Spectrum Brands Holdings, Inc.

Have a good day and thank you for standing by. Welcome to the third quarter 2025 Spectrum Brands Holdings 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Joanne Chilmack. Thank

you and welcome to Spectrum Brands Holdings Q3 2025 Earnings Conference Call and Webcast. I'm Joanne Chilmack, Senior Vice President of Tax and Treasury, 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. Starting with slide 2 of the presentation, our call will be led by David Mora, our Chairman and Chief Executive Officer, and Jeremy Smeltzer, our 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 August 7th, 2025, 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. Our statement reflects our expectations regarding tariffs, which are based upon currently known and effective tariffs, and do not reflect tariffs that have been announced and delayed, or other additional tariffs which could result in additional costs. Also, 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 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. Welcome to our third quarter earnings update. I want to thank everyone for joining us today. I'll start the call as usual with an update on kind of the global economic markets and their impact on our company. We'll then talk about Spectrum's operating performance and then our strategic initiatives. Jeremy, as usual, will then provide a more detailed financial and operational update, including a discussion on the more specific results of each business unit. If I could get you guys to turn to slide six now. When we spoke last quarter, the company had been hit with what I'm now calling the tariff torpedo. That really disrupted practically every aspect of how we do business around here. Operating when the cost of your products can more than double overnight is something we never really thought we'd experience. Frankly, about 20% of our global cost of goods sold at the time was sourced from China for the U.S. market, and the cost of importing that product for sale to the U.S. consumer was suddenly so high, we had to take very swift and, quite frankly, draconian actions to protect the company. I told you last quarter that we would control weak control, we would be nimble, and we would protect the house. We were resolute in our conviction that we would not sacrifice long-term health, the long-term health of our business, for any sort of short-term gain. I was confident that we would get through the near-term volatility and emerge a stronger, a more focused competitor in our space. We knew that there would be short-term consequences to these decisions, but we also believe that doing the right thing for the long-term would outweigh any sort of short-term gain. As I sit here today, 90 days later, I'm confident that we've made the right decisions. We took the challenges head on. We felt the impacts on our results this quarter, but we're now already starting to see the benefits of making these difficult but correct decisions. Doing the difficult but right thing meant we had material supply issues in the third quarter. You'll recall that when U.S. tariff rates on Chinese-sourced products went to 145 percent, and in some cases up to 170 percent earlier this year, we paused virtually all finished good purchases from China until such time that tariff levels declined to a place where we believe we could maintain profitability and margins. In mid-May, when the U.S. tariff rate on Chinese imports dropped to 30 percent, only then did our businesses begin to strategically place orders again, and we only bought product where we knew we could price them for tariffs. Turning to the supply chain took time because we completely shut it off. We were negotiating supplier pricing concessions. We were prioritizing production runs and we were making arrangement with ocean freight carriers. We genuinely have one of the best supply chain teams in the industry today, but even with them at the helm, we went up to eight weeks without any importation of product, and that left us out of stock on some of our main SKUs. Regular supply is now back on, but in this case, doing the right thing meant we had orders we simply couldn't fill in our global pet care and home and personal care businesses during the third quarter. Some of that will continue into Q4 as well. Doing the difficult but right thing meant that we stopped shipping to some customers. When we faced material inflationary headwinds, our playbook is to cover our margin structure through a combination of supplier concessions, internal cost reductions, and yes, unfortunately pricing. So with each round of tariffs, we had to notify our customers that we will be increasing prices. No pricing negotiation with a retail customer is easy. But generally, we seek to be in a mutually agreeable place to arrive at a logical point given the inflationary headwinds. But when these negotiations stall, we simply have no choice but to stop shipping to the customer and allow the negotiation to play out. We know that our products matter not only to our retailers, but to our ultimate consumers. And we need to protect our bottom line, in part, through pricing. With all the tariff headwinds this year, and even with at the lower Chinese tariff levels, it simply wasn't practical for us to absorb all the cost of tariffs without increasing some prices. Unfortunately, some of our negotiations lasted much longer than others, which meant we had to stop shipping to certain customers while those negotiations were ongoing. In fact, in some of these cases, the customers were quite large and they were our key customers and the stop shipment lasted weeks. The good news is that we have now we now have tariff related pricing in place with practically all of our customers and our sales levels are already improving. Again, doing the right thing to avoid massive long term P&L hits meant we had to lose a significant amount of revenue in the third quarter. Doing the difficult but right thing also meant we had to look internally, unfortunately, and we had to reduce our own costs. During the quarter, we executed a number of reduction in force activities that spanned across all the businesses and our corporate functions. We have either eliminated open positions or delayed their backfill. We had to adjust our investment spend to reflect the state of the business and the consumer environment. We've had to prioritize investments that would be the most impactful to both this year and into the future, given software consumer demand in some of our categories. We also reduced discretionary and external spend, and we've been shrinking the real estate footprint of our company by right sizing office spaces, warehouses and distribution centers. I'm very pleased that despite these tough decisions, these cost reduction activities that we engaged in and that we've implemented literally in the last 90 days, we now expect to reduce our costs by over 50 million dollars in the fiscal year, fiscal 25. That's a lot of work in a 90 day period of time. We also have been working hard to diversify the supplier base across the board. The teams are continuing to create diversified sourcing footprints for global products, developing and activating non-Chinese sourcing alternatives. Our goal is to have the lowest all in cost of supply for each of our markets. We expect that China will likely be the low cost supply base for our international markets because of its cost advantages and its manufacturing efficiencies. Now, for the US market sourcing outside of China, even there may not always be the lowest cost option due to tariffs on other Asian countries. However, with the recently announced reciprocal tariffs and the trade agreement between the US and China not finalized, it is possible that Chinese sourcing can still be the low cost option. We have to be nimble. We're doing the work that provides us the highest level of flexibility to react to whatever the volatility there may be in the marketplace going forward. We are still working toward the targets we discussed during our last call with GPC or a global pet care company having non-Chinese sourcing alternatives for the dominance of its purchases by this county year end and HPC continuing to build out its non-Chinese sourcing footprint throughout the remainder of fiscal 25 and growing it in 26. However, the drop in Chinese tariff levels has provided some relief to these diversification efforts and they're giving us a slightly longer timeframe in which to address it. If the relative tariff rates change, we will return to an accelerated path to exit China. Ensuring we have quality product, finding the right long term solution for the company is the priority. With our initial rounds of pricing and supplier concessions, we have essentially eliminated our tariff exposure at the end of Q3. I'm very proud to make that statement. Based on the current known trade agreements between the US, the European Union and other countries that we source from, we are now targeting an incremental 20 to 25 million dollars worth of pricing and supplier concessions across the three businesses to fully cover what we believe will be the incremental exposure heading into fiscal 2026. Our ability to do the difficult but right thing is enabled by our balance sheet, which is of the business and our ample liquidity and extended debt maturities. These things are all enabling us to be not only sustain ourselves, but to enable us to strengthen our position in a volatile environment with quarterly sales that quite frankly were materially disrupted given the tariff activities of the last 90 days. But these things, we continually do the right thing for this company to set us up to enter 26 on strong footing. It's really made us the partner of choice, too, for suppliers that are trying to build out new Southeast Asian factories. They know we're going to be here. They know we're going to give them orders. They know they can count on us to pay them in time, on time, every time. We're going to continue to strive to do the right thing when it comes to protecting our balance sheets and our cash flows always. If I can now have everyone turn their attention to slide seven, I'll take you through the Q3 numbers. And again, these numbers are materially distorted because of shutting off inputs from suppliers and then quite frankly, shutting off sales to customers during pricing negotiations. But our net sales in Q3 did decline 10.2 percent. If we exclude some foreign currency benefit, organic sales decreased 11.1 percent. The U.S. and European customers have been feeling macroeconomic pressure, quite frankly, from the global trade instability around the world. Customers have been stressed and that's led to kind of overall category decline in both pet and the appliance businesses. Quarterly sales were also negatively impacted by the temporary but difficult decisions we made to stop shipments to major retailers when tariff related pricing negotiations stalled, as well as some inventory shortages from the period when we paused all imports from China. In our home and garden business, we actually had a cold and wet season. We had to start to the season and that did negatively impact POS and retail reorder patterns during Q3. The adjusted EBITDA generated by the business was 76.6 million dollars. That's a decline of 17 million compared to last year's results, which excludes the investment income we had from the large cash balance at the time. Our gross margins did suffer a contraction of 110 basis points during the third quarter, and that's mainly driven by negative mix tariffs and inflation. We reacted, as I've described, very quickly to offset these tariff headwinds and consumer softness by taking out our fixed costs and limiting external spend. It's imperative every dollar of our spend has to be purposed and to be focused on driving the top line of our companies. Our teams have and will continue to step up to the challenge of doing things better, leaner and more efficiently. The third quarter was all about making the tough but right decisions to protect our house, to protect our balance sheet and to protect the long term success of this company. We have now put Q3 in the rearview mirror. We are excited to be focusing on the future and we are already seeing the results with a very strong start to the fourth quarter from a big rebound in sales in July. We have had a strong start to Q4. In July, both our global pet care company and our home and garden division delivered growth over the prior year. For home and garden, the weather started to improve in the final weeks of Q3 and that momentum is carried through into July when we had very strong POS and retailer reorder rates. The new products we introduced this year, including Spexicide Wasp Hornet and Yellow Jacket Trap and the Hotshot Flying Insect Trap are driving category growth. And in spite of a lot of new competition entering the category, Spexicide is taking share. GPC and HBC's results continue to be impacted by supply constraints from our POS and Chinese imports, but each business is now shipping to all customers. In global pet care, we gained new points of distribution and regained premium shelf placement for some of our choose at a large retailer who had moved them to prioritize their private label product in the past. Our new GPC president has quickly elevated the level of engagement of our business and is bringing excitement to the team, rallying around new innovations in health and wellness, niche treats and food and cat. HPC performed well during Amazon's prime days and is now shipping new innovation to retailers that have been impacted by our pause on Chinese purchases. We are continuing to make top line brand building investments to support our new innovation and to drive category growth. If I could have everyone now go to slide eight and I'll give you guys an update of the strategic priorities for the remainder of fiscal 25. After updating their priorities last quarter to reflect the tariff, the new tariff landscape and softening consumer demand environment, our strategic priorities remain unchanged this quarter to reflect our continued focus on making the right long term decisions for the business and maintaining a nimble stance during these times of volatility. We are focused on protecting the balance sheet and we remain on track to deliver approximately 160 million dollars in free cash flow this fiscal year, which is nearly seven dollars per share in free cash flow. On our last call, I told you we were running the business for cash flow generation for the rest of the year due to the high tariff environment and the volatile situation we found ourselves in. The reduction in Chinese tariff rates has shifted our focus back to a more normalized approach while we remain laser focused on cash flow, liquidity and net leverage. We continue to identify working capital improvements throughout our operations. We are leaning into our supply chain strength to diversify our supplier footprint and our supply chain team is uniquely situated to strategically anticipate and to quickly and proactively respond to macroeconomic developments. In the third quarter, they handled not only turning off Chinese imports to the U.S. literally overnight, but also turning that back on in a way that ensured we would maintain our profitability. Our quarterly average global fill rates were over 95 percent in spite of having tariff related shortages. I'm very proud of the team for that accomplishment. Thank you all. Having high fill rates and service levels are critical when you're negotiating terms and trying to get pricing with your retail partners. Thanks, everyone, and supply chain for making that a reality for us. We are reducing our cost profile to adapt to consumer demand and, quite frankly, the tariff headwinds. We'll continue to adapt to these new macroeconomic conditions swiftly and decisively, just like we did this past quarter. The teams are focused on fewer, bigger and better initiatives to maximize the impact of our investments. We are preparing to take advantage of the opportunities that the times of economic uncertainty bring and emerge a growing, stronger company that will be the partner of choice for M&A activity. Our businesses and our advisors are actively looking for acquisition targets for both our pet and home and garden businesses. We believe that when we make the right acquisitions, both our businesses and the target accelerate sales growth and profitability, which makes our strong capital structure to fund M&A the right move. We will remain disciplined, however, and we will not overpay. We will make sure we have the right assets. Our strategic transaction for home and personal care business continues to be delayed given the current tariff landscape and geopolitical factors that are frankly out of our control. While we are disappointed in the delay of the transaction, Spectrum Brands and Spectrum becoming a pure play pet home and garden company, we believe in the HPC business and we're going to continue to be great stewards of it. We have not called off a transaction permanently and as always, we will seek ways and opportunities to maximize its value. If I can now turn your attention to slide nine and give you an update on share repurchases. During the third quarter, we repurchased just under a million shares. We in fact bought back 900,000 shares and we continue to buy during our pre earnings quiet period through a 50 million dollar 10 B five one plan put in place in June year to date through today. We have repurchased approximately four million shares for roughly three hundred million dollars. And in total, since we closed the HHI transaction, we have returned approximately one point three two billion dollars of capital to shareholders through various share repurchase programs. And we've repurchased 42 percent of our share count since the closing of that deal. We have been more conservative lately in share repurchases to preserve the strong balance sheet and liquidity to manage through the volatility of Q3. And we'll monitor and be opportunistic in share repurchases going forward. Turning to slide 10. Given the continued unpredictable nature of global tariffs and global trade negotiations, particularly between the US and China and some softening in the US and Europe of consumer demand, at this time, we don't have sufficient visibility to give you an earnings framework for 25. However, we are reiterating our expectation to deliver the one hundred and sixty million dollars of free cash flow. And as I noted earlier, that is approaching seven dollars per share in free cash flow and fiscal 25. Now, before I turn the call over to Jeremy, I want to sincerely thank each and every one of the members of the specs and brands team. The last 90 days was no fun for any of us. You guys all worked hard and tirelessly. I'm proud of how you faced into the tumor that was that was delivered to us through tariffs. And I'm really I'm really proud of how we've handled that. I think we took our medicine and better days are already happening. So I hope we never get hit with this this tariff torpedo again, but I'm confident this team will do the right thing. Make the tough decisions, work together to ensure the long term success of this company. I'm going to turn the call now over to Jeremy and he's going to give you some updates, more specifics on the financials, a lot more business unit insights. And then I'll come back to you guys for closing remarks. Turning it over to you now, Jeremy. Thanks,

David. Good morning, everyone. Let's turn to slide 12 and a review of Q3 results from continuing operations. We'll start with net sales, which declined 10.2 percent. Excluding the impact of six point eight million dollars of favorable foreign exchange, organic net sales decreased 11.1 percent, primarily driven by targeted stop shipments to certain retailers, supply constraints and category softness in our global pet care and home and personal care businesses, as well as unfavorable weather in our home and garden business, with a cold and wet start to the season, impacting the timing of replenishment orders. Gross profit decreased 38.7 million dollars and gross margins of 37.8 percent decreased 110 basis points, largely driven by lower volume, unfavorable mix, inflation and higher tariffs, partially offset by pricing impacts from cost improvement actions and operational efficiencies, as well as favorable effects. Operating expenses of 232.8 million dollars decreased 8.7 percent due to lower investment spend and advertising and marketing and general expense management in light of the category softness and lower restructuring related projects, partially offset by higher impairment charges in the quarter. Operating income of 31.3 million dollars decreased by 16.4 million, driven by the gross margin decline, partially offset by the lower operating expenses I mentioned. Gap net income and diluted earnings per share both increased, primarily driven by lower interest expense, reduced income tax expense and lower share count, partially offset by lower operating income and the lower investment income. Adjusted EBITDA with 76.6 million dollars, a decrease of 29.7 million, driven by investment income of 12.7 million dollars last year, lower volume and reduced gross margins, partially offset by continued general expense management and lower investments in light of category softness. Excluding last year's investment income, adjusted EBITDA decreased 17 million. Adjusted diluted EPS increased to one dollar and 24 cents, driven by reduced income tax expense, lower interest expense and the reduction in shares outstanding, partially offset by lower adjusted EBITDA. Turning now to slide 13, Q3 interest expense from continuing operations of 8.4 million dollars decreased 7.3 million dollars due to our lower gross outstanding debt balance. Cash taxes during the quarter of 14 million dollars increased 9.6 million from last year. Appreciation and amortization of 25.1 million dollars was flat to last year and separately share based compensation increased to 4.8 million dollars from 4.5 million last year. Capital expenditures were 10 million dollars in Q3, essentially flat to last year. Cash payments towards strategic transactions for structuring related projects and other unusual non recurring adjustments were 8.6 million dollars versus 10.5 million last year. Moving now to the balance sheet, we had a quarter end cash balance of 122 million dollars and 388.5 million dollars available on our 500 million dollar cash flow revolver. Total debt outstanding was approximately 681 million dollars, consisting of borrowings on our cash flow revolver of 103 million, 496 million of senior unsecured notes, and 82 million dollars of finance leases. We ended the quarter with 559 million dollars 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. We will start with global pet care, which is on slide 14. Reported net sales decreased 9.6 percent and excluding favorable foreign currency impacts, organic net sales decreased 11.4 percent. The primary driver of the sales decline was our decision to stop shipping to a handful of customers during tariff related pricing negotiations. In the case of one key customer, the stop ship lasted a number of weeks. By the end of the quarter, the pricing was in place and we had resumed shipping to this retailer, although our shipments were below normal levels. In addition, sales were negatively impacted by tariff related supply issues attributable to the period during which US tariff rates on Chinese products were 145 percent and we had paused importing Chinese source products. Sales in the early part of our quarter were also negatively affected by capacity constraints at a large retailer, causing the retailer to slow purchases for a period of time. Those purchase patterns returned by the end of the quarter. These headwinds led to companion animals organic net sales being down low double digits for the quarter. In addition, while we maintained our market share, the overall North American companion animal category declined in the low single digits. We are pleased with the consumer reaction to our innovation and commercial activation amplified by successful collaboration with key retailers that resulted in expanded distribution and improved shelf placement. In EMEA, organic net sales for our Good Boy brand increased, driven by successful range reviews in the UK and a very successful launch into Germany and Austria. Yet overall companion animal sales were down low single digits, driven by weakening European consumer sentiment and a sales push into Q4 due to customer warehouse constraints. Organic net sales in Latin America grew low double digits, predominantly in the choose category. In aquatics, organic net sales declined in the low teens with sales declining in each region. In North America, consumer demand remained soft and sales were affected by the same pricing negotiation and weeks when we were not shipping to certain retailers. Distribution gains at Pet Specialty offset some of that softness. In EMEA, market share increased nicely, however sales were impacted by lower consumer demand and the timing of order fulfillment. In the US, GPC's new leaders are focused on commercializing innovation to engage our retailers and consumers. Our recently launched Dreambone Colleyums continue our focus on introducing innovation that offers health and wellness benefits for pets. Colleyums are the only two on the market enriched with a type 2 collagen derived from chicken cartilage, benefiting hip and joint health while offering flavor that was liked by 100% of invested dogs. Good and fun is gaining points of distribution, including in Pet Specialty, and we will be launching new innovation in good and tasty treats in the next few months. Our investments in Nature's Miracle are gaining momentum. Nature's Miracle has an extraordinarily high loyalty rate driven by its best in class product performance. Our investments and partnerships with retailers and influencers to increase consumer engagement, along with our recently launched delivery system featuring our patented flipping go technology to enhance user convenience and drive consumer engagement is being well received by Nature's Miracle consumers. In dog and cat food, we went live with an IMEs grain free line of products and our expanding countries of distribution within EMEA. In aquatics, we are partnering with key retailers to feature our unique glow fish experience at the stores, promoting the brand and its exciting innovation. This quarter's adjusted EBITDA of $44 million is $12.7 million lower than last year, and adjusted EBITDA margin was .2% compared to .1% last year. The reduction in adjusted EBITDA was primarily driven by lower sales volumes, unfavorable mix and inflation, partially offset by operational productivity improvements, lower brand focused investments and effects. Looking forward, we expect cautious consumer behavior in North America, but we remain optimistic about our performance in the category with some recent wins in product distribution and placement, together with a positive pace of sales and consumer acceptance to our innovation. European consumer demand in the pet categories is also feeling the effect of the global economic uncertainties, yet our good boy brand is performing well and we have a promising innovation pipeline. We remain cautious about aquatics, where some US retailers are reducing shelf space due to lower consumer demand and recent growth trends. We are overall excited about the pet category and believe these short term headwinds will be behind us in the near term. As a reminder, our prior year fourth quarter net sales were positively impacted by a non-repeating customer pull forward of approximately $10 million in purchases ahead of our SAP S4 HANA Go Live last October. Let's turn now to Home and Garden, which is on slide 15. Net sales decreased .3% in the quarter. The cold and wet start to the season delayed POS in our categories, negatively impacting retailer reorder patterns. Net sales and controls, our largest business, were down low single digits, while net sales and household pest repellents and cleaning were down double digits. While total category sales in each of our categories were lower this quarter, Spectracide gained market share, with Wasp and Hornet pest control sales well above category and comps improving with the weather conditions towards the end of the quarter. In fact, Spectracide is the only top five brand that grew across the controls category in the quarter from the data that we see. Hot Shot also outperformed the category this quarter, growing in every indoor segment in which we compete, driven by our new products and innovation. And Repel was the fastest growing repellent brand in the category, where sales in the food, drug, and dollar channel this quarter were especially strong. While cleaning sales comparisons continued to be affected by the loss of distribution in the prior year. As the weather improved in the last weeks of June, we saw both POS and retailer reorder patterns improve. And as we closed the quarter, retailer inventory levels were generally flat year over year. Our innovation continues to gain support from our retail partners and interest from consumers. The Spectracide One Shot product line, our higher performance, longest lasting product, gained incremental off shelf display support early in the season inside the home center channel, and combined with the continued advertising support contributed to Spectracide's market share gains this season. This year's innovation launch, the Spectracide Wasp, Hornet, and Yellow Jacket trap continues to gain momentum with consumers and support from all of our key accounts. POS performance is well above expectations and we are in the process of increasing capacity for fiscal 26. This product quickly gained penetration in the category, one of the highest of any new items in overall pest control. We also launched the new Hot Shot Flying Insect Trap this season in line with our brand strategy of offering strong benefits and significant value to consumers. This innovation was voted product of the year for best in pest control. At a value price point to competitive products, the Hot Shot Flying Insect Trap provides continuous action to attract and capture houseflies and fruit flies with a discreet compact design that blends seamlessly into your home with no setup or electricity required. POS performance has been very strong, significantly surpassing expectations. Adjusted EBITDA was $38.6 million compared to $43.3 million last year and the adjusted EBITDA margins was 20.4%, 10 basis points down from last year. The decrease in adjusted EBITDA was driven by lower volumes, inflation, incremental brand-focused investments, and negative mix offset partially by productivity improvements, favorable cost variances, and lower trade spend. Weather conditions improved in the final weeks of June and have generally remained favorable in the early weeks of our fourth quarter. In fact, we had record high shipping weeks in July. Our retail partners continue to prioritize the lawn and garden category in their stores with off-shelf space and displays supporting consumer sales during the later breaking season. We are encouraged that the control season has extended this year compared to prior years with higher POS than typical carrying into the fourth quarter. Our fall crawl program is gaining momentum with retailers recognizing the shifting seasonal patterns and opportunity to continue driving foot traffic throughout the fall as consumers focus on controlling pests inside their homes and weeds in their yards. We are anticipating expanded retail placement for the fall crawl season supported by incremental in-store displays, promotions, and media. Overall, the category remains competitive and we plan to sustain our brand-focused investment throughout the fourth quarter. And finally, home and personal care, which is on slide 16. Reported net sales decreased 10.8 percent. Excluding favorable foreign exchange, organic net sales decreased 11.4 percent. Sales in the home appliance category were down mid-single digits this quarter, while sales in personal care were down double digits. Organic net sales in EMEA were also down double digits, driven predominantly by softness in personal care. Weaker consumer confidence across the region negatively impacted hair care sales in the quarter, offset by some favorability in shave and groom. Home appliance sales were down low single digits due to continued softness in brick and mortar, partially offset by growth in e-commerce, with growth in garment offset by a decline in food preparation. Overall, European consumer confidence remains cautious in the current geopolitical environment. North American sales decreased around 20 percent. Similar to EMEA, the sales decline in personal care was greater than the decline in home appliances. Throughout the quarter, the US HPC team negotiated tariff-related pricing increases. And while pricing is now in place, those negotiations were dynamic and in some cases required us to stop shipping product to certain retailers for a period of weeks. The negotiations for personal care in some cases lasted longer than those for home appliances, negatively impacting relative sales. Product availability and sales were also negatively impacted by the period during which we paused purchases from China. Consumer demand remains cautious and retail prices for the category have hit the shelf. Organic net sales in Latin America grew low double digits, with strong growth in both categories driven by new product launches and personal care and cooking and coffee for home appliances. On the commercial side, we launched the PowerXL Air Max at Walmart this quarter. The Air Max is sourced from Indonesia and sell-in is exceeding our expectations. We're pleased with our launch on TikTok in the UK, where our products are resonating well with consumers and monthly sales are growing. The PowerXL brand is developing strong brand awareness and positioning in Latin America across multiple countries and retailers. Our Remington Balder, the CIRCANA certified number one brand of head shavers in the US, continues to win accolades, having recently been awarded the best overall head shaver by Men's Journal magazine. We're launching a new Remington line, the Air Veev in our international markets, and recently hosted 40 of our largest European customers at a unique Manchester United event to build on the regional brand strength and positioning of Remington internationally. We plan to launch the Air Veev in the US in the near term. This quarter's adjusted EBITDA was $7 million compared to $11.8 million last year. The adjusted EBITDA margin was 2.7%. The decline in adjusted EBITDA was driven by lower volumes, inflation, unfavorable mix and tariffs, partially offset by pricing, lower brand focused investments and distribution costs and effects. We are actively streamlining our global business, reducing our fixed costs and executing our plan to diversify our global sourcing footprint. We are pursuing a dual sourcing model to provide options to source either from China or an alternative country, depending on which source of supply provides us with the lowest all in cost. We also intend to significantly streamline and reduce our US skew count to simplify our supply chain and the lift of moving production out of China. With most of our pricing negotiations behind us, we should not have meaningful stop shipment situations in Q4, but do expect that we will have some supply constraints in North America due to the pause in purchases while the 145% tariff on Chinese imports was effective. Let's turn now to slide 17. As David said, given the continuing instability regarding global tariffs, the unpredictable nature of global trade negotiations and the continued cautiousness of consumers in the US and Europe, at this time we do not have sufficient visibility to provide an earnings framework for fiscal 25. We are, however, reaffirming the expectation that we will generate approximately 160 million dollars of free cash flow for the year, actively managing our spend and working capital. In addition, with our sales performance in July, we do expect Q4 year over year sales to be improved from the .1% organic sales decline we experienced in Q3. To end my section, I want to echo David and thank all of our global employees for their hard work in these challenging times. Now back to David.

Hey, thanks, Jeremy. And thanks, everybody, again, for joining us on the call today. Look, let's take a few minutes like I normally do and let's just recap kind of the key takeaways of today's call. We could find that on slide 19. I concluded our last call by telling you I was confident we'd get through the near term tariff related volatility and emerge a stronger, more focused company and competitor. We really did make very swift, difficult, decisive decisions to protect our long term financial health during Q3. And that's caused, I mean, Q3 is just there's a lot of distortion in the numbers when you look at, you know, not importing product for months and then, you know, not shipping for weeks. But we didn't wait. We tackled this thing head on and aggressively. You know, we didn't wait to turn off supply from China when tariff rates on Chinese imports skyrocketed to one forty five percent and higher. We didn't wait to notify retailers of reasonable tariff related price increases. And we did not wait to stop shipping when negotiations stalled. We did not wait to develop dual sourcing plans to diversify our supplier base and to reassess these plans to ensure we have the lowest cost sourcing options. We did not wait to take out fixed costs and discretionary spend. Like I said in my earlier comments, I mean, taking 50 million of costs out in 90 days, it was painful. It was a lot of work, but I'm really proud of the teams for just being proactive and getting it done. Thanks, everybody. In a typical quarter, any one of those actions is a significant under caking. And the team did all this in the third quarter. Look, we took hits in Q3. We took our medicine. We made some hard decisions, but that's behind us. Our focus is now on the future. And you know what? Q4 is off to a good start. We are seeing more normalized sales than Q3. We will have a little bit of supply constraint and some orders still in the fourth quarter. And that's lingering over from when we paused all the Chinese purchases, particularly in the in the appliance. But those are going to be all behind us by the end of the fourth quarter. Consumer sentiment in the US and Europe is still a little soft, but we do see signs of improving macroeconomic conditions. And in fact, we expect consumer confidence will stabilize once this heightened geopolitical tension subsides. Weather trends have improved for Alman Garden. We expect to see continued strong POS levels into the fall. And we're excited about the fall crawl season that have here and the team has going on currently. We know the hard work's not behind us. We're not kidding ourselves. We expect that tomorrow we'll bring more changes and challenges and we'll again have to make difficult but correct decisions. However, I'm highly confident that our team of three thousand global employees will rally together, attack those challenges just like we attacked them this past quarter. We're going to continue to lean into our competitive advantage as we take on these challenges, knowing our brands, leaders, teams, strong cash flows, strong balance sheet are all there to support us. With the third quarter behind us and a very solid start to Q4, we are now full steam ahead to finish fiscal 25 strong and we're optimistic about setting up for a better 2026. At this time, I'm going to turn the call back to Joanne and we're happy to take questions.

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

Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to 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. Please stand by while we compile the Q&A roster. Our first question comes from Brian McManera at Kenna Court Genuity.

Hi, Brian. Good morning. Hey, guys. How are you? You're good. Thanks for taking our questions. First, could you reasonably quantify how much sales you left on the table by stopping shipments and other internal actions in Q2 and what impact if any lingers in the Q4? Thanks.

A lot and less. Yeah, I think I think Madison, if you look all in, we would probably estimate in the neighborhood of 30 million dollars in Q3. And to David's point, I think it'll be quite a bit less than that in Q4.

OK, great. And why is guidance still so difficult, even with the improved clarity on tariffs? We heard from other companies who are more exposed that have had a like reinstated guidance or updated their prior outlooks. Any color you could give us would be great. Thanks.

Well, first, comparisons with FIFA Joy. We don't do that. We manage. Our own business. Look, I think the message I'm trying to get you guys today is we took this thing on. Full steam. I mean, I use nautical terms because I grew up around a lot of boats, but we stuck the bow of this company right into the wave. And I'm really proud of how we've addressed it. I mean, you know, if you're evaluating the stock, you shouldn't price it off Q3. Q3 has got a ton of noise where you're shutting down inputs for two months. You're shutting down, selling stuff for weeks on end to get pricing and you're taking 50 million a cost out of the business. That's a lot of surgery in a 90 day period. And that's why I'm really proud of the team. What we've told you is say things are really looking a hell of a lot better. July is off to a great start. But look, the year we got hit with this tariff torpedo and it just doesn't make any sense. Listen, it's still fluid, right? You can you know, you read the headlines every single day. And it's just irresponsible to sit here and say, oh, yeah, we can we can we're going to predict this stuff like a slot, like, you know, very accurately. We are getting back. What we're trying to convey is that we're in Q4. We think the bulk of this is behind us. We're getting into a much more normalized operating rhythm. It's full steam ahead and we're setting up for a great 26. It's only two months away. And obviously, we look forward to talking to you then in November. I think that's the best way I can I can tell you where we're at.

Thanks,

guys. Thank you.

Our next question comes from Bob Labic at CJS Securities.

Hey, Bob, how you doing?

Hi, this is Willan for Bob. How are you doing? Good. You've been increasing your brand investment in recent years. And, you know, can you just talk about your capital allocation strategy in a soft consumer environment? And, you know, are there any changes to where you are investing?

Listen, I think the whole space is undervalued. I think anything that's facing the consumer had any sort of tariff, you know, exposure to it got destroyed from a share standpoint. I think the shares are dramatically undervalued. We keep buying them every single day. We have a very unlevered balance sheet to continue buying back shares. But we've bought back almost half the float. And I guess if the shares want to stay down here, we're going to keep buying them. At the end of the day, I do want to do M&A. We chased a deal this quarter, got really close, unfortunately got outbid. We have to maintain discipline when it comes to price and getting return on acquisitions. But, you know, we have a vision to triple our pet business and double our home and garden business and find something creative with appliances. And, you know, I want to maintain enough balance sheet flexibility to accomplish that. And we may or may not take on partners to do it. But look, at the end of the day, I think the balance sheet is super healthy. We're super liquid. We want to go build an AOP plan and put together a much better 26. And we look forward to talking about that in November. We want to invest behind these businesses and grow them organically again. But we want to do a creative acquisitions in M&A. We think our pet platform is amazing. Super excited to have Ori on board. I just got invited to a leadership meeting in St. Louis and gave him a little bit of a pep talk. But I was blown away by the opportunity we have both organically and strategically. As I talked about last quarter, we think if we can fill in some voids, you know, whether it's wet food, whether it's cat, whether it's some of these treats as we try to expand into treats versus just being in chews. All the while strengthening our core chews business. You know, we think our pet platform's got a very exciting future. We've got a few gaps, health, wellness, food, cat, etc. We want to go fill those in with M&A. And so we're going to continue to pursue that. Home and garden. I think there's a couple of things that are coming down the pipe that could fit really well with have your business. So we've got tons of capital. Everybody calls us. You know, everybody loves our low leverage. And so there's tons of capital available to us. We have to be disciplined, find the right assets and in the interim, we'll keep buying a sheriff.

Thank you. And just to follow up, has the M&A environment improved meaningfully with the new tariff map recently enacted or is, you know, there's still too much uncertainty?

It's both right. Uncertainty makes it hard to underwrite stuff that's in trouble. And so you've got to be careful. You don't catch a falling knife. But then there's a lot of capital still around. And like I just disclosed, we unfortunately just got outbid on something I think would have been a fantastic fit with us. Thankfully, it went to private equity, so it'll come back again. Hopefully we'll get a second shot at it. But no, we think we think, you know, and if you I agree with some of the bigger private equity shops, I think what you're seeing them say is, hey, look, you know, seller expectations are still too high. Bids are below clearing prices on a lot of stuff. And hopefully that bit aspera narrows and you see more more transaction. But I think it's getting better, but it's getting better slower than we'd like. Thank you. Thank you.

Our next question comes from Carla Casella at JPMorgan.

Hi, I'm wondering if you could give us a

little

more color on the pet category. And kind of if you're seeing a major channel mix there in terms of consumer preferences towards mass club specialty and you talked about share gains is more color on where you're gaining share or where the supply constraint you talked about. You talked about one retailer having supply constraints where that came from. So any more color on pet?

Yeah, I mean, I'll start. So I mean, I think. It's interesting to see the overall category still declining in what we do, particularly for choose and treats, right. And I think that's been the biggest challenge for all of us that compete in that space, because it's been, you know, years of category growth. And I think that goes back to what we talked about on the call, which is it's really driven by consumer sentiment and some trade downs. And that's been a challenge for us really the last four quarters. I think what you heard in my prepared remarks today is actually a little bit more optimism from a number of things. One, we got our pricing through, you know, on choose in particular. That's very important because that's our biggest exposure from a category perspective. And then two, I think, you know, as we've talked about the last couple of calls, particularly last call is that all of us are in the same boat, right. Everybody on the on the choose and treat side, the vast majority, the larger players are sourcing out of Asia. And so the tariff is hitting tariffs are hitting everybody. And that includes private label. And so we have actually started to improve versus private label in the US market, which is great to see. But that definitely was impacted materially by stop shipments. I actually think that if we didn't have stop shipments and some product availability issues, we probably sequentially would have improved sales from Q2 to Q3, which again goes back to it actually does feel like it's bottomed and start starting to get a little bit better. Certainly, we at least maintain share from a POS perspective, even though our net sales were below because of the timing of those stop shipments and and retailer constraints. That was mostly in the US a little bit in Europe, too, around a global customer that really was having just some overall warehouse constraints and issues with too much product in their DCs and it delayed some orders. So, you know, overall, I think our message is we think we're probably incrementally in a better place than we were six months ago in Pat. We've got our pricing in place and a new team in that business reinvigorating the messaging, both internally and externally with our retail customers. And we're excited about what's ahead in twenty six.

OK, great. And can I just ask on you talked about the timing of your shipping and holding off on purchases during the tariffs. Are you seeing major volatility in shipping or container rates with yourself and maybe others doing some of the same?

No, not anymore. No, we're we're pretty steady. We're pretty much on contract rates. We're really pleased with our relationships with ocean freight carriers. And I think I really don't see anything disrupting disrupting the normal pace in Q4 like we had in Q3, obviously, barring some blow up in trade negotiations amongst the US and countries that matter to our sourcing.

OK, great. Thank you.

Thanks, Carla.

Our last question comes from Olivia Tong at Raymond James.

Great thing.

Hi,

how are you doing?

Good, good. Much, much better after getting through the last 90 days. We're feeling better. I would imagine so.

I want to follow up a little bit on what was left on the table and of that of that 30 million, how much of that you think you can make up or have made up already? If you could sort of parse that out between HPC and H&G to start.

Yeah, I mean, it's that doesn't really impact H&G, Olivia. It's really an HPC and GPC

issue

in Q3. You know, I think probably half of it we've already recovered and goes to that solid July that David talked about, particularly around some of the stop shipments. So some of it will miss, you know, product availability. Oftentimes you'll miss a little bit of POS. But I don't think by the time we get through the full year, that'll be an overall meaningful impact to our results.

Got it. Sorry about that, except on H&G. And then, you know, putting aside, obviously, the noise with the stop shipments and the stop ordering, you know, what's your view in terms of consumer demand? We talked about this a couple of times in the call, but are you seeing any change in demand across price points or consumers looking for more value or are they, you know, holding the line? And then, you know, in terms of the pricing that you're planning, could you talk about how much on average and sort of the range that you're looking for and when that's getting implemented?

I'll go first and then Jeremy can fix it. Look, I've been surprised at how resilient the consumer is, you know, honestly, given everything thrown at them. And, you know, we saw weakness in the US, I think, you know, last fall coming into the start of this year. And then, you know, Europe kind of followed behind that. You know, and again, you know, there's still uncertainty out there, but my personal view is that we're probably through the bulk of the material volatility and just scaring the hell out of people with, you know, tariff rates changing every day and just the unpredictable nature of global trade. And so I think as that kind of calms down, I do think consumer sentiment will start to heal globally. Now, if we can get some rate cuts and all the rest of that, that helps. We clearly have seen people be more judicious in how they spend money, tighter, more selective. And that's, but that's also why we're so bullish on what we're trying to tell you. You're like getting a mod reset, you know, getting better shelf placement, you know, getting our branded product, which actually generates a lot of margin and a lot of turns, a lot of velocity and foot traffic for retailers and accomplishing that this quarter in pet. That's a really positive outcome. And so, look, I would say the consumer has been more resilient than I thought. You know, we have a lot of new innovation in the pipeline. It's going to take a couple quarters, right? We just put new leadership in there. It's going to take some time to get some traction. But, you know, we're pretty jazzed about where I think we can go organically. We want a couple of months here to write an AOP plan and put together something for 26 and then, you know, we can give you a lot more specifics. But, I, what would you add to that? Yeah,

I mean, I agree with everything David says. What I tell people about what we're seeing from a consumer behavior perspective is just look at what we're experiencing in pet versus what we're experiencing in home and garden. And think about the different brand strategies there, particularly in the US. So our home and garden business is entirely a portfolio of value brands that, you know, while we have great innovation, by definition, when consumers go to the shelf and buy our products in those categories, they are values to other brands in that space. And we're gaining share in every category is what you heard in my prepared remarks. So consumers are looking for values. And I think that's pretty consistent with what all of our big retail customers say on their earnings calls as well. And then if you look at pet, you know, the last three or four quarters, it's been a struggle for us to hold share versus category predominantly due to trade downs and private label. But that is starting to get a little bit better. So that's, that's, I think, a great picture of what the consumer is experiencing. But I think, you know, the fact that when when prices do get raised, when we do a rollback on our premium brands, we actually see consumers come right back to those brands. And so they still really do want those branded products. That's why I feel so much better heading into 26 in that business. And then to your last question, you know, I'm, I'm really pleased with where we're at right now. You know, as we sit here, you know, still fairly early in the fourth quarter, you know, and all these trade arrangements have been made just in the last few weeks with countries that matter to us. And many of them have made arrangements with the US at pricing above the 10% tariffs that we were operating under. We still only have, you know, 20 to $25 million incremental pricing and supplier concession on an annualized basis that we're targeting for 26, you know, to mitigate that. And so that's a pretty low number across a $3 billion revenue base in three different businesses in multiple categories. So to your question on how much price, it's, you know, by definition, it's less than 1% in total. And, you know, at this point, I think it'll be very strategic and targeted from a revenue growth management perspective on how we get that price and we'll partner with our retail customers to make that happen and protect, as David always says, protect our bottom line in our house.

Understood. Thanks, and best of luck.

Thanks. Thank you.

This concludes the question and answer session. I would now like to turn it back to Joanne for closing remarks.

Thank

you. And with that,

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

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.