Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Spectrum Brands Holdings Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today to Kevin Kim, DVP of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Dalam. Welcome to Spectrum Brands Holdings fiscal 2020 Q2 earnings conference call and webcast. I'm Kevin Kim, DVP 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 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, Chief Operating Officer. After their opening remarks, we will conduct the Q&A session. 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 today, April 30, 2020, and our most recent SEC filings and 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 in 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. Now, let me turn the call over to David Maura.

Hey. Thank you, Kevin. Good morning, everybody. I appreciate everybody for joining us this morning. I certainly hope this call finds you all well and safe during these times. Before we start the call, it's really important to me, and it's very hard for me to convey over an earnings conference call the gratitude I feel toward all of our employees. I would be remiss not to say a huge thanks to everybody in Spectrum Brands, all of our employees and associates globally. I'm extremely proud of the amazing way the Spectrum Brands family has come together and taken steps to protect not only our people, our company, but also to serve our retail customers, consumers, and our communities around the globe. I am extremely proud of the response, the proactive steps, and the collaboration that this team called Spectrum Brands has demonstrated. We have acted perhaps more united, more cohesive as a team than we ever have before. And I am thrilled to see evidence of servant leadership and empowering and encouraging and inspiring our teams honestly in the U.S., Europe, and worldwide. So a really big thank you from me, from the bottom of my heart, to all of our employee associates and partners in Spectrum Brands. I couldn't be more proud. Thank you. Now to turn to the quarter. At Spectrum Brands, we are in an extremely fortunate position. We are not only diversified with four different business units, but all of our four operating companies have been deemed essential during this time. We are open for business. We are producing. We are selling to our customers. The majority of our customers also have been deemed essential in this time of crisis. So all four of our business units revolve and center around the home. In fact, if you look at the names of our four business units, three of them have the name 'home' in it and I'm thinking of adding 'home' to the Pet Care division. They not only have been coming together, as I talked about in my earlier remarks, but they've been really helping our fellow citizens through the crisis. They've helped people cook their meals with our Black & Decker and George Foreman appliances in their kitchens. They're taking care of and enjoying their pets, whether it's DreamBone, SmartBones, Nature's Miracle, etc. They're securing their personal residences and businesses with our Kwikset locks and hardware, Baldwin, Weiser up in Canada. They're ridding their yards of weeds with our Spectracide line of products. And they're protecting their families and homes from insects with Cutter and Repel to name a few. I believe that it's this realization that we are actually serving a much greater purpose here that is motivating all of our employees to come together in the way we have over the past six weeks and demonstrate our vision of having a team that is really empowered and inspired to perform. Our second quarter results reflect very strong top and bottom line numbers. That's just a fact. Organic growth was over 4% in the quarter. Operating income growth exceeded 62%, and our adjusted EBITDA growth of over 21% is impressive to say the least. It is important to recognize that this growth was driven by strong results throughout the quarter. Our results also include a small operating benefit to the operating profit in the EBITDA line of $8.4 million in our HHI segment, and that relates to a retrospective tariff exclusion that Jeremy will cover more in his section in a little bit more detail. Let me turn real quick to the balance sheet. As we entered March and the crisis became a lot more real and close to home, our response to COVID-19 accelerated. We moved very quickly to increase the amount of cash that we had on our balance sheet to strengthen our liquidity. We drew down on our $800 million revolver, and we ended the quarter with $458 million of cash in our checking account. Since the end of the quarter, we've also added an additional $90 million tranche to revolving credit facilities and that currently remains undrawn. During the quarter, we also closed the sale of our European dog and cat food manufacturing assets for over $30 million cash. We closed our Cambodia rawhide manufacturing facility and we made a small tuck-in acquisition of Omega Sea, which is another fish food business that complements our Tetra portfolio and we've added that obviously to our Global Pet Care portfolio of aquatic brands. All of these accomplishments further demonstrate the importance of strong and consistent execution. Operationally, our second quarter results also demonstrated a disciplined approach to supply chain disruptions that were experienced in China. And while this delayed some shipments and hurt our sales during the second quarter, by the end of the quarter, our factories were at or near full capacity and our external supply chain from China is in a similar position. At this point, we expect some shortages in supply in the first half of the third quarter, but if our current situation holds, we believe we'll be in a position of substantially recovered by the end of the current quarter. From a factory perspective, our HHI business does currently have supply disruptions in both the Philippines and Mexico, and I'll have Randy give you much more details as he gets into the operating results. While there are countless examples in this current quarter of servant leadership and operational excellence around the company, I do want to highlight one specific example that really represents the best of who we are in Spectrum Brands, and this occurred in March. Within just a couple of weeks, our Global Pet Care team in Blacksburg, Virginia, repurposed part of a facility there and started producing hand sanitizer to combat the spread of this disease and assist with the fight against the COVID-19 pandemic. This accomplishment demonstrates our team's drive and ingenuity. As the product is now available for use across our facilities, we've been donating it nationally to local health organizations, hospitals, various charities, frontline workers, etc. Recently we've started selling the product on Amazon under the Cutter brand. I could not be more pleased to see the Spectrum family come together and not give in to fear, not give in to the negative headlines but instead to take a positive mental attitude and find ways to be part of the solution and keep moving forward. In fact, if you look at the Blacksburg facility, it typically makes pet products and now it's producing hand sanitizer under our world-renowned Cutter brand, which belongs in our Home & Garden business. So the collaboration here is just fantastic. Anyway, let me turn your attention now to slide 8. Our Spectrum 2020 guiding principles remain, and quite frankly Spectrum 2020, which we adopted a while ago is the seeds that are now producing the results our business is reporting. They remain vision. Vision is the core of this, and that is to be a strong innovator of great products, marketed with excellence, and supported by consumer insights, clarity, which is our continued striving to simplify our businesses and streamline our go-to-market strategy to become a much more productive and efficient company. I think you can see that in this quarter's lift to both the gross margin line, the reduction in operating expenses, and obviously the lift to the cash flow margins and EBITDA margins. Focus. Focus. We relentlessly focus on best-in-class customer service now. This is our pathway to a consumer-driven mindset. We accept nothing but outstanding quality and service while increasing innovation and continuing to increase marketing investments to drive our brands and our business. Clearly, there's much more work to be done. As we enter the back half of this fiscal year to combat the effects of COVID-19, I'm extremely pleased with the work that we've been doing over the last 24 months to stabilize the business; secondly, to deliver on our 2019 financial commitments to all of you. We have completed $3 billion of asset sales in this time. We have paid down over 50% of our net debt during this time frame. And as you can see in these quarterly results, we have returned our company to a growth trajectory, not only on our revenue line but, more impressively, our operating income lines throughout our four businesses. While this pandemic was clearly not foreseeable and it is, in fact, a most unwelcome event, Spectrum Brands is entering this next challenge in the strongest position it’s been in over a decade. In the back half of our fiscal year, we will seek to weather the COVID-19 pandemic by realigning our supply chains to better reflect and accommodate new demand patterns. We will continue to execute on our global productivity improvement plan with at least $100 million of run rate savings and our teams will continue to embrace a more consumer-driven mindset as we continue to increase our investments in our new commercial operations group we call it comm ops. Given the manufacturing disruptions we are currently experiencing, as well as rapidly changing economic conditions and the related impact to both supply and demand, it's currently fairly difficult if not impossible to forecast actively the degree to which our financial results may be impacted for the balance of this fiscal year. As such, we have withdrawn our fiscal 2020 guidance this morning. With all that being said, I continue to believe that our best days are absolutely ahead of us as we work to deliver significant long-term value creation to our stakeholders and produce sustainable growth going forward. At this point, I want to turn the call over to Jeremy Smeltser to give you more granularity on our financials. And then Randy Lewis will update you and take you through greater insights on the different business units. So, I'll turn the call over to Jeremy at this point.

Thanks, David. Good morning everyone. If you could please turn to slide 10 and a review of our Q2 results from continuing operations beginning with net sales. Net sales increased 3.4% excluding the impact of $7.3 million of unfavorable foreign exchange and acquisition sales of $800,000. Organic net sales increased 4.1% with growth in Global Pet Care, HPC and Home & Garden offset by a slight decline in HHI. Gross profit increased $23.4 million with the largest driver being the tariff-related benefit David mentioned of $8.4 million. This is essentially a recovery of tariffs paid over the last 18 months as a temporary exclusion was granted in February related to certain products and SKUs in our HHI business, going back 18 months and expiring this coming August. You should note that it is a cash benefit and would have resulted in higher margins over the past five quarters. Gross margin of 35.1% increased 140 basis points, primarily related to the tariff benefit. SG&A expense of $231.9 million increased just over 1% at 25% of net sales this year compared to 26% a year ago, driven by lower operating expenses. Operating income was driven by the increase in sales and gross profit and in addition there was recognition of a $7 million gain adjustment on the final disposition of the European dog and cat food manufacturing operations offsetting higher GPIP restructuring costs. Net loss and diluted earnings per share were driven by a loss on our Energizer common stock holding, despite an increase in operating income, lower interest expense and shares outstanding. Adjusted diluted EPS was up 248% attributable to improved operating income, the lower interest expense and lower shares outstanding. Adjusted EBITDA increased nearly 22% with growth in HHI, Global Pet Care and HPC offset by a slight decline in Home & Garden year-over-year. Adjusted EBITDA margin increased 230 points driven by improved gross profit and lower operating expenses. In total, we estimate that the overall impact of COVID-19 to the company in the quarter was a net negative $7.5 million on the revenue line and negative $3.6 million on the adjusted EBITDA line. We also repurchased 2.7 million shares of common stock for $149.2 million through open market repurchases and settled our accelerated share repurchase plan for an additional 300,000 shares. Turning now to Slide 11. Q2 interest expense from continuing operations of $35.5 million decreased $58.7 million driven by lower debt levels. Cash taxes during the quarter of $16.3 million were $1.8 million higher than last year. Depreciation and amortization for continuing operations of $36.4 million was in line with the prior year. Separately, share and incentive-based compensation decreased from $17 million last year to $15 million this year. Cash payments for transaction-related charges were $6 million down from $14.6 million last year. Restructuring and related charges for Q2 were $12.8 million versus $4.8 million last year. The higher cash spend was driven by the GPIP program. Moving now to the balance sheet, we completed the quarter with a strong liquidity position including the cash balance of $458 million. This cash balance includes $123 million of cash pulled into the second quarter as a result of entering back into our accounts receivable factoring programs offered by our major customers. Debt outstanding was right at $3 billion and up as a result of drawing down our revolver. As compared to the prior year, our second quarter ending inventory was lower by $168 million as enhanced demand and supply delays associated with COVID-19 combined with increased discipline and improved process around inventory management, we demonstrated in the past two quarters limited our inventory investment. We continue to invest in capacity, automation and consumer insights to better manage our working capital and are really pleased with the progress this year. On April 3, we strengthened our liquidity by adding the $90 million tranche to our $800 million multicurrency cash flow revolver. Our strong balance sheet and substantial liquidity position provide meaningful financial flexibility as we enter the second half of the year. Based on the seasonality of our working capital, we expect to generate substantial positive cash flow in the second half of the year. Additionally, we sold approximately one million shares of Energizer stock during the quarter and held just under 4.3 million shares at quarter end. CapEx was $13 million in the quarter versus $13.6 million last year. Now we'll turn to Slide 12 and our 2020 guidance. While we expect that our 2020 financial results will be lower than our previously issued guidance and have withdrawn that guidance today as a result, we did want to spend time discussing our current market conditions. As David alluded to earlier, we continue to be disciplined around spend control. This includes actions in Q2, 2020 to delay merit increases, halt nonessential capital expenditures and projects, slow down on hiring decisions and implement travel bans. We are also temporarily suspending share repurchase activity. With regard to dividends, we currently do not expect to change our approach of rewarding shareholders with a quarterly payout of $0.42 per share. We believe our strong liquidity positions us to weather the storm of a recession and expected near-term variability in demand and supply. We plan to continue a conservative approach until we return to a more normalized social and economic environment. From a demand perspective so far in April, we have experienced continued strong orders in Pet and Home & Garden, while HPC and HHI have begun to see certain areas of slowing, particularly in new home construction and closed retail channels.

Thanks, Jeremy. Good morning everyone and thank you all for joining us. My comments today will focus around our operational performance in Q2, including the impacts of COVID-19. The progress we've made on our Global Productivity Improvement Program. And a review of each business unit to provide you more detail, on the underlying drivers of the performances. So as David mentioned, Q2 represented a very challenging environment for managing all aspects of our business in response to the COVID crisis. I have been incredibly pleased with how all areas of our organization have responded. And as a result, the financial impacts of COVID-19 on our Q2 performance were relatively small, as you heard from Jeremy. In the back half of the fiscal year, we do expect to see more impact from both supply and demand that will vary by business unit. Early in this quarter in response to the coronavirus, the Chinese government extended the Lunar New Year and shut down operations. This did create delays for us in our supply base in China, but mainly attacks our safety stocks on many finished goods and components. However, we are pleased to report that by the end of the quarter, our Chinese factories and our Chinese supply partners were at or near full capacity, as that country returned to work. While this may create near-term delays for the third quarter while products are in transit, we believe that if the current situation holds, those issues are largely manageable. Towards the end of March and into early April, we saw government restrictions impact our HHI facilities in the Philippines and Mexico. These orders required us to limit production capabilities in our Philippines factory and in one of our Mexico factories, while requiring us to temporarily suspend operations at another Mexican facility. Our team has responded quickly to these limitations, including redesigning work to be more efficient with reduced staffing, ramping up production at third-party partners, and moving work to other manufacturing locations where possible. Notwithstanding these measures, our manufacturing output continues to be constrained and while we hope we will return to full capacity very soon, the situation does remain uncertain. Additionally, we temporarily shut down our Home & Garden manufacturing facility in St. Louis, Missouri towards the end of March because of confirmed cases of COVID-19 amongst our own employees. Our teams reacted quickly to close the plant for deep cleaning, redesigning work environments, and performing additional employee training. We were able to reopen with only a few days of total downtime. The facility is currently operating at a slightly reduced staffing level while we expand production in a very measured way. We are continuing to monitor that situation and all other locations and feel that we have the preventive measures in place to protect the health of our employees, which is our primary concern. We have extensive safety measures in place at all of our sites and are vigilant in consistently reviewing our processes and protocols against the latest data for this disease. It's important to point out that all other facilities around the globe remain open and operational as part of our essential businesses. We continue to manufacture, distribute, and supply products that center around the home. And we remain open under government shelter-in-place orders based upon that qualifier. However, until the impacted facilities are fully operational, we do expect these constraints to limit output for some security products in HHI and some control products in Home & Garden. We have been able to respond quickly to these events due to the actions of our global COVID-19 response team. This is a cross-functional, cross-regional team, where we are collectively harnessing our experiences and best practices to benefit all the businesses combined. This team has prepared our facilities and our employees for the impact of this virus and there's been great work from everyone involved to provide a consistent approach across all aspects of our enterprise. Turning to slide 15, from a commercial perspective, our teams are reacting quickly to changes in the market due to COVID-19. Our marketing and commercial operations groups have adjusted our consumer-facing messaging to ensure that it is appropriate, authentic, and caring in the context of today's reality. This includes highlighting how our products help people live a better, more enjoyable life at home. In this new reality, we've seen particular interest in many of our products, including men's haircut kits with Remington brand, Russell Hobbs, and Black & Decker products in the kitchen. Companion pet care products are experiencing a period of elevated dog adoption rates, and there's even a strong increase in the demand for aquatic systems, as consumers appear to be investing to create a more rewarding home environment. At the same time, from a macro perspective, GDP levels have declined significantly over the past few weeks. And while we believe our products are very well positioned for the future, the overall level of consumer demand recovery is difficult to predict. Additionally, over the last month, our digital teams have moved quickly to create content that appeals to consumers who are now allocating more time to shopping online, for home improvement, personal care, and other products in our lineup. This pandemic has accelerated our already fastest growing channel. Last year in Q2, our e-commerce business grew almost 15%. This year our e-commerce growth in Q2 was over 38%. While we believe these changes in consumer behavior will have a lasting impact, we are planning not just for the near term, but for the long-term implications of this societal milestone. Led by our newly-formed commercial operations team that David mentioned, we are dedicated to gathering insights from this pandemic and adjusting very rapidly to our business strategies to pivot towards the new ways that consumers are behaving today and in the future to improve life at home. Now, turning our focus back to the present operations on slide 16, we want to provide an update on our Global Productivity Improvement Program. As a reminder, one of the important aspects of this initiative is to create and leverage new capabilities to drive product and brand strategies of our individual businesses with consumer insights and data from an efficient service team that brings us together as one company to harness our collective power and resources. In many ways, the current COVID-19 challenge has accelerated the spirit of this plan in promoting partnership and collaboration across the business units, regions, and functions. As I've said before, this program continues to be our most important strategic initiative for delivering long-term sustainable organic growth as we focus on quicker, more globally aligned decision-making within each of our businesses and driving more focused and relevant product innovation and enhanced consumer analytics and R&D processes. On the cost front of the GPIP program, we continue to expect the gross annualized savings to deliver at least $100 million annually and that these savings will be at full run rate within the next 12 to 15 months. Much of the savings is being invested back into the growth initiatives and consumer insights, R&D, and marketing across each of the businesses to ensure long-term sustainable organic growth. We look forward to continuing to provide more details on the GPIP program on our future calls. Now, let's dive into more details on the performance of each of the four businesses. Starting with Hardware & Home Improvement on slide 17. Second quarter reported net sales and organic sales decreased 0.6%. The net impact of COVID-19 in the quarter was nearly $3 million in revenue loss due to supply challenges, which more than offset orders we believe customers may have pulled into the second quarter. Adjusted EBITDA increased 31.9% driven by the catch-up benefit of $8.4 million from retrospective tariff exclusions, but also productivity improvements and favorable mix partly offset by tariff expense. In the quarter, HHI successfully unveiled the Halo Touch Wi-Fi Smart Lock, which integrates biometric technology with the convenience of remote functionality. The product was very well received and won multiple new product awards at the Consumer Electronics Show in January. Early signs show a very high level of retailer and consumer intent pointing to a successful launch in the summer of 2020. In the plumbing segment, HHI continues to see success in expanding retail listings and has been awarded new business in wholesale distribution driven by strong design capabilities and the ability to deliver popular new styles at consumer-relevant pricing. This includes a new partnership with Clayton Homes, a top builder of manufactured modular and site-built homes in the United States that leverages the scale and innovation of Kwikset and the strong design and value of Pfister together. HHI expects demand disruptions in both retail and wholesale channels due to the impact of COVID-19 in the back half of the year. The HHI team continues to take actions to mitigate supply chain disruptions related to COVID-19 in our facilities in Mexico and in the Philippines. While our teams are shifting capacities and capabilities to other facilities, we do expect reduced output for residential security to negatively impact second half results. Now, Home & Personal Care, which is slide 18. Reported inorganic net sales increased 5% and 7.5% respectively. Adjusted EBITDA improved $3.5 million to $8 million, or a 78% increase. Net sales were driven by growth throughout the quarter across all regions and in both personal care and small appliances. Strong net sales growth in the U.S. was driven by mass and online channels, despite declines from the impact of temporary store closures of many department stores and specialty channels during the last few days of the quarter. EBITDA growth was driven by higher volumes, lower operating expenses, and productivity improvements, partially offset by foreign exchange headwinds and tariff costs. The team's renewed focus on supporting our brands and investing behind fewer, bigger, and better products helped drive top line sales. One example of strong sales growth included the partnership with the comm ops team to drive online growth and increased customer engagement with improved digital content. In mid-March, we introduced the George Foreman Smokeless Grill at Walmart enabling convenient and healthier meal preparation without the mess and smoke from stovetop cooking, which is perfect for a time when consumers are preparing more meals at home. The George Foreman Smokeless Grill series will be available in the coming months at most retailers where small appliances are found. In addition, Remington continues to advance its leadership in hair care appliances with over 15% growth in both Europe and North America, bolstered by the success of products like the Twist & Curl Multi-Styler and the Curl and Straight Confidence collection. Over the last few months, our marketing teams were quick to respond with digital content ranging from DIY home haircut, coffee at home placements, baking, and home cooking solutions. While our China-based factory capabilities are largely back to pre-pandemic levels, our second half results will be impacted by some supply disruptions in the current quarter from previous production gaps, volatility in demand patterns, and from the continued closure of non-essential retailers around the world. Moving to Global Pet Care, which is slide 19. Second quarter reported net and organic sales increased 10.2% and 10.6% respectively. Adjusted EBITDA increased by 22%. Higher net sales were attributable to strong growth in both the companion animal and the aquatics categories with growth occurring throughout the quarter. Higher adjusted EBITDA was driven by volume growth, productivity improvements, and positive pricing, partially offset by higher tariff costs. Also in the quarter, the Pet Care team successfully completed three major productivity initiatives. First, the closure of the Cambodia rawhide manufacturing facility. The Cambodia facility was the last remaining rawhide manufacturing location that we operated, and this action was a continuation of our strategy to exit non-core manufacturing assets. Second, the team also finalized the sale of the European dog and cat food manufacturing facility while simultaneously entering into a multi-year supply arrangement with the new owner. The new owner has the scale to bring needed volume to the facility and this again demonstrates the team's commitment to the strategy of addressing underutilized manufacturing assets. And third, the team also added the Omega One brand into the portfolio through the acquisition of the Omega Sea company. Omega Sea is the leader in the U.S. in the freshly frozen aquatic nutrition market with premium positioning and strong share in pet specialty and independent pet channels. While the business is relatively small from a revenue perspective, this tuck-in acquisition is highly complementary to our existing portfolio with untapped future growth opportunities as we execute our strategies. Q2 represented the sixth consecutive quarter of year-over-year top line and fourth consecutive quarter of bottom line growth for this business unit. As the market leader in four categories, which are aquatics, dog chews, pet grooming, and pet stain and odor, the team will continue to drive growth by investing in the creation of platinum products and by focusing on our growth brands. And finally, Home & Garden, which is slide 20. Second quarter reported net sales increased 0.1% and adjusted EBITDA decreased 4.1%. Net sales were essentially flat with the prior year despite difficult year-ago comps and COVID-19-related transportation shortages this year as strong POS in the quarter generated early season orders. Net sales growth of our brands was offset by a decline in private label and captive brand sales. The EBITDA decrease was primarily driven by the COVID-19-related revenue impact. Our strong early season orders were driven primarily by new items, increased product placement, and favorable weather, which has continued across much of the U.S. as we enter our largest quarter. The vast majority of our retail partners, including our three largest, remain open as essential retailers in the U.S. Our main manufacturing facility remains open and operational, but we do expect some capacity constraints in Q3 as a result of implementing processes to ensure employee safety. We are working through these supply chain constraints in order to meet the strong demand for our products that we are seeing continue as we go into April. The fundamentals of this business remain strong, with solid profitability and high barriers to entry. The team continues to drive efficiencies from the GPIP program, which are enabling incremental investments to support our growth strategies. We are confident that our strong brands and investments in product development and marketing will accelerate long-term growth rates. So to wrap-up my section, I want to reiterate how pleased I am with the progress that we've made on our operating culture and our strategic initiatives and to thank our 11,000-plus employees for all they are doing to make us proud these days. So with that now back to David.

Thanks very much, Randy. Thank you, Jeremy. Thanks everyone on the call. Look, we've covered quite a bit today. And so what I'd like to do, if I could, is conclude with kind of the key takeaways in my mind. First, our Global Productivity Improvement Program and the action we've taken over the last 24 months are really paying off and they are reflected in the strong performance that we just reported. Make no mistake about it. The performance that we just reported is a direct result of the seeds of investment that we began planting in our business over 24 months ago. We remain absolutely committed to this program, which we believe is the foundation for the long-term growth of our company. Second, in terms of our financial performance this quarter, I am thrilled that we had both top and bottom line growth before and during the first part of the COVID-19 pandemic. I am very pleased that at the end of the second quarter we are tracking ahead of our earlier expectations. Third, our global teams demonstrated strong operational excellence across the board including our response to the COVID-19 pandemic. I have to pause here and it's not in the script, but I really need to thank Rebeckah Long, who runs HR for us and our global COVID-19 response group, really done a fantastic, fantastic job. Hats off to all of you. Thank you. I’m indebted to you. I'm personally extremely proud of all of you for your help over the last six weeks; it’s been amazing. Fourth, we are very, very well-positioned from a balance sheet perspective for further dislocations in the market should they occur. We have upsized our revolver. We've significantly increased our liquidity position. As I’m talking to you today, we've got over $0.5 billion of cash in the bank. And we're going to build on that cash balance as we go through the balance of the year. We do generate a lot of free cash from operations over the next couple of quarters. And we have multiple levers for additional sources of liquidity. It was a strategic intent of mine with the asset sales to make sure we had no senior secured debt in our entire capital structure post those asset sales other than the revolver, and so I feel very good about how we positioned ourselves on the balance sheet, liquidity side of things. Fifth, we do believe that despite what's going on in the world around us, our consumers are going to continue to look to Spectrum Brands, our four essential business units, and find themselves at home with our innovative product and our great brands. For those reasons, I really think we're well-positioned financially and operationally to weather the storm. With all that said, I don't think anybody can really tell you what the future is going to look like over the next three to six months. We have certainly seen tremendous volatility and uncertainty already. The degree of supply disruption, demand disruption in the economy, in general. We do not know where GDP is going to go down to where discretionary income levels are going to be. And so this is an unprecedented time for all of us and our company. So that's reflected in the withdrawal of our guidance. It's just the uncertainty around where we currently are and where the new normal may be. The one thing I can definitely say is we continue to be laser-focused on our company, our operations, our employees and creating great shareholder value over the long-term. So with that, I just want to thank everyone for your time this morning. Appreciate your continuing support. I hope you and your loved ones remain safe. Stay well. And as I like to say, stay positive. So I'll turn it back to Kevin for any questions.

Great. Thank you, David. Dalam, let's just dive right into Q&A.

Thank you, sir. I see our first question is from Olivia Tong at Bank of America. Please proceed.

Hi, thank you. Good morning. I guess, let's start with a couple of questions around sales as they obviously accelerated pretty dramatically this quarter. So can you just talk about the changes? How much was there? Any potential catch up pull-forward? And then importantly just the longer term implications versus those that are more transitory? Just how the organization is balancing the near-term objective given the challenges in the current environment versus potentially maybe to re-jigger expectations here a bit given what could potentially be longer lasting structural changes to demand in some of these categories? Just trying to understand how you're thinking about how the business changes once we get past this sort of quarantine phase due to the supply chain and other areas as you think about weathering the demand volatility? Thank you.

There's a lot to discuss, so I'll pass this to Randy to elaborate on it. However, I want to express how optimistic we are about our fourth quarter. All four of our businesses are crucial, with each having "home" in their name. I cannot predict GDP for September or discretionary income levels. I do believe our pet business will remain strong during economic downturns, and we plan to invest and grow in that area. Home & Garden, despite this quarter being flat and facing some supply chain challenges, is a very resilient sector for us. Much like the effort it took to turn around the pet division, we are making strategic investments in Home & Garden through research and development and innovation. We have no intention of slowing down in this area. With our pet division also contributing by producing hand sanitizer, expect to see more advertisements for Cutter this spring and summer than ever before. We will be selective but aggressive as we move forward. If economic conditions force people to stay home and hinder activity, that will impact our more cyclical businesses, including HHI. Appliances have also faced supply chain disruptions, which we are addressing. However, our position is as a value brand—not the cheapest but offering great products at good prices. Overall, my main message before I hand it to Randy is that I'm genuinely excited. We're starting to see the rewards of our hard work and investments over the past two years. Even though I anticipated a phenomenal year with a strong stock price and bought shares at $60 recently, I didn't see a pandemic coming. Nonetheless, our core earnings capabilities are solid, and we're on track for $7 a share in free cash, though I can't provide a timeline for that. Randy, would you like to add more detail?

Good morning, Olivia. Just back to your original question as far as how we were thinking of the impact in the quarter and whether or not there was COVID positivity that was the result or was the driver of the Q2 results. And again, as Jeremy said, when we look across the businesses, we think that the COVID situation was actually a net drag on revenue for the quarter. We had three of the four businesses that actually had a negative. Our pet business we believe did see a slight benefit a couple of million dollars maybe in the quarter on revenue. But for the most part, it was across the board a negative to us. With regards to all the forward-looking questions that you asked, we're going to try and be as disciplined as we can be to not go there simply because it's uncertain. And maybe I can talk a little bit about the process that we're employing. So we've divided this situation into the immediate, the intermediate, and the longer-term. We've ensured that we have collective groups that are managing across all businesses and they're discrete and independent and led by separate teams so that we don't get tunnel vision within the current environment and not pay attention to the long-term. So as an example, we're watching POS in all businesses daily, trying to make sure that we're adopting our processes such that we're interjecting new information from the market as quickly as we possibly can to adjust our orders, our inventories, trying to see where consumers are going and just being able to react as fast as we possibly can. We feel good about our ability to make the most of how we go forward. And as David said, we also feel really good about all the changes that we've been making through the GPIP program, the cultural changes, and believe that we've been able to respond to this crisis in a way we never could have 24 months ago. So I hope that helps.

Super helpful. Maybe can we just build on GPIP? Can you talk about the flex that perhaps that's provided you before you had implemented these actions both you and David kind of mentioned there's greater than $100 million target. It sounds like you're sticking to that target. But just trying to understand your ability to hit that over the time frame that you talked about, given some of the operation shutdowns, distancing that you need to do, government restrictions as you saw. Are there – I mean I have to imagine that there were some projects that you had intended to do this year that maybe need to get pushed out because of the virus, whether it's in manufacturing or even if it requires some partnering with retail that just quite frankly, right now isn't feasible.

Great question, Olivia. So I would tell you that it's absolutely the case that there are executional things that are happening where we're having to make adjustments or just being prudent to reduce risk and execution. But I can tell you that those impacts are very minor in the overall scope of the project. And quite frankly, in no way endangering the commitments that we've made publicly because, as we've continued to say the last couple of quarters, that $100 million target is the bare minimum that we anticipate delivering.

Yes, hi. Good morning. So I guess my first question is I know that it's difficult to project and look ahead. But I was wondering if you could share some trends in terms of what's been going on in the various segments as it relates to sales in the month of April?

Yes. I mean listen, I don't – again we're going to try to be disciplined about it. I think we've told you we have pretty durable businesses. Everything we do is in and around the home. And there's a reason lawyers want us to remove guidance because of all the different variables. So we don't want to mess that up. But I think I’ve said in the prepared remarks is we've actually seen some resilience and some stability in Pet and Home & Garden. And quite frankly, I think Randy talked about kitchen products being in demand, haircut kits being in demand and a lot of growth in Remington was disclosed today. I think you'll see us continue to advertise there. We're starting new businesses like hand sanitizer and we do have Microban on our Kwikset door locks and handles. And people are sensitive about germs. There are a lot of ways Spectrum Brands can play offense here. But look, we're in unprecedented times and we took a very defensive posture. We'll adjust as things go forward. But I want to be clear. I don't think our earnings power is at all jeopardized. It's just if we go through a pretty deep recession, we would expect demand to be hit. And so that's why we've given you what we've given you. Randy, do you want to take – do you want to take a stab at it Randy or build on it or detract from it?

No. Faiza, I think that's what David said is what we're going to stick with. We've – April's been pretty much as we expected internally across our businesses and it's just one month in a long period.

I think initially we got hit with the supply chain issues out of China. That was kind of January, February. But six weeks in the water puts a little bit of air bubble in there. And so look, quite frankly, we have a lot of SKUs that are in exceedingly high demand and we're trying to fill that. And so when you talk about costs, yes, you have to look at things like air freight versus the water, but it's not material. And then I think we've basically told you that, even after the – I would say in the depths of this thing, we've seen continued good results out of Pet and Home & Garden. And we've got a little bit of supply disruption in HHI that we have to solve right now in Mexico and the Philippines. But again, we’re very blessed. All our – the majority of our retail partners are open. We have outlets and consumers are shopping.

Good morning. Thanks for taking my questions. I wanted to stick with supply chain first. You obviously mentioned the constraints on the timing in air versus sea. Could you give us a maybe a rough level of capacity you're running at maybe by segment? And then the other part of the supply chain just to ask, can you remind us how much of your products are coming out of China versus elsewhere? And maybe a longer-term question is, how you're thinking about the supply chain overall? When we come out of this, are there any changes you're thinking about making to diversify it further?

Look, I think we actually have some competitive advantages versus some of our competitors. We have a pretty global footprint in supply chain in HHI and the vast majority of that is open today. In terms of China, clearly that's a big source of our appliance business. It's the primary source of it. But again, that supply chain is reopened and is robust. And so it's just a matter of getting the product to the retail partner. But I'll let Randy build on this if you like, Randy.

Good morning, Bob. An interesting development during this pandemic has been the shift in perception regarding Chinese manufacturers and suppliers. Initially, sourcing from China was seen as problematic, but now, it has become one of the most reliable sources for materials globally. The main concern is really just the short transportation time involved. As we’ve mentioned before, about two-thirds of our materials are sourced from China across all our businesses. However, that’s currently not a significant concern for me since it remains manageable. At least for now, the situation looks stable, and we are addressing other issues as they arise.

Got it. Great. And then just pivoting a little bit. Obviously, as you've mentioned, you're very fortunate to be selling essential products at essential retailers mostly, but there's obviously also a large increase in online shopping. And we've talked about for several quarters your online approach. Just wondering how your capabilities stand today for online purchases and how it's evolving and if that's accelerating as a result of the pandemic?

Hey, Randy, why don't you take it? And why don't you talk about not just comm ops, but the marketing and some of the videos, some of the digital? Give them the flavor there.

Yes. So Bob, in that space if you go back, we've made very discrete and strategic investments in what we call omni-channel management across the top of all four of our businesses starting about 18 months ago. And so we've built a team. It's headquartered out of Austin and it's made up of some of the best and brightest minds we can find from the e-commerce retailer space as well as data scientists and others. The task there was to ensure that we were getting more than our fair share of any transition from brick-and-mortar into the e-commerce, while at the same time ensuring that we weren't putting our brick-and-mortar partners at any sort of disadvantage. And so that team has just performed fantastically. And so whether it be the sales side on the interface side with the customer, whether it be the optimization of search and all of the analog issues that need to be dealt with, but also the creation of video content. And so as we've created this commercial operations team and we've separated out content creation from the marketing approach from the data science approach. And so now we have a very procedural approach to all of our businesses on how to optimize e-commerce. And so we believe that in most of our businesses that transition from brick-and-mortar to e-comm has a net positive impact on our share position.

Hey, guys. This is Mark on for Ian. Thanks for taking my question. So it's interesting you guys are still active on M&A. So can you guys give a sense of the pipeline going forward? And which lines of business do you guys see the most opportunities? Are there any specific areas that they're targeting? And has your investment philosophy changed at all given the current environment? Thanks.

We are currently open to mergers and acquisitions. However, I believe our shares offer the best return on capital available, which is why we have been buying back a significant number of shares. When the pandemic struck, we decided to pause our buyback program temporarily. There is considerable dislocation in the market, and if we can find opportunities that are priced lower than our shares, align with our core portfolio, and are accretive, we would pursue those. Still, I don't anticipate any large-scale deals. I plan to build a substantial cash reserve by the end of the year, allowing us to pay down nearly a third of our debt by September 30. We are generating a lot of cash for the remainder of the year and will reassess our strategy then. If there is a small, strategic opportunity that provides significant value, we are open to it. Nevertheless, I believe our stock is significantly undervalued compared to our fundamental earnings potential. We want to see stability in the next couple of quarters and have a clearer picture of overall demand, discretionary income, and consumption before making any major capital decisions.

Good morning. Just to follow-up a little bit on the manufacturing. Are the facilities in Mexico and the Philippines currently operational, or are those shut down? And I guess just with the one facility in St. Louis, what percent of capacity are you at there?

Yes, we are currently operating in the Philippines at reduced staffing levels due to a temporary reduction. We prioritize the safety of our employees and will gradually increase staffing as conditions allow. We have a similar scenario at one of our facilities in Mexico, while another facility there is shut down, and we are actively working to reopen it.

Okay. And then you gave some e-commerce growth rates. Were those direct-to-consumer sales or were those from your customers as they sell to the final customer?

Yes. No, we partner with the dot-coms whether it's walmart.com, homedepot.com, Amazon; that data relates to those.

Good morning. Just when we look at point of sale. How is inventory trending at those essential retailers that are still open? And how has the supply chain for distribution been to get them supply?

I will let Randy provide more details, but we are currently low on inventory and need to replenish it across the board. You should keep in mind that we are uncertain about future GDP and discretionary income in the next six months. However, our retailers are actively seeking a larger variety of pet products, Home & Garden items, and a greater selection of appliances. Due to some temporary production reductions in HHI, we need to reduce our safety inventory there and restock. I hope that gives you a clearer picture, and I'll turn it over to Randy for additional insights.

Now, Karru, I would just say that it varies by region, by product, channel, et cetera. But overall, most of our situations are in a net reduction in retailer inventory versus the same period a year ago. So, there was a net de-loading of inventory over the course of the quarter across the enterprise for Spectrum Brands.

In Home & Garden, do you believe these products are seasonal in nature? Specifically, if the sales of grass seeds and similar products do not occur now, will we miss out on those sales? Or is it possible that sales will increase as we replenish our inventory to normal levels?

So it's important to understand that, we don't participate in the categories of fertilizer or grass seed or potting soil which tend to be earlier season categories. And so our peak demand at retail is in the June and July timeframe. So our Home & Garden business almost always experiences its largest POS week the first week of July. So we're still in the prebuild side. And our POS numbers on that business continue to be very strong. So we do not believe at this point that we're losing material retail sales because we're still running probably at a 25% to 30% rate of what our seasonal peak POS will be at retail.

Thanks very much, Randy. Thank you, Jeremy. Thanks everyone on the call. Look, we've covered quite a bit today. And so what I'd like to do if I could is, I'd like to just conclude with kind of the key takeaways in my mind. First, our Global Productivity Improvement Program and the actions we've taken over the last 24 months are really paying off and they are reflected in the strong performance that we just reported. Make no mistake about it. The performance that we just reported is a direct result of the seeds of investment that we began planting in our business over 24 months ago. We remain absolutely committed to this program, which we believe is the foundation for the long-term growth of our company. Second, in terms of our financial performance this quarter, I am thrilled that we had both top and bottom line growth before and during the first part of the COVID-19 pandemic. I am very pleased that at the end of the second quarter, we are tracking ahead of our earlier expectations. Third, our global teams demonstrated strong operational excellence across the board including our response to the COVID-19 pandemic. I have to pause here and it's not in the script, but I really need to thank Rebeckah Long, who runs HR for us and our global COVID-19 response group, really done a fantastic, fantastic job. So hats off to all of you. Thank you. I'm indebted to you. I'm personally extremely proud of all of you for your help over the last six weeks it's been amazing. Fourth, we are very, very well positioned from a balance sheet perspective for further dislocations in the market should they occur. We have upsized our revolver. We've significantly increased our liquidity position. As I'm talking to you today, we've got over $0.5 billion of cash in the bank. And we're going to build on that cash balance as we go through the balance of the year. We do generate a lot of free cash from operations over the next couple of quarters. And we have multiple levers for additional sources of liquidity. It was a strategic intent of mine with the asset sales to make sure we had no senior secured debt in our entire capital structure post those asset sales other than the revolver, and so I feel very good about how we positioned ourselves on the balance sheet, liquidity side of things. Fifth, we do believe that despite what's going on in the world around us, our consumers are going to continue to look to Spectrum Brands, our four essential business units, and find themselves at home with our innovative products and our great brands. For those reasons, I really think we're well-positioned financially and operationally to weather the storm. With all that said, I don't think anybody can really tell you what the future is going to look like over the next three to six months. We have certainly seen tremendous volatility and uncertainty already. The degree of supply disruption, demand disruption in the economy, in general. We do not know where GDP is going to go down to where discretionary income levels are going to be. And so this is an unprecedented time for all of us and our company. So that's reflected in the withdrawal of our guidance. It's just the uncertainty around where we currently are and where the new normal may be. The one thing I can definitely say is we continue to be laser-focused on our company, our operations, our employees and creating great shareholder value over the long-term.

Great. Thank you, David. Dalam, let's just dive right into Q&A.

Thank you, sir. I see our first question comes from Olivia Tong from Bank of America. Please go ahead.