impairments compared to last year. partially offset by increased investment spend in advertising and marketing as we reinvest in our brands. Operating income of $47.7 million improved by $172.4 million, driven by the gross margin improvement and lower operating expenses I mentioned. Gap net income and diluted earnings per share both increased, primarily driven by the higher operating income, higher investment income, lower interest expense, and the lower share count. Adjusted EBITDA was $106.3 million, an increase of 7.9%, or $7.8 million over last year, driven by improved gross margins and investment income of $13 million, offset by almost $23 million in increased brand-focused investments. Adjusted EBITDA, excluding investment income, was $93.6 million. Adjusted diluted EPS increased by 17 cents to $1.10, driven by higher adjusted EBITDA and the reduction in shares outstanding. During the third quarter, we returned $142 million to shareholders through our share repurchase program and reduced our outstanding shares by approximately 5% or 1.6 million shares. Our current share count is approximately 32% lower than it was prior to the closure of the HHI transaction. Turning to slide 12, Q3 interest expense from continuing operations of $15.7 million decreased $14.6 million due to our lower outstanding debt balance. Cash taxes during the quarter of $4.4 million were $5.5 million lower than last year. Depreciation and amortization of $25.2 million was $2.6 million higher than last year, and separately, share-based compensation was flat. Capital expenditures were $10.1 million in Q3, down from $18.4 million last year. And cash payments towards strategic transactions, restructuring-related projects, and other unusual non-recurring adjustments were $10.5 million versus $10.3 million last year. Moving to the balance sheet, we had a quarter-end cash balance of $158 million plus $149 million in short-term investments and $490 million available on our $500 million cash flow revolver. Total debt outstanding was approximately $578 million, consisting of $496 million of senior unsecured notes and $82 million of finance leases. We ended the quarter with $272 million of net debt. 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 with Global Pet Care, which is on slide 13. Reported net sales increased 3.6%, and excluding unfavorable foreign currency, organic sales increased 4.1%. Organic companion animal sales increased in the mid single digits while organic aquatic sales were flat to last year with growth in aquatics consumables offset by continued softness in new environments and equipment. GPC sales in North America and EMEA grew this quarter. North American companion animal sales grew from strong performance in the e-commerce and food and drug channels to offset by some softness in mass and dollar channels. Companion animal sales in EMEA also benefited from strength in e-commerce and growth in our Good Boy brand. The decline in North American aquatic sales is tempering, and aquatic sales continue to grow in EMEA with good performance in pond nutrition products this quarter, aiding our consumable sales. Global GPC e-commerce sales increased by double digits, continuing the recent trends in consumer behaviors moving to online buying for pet products. E-commerce sales were in the mid-20% of GPC's global sales this quarter and year to date. On the innovation front, we recently launched good and tasty dog treats in the U.S., further expanding our presence in the nearly $5 billion U.S. pet treat market. The early results are promising, with Good & Tasty already demonstrating a positive halo effect from our well-established Good & Fun brand, driving increased brand awareness and household penetration. This demonstrates the power of our multi-branded portfolio and our ability to leverage brand synergies for both core and adjacent category growth. We are also seeing encouraging early traction in our Furminator consumables segment, with our new tub-free grooming offerings in the pet specialty channel. This innovative format is resonating with consumers, opening up new avenues for growth in the pet grooming category. We also entered the fast-growing adjacent category of wet dog food in the UK this quarter with the launch of Good Boy Home Faves, securing listings in major retailers and promoting natural meaty recipes across the range. This was the second best adjusted EBITDA quarter ever for GPC after posting the highest adjusted EBITDA quarter ever in the second quarter of this year. Adjusted EBITDA for GPC grew by $3.1 million to $56.7 million, primarily driven by higher sales volume, a favorable comparison to last year's higher input costs, operational productivity improvements, and favorable mix, partially offset by unfavorable FX. GPC also significantly increased its brand building investments this quarter. This is the sixth consecutive quarter of year-over-year growth for GPC and fifth consecutive quarter where the GPC business delivered adjusted EBITDA of over $50 million, giving us confidence that our model of investing in innovation to drive growth as a market leader is working. The commercial investments we are making in brand advertising, trade promotions, and new innovation launches are supporting our sales growth. Let's move now to home and garden, which is on slide 14. Net and organic sales increased 13.1% in the third quarter, driven primarily by higher volumes. Double-digit sales growth in the controls and household categories and mid-single-digit growth in repellents We're partially offset by declines in cleaning. This year's weather trends have been more constructive than last year. Weather conditions for our controls products generally improved in key regions throughout the quarter, with improved temperatures and precipitation levels providing favorable weather conditions and driving foot traffic at our large retail partners. Retailers also allocated off-shelf and promotional space to our categories ahead of last year. helping drive sales volumes. Continuing this season's trend, we saw a strong correlation between POS and retailer orders, and we believe retail inventory levels are substantially back to normal. We are particularly pleased with the impact our increased brand building investments are having on our sales. Our SpectraSide brand continued to increase sales ahead of category this quarter, gaining share in controls. Sales growth in household was led by our Hotshot brand, where Hotshot is performing well in the household categories where we compete. Cutter area repellents led to sales growth in our repellents category. E-commerce sales grew by mid-double digits and represent low double-digit percent of sales in a quarter and high single-digit percent of sales year-to-date. We are supporting this season's new products and innovations with increased media investments to drive top-line growth. This quarter, the H&G business invested over three times more in advertising than last year, communicating our product's superior value to results-driven consumers. We are supporting the season with full funnel advertising, activating TV, digital, social media, and influencer investments to build both awareness of our products and their effectiveness and drive sales conversion. This approach has driven sales and category growth of our Spectracide products, and as we head into the highest sales season for repellents, we will activate the same strategy for our Cutter Eclipse Zone Mosquito Repellent. Adjusted EBITDA increased by 12.2% to $43.3 million. The increase in adjusted EBITDA was primarily driven by higher sales, Cost improvement initiatives and pricing offset partially by a significant increase in brand building investments. And finally, home and personal care, which is on slide 15. Reported net sales increased 3.5%. And excluding unfavorable foreign exchange, organic net sales increased 6.1% from the increased sales volume. The organic net sales increase was driven by mid-double-digit growth in global personal care sales and modest organic sales growth in global home appliances. E-commerce performance was particularly strong for HPC this quarter, growing by over 33% from a record prime day in both North America and EMEA. E-commerce sales accounted for over 25% of HPC's global sales in the quarter and year to date. North American sales increased high single digits with growth in both the personal care and home appliance categories. We are encouraged to see North American consumer demand for small kitchen appliances starting to grow. Sales of the Emeril Lagasse French door air fryer continue to be strong and grow compared to last year. And we have seen new listings in both e-commerce and brick and mortar in Q3 with more expected in Q4. Sales in EMEA grew mid-single digits with growth in personal care from strong hair care and shave and groom sales offset by a decline in home appliance sales. Sales in LATAM posted single-digit growth led by personal care with flat sales in home appliances. Our Remington One products are performing particularly well internationally and are reacting to the brand-focused investments we are making. The Remington One Dry and Style Hair Dryer Remington won curl and straight styler won the Australian gloss color award 2024 for best new hair dryer and best new multi-use styler Remington outperformed two key competitors to win this award that recognized the best new products launched across skin hair and beauty categories commercially our Remington Balder Prohead shaver continues to perform well and was recently named the number one head shaver in the U.S. according to Cercana. We are investing behind a PowerXL relaunch in the fourth quarter and have secured new Q4 listings for our new innovative PowerXL StirMax, which is a self-stirring slow cooker, and our expanding international distribution of the PowerXL brand supported by marketing and advertising investments. Adjusted EBITDA was $11.8 million in the quarter compared to $11.4 million last year. Adjusted EBITDA margin was flat to last year at 4.1%, driven by higher sales volume, lower inventory-related expenses, a favorable comparison to last year's higher input costs, and the continued benefit of cost improvement initiatives offset primarily by higher brand-focused investments, unfavorable mix, and pricing. Now we'll turn to slide 16 in our expectations for 2024. Consistent with our prior earnings framework, we expect fiscal 24 net sales to be relatively flat to fiscal 2023, driven by higher demand in our home and garden business, offset primarily by the lower consumer demand in the small kitchen appliance category we experienced in the first half of the year. Adjusted EBITDA excluding investment income is expected to grow approximately 20%, driven primarily by higher sales volumes and lower cost inventory as compared to fiscal 23, offset by the increased investments in our brands and people. Turning now to slide 17, depreciation and amortization is expected to be between $115 and $125 million including stock-based compensation of approximately $15 to $20 million. Cash payments towards restructuring, optimization, and strategic transaction costs are expected to be approximately $50 million. Capital expenditures are now expected to be between $45 and $55 million, and cash taxes are expected to be $35 to $40 million. To end my section, I want to echo David and thank all of our global employees for their hard work so far this year. Now back to David.