Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 Spectrum Brands Holdings Incorporated Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Kevin Kim. Thank you, and please go ahead, sir.

Thank you, Chris. Welcome to Spectrum Brands Holdings' fiscal 2020 Q1 earnings conference call and webcast. I'm Kevin Kim, Divisional VP of Investor Relations and moderator for today's call. To help you follow our comments, we have placed a slide presentation on the events calendar page of the Investor Relations section of our website at www.spectrumbrands.com. This document will remain there following our call. Starting with slide two of the presentation. Our call will be led by David Maura, Chairman and Chief Executive Officer; Jeremy Smeltser, Chief Financial Officer; and Randy Lewis, our Chief Operating Officer. After their opening remarks, we will conduct the Q&A session. Our comments today include forward-looking statements, including our outlook for fiscal 2020 and beyond. These statements 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 January 30, 2020, 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 statement. Also, please note, we will discuss certain non-GAAP financial measures on this call. Reconciliations on a GAAP basis for these measures are included in today's press release and 8-K filing, which are both available on our website in the Investor Relations section. And now, let me turn the call over to David Maura.

Hey, good morning. Thanks, Kevin, and good morning, everybody. Thanks for joining us today for our first quarter conference call. As I stated on our last earnings call, fourth quarter of fiscal 2019, we expected to have a divot in our first quarter performance starting in 2020, and then to regain momentum in the balance of the year. In this quarter, we just reported organic sales were essentially flat with our adjusted EBITDA down 11.4%. The first quarter decline in adjusted EBITDA was in line with our expectations is tariffs exceeded the ramp-up of our productivity improvements. We expect to resume sales growth this quarter, and additionally our Global Productivity Improvement Plan is expected to catch up to our tariff headwinds. On the topline, we did experience organic growth in our Home & Personal Care divisions and in PET, and while timing issues in our Home & Garden and HHI segments drove us flat overall. We continue to expect net sales, Adjusted EBITDA and free cash flow growth in 2020. If I could have you turn to slide seven, we are executing on our strategic plan and delivering full-year revenue growth is a top priority for each of our teams. For example, in our Home & Personal Care division, we had an outstanding quarter. This quarter, our appliance unit reported its first quarterly growth in over a year. We're particularly pleased to see this positive inflection point in our appliance business as it fuels our confidence as a management team that the investments that we're making to streamline our businesses, launch new products, invest in innovation, R&D and marketing are beginning to bear fruit. We experienced top and bottom line growth from Home & Personal Care, demonstrating tremendous progress from the new leadership team there, led by Dave Albert. Additionally,…

Thanks, David. Good morning, everyone. If you will turn to slide nine. I will start with a review of Q1 results from continuing operations, beginning with net sales. Net sales decreased 1%. Excluding the impact of $6.3 million of unfavorable foreign exchange, organic net sales were essentially flat, with growth in HPC and Global Pet Care, offset by declines in Home & Garden and HHI. Gross profit fell 12%. Gross margin of 30.9% decreased 380 basis points as higher tariff costs, timing of capitalized manufacturing variances and GPIP restructuring costs were partially offset by productivity and positive pricing. SG&A expense of $226.5 million, decreased 11.1% at 26% of net sales this year compared to 29% a year ago, driven by higher non-cash depreciation and amortization charges recorded last year in HPC due to the reclass back into continuing operations in the period. The operating loss was driven by the recognition of a loss on the asset sale and impairment charges and Global Pet Care associated with the Coevorden dog and cat food manufacturing operations and higher GPIP restructuring costs, partially offset by lower depreciation and amortization. Operating income was also negatively impacted this quarter by $8.5 million of higher stock compensation for a more normalized long-term incentive compensation compared to a timing delay last year. This will normalize on an annual basis. Adjusted EBITDA decreased 11.4%. Growth in Global Pet Care and Home & Personal Care were offset by declines in Hardware & Home Improvement and Home & Garden. Adjusted EBITDA margin declined 140 basis points driven primarily by higher tariff costs, timing of capitalized manufacturing variances and stranded costs, partially offset by productivity and positive pricing. If we turn to slide 10, you can see Q1 interest expense from continuing operations of $34.8 million decreased $22.2 million dollars, driven…

Thanks, Jeremy. Good morning, everyone, and thank you all for joining us today. At this point, I'll walk through the results of each of our business units. So turning to slide 13 and hardware and home improvement. First quarter reported net sales, organic sales decreased 2.4% and 2.5%, respectively. The lower net sales were driven by residential security and builder's hardware categories, partially offset by growth in a plumbing category. The decline in residential security was driven by lower builder volume and builder's hardware was driven by timing of orders from two large customers. Adjusted EBITDA decreased 23% driven by incremental tariff costs and lower manufacturing volumes in the quarter, partially offset by higher pricing and lower distribution expenses. We remain excited about the outlook in this category, the electronic deadbolt and smart locks in 2020 given the relatively low but fast growing US residential adoption rates. As an example of this, earlier this month, the Kwikset team introduced the Halo Touch WiFi Smart Lock at the Consumer Electronics Show in Las Vegas. Further innovating the halo smart locks by providing homeowners access to their homes via fingerprint. This is the first in the industry to have this technology. We are very pleased with this innovation was given a best Home Tech Product Award by several different outlets. In this space, we continue to use our proprietary cloud-based platform and new mobile application as a competitive advantage for launching new product introductions in this space. Additionally, our strategy in the plumbing segment is expected to deliver significant new wins in this segment and we look forward to updating you on that in our next quarter call. We believe our long-term growth will be driven by a robust electronics product roadmap and the new introductions our teams are bringing to market…

Thanks so much, Randy. Thanks, Randy. Thanks, Jeremy, Kevin. Thanks, everybody, for joining us this morning on the call. With our first quarter, there's a call, the first quarter divot behind us. We're pleased to begin realizing additional benefits from the Global Productivity Improvement programs, which Randy described in detail and returning our company to growth in the second quarter and for the balance of this fiscal year. I'd like to thank all of our teams for the progress and revitalizing our company and driving change for our future success. We do have a strong balance sheet and healthy liquidity and we are now setting our sights on accelerated growth. We also continue to believe that our share price continues to be materially undervalued and we will repurchase our stock opportunistically from time to time. Team and I are proud that we were able to deliver on our financial commitments for 2019, which is only strengthened our resolve to deliver our 2020 financial guidance of low single-digit sales growth, adjusted EBITDA of $570 million to $590 million, and adjusted free cash flow of $240 million to $260 million. And going forward, we expect to drive material further growth in our free cash flow generation from there. Now I will turn it back to Kevin to take any of your questions.

Thanks, David. Chris, let's just jump right into Q&A.

[Operator Instructions] And our first question comes from the line of Bob Labick with CJS Securities. Your line is now open.

Good morning. Thanks for taking my questions. So on prior calls, we've talked about part of your growth and expect to reacceleration in growth is driven by consumer-centric new products. Could you -- you've alluded to a little bit on the call already. But could you talk more about the pipeline of new products and maybe the new product introduction capabilities and process now versus a year or two ago and where that's going to go?

Yeah, I'll let Randy hand it alone.

Yeah, good morning, Bob. So that's a major component of our GPIP. We talk about GIP, when we talk a lot about it being kind of savings front loaded. But really behind the scenes, the heavy lifting is redesigning that innovation process and we are working with some world-class experts to help guide us through that. It starts with this commercial operations team that I discussed in the prepared remarks where we tend to want to centralize all of the generalized functions of scraping and harvesting data of what's happening within categories macro, micro, internal, external, and vending that back into a disciplined innovation process within each of the businesses, it's aligned with the brand strategies, the channels and the products. And so those new product development processes are embedded in each of the business units and they tend to be at a little different stages of development. But as an example, HHI being first to market with a fingerprint WiFi lock that we continue to be able to hang on our own security cloud is just the kind of the tip of the iceberg of being able to launch a whole line of products in that space. When we look at our appliance business, very happy with the progress we've made there in the last year and it's not been short-term minded. From the very beginning, David was committed to revamping that business with a focus for growth and we could have turned around bottom line numbers much quicker, if we weren't committed to the long-term. And so we've got a great NPI engine there and we're doing a lot there to focus that on fewer, better, stronger. We've got a number of new and exciting products coming out in that space within the next couple of quarters. We'll be launching a George Foreman smokeless contact grill in the US that will start shipping later this quarter and exciting new products in Remington Wet Style, Black & Decker, Air Fry Toaster Ovens etc. And so that's evidence there. A little bit longer timeline in Home & Garden, but you'll start seeing products that we'll be launching out of that process later this year.

Yeah, absolutely, that's super color. I really appreciate that. And then, I don't know if it's in the earnings slide deck today, I don't think. But in recent slide decks you've discussed that 15 of your brands make up about 80% of your sales. You've also talked about divesting non-core businesses. You talk a little bit about the other -- is it other brands or where the portfolio optimization stands, might there be other small sales like the European divestiture of dog and cat food mentioned today or where is that process?

Yeah, look, I think we're -- we've been pretty open about it. We want to feed the winners and starve the losers. And -- but I think most of the streamlining is done. I mean, quite frankly -- I mean, our global footprint in Pet and, again, thanks to that team for bearing down odd, probably four facilities, down from 10 and will be actually growing our sales pretty nicely resuming pretty good growth there in the second quarter on Pet, much better than what you saw this quarter. So, again, everything is about productivity. Everything is about getting greater yield and it's -- the design is what I'm really excited about. Everything here is built on getting data to make sure that as we allocate capital internally, we're doing it much more efficiently and getting a higher return on those dollars. So, look, yeah, there is no question, things like Coevorden are little bit disrupting and they cause some noise in the quarter and it's -- we're still not done, but I think we're down to little pieces of it. And so, yeah, that business, it's nice to get $33 million on an asset that quite frankly was dormant and we weren't making a profit on it and we've got a good partner there to take that asset over and give our people employment and quite frankly, there will be a synergistic partner there. But, look, we -- most of the teams have already jumped on board with the whole mantra of vision, clarity, focus, and I think, everybody knows who they -- what they stand for, where they're going and what they're hearing our brands are and want to support at this point. You did -- Randy, disagree with that or --?

No, I think that's exactly right. As we've transitioned from a more and more and more strategy, which led to a lack of global prioritization, we focus very heavily on realigning the businesses on global brand strategies. And so, Bob, there's not a lot of large assets that we're talking about, but we have literally dozens of smaller brands and product categories that have kind of emerged around the globe and they just become distracting on resources. And so a lot of effort going into making sure that we're focusing within each of our businesses on those strategic brands and those brands will get the investment, they'll get the NPI, they'll get the reach to the top talent and that's where a lot of the growth is going to come from.

Thank you. And our next question comes from the line of Ian Zaffino with Oppenheimer. Your line is now open.

Okay, great. Thank you very much. Just kind of keying in your comments about the return to growth in the second quarter. What in particular is driving that? What particularly excited about? And give us a little more color there. Thanks.

So growth in the second quarter, I mean, I think, as we talked about in appliances impact, we expect that growth to continue. As we mentioned on our fourth quarter and guidance call, we expected growth in all four businesses, top line and EBITDA. I think Randy has talked about new products coming down the pipeline, which will help accelerate that growth from first quarter on through the rest of the year. And in particularly in Q2, some of the challenges we had around the seasonal side of the Home & Garden business, we expect to improve sequentially.

Go ahead.

I was just going to add a little bit of color for the team as far as the Home & Garden business for the season. While we are bullish on the year and we've got good weather forecast for the spring. It is important to understand that we are seeing a different strategic approach to the strat -- to the category from some of our top retailers. Actually seeing a heightened strategic focus that is exciting to us. But the timing is going to be different, many retailers really loaded upfront last year and so the pacing of revenue over the course of that business this year is going to change to be a little bit more back-end loaded than what it was before. But overall, Jeremy is right, it's the timing of new product introductions in each of the businesses.

Okay. And then just one other question on the tariff side. What should we expect for the remainder of the year? And then just tell us what the impact would be given the kind of a lot of moving parts transmitted on the way, etc.? Thanks.

Look, I think, I think, we've disclosed in the past, the headwinds we're facing, look, obviously, Phase 1. I think a lot of people expect that to be massively beneficial, we would tell you it's slightly beneficial. I mean, my main takeaway on Phase 1 is, it's, we're not getting hit in the face anymore. We will pick up a little bit of incremental benefit there. But, it's immaterial. And so the best thing I think that's occurred is there is some -- there is some clarity and certainty in the marketplace where our retail customers -- you could see stuff where people would get nervous about tariffs get more out of control and do some pre-buys. And now I think with certainty with Phase 1, I think our customers are resuming to a more normal trading patterns and that also gives us fuel for our confidence in Q2 growth.

Thank you. And our next question comes from the line of Olivia Tong with Bank of America. Your line is now open.

Great. Thanks. Good morning. Wanted to talk a little bit more about sales because you guys have been pretty explicit about EBITDA expectations to start the year, but sales was quite a bit lower than what the market was expecting. So relative to your expectations, what didn't go as expected? And then just on -- specifically on HHI for a minute. That was particularly surprising given the strength in housing data both new, remodels, etc. So, you mentioned a few things on the timing. How those orders that you expected to come -- that you expected in the December quarter now come through. And then if you could talk about the decline in residential locksets. Thanks.

Yeah, good morning, Olivia. So with regards to the quarter, we talked about Home & Garden being a little bit of timing. And so as we got closer to the season, we are seeing that several large retailers are taking a more measured approach to the feed-in. And therefore, some of the things we might have expected to ship at the end of December are coming in Q2. With regards to HHI, it was just kind of mainly three areas where we had a hit with two large customers who took inventory out of their system over the course of the quarter we believe related to potentially terrifying patterns as David alluded to before. We did have a material Black Friday event that we had last year in the quarter that didn't anniversary this year. And then we were in the final quarter of lapping two material losses of low-margin items from a year ago. So that's the main drivers of HHI. And we're continuing to watch it closely the category, as you said the metrics, the market is pretty solid and we expect that to turn back to growth and to deliver good numbers for the year.

Got it. If I can just ask specifically on residential locksets, because that's obviously a business that where you alluded to a quite a bit of the innovation and obviously the tailwinds. So it's a business that you lost there. I would assume is lower margin relative to HHI average?

Yes. It was lower margin and it was older technology and it was in -- where we were not willing to go chase pricing and it was kind of related way back to outcomes from the challenges we had in supply chain execution 18 months ago.

Got it. And then if I could just follow up on market share positions across the portfolio because HPC, it seems like that's now stabilizing but HHI has some losses, H&G, at least you underperformed your closest competitors. So if could you talk to what's going to drive that improvements there because you mentioned the retailer excitement around but also pushing out orders, which seems a bit at odds with each other.

So if you're comparing our Home & Garden business to large competitor, there is a big gap in the line up there. And so we're -- when you look at our product category versus another competitor there, there is about a 11%, 12% overlap of revenue. So we don't compete in many of the categories and the trend lines tend to diverge. So as we look at the categories that we compete in and being insect repellents, indoor insecticides and outdoor controls, our data would show that we've taken share, especially at the home centers in each of those segments over the last 12 months. And as far as the timing goes, it's not super concerning to us there as long as the inventory is available and we've got the capabilities we -- last year, we were able to meet expectations of our retailers when they accelerated purchases and it was not a problem. So as they delay those orders, I'm still not worried about that.

Thank you. And our next question comes from the line of Faiza Alwy with Deutsche Bank. Your line is now open.

Hi, good morning. So a couple of questions from me. Just first on HHI, just wanted to go back on the timing of orders, I don't think you quantified the impact from that. So I'd love to hear how much the impact was just on the timing of orders on the builders' hardware piece? And then I know that -- I believe builders' hardware is where you might be competitively disadvantaged due to tariffs because you had consolidated your manufacturing in China. So I wonder if there has been a little bit of impact from that. And is there sort of a pricing component there, and are you seeing sort of some -- any volume impact from that pricing?

On builders' hardware, specifically, we're taking material actions internally to get more efficient there to lower our cost structure and to improve our profitability materially in the current fiscal year. And also on HHI is we are -- we are resuming the growth in Q2 and we expect a very good finish for hardware for the balance of the year. I think I'd like to go back to the Home & Garden piece of it, it was $46 million revenue, I believe. Just, again -- I know we live in a short-term world but every other quarter in Home & Garden is typically $150 million or $200 million a year. So I wouldn't get overly concerned about Home & Garden.

No, I completely agree, I think Home & Garden is pretty irrelevant for this quarter. I was just -- I was more concerned about HHI and the builders' hardware piece. But I also -- I was wondering if I could get more color on the Pet segment, because you've done really well on the treat side of that business. But comps do get a lot tougher. So how are you thinking about growth for that segment for the remainder of the year? And then, I just want to understand the mechanics of the sale of these facilities. I mean it sounds like -- so you're keeping those brands of those businesses aren't really going away, you're just going to be outsourcing the manufacturing. Is that really what's happening?

Yeah, so let me try and take those questions. Maybe I'll do in reverse order. So, with regards to the Pet facility, the mechanics of it is the fact that we are working with the synergistic partner who will take over the operations. This will be one of many facilities that they operate in the European continent. And so they bring a ready-made understanding about how to operate with high degrees of efficiency and cost improvements. They will be able to instantly add capacity to an underutilized facility thus improving the absorption and freeing us to focus on the commercial aspects in the brand management. We'll continue to look for strategic options for the remainder of that business, but overall it's going to be a net positive for us from an operation of again freeing up those resources. With regards to the future comps in Pet, we are feeling good about that, because one of the things, Bob asked a question earlier about the NPI process and Pet is where that cycle is the shortest and consequently it's where the fruit of our work a year ago, 18 months ago has really started hitting the market and has been evidenced since last summer. So we continue to see a higher vitality rate. I mentioned in the prepared remarks that we are returning to positive relationship building with US pet specialty and for anyone who has followed us for a while, you know, that's a major advantage for us. And then innovation coming in the aquatics space, we had a major US retailer decided to exit live fish and that's having an impact on the category, but we're actually being able to counterbalance that much better than we anticipated. And our GloFish business is a key piece of that bringing able -- being able to bring innovation into a somewhat stagnant category is really exciting, and so we continue to launch new species and new colors. And if you haven't heard, we will be launching the world's first ever Glo Betta later this quarter. And so we have received FDA approval three weeks ago. And so later in this quarter, we will be launching with three species in the first color. And so that's driving a lot of excitement in those spaces. I mean these are fish that will retail for up to $29 each. And they're really exciting and they target a whole new category where betta fish can be kept singularly in a small desktop tank and it really broadens the appeal to the entry point of that category. So it's those types of things that have us feeling confident about continued preference.

Thank you. And our next question comes from the line of Jim Chartier with Monness, Crespi, Hardt. Your line is now open.

Just wanted to talk about some of the marketing investments you guys have made over the last 18 months. Any color you can give us there on what kind of returns you're seeing? Are you seeing the lift in the products you are investing behind? And then specifically on Manchester United, is that partnership fully activated and what are you seeing there? Thanks.

Thanks, Jim. So, I don't think we're going to go into the detailed specifics of the ROIs by brand investments. But, overall, we are measuring the ramp up of those investments to be more focused and more aligned with the brand strategies that I discussed earlier, being more aligned globally. And so one of the aspects of the commercial operations team that we announced this past or a couple of weeks is exactly that is putting additional external resources around ensuring that we've got visibility to those ROIs and we can make better, faster decisions in that space. With regards to Manchester United, fully executed and seeing really positive impacts there. I don't have those data points with me -- in front of me, but I don't --

It was a growth rate in Remington Europe this last quarter.

We have to find that number, it's buried in my deck here. But you can definitely see it in Remington both from the standpoint of Europe, but also in Asia-Pacific also.

Great. And then on the smart locks, you guys have highlighted your in-house cloud platform. Do your competitors have in-house platforms themselves? And I guess what kind of advantages to use your platform provide versus the rest of the industry?

We believe our platform is unique against -- within the major providers. And what is really important about this is back before smart locks, the key was controlling the key and the lock in the key combination was the key to that category. As we move to smart locks, it's all about controlling the credentialing of whatever you're using to replace the key in that interface both from a standpoint of technology, the liability, speed and security. So being on our own cloud, greatly improves our overall security of the product. It greatly improves the operation and consumer experience because everything is done locally so much faster reaction times, and on top of that, we don't have to rely on a home hub network, you can connect directly into your WiFi system. So it takes an additional step and additional cost and additional unreliable step out of the process in smart home development.

I've got that -- Remington thing, I'd ask the team. But I believe we grew 9% with Remington in Europe and that's based on fully loaded Manchester United programs. And so I just want to give you some color. While we don't want to go into ROIs on everything, but the teams are continuing to do what's hard, right. And what's hard is when you have a quarter like this for Home & Garden where you guys are clearly depressed that the top line is down. We keep spending on advertising. We keep building those brands. And we're doing what is right for the base businesses long-term. And so, again, like, I'm personally thrilled that after nine months, we now have the top line and bottom lines growing on our appliance units and it's up to us to maintain the discipline, no matter what the quarterly headwind is, the tariff headwind that we keep investing for growth. And that's despite the category over in Europe being down 1.3%. So we're swimming upstream pretty fast.

Thank you. And our next question comes from the line of William Reuter with Bank of America. Your line is now open.

Good morning. I know most of the tariffs for you guys were list 3 issues, but given that the list 4 has been pushed off and eliminated, is the $80 million to $85 million of incremental tariffs still the right number or should it be lower than that?

I think you still have a good ballpark, I think, net-net, we probably have a couple of million dollars small, some -- we got a small benefit $2 million to $3 million, something like that. That's what we want to disclose at this time.

Okay. And then I guess in terms of price increases that you implemented this year, do you have a sense for what percentage of that $80 million to $85 million you may have pushed through in price at this point?

Yeah, so William, I won't go into specifics, but we did get well over 50% of the tariff cost impacts in pricing, but that very dramatically by business and by category and by channel depending upon a number of factors as you can imagine. So it was roughly maybe 60% across the portfolio, but there was a widespread.

That's useful. And then just lastly from me, when you last updated us your leverage target was 3.5 times, given the rapid share repurchases, you guys are a little bit above that right now. I guess, do you continue to have that as your target? And, I guess, how should we think about that in the context of share repurchases going forward?

Yeah. Here, so you should think about it. 3.5 times to 4 times leverage is where I want to steer the ship. The company is materially undervalued at the moment. I'm happy to take leverage above that for a short period of time, because we're running the business for the long term, and we are steering toward a $7 per share free cash flow business in 2021. And so with shares trading at these multiples, we will be buying stock.

Thank you. And our next question comes from the line of Carla Casella with JPMorgan. Your line is now open.

Hi, just one follow-on on the tariffs, I mean, they even talked about mitigation and coming through the back half of the year, how much of that is moving the sourcing in pro forma by the end of this year, where do you expect to be in terms of your amount of goods, percentage of goods, however, you want to look at it, sourced from China?

Look, I think our appliance unit will remain sourced out of Asia, China, we are making some changes to footprints and other parts of the businesses to become less reliant on China and to push things into neighboring countries. I don't want to go into specifics on that yet. But, yeah, absolutely, we are -- we continue to move the supply chain around to benefit the company and we'll continue to do so. But, look, I think what we want to hopefully get across to you guys today is that we -- the dividend in Q1 was expected from Q4, we've basically taken the pain and we expect productivity to now catch that up in Q2. And then going forward, we're hoping to be through with this whole discussion on tariff and get back to materially grow in the business and also reinvesting in a much healthier manner to propel the top line.

Okay, great. And then just one more on, you talked about a couple of plants potentially -- one closing and one potential. Are there opportunities there and on the flip side, you're talking about investing in the business, is some of that -- any of the additional capex will need for plant investment beyond kind of what you've guided to this year. Are you in a good spot after you complete the first process you announced?

My answer is, we're in a good spot. But I'll defer to Randy.

Yeah, just a little color, Carla. We had four manufacturing locations throughout Latin America that produced dog chews and treats. Those are the four that we announced that we have closed in the course of the quarter and also the manufacturing facility in the Netherlands, which we will divest. There may be other changes in the future, but not significantly more. And we are in a good spot with our manufacturing footprint, and so we will continue to use kind of the run rate maybe less in total on CapEx going forward to drive efficiencies in automation. But you should not be thinking that there's a big hump in the CapEx to adjust to this. This is -- that's not connected.

Thank you. And our last question comes from the line of Karru Martinson with Jefferies. Your line is now open.

Good morning. Just on the Chinese virus that's in the headlines, is that affecting any of your production capabilities and what's the impact there?

We're definitely taking less flights to the mainland, but, look, our contract manufacturers are there. It's potential we could get like a week delay on some of the shipments coming into the LA ports. But we don't expect any material interruptions.

Okay. And then when you look at your stock price versus acquisitions out there, do you feel that you have the right footprint or other bolt-ons that you would like to add or is it just that stock prices too compelling at this point?

I can't find anything to buy cheaper than my own stock.

Okay. And then just a clarification. When is the Glo Beta come out, my son's in the market after is -- after a friend killed his other fish.

Karru, I think you should be looking at US Fed specialty in the latter part of March. We'd be glad to send you the invitation.

Appreciate it. Thank you.

And this concludes today's question-and-answer session. I would now like to turn the call back to Kevin Kim for any closing remarks.

Great. Thank you, David, Jeremy, and Randy on behalf of Spectrum Brands. Thank you for your participation.

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect.