Good day and thank you for standing by. Welcome to the Q2 2021 Spectrum Brands Holding, Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Kevin Kim. Please go ahead.

Great. Thank you, Francis. Welcome to Spectrum Brands Holdings Q2 2021 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 Event Calendar page in the Investor Relations section of our website at www.spectrumbrands.com. This document will remain there following our call. Starting with slide 2 of the presentation, our call will be led by David Maura, 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. Turning to slides 3 and 4. Our comments today include forward-looking statements, which are based upon management’s current expectations, projection and assumptions and are by nature uncertain. Actual results may differ materially. Due to that risk, Spectrum Brands encourages you to review the risk factors and cautionary statements outlined in our press release dated May 7, 2021 and our most recent SEC filings and Spectrum Brands Holdings most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statements. Also, please note, we will discuss certain non-GAAP financial measures on this call. Reconciliations on a GAAP basis for these measures are included in today’s press release and 8-K filings, which are both available on our website in the Investor Relations section. I will now turn the call over to David Maura.

Hey. Thank you, Kevin. Good morning, everybody. Thank you for joining us for the call today. Before I get started, I want to take a moment and speak directly to our employees and our partners around the world. While our work is far from complete, our financial results reflect another quarter of strong top and bottom line growth and further confirm that we are structuring for growth and efficiency to serve our consumers, customers and stakeholders. I'm also very proud of the progress we've made these past three years. Our teams have embraced both our new global operating model and the spirit of our servant leadership culture. They've also persevered through a global pandemic to deliver excellent and consistent financial performance for our stakeholders. Because of you our employees the new Spectrum Brands has emerged a more efficient, focused, productive and consistent operating company. We will continue to be driven by our values of trust, accountability and collaboration to serve our mission as we make living better at home. Again, I thank you, much appreciation. If I could have your attention, now turn to slide 6. Our latest financial results for the second quarter reflect another excellent quarter of top line growth and operating leverage. Our investments in marketing and advertising for our trusted brands were higher in each of our business units and this continued to drive strong demand this quarter. Our second quarter revenue grew 22.6% as we achieved double-digit growth across all of our business units. And our e-commerce sales grew nearly 43%. Turning to the bottom line. Second quarter adjusted EBITDA increased 28.8%, driven by higher volumes and improved efficiencies from our Global Productivity Improvement Program. Our operating leverage also improved, despite higher inflation and incremental investments that we're making in marketing and advertising. As we…

Thanks, David. Good morning everyone. Turning to slide 11 and a review of Q2 results from continuing operations. I'll begin with net sales. Net sales increased 22.6%. Excluding the impact of $18 million of favorable foreign exchange and acquisition sales of $26.8 million, organic net sales increased 18% with double-digit growth across all four business units. Gross profit increased $75.1 million and gross margin of 35.1% was in line with the year ago, driven by higher volumes in all business units, improved efficiencies from our Global Productivity Improvement Program and favorable mix offset by higher freight and input cost inflation and last year's retrospective tariff excluding benefits. SG&A expense of $262.2 million increased 13.1% at 22.8% of net sales with the dollar increase driven by the improved volumes, higher advertising and marketing investments and incentive and distribution costs. Operating income of $116.8 million was driven by improved volumes, improved productivity and lower restructuring costs, partially offset by input cost inflation, marketing and advertising investments and incentive costs. Net income and diluted earnings per share were primarily driven by the operating income growth and favorability from Energizer investments, offset by higher debt refinance costs. Adjusted diluted EPS improved to $1.76 driven by operating income growth along with lower shares outstanding. Adjusted EBITDA increased 28.8% from the prior year, primarily driven by growth across all business units. Turning to slide 12. Q2 interest expense from continuing operations of $65.5 million increased $30 million due to the debt refinancing costs. Cash taxes during the quarter of $11.9 million were $4.4 million lower than last year. Depreciation and amortization from continuing operations of $38.7 million was $2.3 million higher than the prior year. Separately, share-and incentive-based compensation decreased from $14.6 million last year to $8.5 million this year driven by the change to incentive…

Thanks Jeremy, and thank you all for joining us this morning. My comments today will focus on reviewing each business unit to provide detail on the underlying performance drivers of our operating results. And I will also update you on the current overall cost environment, progress on our GPIP program and results from our commercial operations team in e-commerce and marketing. Overall, we continue to see significant benefits from our operating model transformation, as well as the addition of new talent in many key strategic roles. Q2 reflected another quarter of exceptional financial results with strong improvements across all four businesses. With the backdrop of elevated demands, this quarter reflected generally improved supply chain performance and consistent service levels despite continued industry challenges. These efforts in addition to our continued commercial investments helped drive another quarter of double-digit sales and adjusted EBITDA growth. Diving into the specifics of each business. Starting with Hardware & Home Improvement on slide 15. Second quarter reported net sales, increased 18.4% and organic net sales increased 17.4%. Adjusted EBITDA increased 5.6%, primarily driven by positive volumes and productivity improvements that were materially offset by last year's significant benefit from retrospective tariff exclusions, as well as higher freight and input cost inflation, distribution costs, COVID-19-related costs and higher marketing investments. Excluding last year's tariff exclusions, adjusted EBITDA improved 20.1%. This represents another quarter of strong double-digit growth within HHI. While inventory levels are improved and have normalized over the last few quarters, demand continues to outpace supply with continued strong consumer demand for our products. This bodes well for our third quarter, especially as we are lapping last year's government-mandated shutdowns in three of our manufacturing facilities throughout Mexico and the Philippines. We expect continued demand increases throughout the balance of 2021, driven by our new…

Thank you, Randy. Thanks, Jeremy. Thanks, everybody for joining us today. Earlier this year at CAGNY, at the investor conference, we shared our Spectrum Brands mission, which is we make living better at home. And as I shared earlier, we are more efficient, focused, productive and consistent operating company. Given that we've covered a lot on the call let's conclude with a few takeaways on Slide 21. First of all, our second quarter financials reflect another excellent quarter of top line growth. Investments in marketing and advertising for our trusted brands were higher in each division, which helped drive double-digit top line growth across all of our business units. Second, our second quarter financials reflect another quarter of operating leverage with adjusted EBITDA increasing 28.8% from the prior year with growth across all businesses. Thirdly, our balance sheet improved sequentially, ending the quarter with net leverage of 3.2 times with over $860 million in total liquidity. Additionally, our successful debt refinancing actions this quarter are expected to drive a material step-down in our interest expense. I again want to thank all of our employee partners from our frontline workers in the factories to the distribution centers to the many other teams around the world that have been working from home. I'm extremely grateful for all the sacrifices you have made to navigate our company successfully through these challenging times. Thank you again for your time and for your continued support. Now I'll turn the call back over to Kevin for any questions that we have on the line.

All right. Thank you David. Francis let's just dive right into Q&A.

[Operator Instructions]Your first question comes from the line of Nik Modi from RBC Capital. Your line is now open.

Thanks. Good morning, everyone.

Hey.

Hey, how are you doing? Just a couple of quick questions. Just on the GPIP program with the increase, can you just provide us any detail on kind of how the flow-through will be for the rest of this year but also next year just so we can understand, how to think about the modeling from that standpoint? And then is Rejuvenate in your guidance? I was unclear, if you guys have included that in your actual framework?

Yes. Go ahead Jeremy.

Yeah. So Nik given the – we don't have pinpoint certainly on timing of closing on Rejuvenate, so we did not include it in the current earnings framework. And on the first question, I'll start. Maybe Randy will have some more color. I think we talked about as we started the year an incremental $60 million in savings from GPIP, most of which we expected this fiscal year on top of the $90 million that we'd already had as we started the year. As Randy mentioned, we're a little bit ahead of that. So I think we'll be a little bit more than that $60 million this year with the rest of the increase flowing into next year. Again, we talked about a little bit better savings on existing initiatives and adding some additional scope, Randy, if there's any color you want to add.

I think that covers it well. Nik, a little heavier maybe this year than next. But I think Jeremy covered it.

Yeah. Obviously that's excluding – that's growth. So that's excluding the inflation that we're experiencing.

Okay. And then just one question Randy or maybe David can answer this as well. The housing market obviously has been on a tear, but it looks like inflation in terms of home prices has gotten pretty high. And there's some concerns over affordability. I'm just curious kind of the Spectrum Brands take on that end market?

Look my view on that and I've been talking to a few economists during this week as we prepared for this public earnings call is, we continue to see strength in the housing sector. And quite frankly, I think the new administration's policies are going to move cash flows quite frankly to the customer base that we have in Spectrum Brands kind of across the board. Yeah, clearly housing has had a good run. But I think that – I think what – there's a couple of components here. I think during COVID-19 people have expected, hey, there's a lot of pull-forward in a business like ours. I would say, at this point in time, what we've talked about in prior calls is there's some real stickiness that is going to benefit businesses like Spectrum Brands for a very long time. We've talked about pet adoption. That's a material commitment with a lot of duration buying a house with a yard moving to the suburbs. People generally the first thing they do is change that lock. And so our hardware division is really an R&R. It's a renovation business replacement business, and that's 70%, 75% of our business. And quite frankly, we continue to see a lot of homebuilding activity particularly Sunbelt other places. I've been out personally to some of these sites and they're sold out for a year or two years. But there's a lot of shovels going into the ground. There's a lot of projects going on. And we quite frankly are pretty bullish, because we've strengthened our management team. They were upgrading talent there. We're launching a lot of new products in that hardware division, and so we have a very constructive outlook all in all for HHI over the next 12 months, 24 months.

Excellent. Thanks, guys.

Thanks, Nik.

Thanks, Nik.

Your next question comes from the line of Chris Carey from Wells Fargo. Your line is now open.

Hi. Good morning, everyone.

Good morning, Chris.

So I wanted to pick up on that line of questioning, but perhaps from a bigger-picture perspective right? So it sounds like you think HHI tailwinds can continue into fiscal 2022, in other words that we're at a new base. I wonder if you could maybe just talk to maybe the broader portfolio and the types of things that you think might be helping you now which won't necessarily help you in fiscal 2022. Stimulus checks for the appliances business comes to mind. Pet seems like it's at a new base. So would you expect to grow off of this new base? You're seeing some strength in areas like aquatics which is not typical. Companion animal makes sense to me, garden that makes sense that you have a new home and you want to take care of your front lawns and everything associated. And, I guess, what I'm getting at is that this year has just been so strong so far. And I think that eyes are going to start looking at the fiscal 2022. And if you just think about the divisions that you think can sustain growth or the specific businesses and those that might reverse and basically whether you think you can still deliver organic sales growth off of what is going to be a pretty atypically strong base this year. So any, sort of, broader portfolio perspective would be very helpful for me.

Look I'll be very blunt. I think this is what Wall Street has wrong. I think Wall Street is projecting very flat numbers for us in the next two year, three years. And I don't see that. And your comment around stimulus checks is a good one because it's almost like a direct injection to a vein. It impacts the ecosystem very fast. And so you're not wrong that when stimulus checks go out we see big POS in certain sectors like our appliance unit. But if you look at what the current administration is proposing both the family plan and the infrastructure plan it is effectively a redistribution of cash flows to our very consumer base. And so look I believe that the other structural change here is that as we deal with going back to work through the summer into the fall not everyone is going to return to work. There's going to be a lot more flexibility in the workforce in this country and people are going to continue to work from home part of the week. And they want that home to look good and that's the exact reason why you see aquatic sales going up when they didn't in the past because it's a beautiful thing to have in the house. It's a -- it helps relieve stress. The kids love it. And so I do think there are some real structural changes that have occurred through this pandemic period. And then as you go into this new administration's policies and you dig into it I think -- look I think the next three months to six months the economic data is going to look a little crazy. You've got very easy comps on inflation because last year our factories were shut down and you…

Okay. Thanks for that. And then just as a follow-up David you certainly have a long history and track record with doing deals. I wonder if you can just provide a bit more perspective on the Rejuvenate acquisition. Certainly, cleaning had a good year in 2020. And just how you're thinking about delivering growth in this business whether distribution opportunities whether taking incremental market share? And then just connected to that the synergy expectations that you think you can get from this business from a margin standpoint and how that's factored into your decision process to acquire the business? Thanks for that.

Yes. Look I'm going to touch on it, but I'm going to hand it over to Randy. I mean look there's -- we clearly have phenomenal expertise core competence in manufacturing liquids. Household cleaning is a space we like. We want to be bigger. And this acquisition -- the company is relatively small. Your -- you answered your own question. 100% we can get additional retail distribution. I think we can innovate the product and we can make the product better. And quite frankly I think we have a lot of stuff in our portfolio. We have a lot of ideas around innovation new product launches that will further accelerate that. So, it's very much a plug-and-play with yes, tremendous synergy coming into the -- in the Spectrum family. But it's a growth play. Relative to competition this is a very small asset. And if we can be good stewards of it, I think it can be a meaningful earnings driver for us the next three, five, 10 years. Randy, you want to chip at that?

Yes. Chris, I mean David hit most of the key points here. But we really like the brand. It allows us to jump into a space that we've coveted for quite a while and do it from a position of strength that fits well within our portfolio and our new objectives as David said to be number one in the areas in which we compete. We've got substantial benefits in our selling capabilities and a lot of underdeveloped channels for this business. We've got a lot of opportunities to meld our existing innovation delivery systems formulations et cetera to continue the innovation that Rejuvenate has demonstrated. And we think there's a fair amount of cost synergies associated on the product side that we can continue to drive forward to keep the topline moving.

Okay, fair enough. Thanks.

Thanks Chris.

Your next question comes from the line of Karru Martinson from Jefferies. Your line is now open.

Good morning. When you guys talked about demand outstripping supply, where are the bottlenecks? And what can you do in the near term to alleviate those?

Yes, I mean we've got -- the ships anchored offshore that we can't get into port. We've got some containers that are -- they're stocking boats too high and the containers have fallen in the ocean. You had the Suez issue. We got eight containers on that. I mean it's an everyday battle. But we've got our bill rates up and we know we've built a much more resilient supply chain and we continue to serve our customers. I mean look, I think we're sitting here and we're looking at kind of -- I think it's transitory. I think we solved the bottleneck as we get into the early -- maybe spring of 2022. But every day is a lot of hard work on the supply chain until then. But our company, our teams, our sourcing teams, our supply chain teams are doing a fantastic job. And so, it's really -- it's not an availability issue to our company thank God. It's just higher expense right now. And it's going to hurt us. It's a headwind. We're facing into it. But I do think it's transitory. And I do think we get through it as we get into the early part of next calendar year. Jeremy, Randy, any...

Karru, I think one of the things that we want to point out is that we have a lot of businesses that are pretty vertical in the supply chain. And our operations are all running at full output based upon availability of transportation and some limited components. So, it's not an internal issue mainly, as David mentioned. We're working with our providers to get through the global transportation kind of backlog. And we see it getting better each month each week and anticipate it continuing to do so into the fall.

And then, when you guys talk of taking price here in the third quarter, we've been hearing that inputs are certainly easier to price. They're always all over the headlines, but the freight and the shipping has been harder. Are you getting that full price? And are you seeing the industry follow?

Well, it's a very dynamic situation. It varies by channel, by category, by business unit. And so I can't give you a blanket answer, but I would tell you that we are attacking it from a standpoint of both transportation and freight as well as input costs. I think I almost feel that transportation ultimately will work itself out over time. And we're taking some unique pricing approaches there with our partners. And we are having success in that space. So, it's going to continue to be a very important thing for us to manage well for the next several quarters as well as everybody in the space. But, we feel good about how we're approaching it.

Okay. And just lastly, last year weather-wise garden had almost the perfect season. Is that a bit of a headwind for you guys here in the back half, or it's just the continued strength of that at-home customer going to overwhelm that?

So, the overall dynamic of the category, I'm very pleased with. I have been in this particular piece of the business for most of my career in Spectrum Brands, and tell you I've never felt better about our ability to compete. With regards to what the weather impact is going to be on the season, I will tell you about that on the November call, because I've never been able to figure it out how to predict it at this point. So, our strategy is always to go in the best position we can to win the game that ends up being on the field. And I feel like we are poised to do that extremely well.

Thank you very much, guys. Appreciate it.

Thanks, Karru.

Your next question comes from the line of Faiza Alwy from Deutsche Bank. Your line is now open.

Yes, hi. Good morning.

Good morning.

Hi. So I guess I wanted to directly ask the question on -- it seems like as I look at your earnings framework, you're assuming better growth in the back half on both -- on -- at least on revenue. And I'm curious if there's a particular segment or categories that's making you more optimistic. And I'm thinking in particular about HPC because -- I mean I was very surprised by those numbers. So I'm curious of how you're thinking about generally in that particular business specifically.

Yeah. So I'll start. It's Jeremy. I mean, if you look at our first half results, you're essentially growing 20%-ish range and we're implying for the year mid-teens on net sales. So that implies a slowing of the growth rate. It's going to be a little bit different business-by-business given the oddities of fiscal 2020. So if you recall Q3 last year for our HHI business in particular it was very challenging on supply. So they were down 20% plus. In Q4 it was the exact opposite, where they caught up. So it will be a little bit different business-by-business, but we do expect a moderation in the growth rate from the first half rate that we experienced in that earnings framework. As it relates to HPC fair point, obviously, a very good quarter. Frankly higher than we expected as we started the quarter. But POS continue to be good. Like David and Randy both mentioned some benefit from stimulus likely in there as well. And perhaps some benefit frankly from people starting to go back to work or starting to travel again particularly in the Remington areas of groom and shave.

Okay. That's very helpful. Make sense. And then I guess your comments around like the Rejuvenate brand loyalty and just -- it's making me wonder and think about your existing brands. I know you've talked about reinvestment. And I'm curious if there's any brand metrics or any -- we've seen the great sales right? But is there anything underlying that can you talk about whether it's loyalty or just any other brand metrics that you can share around where you're -- you've seen the most improvement I guess over the last couple of years?

So Faiza we -- probably we don't want to get into the specific metrics. But we can -- I can comment that we watch them very closely. And across the board, we're seeing positive responses to our reinvestment strategy. And we're using that on a monthly basis to continuously adjust and redirect the flow of investments. And right now the great news is that all categories, all business units are seeing net positive movement in awareness consideration, trial and commitment. And so it's a really exciting time to be part of the strategy. I hope that helps.

Yes. Thank you very much.

Your next question comes from the line of Bob Labick from CJS Securities. Your line is now open.

Good morning. Congratulations on another great quarter.

Hi Bob.

Yeah. I just wanted to talk I guess a little more about the mitigation efforts for the material headwinds. In terms of -- you talked about price a little bit. On the supply side, can you tell us what you're doing there? And then I guess thinking through just to next year in terms of the pricing, are these permanent price increases? Are they kind of surcharges, or if, raw materials and freight normalize, how does the pricing of the products change going forward?

Great, questions, Bob, so what I would say on the mitigation, it's all about optionality. So it's really about working with your suppliers your strategic relations of just trying to get the most out of that. How you can value engineer your products. How you can adjust, in other ways that don't impact the value to the consumer. But it's also around optionalities for other relationships or other suppliers. The great news for us is that, we've been doing nothing but gathering and leveraging that data for the last 2.5 years. So the biggest piece of our Galileo or GPIP savings that's driving the investment has come from the area of cost of goods sold. And so, all the process work that was done behind that to prepare for that, and drive that through a very successful project was based around, very detailed data-oriented optionality. So we had the playbook ready to go. And the organizational muscle memory around all of those activities. And so that's what's helping us with mitigation. With regards to pricing, you hit on all the topics we're working. So we're trying to be very transparent with our retail partners. With our -- the investments that we've had and the brand momentum that we have has put us in a good position in these conversations, where we're able to go in and work together to try and drive the best outcome for our retail partners and categories. And so in areas where we believe, there's transitory costs we are working on programs with surcharges that would abate. In more normal input cost areas, we're taking more permanent pricing. But there's no such thing as permanent pricing. So it'll always be a point of discussion that we're having with our partners constantly.

Got it. That's really helpful. Thank you. And then, as it relates to Rejuvenate, I don't know if it's too soon to say or not. But, is there an opportunity to kind of in-source to your St. Louis facilities to manufacture there? And if so, is there enough capacity, or is there additional capital needed for that?

Yeah. It's an obvious area that we're focused on. And we don't know enough about all the details, on the other side, yet the deal having not closed. But what we do know as David said is this is a bread-and-butter competency for our Home & Garden business. And we believe that -- whether production moves from where it is now or not, we believe we're going to have a positive ability to improve the quality and the cost structure of that business.

Okay. Super. Thanks very much.

Thank Bob.

Thank Bob.

Your next question comes from the line of Ian Zaffino from Oppenheimer. Your line is now open.

Hi, great. Just one more inflation question, since you guys probably haven't gotten enough of them. On offsetting this -- I mean, typically I guess, with tariffs you're usually looking for like a 70% to 75% recovery through pricing maybe a 25% 30% offset from a supply chain price release. Is that something similar, we should expect as you kind of try to offset inflation in this environment, or would the mix maybe change a little bit?

Well, I think, we're not going to get into specifics on pricing and dollars out there. I think, as Randy said, being transparent with our retail partners and approaching it as a partnership, approaching it for multifactor pre-surcharges price increases being very conscious of the impact on POS and the brand momentum that we have is the most important thing to us, particularly when as David said earlier, we do expect at least some portion of these inflationary issues to be somewhat transitory. So we want to be really smart about the impact on POS and the momentum that we have. Getting into specific percentages or dollars on -- in this environment is probably not the best thing for us to do Ian.

Okay. Understood. And then maybe asking about the repurchase authorization you guys announced. What kind of cadence should we expect, or is this a signal maybe that there's not as many acquisitions out there, or are they not mutually exclusive? Just a little bit of color on that would be helpful? Thank you.

Yes. So we had a $1 billion program in the past. I think we used about $600 million of it. It was due to expire. I like the optionality of being able to buy in our stock. And so I asked the Board to give me another $1 billion to buy back our shares. Look it's a 3-year program. But I continue to tell you that even though our stock is starting to react favorably to what, I believe is a lot of fundamental work to drive long-term value creation it's still -- I believe our stock is undervalued right now. And our company is starting to generate higher and higher levels of free cash. External acquisitions remain pricey. And it's nice to have the ability to buy in $300 million of stock a year hypothetically or more. So look we'll let you know after it's done, but we want to manage our leverage in this context. We've got a couple of tuck-ins we need to close and integrate. And as I look out I think our share price is very attractive for us to continue to repurchase.

All right, great. Thanks for the color. Good quarter.

Thank you.

Your next question comes from the line of Carla Casella from JPMorgan. Your line is now open.

Hi. I am following on your last comments you mentioned that your stock is undervalued. I'd also argue that your bonds are underrated. And you were brought -- S&P took you down during the pandemic. Any conversations you've had with the rating agency? And do you have a rating target, or do you want to get to BB or investment grade at some point?

I agree with you with BB. Getting the rating agencies to agree is -- I guess that requires a few more follow-up calls. But well look I think what -- Carla I think is what you see right now is -- I think on the ratings front, we've got two really good things going on right? We've really got EBITDA on a nice growth trend. What we're trying to signal is, look we want to continue to underpromise and overdeliver. We don't want to get out in front of our skis, but the reality is we're winning. And we expect to keep winning. And so we just -- we've got some trend. We've got some inflation. We've got a few things here in the back half of the year that we want to point out openly. But we're generating higher and higher levels of EBITDA and I expect that to continue as we go into '22 and beyond. So that obviously drives the leverage ratio down improves interest coverage etcetera. We've also just done a refi which is materially lowering our cost to carry our debt. And so as that interest expense drops that free cash flow really expands. And so, I think we've become a more exciting free cash flow story as we get into 2020 as well. And so all those things create dynamic and positive trajectory for our credit profile and then hopefully get the rating agencies to agree. But yes, let's see where we go. I don't -- just Jeremy any color?

Yes. Obviously, we have ongoing conversations with the agencies Carla and good relationships. I think you're as aware as anybody on the call. If you go back a year ago, the agencies in general we're very, very cautious and conservative in the pandemic. And so I think the recent actions we've had to move from a negative outlook to positive is a good start, but I think they were a little bit entrenched in that cautious approach, having been burned in the past. And so we understand that. I think like David I like operating in a BB world where we execute more at the investment grade type terms and covenants. I think high -yield investors understand us really well. I think we're comfortable operating where we are.

And just one follow-up. I know you took out some of your debt or refinanced this year. You've got one more piece of somewhat high cost debt in the structure. Any thoughts about either further refinancing, or would you just consider paying down with cash and free cash flow?

Yes. I mean look we're always paying attention to the markets. We're -- obviously, when something gets closer to the call premium drop into par that gets more exciting. It does appear that the interest rate outlook will remain low for a while. But yes, look current intent right now is to generate free cash flow pay down debt. That is -- and that is nice that -- we had zero bank debt in our cap structure before the recent refi. Now obviously we have some prepayable debt at par. But look your observation is accurate that we still have some paper out there at a high coupon and we can -- it's a wonderful thing to be able to look into the future and say, Jeremy, Randy and I consider on the table and pull another lever to reduce interest expense further. So stay tuned and -- but we understand where you're going and we're watching it.

Okay. Great. Thanks.

Thanks, Carla.

From here, I would like to hand the call over to Mr. Kim for closing remarks. Go ahead sir.

Great. Thank you Francis. Thank you Francis. With that, we've reached the top of the hour. We'll also conclude our conference call. Thank you to David, Jeremy and Randy. And on behalf of Spectrum Brands, thank you for your participation.

This concludes today's conference call. Thank you all for participating. You may now disconnect.