ASSA ABLOY AB (publ) (SPB) Earnings Call Transcript & Summary

Good day. Thank you for standing by, and welcome to the Spectrum Brands announces definitive agreement to sell Hardware & Home Improvement segment for $4.3 billion in cash. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the conference over to Kevin Kim. You may begin.

Great. Thank you, Blue. Welcome to Spectrum Brands Holdings conference call and webcast. This afternoon, I'm Kevin Kim, EVP of Investor Relations and moderator for today's call. To help you follow our comments, we've placed a slide presentation on the Event Calendar page in the IR section of our website at www.spectrumbrands.com. That document will remain there following our call. Our call today will be led by David Maura, Chairman and Chief Executive Officer; Jeremy Smeltser, Chief Financial Officer; and Randy Lewis, Chief Operating Officer. After opening remarks, we will conduct a Q&A. Turning to Slides 2 and 3. 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, September 8, 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 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. Now let me turn the call over to David Maura.

Okay. Thanks, Kevin, and good morning, everyone. Or actually, it's good afternoon now. Turning to Slide 4. We're excited to share a snapshot of the transaction we just announced earlier this morning. We believe it delivers significant value to our shareholders. The announced definitive agreement is for us to sell our HHI business for $4.3 billion in cash. It allows our company to strategically shift to a more focused consumer staples business with concentrations in Global Pet Care and Home & Garden. The net proceeds create significant opportunity to drive total shareholder return and unlock value for Spectrum Brands shareholders. If you recall, we acquired the HHI business for less than 8x EBITDA in December of 2012 for $1.4 billion in cash. And during our ownership, I'm proud to announce that our brand and product investments have helped nearly double the adjusted EBITDA of this business unit. The transaction today represents a significant premium -- into control premium, obviously, which we believe will deliver significant value for our shareholders today. And frankly, I'm really happy to find a home in ASSA ABLOY. We really believe they'll take this company to its highest potential from here. Until the deal is complete, we're still one Spectrum Brands. We're still working on our current earnings framework and finishing this year strong. We plan to address our current quarterly performance and earnings framework on the next quarterly call, Q4 of 2021. We're going to do that call mid-November. Stay tuned. With approximately $1 billion in net cash, gross cash position of nearly $2 billion, our use of proceeds are going to be focused on maximizing the impact of each dollar capital generated from the transaction. Initially, we're going to significantly reduce our debt and be a very delevered company. Debt leverage ratio, we're calling at 2.5 right now. But obviously, we could be debt-free if we'd like with a material cash surplus. This brings us more in line with the peer group. We recognize our current leverage creates a little bit of a drag on our value, and we haven't been happy with that. This priority of reduced debt directly addresses some of that value drive. It significantly improves our balance sheet with a net cash position to invest in the business, pursue M&A and repurchase shares. We continue to believe -- in fact, I continue to believe right now, even after today's announcement, that Spectrum Brands trades below its intrinsic value. And if you can recall, in May of this year, we did authorize $1 billion new share repurchase program. We remain committed to our quarterly dividend of $0.42 a share. Another way this transaction brings shareholder value today is our ability to apply all of our usable federal NOLs to maximize our after-tax proceeds. Today, we plan to share as much detail as possible in our efforts to be transparent. However, please be mindful that our teams have continued to work through details and have been up for a couple of nights this week, and we're trying to ensure a smooth transition to close. While we're proud of the success from HHI, as we looked at our Spectrum Brands business and our strategy for the future, it became clear HHI's business differs from our other businesses in a few important ways. Some of these key differences is obviously HHI sales are closely tied to the industrial sector and the new housing market. HHI's products are a little bit more durable than our other product offerings, and they're purchased a little less often compared to our other business units. HHI's customer include more industrial commercial segments than the rest of our businesses. Because of these unique features, we actually are very confident ASSA ABLOY is better positioned to move HHI forward in the coming years as they grow across key market verticals, geographies, et cetera. I actually think that these guys will be a phenomenal steward of the business. I think they will bring tremendous R&D and value to the marketplace, and this will all come to the benefit of consumers around the world. If I look at the transaction thesis on Slide 5, we want to share some key points with you why we're excited about it and what changes. This unlocks some shareholder value in the near term. We plan to use proceeds to improve our balance sheet materially. We'll also have $2 billion of additional capital to deploy. This will result in a more focused leading consumer staples company in attractive growing categories with a concentration in Global Pet Care and Home & Garden. And we continue to believe in the attractive attributes of our HPC or appliance business, and we'll continue to look for strategic and organic ways to enhance its value. Our strategy as a home essentials company does not change. We expect some brands will continue to focus on what we do best, which is delivering innovation and high-quality products in a profitable and fast-moving consumer goods landscape. We remain committed to using our operating model and our global enabling functions with consumer-focused business units to deliver organic growth by driving organizational efficiencies, delivering best-in-class services, building on our brands and improving our home-based solutions. Look, this new simplified business, I'm pretty excited about. We've done a lot of investing behind our pet business, our Home & Garden business. If you turn to the next slide, Spectrum Brands will remain committed to our strategy of striving to use consumer insights to fuel innovation. We've been making a lot of R&D efforts, particularly in Home & Garden and Pet. And we're going to grow these trusted brands and excite consumers by providing real new solutions for the home. We're excited to tell you about those as we come with them in the future here. This results in a more focused leading consumer staples company in attractive growth categories. The largest profit contribution is now from our Global Pet Care unit. This is our most consistently performing business unit over the last few years, and it's grown quite rapidly. Home & Garden is our second-largest profit contributor at 29%, and that's followed by HPC at 25% on an EBITDA basis. The total company on a pro forma basis will generate over $3 billion of sales and adjusted EBITDA of $386 million. Additionally, our net leverage improves significantly from its 3.6x to a net cash position. Look, with this overview, I'm going to pass it over to Jeremy to take you through a few slides, then I want to get to Q&A because I know a lot of you have questions. Jeremy, take it away.

Thanks, David. Hello, everyone. Please turn your attention to Slide 7. So here, you see the new Spectrum Brands is a company with leading market shares, attractive growth opportunities and consistent operational execution. Looking back at the last 3 years, each of our 3 remaining business units have delivered significant financial improvements with solid top and bottom line growth. Starting with the top line, we've seen strong growth with net sales CAGRs ranging from 8.5% to nearly 14%. We also delivered strong operating leverage across each business unit with adjusted EBITDA CAGRs ranging from 9% to 25%. Global Pet Care will become our largest profit-contributing business, generating 46% of EBITDA on a pro forma basis. And over the last 3 years, this business unit has grown top line at a 14% CAGR and adjusted EBITDA at a 25% CAGR. Turning quickly to the next page on Slide 8. We will continue to focus on increasing investments to grow our leading brands. David mentioned the investments in R&D... Also, as many of you know, over the past couple of years, we've doubled our A&P investments alone. Our top 15 brands going forward will represent 88% of last year's net sales. Our brand reinvestments across advertisement and promotional spending, commercial operations, R&D and IT investments will continue to focus on driving sustainable organic growth, and we are very pleased with the returns we've seen these past couple of years. Finally, on Slide 9, what you see here is that we are reducing our net leverage target from our prior range of 3 to 4x to a new lower range of 2 to 2.5x. Given the massive amount of liquidity coming from the HHI sale, we will still have more than sufficient funds to deploy across our 3 main pillars of capital deployment strategy. We'll continue to focus on investing internally for organic growth, that's our highest ROI; returning capital to our shareholders via dividends and opportunistic share repurchases; and disciplined M&A as we pursue complementary strategic acquisitions that are synergistic and help drive additional value creation. That concludes our prepared remarks today. So Kevin and our operator, please transition to the Q&A session.

[Operator Instructions] Your first question comes from the line of Bob Labick from CJS Securities.

Congratulations on a really fantastic transaction.

Bob, thank you.

Absolutely. No, it's exciting. Lots to ask. I wanted to go first, maybe you talked about shifting the composition of the portfolio of the remainco now. Can you just tell us roughly what percent of sales are now consumable in the remaining business and how you think -- how we should think about that relative to how you were positioned?

Jeremy, I'll let you take that, please.

Yes. It's about 2/3 overall now, Bob, which is a nice move forward from a percentage perspective. As you know, really, all of Home & Garden is consumable; 2/3, 70% of Global Pet Care is consumable. Obviously, in HPC, a little bit longer lead time on product life cycle. But overall, we're kind of in the 2/3 range.

Got it. That's great. And then as you look to reinvest the proceeds, obviously, you have a net cash position for the first time in forever, I don't know. Can you talk about -- you just proven as a seller's market, talk about your time frame for reinvestment. And then also, what areas are you looking for potential acquisitions and what -- in which areas of the remaining businesses that you have?

Yes. Look, the reality is, we have worked tirelessly over the last 3 years to turn our operating performance around and not only to stabilize the business but through our GPIP program, really drive tremendous growth in sales and earnings. And I think if you look back over the last 3, 4, 5, 6 quarters, we've been growing top line near 20% EBITDA, in some quarters, up 30%. And look, the stock price has reacted somewhat favorably to it. And so we feel some pride in the fact that our operational performance has been recognized by shareholders. But in my opinion and the Board's opinion, our share prices remained materially undervalued. I've been saying that on conference calls for quite some time now. And we simply decided, look, it's time to unlock some value. And we demonstrated that, I think, today. And I think, look, even right now, I think the intrinsic value of this company is materially higher. In terms of where we want to go, I mean, listen, pet is a great industry. We've built some amazing brands. We have very fast growth in pet. And it's a very high-margin business. It happens to be a fragmented space. So tuck-in acquisitions and even strategic acquisitions are more readily available. And the same goes with Home & Garden. I think we just -- we have a path to grow organically and inorganically much faster in Pet, Home & Garden. And I think that's where -- basically, we're pivoting and we're reshaping the portfolio around Pet, Home & Garden.

Got it. That's great. And then last one for me. I'll jump back in queue. But obviously, you've been operating extremely well in a very difficult environment. And we've talked about it on previous calls how there's some major headwinds, not just for you but for every company out there like you in the supply chain and transportation, et cetera. How are those headwinds like relative to HHI versus the remainco? Was it more heavily weighted from that? Or was it more heavily weighted to remainco? Or how should we think about the kind of inflationary macro pressures and how the newly positioned Spectrum is versus with HHI?

I'll spend 10 seconds on it, and then Jeremy can fill in. I think, look, there's not a company on the planet right now that didn't have any supply chain issues. We continue to battle for that, but I'm very proud of our sourcing teams. They've done an amazing job securing containers and trying to keep our customers as happy as can be. If you'd asked me a couple of months ago, I thought this would kind of abate as we get through holiday and into calendar 2022. I'm just not so sure anymore. I think this is going to go on for longer than I'd like. But no, I mean, listen, HHI has phenomenal brands, dominant market share positions. And that business, like others, it's facing inflation, but there's things you can do to offset that, and we're kind of doing that across the board. That's more than 30 seconds. Jeremy, you want to add any color on that?

Sure. Yes, the only thing I'd add is, one, I don't think it changes the overall landscape inflation of the problem for us. I think, two, the one difference would probably be metals or -- the metals exposure in HHI is a little bit different than our other 3 business units.

Your next question comes from the line of Peter Grom from UBS.

Congrats from my end as well. So David, I just wanted to ask, maybe a follow-up to the prior question. So given the background of the deal, you kind of gave an answer that said that you decided to start unlocking value. And so I guess, following this sale, how should we think about your willingness, the Board's willingness to unlock value in a similar fashion across other businesses versus saying that this is kind of the right stand-alone entity longer term? And maybe just building on that, does this transaction change your view on how HPC fits strategically in this business longer term?

Well, let me say that to start, it's not very often you get the opportunity to sell one of your 4 business units for $1 billion more than your entire market capitalization. And I'm a large shareholder personally. And I don't like selling assets. I prefer to buy and build and add value to them. But it's my fiduciary obligation to maximize shareholder value, in addition to try to run the business better. I think we've done a very good job of making tremendous operational improvements to our company. And as I said, I see a greater ability to pursue inorganic activity around the Pet and Home & Garden space, which is much more fragmented than the industries in which the 3 different businesses that combine HHI that we just agreed to dispose of. So that's that. I mean I think, look, around HPC, we're going to continue to invest in that business. But there's no question that I'm looking to unlock further value with HPC. But we're going to be -- we're going to take our time, and we're going to be judicious. And when the right thing comes around, we'll let you know about it. But it's -- I want to participate in industry consolidation. I think everybody knows that. And we want to continue to invest in our people, our R&D, and we want to continue to build that business. And until we can find a way to be a better -- a bigger player at the table, and we'll figure out how to structure that.

Got it. That makes sense. And then just in terms of the use of proceeds, is the order kind of a preference listed on the slides the right way to think about it going forward? I just -- David, I felt like last quarter, you kind of gave maybe more of a preference or there would be more of a focus on buying back stock should you come into a ton of cash. I just want to make sure on that. And then is there just -- how do -- how should we think about timing in terms of that use of cash versus saying sitting on it to maybe find an attractive acquisition versus going out and buying back stock in a quicker fashion?

I can't give you all the detail you want. But again, we just sold the business for $4.3 billion, and we don't even have 43 million shares outstanding. And that's over $100 a share. So I don't know how to communicate value any better than that. It's frustrating to see the holdco trade at an 8, 9 multiple when your assets are worth materially more than that. And I think we're just trying to be good stewards and unlock some value. I think our Pet and Home & Garden businesses are worth phenomenal multiples, too. But hopefully, the public markets will recognize those because we intend to build and grow those. Look, I'm looking at a $93 or $94 stock on my screen. I think it's cheap. I would personally be buying back shares here. So let's see where we go. But I think, look, we want to pay down debt, and we want to sit with some cash. And first things first, we've got to close the transaction. We want to continue to invest behind HHI. HHI has -- is comprised of some amazing people that have created a lot of value for us, and we want to retain them. We want them to be really excited about the new home they're going to. And I think they're going to take this asset to the next level and the people with them. And so that's our job 1 is to continue to execute flawlessly in that business and be good stewards of it until we can ensure a seamless transition.

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

Congratulations. David, I know you mentioned the stock being cheap, and clearly, use of proceeds is going to go to take advantage of that. But at the same token, I'm excited that you guys kept the dividend. How are you thinking about the dividend going forward? Maybe ability to grow? Or are we going to sit here with a dividend at these levels and just watch you guys buy back stock?

Yes. I mean, definitely, rather buying shares here and try to increase the dividend amount. Dividend is -- we're maintaining it for consistency, and who doesn't like getting a check once a quarter? But at the end of the day, I'm really about building back a very strong Pet, Home & Garden business. And I think you could -- we're looking to meaningfully build back revenue. And I would have a long run plan of adding billions of dollars back to the top line in those industries and really building a very exciting company that hopefully can grow back into that dividend and maintain it, and then ultimately increase it. But the dividend is not my priority. We're going to close the deal. We're going to pay down debt. And at these levels, I'm going to be pretty aggressive in buying back shares.

Okay. And just one other question would be on the potential maybe for another tag-along sale. I know you did that with the battery business, and you had a tag-along sale shortly after that. Any chance of that or any potential for that? Or is this just sort of it is what it is and what we see is what we get?

We tell you about anything when we have something to tell you. Never say never. I've learned that the hard way. So let's see where we go.

Your next question comes from the line of Steve Powers from Deutsche Bank.

Just a couple of -- hey, just a technical question or 2 just to start. Just any estimates, first off, on time to close the transaction? And then just was hoping you could just bridge us from the gross proceeds of the $4.3 billion, the net estimate of $3.5 billion. I think you had $800 million or so of usable NOLs coming into today. So just a confirmation of that, any color on how those are being applied as part of that gross-to-net math.

Sure. I'll take the first one. We're going to close this transaction ASAP. Second piece, Jeremy, if you could walk them through gross to net on cash.

Sure. Yes. Thanks, David. So we have about $700 million of NOLs that are usable for this transaction, I think, give or take. And we have assumed in the calculations that we would use all of those as well as assumed in that gross to net is the global fees that we'll pay. And then, depending on timing of closing and any federal tax changes, we've had to try to take that into consideration as well. So that's why you see a lot of approximates in the documents today because there's a lot of moving pieces between now and when we close. And that's just our best estimates as of now.

Okay. And David, on the...

Yes. To David's point earlier in the prepared remarks, obviously, we have quite a taxable gain here given the low basis compared to the selling price, which is a great problem to have until you have to write that tax bill. But it is what it is.

Right, right, right. And then just on the ASAP, David, is there -- are there any regulatory -- are there any -- are there 1 or 2 regulatory hurdles that you're most focused on? Or is it -- do you expect it to be smooth?

Again, you're talking to a guy that's sold Rayovac to Energizer. So look, I don't -- I'm not a regulatory guy. I've got a lot of lawyers who do that for me. And I can tell you this, I couldn't be happier with Nico and Lucas and the team at ASSA. I think we have found the absolute best place for this asset to go. I would tell you that they are a very serious player. And they're not doing this for fun. They're doing this to really take this business to the next level. And I think both of our organizations will dedicate every resource we have to close this smoothly. But there's no guarantees in this world, and that's why we have a $350 million break fee. But we have a pretty tight contract, and I think they really want to close this just as much as I do. So that's pretty much the best you can get these days.

Yes. Okay. And then just with respect to the remainco, I guess, maybe could you elaborate a bit, David, on where you see the biggest opportunities to double down and invest organically around Pet, Home & Garden?

Yes. I mean -- Randy, I think you're on. I'd like you to talk. I mean we've built entirely new R&D infrastructures in Home & Garden. We've built entirely new capabilities and functions across these businesses. And it takes time to come out with real game-changing innovation. And we've been doing it for years. And so we're very optimistic as we kind of get into fiscal '22 and '23, that particularly in Home & Garden, we've been working on a lot of stuff in the background. And so I -- as Jeremy said, I mean, we've not only done it on the R&D and the innovation side. We've done it on sales and marketing, and we've seen it materially lift our organic growth rates. And so I just see that as the highest return on our capital. And obviously, you can't invest this quantum of capital into organic growth. You wouldn't be able to spend it in a budget. But Randy, Jeremy, any comments around that?

Steve, I would concur with David's comments, which is in Home & Garden, we're still early on in the ability to deliver the benefits of all the investment that we've put in that business over the last couple of years. Every time David and I and Jeremy get a chance to sit with that team and look down the road, the truly innovative things that they're bringing to market, it just gets you super excited about where we think we're going to be there in a couple of years. And then our pet business is really starting to hit globally on the strategies that have been coming to play across all of those great brands. So there's been a lot of just basic underlying -- underwriting work around the operating model and the support structure and the organization, and the ways of working and all of that is really starting to finally bust through into delivering the consumer experience, which is driving the POS, which is driving the revenue, which is driving the margins. And so both of those have us really excited. And then we talk about HPC, but it's doing fantastic. It's -- I really need to call out to the whole team there on HPC that has turned that business around and taking it from something that was really on a slide and creating one of the strongest portfolios and teams in that space. And so it's fantastic for us to be looking for consolidation or strategic opportunities to do that from a position of true strength with regards to product innovation and global leadership of the category.

Your next question comes from the line of Nik Modi from RBC Capital Markets.

So David, I was wondering if you could just share your thoughts around your philosophy now and leverage going forward. I mean, clearly, delevering is a great thing. But what is your kind of appetite if you see an asset that would be a great fit for either of the existing business in the remainco or even a new platform of growth? Can you just share your thoughts around that?

Yes. Look, we're -- just because we got a lot of cash coming out of the transaction doesn't mean we're going to go just buy everything inside. We're going to continue to be very disciplined acquirers. We need to see synergy. It's got to fit what we're doing. It's got to enhance what we're doing. And I prefer to be able to buy the multiple down because it's plug and play. I think, look, I think you're right. What has changed is prior to this, you'd see in all our press releases, tuck-in, tuck-in, tuck-in. We're clearly open for business for bigger targets and particularly Pet, Home & Garden. And -- but look, we're going to take our time, and we're going to make sure we get it right. Capital allocation is super important. And so I don't think you should think we're going to be in any rush to deploy the cash, and that's why we're going to bring our debt down and materially cut the interest expense, and we're going to sit very, very liquid. And hopefully, you can write a research report that talks about how there's still $370 million, $389 million EBITDA here that should be valued a lot more than 10x. And there's pro forma $1 billion of cash in the books. And so I still can't figure how my stock isn't above $100. But you're smarter than I am, so I trust you to figure it out. But we're going to continue to be very, very heavy investors in organic growth in Pet, Home & Garden. We're going to continue to invest behind HPC. I agree. I love the work that Dave Albert and his team has done there. We're going to drive a lot more value than where we are today through organic growth and through inorganic opportunity in Pet, Home & Garden. I'm excited about the future.

Your next question comes from the line of Chris Carey from Wells Fargo Securities.

So David, Randy, I don't know who this question specifically would be for, but just what do you think about the scale of the business today as it stands? I guess with HHI, you're losing some scale in your -- in sort of the hardware channel. Maybe that's more in sort of the garden side of the equation, you become smaller relative to those retailers. Is that something that you're happy with? Obviously, your garden business for me is just as relevant. Do you see any potential implication there as just as a starting point from the overall scale of the organization?

Yes, a couple of observations. So when I was building this business starting back in '09, people love doing accretive deals and putting portfolios of assets together and talking about being more relative to the retailer, and my multiple went from 7x EBITDA to north of 12x EBITDA. For some reason, value investing, and that is not really everybody's appetite. People seem to like electronic car companies, bitcoin and SPACs. And I just -- I think there's real value in great consumer staple businesses that have recurring revenue streams, good margins and generate a lot of free cash. And yes, we're going to shrink our scale a little bit right here. But I think what you're hearing me say, and God, help me if I haven't communicated this, is we intend to scale up materially in Pet, Home & Garden, and we're going to continue to invest behind HPC. So yes, we're shedding some weight today, but we're looking to put that on. We're looking to put it on more efficiently. Randy...

Yes. Chris, I was just going to add that our operating model, as David mentioned in his prepared remarks, is all around creating -- enabling functions that support these consumer-centric business units. And those business units continue to operate pretty autonomously within the commercial spaces. And so even though we've got some decent overlap between HHI and at least our Home & Garden business with regards to retailers, have no concern over that scale at the customer level because these -- the remaining business as well as HHI continues to stand on its own with strong relationships within those categories, which tend to be a little separate within the retailer. So that's not a concern for me at all.

Okay. Great. And just within the businesses themselves, your garden business historically more of a controls, maybe a later-season business. Just the kind of dynamic where you get deeper in the categories where you're strong and now you have the capital to actually spread out into some of these other adjacent categories where you're not as big. Pet, it's more fragmented. You've had a -- some exposure to food in the past in Europe. Just -- is that just a matter of sort of consolidating fragmented categories? Appreciate these are big questions, but just as you start looking at the broader space. And probably, if you could just tie into that, David, you talked recently about how high multiples have been for deals. Is that why, in some way, you're looking at taking a little bit of a pause before you start to get into the market, if I heard that right?

Yes. There's no question that 0 interest rates for a decade does something to valuation. We can't think we're as smart as we think we are. We have to be soberly minded about stuff. And so yes, that's just -- that's how I view the world. But look, yes, we like tuck-ins. We like things that are in our wheelhouse, but you did see us buy a company called Rejuvenate. That's a home cleaning business that we stuck inside of Home & Garden. But it's a very fast-growing product. It's got very good margins, and we want to improve on that. And so I'm not saying we won't buy other beachheads, but we like liquids in a bottle. We like sprays. We like higher-margin businesses. We like businesses that are consumed daily, if not weekly. And if you look at the evolution of our pet business, we were 2/3 aquatic, which has always struggled with growth when we got involved with it. Now we're 2/3 companion animal, very, very deliberate activity there. And DreamBone, SmartBone, FURminator, Nature's Miracle, I mean, we have really phenomenal franchises. And so look, today's activity was, one, it was my fiduciary obligation to do it. I love HHI. I love the brands. I love the people. But really, I was hoping to educate The Street that a lot of our businesses have a hell of a lot more value than where they trade on the screen. And so look, we're long term, and we will continue to demonstrate great operating performance. And we will continue to add value through synergistic tuck-ins that enhance our growth and enhance our margin profile. And that's what we're going to go do because that's what I like to do, and that's what creates shareholder wealth.

Would you just comment quickly -- and I apologize for one more question. I know it's slightly inappropriate. Can you just comment on the household cleaning business? Is that something that you're looking at getting bigger in? Or is that just an opportunistic deal, just given that you just mentioned it? And then I'll get back in the queue.

Randy's had more sleep than I. Randy, do you want to talk about Rejuvenate?

Yes. Sure. So Chris, what I would say is it's a little bit of both, but we have a lot of capabilities and core competencies within our Home & Garden business. It fits very nicely within that space. And so even though it's not a pesticide, it's a chemical formulation tends to be in the same delivery system, fits well within our supply chain. That's well within our retail channels. And so as David talks about, we want to make sure that we're disciplined and we're spending money where we can create value beyond what we're paying for the business. And so we were specifically looking in that space in that category. Rejuvenate was a fantastic acquisition. And we are actively looking for anything else that would add to that and do so nicely for the shareholder benefit.

Speakers, this concludes today's Q&A session. I would now like to turn the conference back to Kevin Kim.

Great. Thank you, Blue. As we mentioned earlier, these materials are available on our IR website. Additionally, the company will be at the Barclays virtual conference tomorrow for a presentation as well as individual and small group investor meetings. So thank you very much, and have a great evening.

Thanks for your interest. Have a great day, everybody. Thank you.

Thank you. This concludes today's conference call. Thank you for participating, and have a wonderful day. You may all disconnect.