Yet Another Value Podcast - PJ Kurzweil on Spectrum Brands SPB

Episode Date: July 18, 2022

PJ Kurzweil, founder of PJ's SMID Cap Ideas, comes on the podcast to discuss his write up on Spectrum Brands (SPB). Spectrum is currently in the process of selling their HHI business, and whether that deal goes through or not PJ thinks the stock is too cheap given the quality of their brands / businesses.My notes on SPB: https://twitter.com/YetAnotherValue/status/1547219565016453121?s=20&t=n_liDehcIwWBLmo0x51NLQPJ's SPB write up: https://philippejkurzweil.substack.com/p/spectrum-brands-hard-catalysts-toChapter0:00 Intro2:10 SPB overview4:55 Why is SPB interesting right now?7:30 What's going on with the HHI sale?13:00 HSI's HSR process17:30 What happens if the HSI deal falls through?24:00 HPC's value31:20 Inflation's impact on SPB33:30 Did pets and garden benefit too much from COVID pull forward?37:00 Are millennials a tail wind going forward?40:20 SPB's pet brands45:50 What drives SPB's near term earnings growth?48:00 Is SPB underspending on ad spend?50:00 SPB versus CENT55:00 Capital allocation at SPB

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follow it rate it review it wherever you're listening subscribing whatever with me today i'm happy to have on for the second time my friend p j curswell pj how's it going it's going well thanks for having me on again hey thanks for coming back on and thanks for doing it so quick um let me start this podcast the way you do every podcast. First, a disclaimer to remind everyone that nothing on this podcast is investing advice. Please do your own research, consult a financial advisor, all that type of stuff. We're going to talk about a stock idea here today, but it's not investing advice. And then the second way I started every podcast is a pitch for you, my guess, people can go listen to your first podcast to hear the original pitch, but look, you're a sharp

guy. I know the first podcast got really nice reviews. People, I had people coming out the would be like, B.C. trading for seven times earnings and earnings are going to grow. Like, this is a pretty interesting story with share buybacks. And we've got another one of those today. So that all out the way, let me just pitch it over to you. The company we're going to talk about is spectrum brands. The ticker is SPB. And I'll turn it over to you. What is SPB and why are they so interesting? Thanks, Andrew. Yeah. So as you said, ticker SPB, $3.2 billion market cap company, just giving you a little history here. The company, the company was founded in the early 1900s as a small battery company. It IPOed as Rayovac in 1997,

which would tell you that, you know, it still maintained its battery heritage until a few years ago. The company did some subsequent acquisitions in the early 2000s in the home and garden space, in the global pet care space, and in the home and personal care space before rebranding in 2005 to be Spectrum brands. The playbook here, historically has been to acquire consumer staples and durable brands, mostly U.S. focused, except for, you know, the home and personal care is a little bit more of a global business. But in any case, they want to leverage their channel relationships to boost distribution across geographies or retail channels. And obviously leverage a centralized infrastructure

for back office and marketing and things as such. The company did pick up some leverage, did run into some trouble in the global financial crisis, filing for bankruptcy and Feb of 09 when they missed a interest payment. There was a debt for equity swap, which is how HRG got involved, which David Moore was an analyst for at the time. I remember those days. You might dive into the history. I remember Jeffrey's out of stake, HRG. I remember all the drama. Yep, yep. So moving, you know, those are interesting details over time, but thinking about the business today and why we're talking about it, you know, Spectrum is undergoing a significant transformation, moving from what we'd say a bloated platform

company to a much more focused home garden and pet business. As I'm sure we'll get into a lot of discussion on, they are selling their hardware and home improvement business to Asa Abloi, ticker A-S-S-A-B, which will bring them to a net cash position and incur a lot of management's comments, allow them to buy back a lot of stock. They're also in the process of separating their least desirable business. They're a home and personal care business, a lot of which is contract manufactured out of China. Bottom line, lots of hard catalysts here, but also in a meaningful improvement in the business and financial profile the company when you think about it on a go forward basis. Perfect. Perfect. I want to dive

into a bunch of different things there. And I've already sent you my list of questions. People can see it in the show notes that I posted before we get sorry. But I guess my first question, my first question is always, look, we're going to go into a lot of stuff. But this is spectrum brands. It's a company that's been around for a while. As we mentioned, look, Jeffries had a stake in it. HRG had a stake in it. It's a lot of personal brands. People know this company. So my first question to you is, you know, what are you and the company, because the company's been very clear they want to buy back stock. What are you guys seeing that the market is kind of missing and thinking this stock is cheap, the stock is an alpha opportunity?

Yeah, no, that's always a question I try to answer when we first get to look in at an opportunity. I think there are a few different pieces. I think bigger picture, I think the home and garden and global pet business do have some very interesting tailwinds that don't just make it a COVID winner, but maybe a COVID accelerant or an accelerant because of COVID, and we can talk about those trends in that business. You know, people have some questions about the HHS business, hardware and home improvement business and whether it will get sold. I think, you know, we can certainly discuss that. I don't have an excellent antitrust argument, but there are certain pieces we can point to to feel more confident about that.

But that's a huge game changer from the balance sheet, especially with the business currently having it in discontinued ops, but not giving it credit for in the EV. I think people probably don't give as much credit for getting rid of HPC, home and personal care. I think that will be margin accretive. It will be growth accretive. I think this business will be, you know, a smaller business, but a more focused business that will get better coverage on the buy side and sell side. You're not going to have to straddle building products and consumer products. I do think there's a good chance this business will go after Central Garden and Pet. which is more of a down-the-line feature.

And I think investors probably underrate this company's desire to buy back stock. Yep. No, that all makes total sense to me. I guess the first place we should start is the HHS sale, because if I, my Bloomberg is refusing to update currently, but if I've got my numbers right, right, at about $80 per share, this is a little over $3 billion market cap, somewhere between $3 and $3.5 billion.

This is, it's got about $3 to $3.5 billion of debt. and they're selling HHI for $3.5 billion. So, you know, we're talking about about half, a little more than half of the enterprise value. Sorry, they're selling HHI for more than $3.5 billion, but $3.5 billion is the net after tax, after fees, and everything. So we'll just say $3.5 billion. So this is more than 50% of the enterprise value. Obviously, that's a huge, meaningful number. So I just want to start there.

HHI, what is it? What's the multiple they're selling it for? And why is the market worried that this deal might not happen? Great. So HHS hardware and home improvement was a business that was acquired from Stanley Black and Decker back in 2012 for about 7.4 times EBITDA. 69 roughly percent of the business is in the lockstep. Just real quick, because I think it is important when people think about this management team and the company's history. You said 7.9 times EBITDA, but could you also put a dollar figure on what they acquired it for?

1.4 billion for 7.4 times EBITDA on a trailing basis back in 2012. So 1.4 billion. That's, yeah. And so, yeah, roughly high 60s percent of the business is lockset, which is really what Asa Abloi, the acquirer is interested in. The rest is faucets, their Fisters brand, or you call plumbing, rather, and their hardware business, which is, you know, door hinges, things like that. So the Lockset business is really sold under the Quickset brand. It's also sold under the Baldwin and Wiser brands. And they're a really strong player in the mid-tier residential home market in terms of 75% exposed to repair and remodel, 25% exposed to new construction. They primarily sell through the DIY channel or about 40% DIY, Home Depot, and lows. and the rest they sell through builders. And really, you know, the goal there is that people will continue to need locks over time,

albeit it's a durable good. But there's a real opportunity to move towards electro-mechanical locks, smart locks, locks that can unlock using different verification features. And also they even have a business that can be re-keyed on its own, one of the quickset businesses can re-key a key in 15 minutes. Go ahead. No, I was just going to say, look, I remember looking at this in 2018 or 2019 and being like, oh, that's silly. But then if you ever go to an Airbnb and they've got those electronic locks, so you're not like searching for the key in the dark of night or something like that is what this

business too does, right? These electronic locks, all sorts of different locks. And once you experience like instead of having to take out your key and do it, once you experience the, hey, just tap a couple buttons and get in. Like, it really is a different. And, you know, I don't know, there is a little scale here. I mean, I don't think it's the greatest business in the history of the world, but you can start talking yourself, hey, at the right multiple, this is a business that should grow, that should at least GDP growth. There's probably a replacement cycle. Anyway, I'm ranting a little bit, just wanted to add that because I do remember looking at that and thinking about it. Yeah, it's a high teens margin

business. You know, EBITDA was mostly within the 250 to 260 range after it bumped when they bought it. Last year was a blowout year, whether it's stimulus or people staying at home, building home offices, whatever it might be. So Asa Aboy, they're a behemoth listed on the, I guess, Swedish stock exchange. They are 75% commercial, 25% residential focus. They do, I think they own the HID brand. They do a lot of different things. But they've always wanted to enter to the U.S. residential market, but Schlaj, I guess you pronounce it that way, and Quixet, which is Allegion and Spectrum, really have a stranglehold there. And Assa Abloid just doesn't have the connections through the Home Builder Channel or through

the DIY channel, which is why they wanted to acquire it. They are acquiring it at 14 times EBITDA back in September 8th, 2021, it was announced. They believe they can synergize it down to 10 times EBITDA, which would be, you know, reasonable compared to their 12x multiple. It's the biggest deal they've ever done, but this is, you know, like a $22 billion market cap company, I think when you look at it in U.S. terms. And, you know, this does not have a big, you know, this does not have a huge bilaterious impact on their balance sheet. Yeah. And then so I think there's a regulatory angle and then there's just a price angle. Right? Like, this is not, to use the topic of example, this buyer is not Elon Musk. Oh, like, we paid 14 last year and now it's worth eight. We want to get the heck out of here. We'll do it. But there is a real regulatory angle here. So why don't we talk regulatory concerns? And then I think they'll plead into a discussion around multiple, because I do think people say, oh, sale announced in September or October, multiples are a lot lower now. Like, what's kind of the downside? But let's start with regulatory.

Great. So unfortunately, we don't have a ton of information. I am not a lawyer. I did consult a lawyer for certain general matters in terms of the process. But I didn't find an analog in terms of a similar type case, nor that, you know, if your bet here is purely, will the case be denied on antitrust basis? Maybe you want to wait to see. I'm totally open to that in the thesis. But in any case, the timeline that we kind of map out is that they announced the merger early September. The first request is basically satisfied when the company submit documentation to the regulators. Again, we don't know in the U.S. if it's the DOJ or the FTC. And this business is predominantly U.S.

So we'll just focus on the U.S. regulatory situation. The HSR period obviously expires after 30 days. the companies still indicate the merger is not closed, so we know that there was a second request. We understand that the DOJ and or FTC have been extremely thorough in how they analyze these cases. So they probably gave them a lot of things to look at in terms of giving them additional documentation. Companies can take anywhere from four to six months, maybe less, maybe more, to satisfy the second request. I wouldn't say the burden is on the buyer, size have to contribute materials, but obviously, Saabloi is pushing this along. So that second request

would have been satisfied by our timeline in March or April. At that juncture, the regulators may or may not have entered into a timing agreement, which basically gives them more than 30 days to kind of review everything. And so that kind of puts us in the July, August time frame. Okay, great. And the merger dropped that date is December 8th, 22. So in terms of antitrust, most of what I share has been discussed by the company, but basically, Asa Ablo does not have a real material presence in the U.S. residential lockset market. They do have an MTECH brand and a Yale brand, but definitely not in the mechanical lock business. That's not a big part of their business. Now, in the U.S. smart lock business, they do have the Yale brand and the August brand. and HHA has the Quixap brand. And if you kind of sum those up based on a consultant report that Asa Abloid provided in a press release, I believe it's somewhere in the mid-30s in terms of market concentration for consumer global share in the smart lock business.

So the smart lock business is probably where it gets interesting. You know, in the merger agreement, you know, maybe it was poor drafting, but they, agreed to do any and all remedies for antitrust subject to certain carve-outs that were obviously not disclosed to us. So would they be willing to sell the August business? Would they be willing to sell the Yale business? Will U.S. regulatory body require them to divest in any case? Again, a legion also plays in the smart lock business. So that's, those are the general variables. Go ahead. To me, just like 30%. You say they'd have mid-30s market share is smart locks.

Like mid-30s is generally when having been exposed to antitrust, mid-30s, actually anything higher than 25% is when your ears starts to perk up like, oh, maybe this is a concern. But at the same time, like, it's smart locks, you know? Like, it's tough for me to argue that there's tons of lock-in or that it wouldn't be easy to switch to any of the other 65% if these guys, like, it just does. I'm sorry. You cut out for a second.

Go ahead. No, no, it's just, it's just hard for me to imagine, like, smart locks. Like, there's not competition that it'd be a very narrow definition of the market to say, oh, these guys have 35% of the market share. So all of a sudden, your smart locks are going to be costing like $1,000 per door. You can go with old locks. There's 65% of the, it just, it strikes me as a little bit of a far fetch that this is a real antitrust issue. Right.

So just to be, to be clear, Asa is about 20. and then I think Quixet is, I don't know, 14, 15, 12. So that's how you get to 32. Yeah, look, Asa Aboy is, this business is about technology and innovation. Spectrum brands is just probably not the player to really innovate the way Asa Aboy can. So you're basically replacing, you know, I guess in the smart lock business, you should at the end of the day get better products for the consumer. So let's talk about it.

I think that covers HSR nicely. let's talk about valuation, right? Because they're selling this for 4.1, 4.2 or something, net after taxes will be 3.5 to SPB. And I think the big downside that anyone who looks at this for one second is going to say, hey, Andrew, you just told me how their proceeds from HHI are going to be more than 50% of the EV. If this deal falls through, then all of a sudden, like, the EV, you know, it's not. And they agreed to sell it in September at 14 times EBITDA, multiples are way down there. So how do you think through the downside and what HHI would be worth if this was blocked for some reason? Okay. Well, first, the break fee of $350 million, it's about 8% of proceeds,

or 8% rather of the purchase price compared to usually 4% to 6% that you would see. And that's triggered even if the deal falls apart because of antitrust remedy requirements that are too onerous or subject to the carve-outs. So that's, should give you some confidence that Asa Aboy feels as though they can close the deal. Look, I think in Asa Aboy's merger call, which everyone should read, I mean, Spectrum had a call, Asa Aboy had a call. They do briefly highlight that this was a two-round process and that it was a competitive process. And if you take a step back, you think about it, this is a business. QuickSaid has like 40% market share. It is constant.

traded on the customer side. You can't just be a small guy and just pop up here. So there's definitely some scarcity value here. I would think there were other strategics that may have sniffed at it, whether it's fortune brands or other companies, maybe a masco. And I think there would be private equity interest. And I think the company, you know, through anecdotal conversations, I think the company has acknowledged at some point that this has been a business that has gotten inbound interest over the years. So in terms of how do you value that? There are not a lot of precedent transactions for us to look at of scale. Allegiant trades at roughly 13 times EBITDA, and I think I argue in the write-up, it's a better business. But if you give account to some

control premium, you can probably shake out around 10.5 times EBITDA, and that's not, you know, that's not killing anybody. Granted, it's on a higher, it's on a pretty good EBITDA. base of 307, but that's, you know, roughly a 25% haircut. And that to me, finger in the air kind of makes sense. So if I'm doing the math right in my head, right? Like HHI, I think I've got them at, called 300 million of EBIT. Is that right? About 300 million. And so they're selling it for 14 times or so. You're saying, hey, in a downside scenario where this breaks, it's 10 times. So that would be net $1.2 billion loss, but that would be offset by two things. A, you'd get the $350 million break fee, and B, you're burning about $600 million of proceeds

in terms of just kind of taxes, transaction expenses, everything. Obviously, some of those stick if the deal falls through. But, you know, if you're talking the difference between keeping this business and valuing at 10 times and selling it at 14 times, if you're talking the difference is called 700 million, And yeah, that's not great. We'd obviously rather sell it. But it's obviously not the end of the world, right? It's not, I hate to bring it back Twitter, but it's not Twitter where you agree to sell for 54.

And given what the market's done since then, it's probably worth 20 or 25 on the open market. So there's this mammoth, mammoth difference. Yeah, I would say a couple other things. Look, if they have to do another deal, they're going to be more deal fees, right? But I think that's probably offset slightly by the fact that there, NOL utilization, they say they're going to burn them all up with this deal. It's possible that with a smaller deal, they'd be maybe more fully covered on a tax perspective. But yeah, and there's also the question as to whether Spectrum brands would even sell it for 10 and a half

times. But I think they've made the case that this business is not a platform for scaling up. It's a durable business. It's a good business. But it's just not fitting into the rest of their platform. And so I think 10-5 times might be, you know, the high end of the range of people would give it if we're still part of the company as a sum of parts. But I think for a control premium scarcity value, I think it makes some sense. Perfect. Perfect. All right. So that covers, you know, I think the issue that anyone who studies this is going to be the first scary thing. And like the the answer is, hey, hopefully the sales goes through, but if it doesn't go through, it might not be that's there. So let's talk about the other pieces of SPB. So the two big pieces here,

there's HPC, which they're looking to sell, their consumer branch. But then the two pieces that are going to really drive this going forward are the pets and the gardening side. So let's just talk about them. How big are these? What products do they sell? Why are these nice businesses? Yeah. And I just want to say one more thing about HHI. I think you all should listen to Andrew's podcast from last week, he hosted with Jeremy. There are some people who just think that you can walk away from a merger. Maybe Elon Musk thinks he can be in the wild. You know, I don't think there are any surprises in the HHI business where someone's going

to say after they do a ton more diligence that there's a material adverse effect or change. So anyone who kind of thinks that this deal is just not going to happen because, you know, Asa Aboy has buyer's remorse. A, it's a strategic asset to Asa Aboy, but B, it generally doesn't work that way. Even as a non-lawyer, I think I can say that with some degree of confidence. Yeah, look, buyer's remorse, I'm sure there have been plenty of people in history who've signed deals and been like, oh, this is awful. But if you can just get away from deals without anything other than, hey, I've got some buyer's remorse, I think I overpaid.

One of my arguments for Twitter is Delaware law stops working if every contract you sign and two weeks later you say, I kind of wish I hadn't signed that. I'm just going to walk away now. And as you said, this is a real buyer. There are real synergies here. They're trying to get through. There's a very tight merger contract, which is generally what happens after you have, as you said, a two round process. You generally get it, the seller gets a very seller-friendly contract because other people are willing to pay it. So yeah, 100% agree. All right. So we can cover each three. PC, and then we can talk about really what I consider the Remainco businesses.

Great. So home and personal care, it really began with Remington in the early 2000s, which I think is somewhere between $400,500 million of sales. That's sort of a hair care product, personal and grooming brand, not top tier, but it plays globally. They then did a Russell Hobbs merger. They acquired that for roughly $675 million. It was a stock for stock merger.

that Russell Hobbs is better known in the UK, but they got the licensing rights for Black and Decker to make toasters and things like that. They got the George Foreman brand is a pretty big brand. I remember that. Yeah, I forgot that they had the George Foreman brand. Is that still doing well? Like, I remember in the 90s, right? Everybody had the George Foreman and there were the ads and you'd lose weight because

it would like grill out the grease and everything. Is that still around? I'm not sure how that's held up in kind of the digital age. it's well i mean look people still need to cook food uh it's not like uh their avatar is going to eat food for them so uh i didn't mean i didn't mean that um snively i think they're actually innovating making a smokeless grill uh i know my girlfriend cooks food in your apartment and the smoke alarm always goes off and i have to turn it off but hopefully that's an interesting piece of innovation PJ's a tall guy so you can reach up and press that new york city uh that new york

York City smoke alarm when it's all the way up there. Exactly, exactly. So the business today is, I think it's roughly 60-40 kitchenware and home sort of personal care. Look, the business is predominantly contract manufactured out of China. That's what's kind of made it a little challenging for them. There's been the tariffs in 2019. There's inflation. There's particularly freight inflation.

And it's generally a low, low, single, you know, high single digits, low double digits business. I comment in the write-up that it's really gone from 15% margins to like 8% margins. There should be a bounce back in the second half a year as they get price. These guys, I think 32 or so percent is sold through Walmart and Amazon. But there's private label competition here. I mean, these gizmos have six to nine years of average life, and they're not the most sophisticated devices. So they recently did the TriStar acquisition. That's another $325 acquisition price.

Basically, TriStar has like, I don't know if it's Power Excel, Emerald Legasi, another throwback, his equipment, and I think copper technology. But they also have a direct-to-consumer. studio, you know, they can sell stuff on TV, which is another channel. But critically, this gets this business to around a $1.7 billion revenue business and roughly $140 million EBITDA run rate, something it can stand alone. So that's the overview of HPC. They haven't scaled it beyond the Russell Hobbs deal and just the very recent TriStar deal. There was a rumor that there was inbound interest actually in 2018 that they were going to

sell it. They did a very smart thing and gave guidance for that sale, the timing and the proceeds, which wound up falling through, whether it was tariffs or just them not getting the price they won. There was a rumor last year that CBC was going to try to merge it with Conair and a JV structure, which is kind of why you hear JV rumors today. And ultimately, it's the lowest quality business in my view, and I think in the view of many people. And so just having the scale to divest it. I don't think you can IPO it, just given the markets, but given the opportunity to sell it or spin it, I think those are really the paths forward for that business. That makes total sense. And then so, you know, in your write-up, you've got, hey, this can sell

for about 10 times EBITDA, which, you know, to me, most consumer brands, 10 times is about right. But you do start running in. I think we'll talk about this with the pets and home and garden in a second. But, you know, you start looking and you say, okay, well, the whole company's trading for nine times EBDA. This is their worst segment, like 10 times EBDA. Yes, I get it. But, you know, it does start to stretch. And I would say, oh, like earnings have declined. I'm just looking at their year over year number, like from 76 million in the first half of 2021 to 38 million in the first half of 2002. We'll talk inflation all this in a second. But I just look at all that and say, oh, you know, PJ thinks they can get a billion for this.

That'd be a pretty aggressive multiple on trailing numbers, just given how much earnings decline in the first half. And it doesn't seem like that great of business. People have known it's been for sale for years. Like, is that really reasonable? So a few things. Maybe first on the earnings power. Inflation is a big factor.

Definitely ocean freight. Those have spiked and kind of persisted. This is also a business that, you know, is impacted by. resins, metals. So I really think, and in the Barkway's conference right after the deal, management admitted that HHI and HPC are really most exposed to inflationary forces. You know, the way I tried to think about it is that the business is under-earning, just given tariffs inflation as such. I don't assume tariffs reverse, but the company has said a few times that really this business should be a low double-digits

business. We often know that there's a buyers and sellers multiple. They'll be what the seller is excited to sell it at and what the buyer is saying it's getting at. And so really, I tried to reverse engineer that. I put the sort of the details in the write-up, but I think in the bear case, they sell it, they buy it for a five and a half times buyers multiple. And I think it's six and a half times buyers multiple. And then I think maybe an eight and a half times buyers multiple. So I think that's important to highlight the, excuse me, the base case of seven and a half times buyers multiple. But really, it's the delta and the margins. And, you know, anecdotally, it sounds like there could be a lot of cost synergies from someone else picking it up.

So that's kind of the way I thought about the sale there. No, this is, consumer brands tend to be some of the highest cost synergies because, you know, you own, as you mentioned Conair, you own, the Conair brands. You go and buy the George Foreman brands. Like, you can basically fire everyone in the finance departments. All of a sudden, like, you had one relationship manager at both sides who was managing the Walmart relationship. Guess what? You can merge that. You can pack everything in the same boxes, merge distribution centers to send it to Walmart. Like, you're, you've just got so much duplicative costs because you guys are doing the exact same thing. It does tend to be one of the highest. Let me ask you over inflation. I was going to ask this later, but I might as well ask it now.

HHI, HPC have been two of the hardest hit by inflation. And the company's called out multiple times. Like, I've got a quote out there that says, hey, our continuing operations are going to do like three or 400 million of EBITDA this year. That's after we had $400 million in cost headwinds from inflation in the first half of the year, right? So my question on inflation, we've talked about how it's hit the company in the past. But the company has said, hey, we've taken price increases and by Q4, especially those pricing, increases will have flown through and will be offsetting a lot of inflation. And I do wonder, like, I've wondered this for a lot of business.

Price increases tend to be kind of sticky. And if we got into a situation where their fiscal 2023 or just calendar year, 2022, whatever you want to call it, ocean freight has come way down. Metals have come back to kind of where they were a year ago. Could you be in a scenario where all of a sudden these guys are like printing margins way above what they normally do just because these inflation things that kind of spites have come back and they already took the price and they kind of look and say, hey, we don't need to give all that up instantly. It takes a while. Is that a possibility or am I kind of dreaming?

I think it's actually, it makes sense. I'll say I haven't been a buyer for, you know, one of the customers in terms of the retailers to really be able to speak to the mechanics there, but that, you know, we see that in commodities and other businesses. Look, admittedly, Walmart announced two months ago or a month, a little more than a month ago that they wish, you know, year over your inventory rose 15 billion, and they kind of wish they didn't buy to 20% of that or 3 billion. And that's across all products. So, you know, if inflation comes down, but the consumer is weaker, will the, you know, will the players want to, will the customers that spectrum faces want to get charged lower prices? It's, you know, I think there is some

understanding between the retailer and the consumer product company as far as how temporary or how permanent some of these price increases should be. So I hear you. I think it makes good sense, but I can't speak confidently that there won't be some reversion as well. That actually dives nicely. So I think that covers personal products. Let me talk.

Let's go to pets and home and garden. And we'll talk about each of the individual segments, but your discussion on Walmart, you know, made me think of the high level bear case for these. It's, hey, Walmart and Target, if I remember correctly, they said the right inventory is still moving really quickly, right? Like Target had this thing where they said, hey, our luggage is just flying off the shelves because people want to travel, people want to go have experiences. What we're having issues moving is a lot of the home stuff that we stocked up in 2021. And people already bought that. They don't need any more and they want to go experience. So my question on home. and garden and pets would be both seem to have great tailings, but especially home and garden, because Penny's sitting behind me, I was checking my thing to see, Penny, my dog's behind me. Like, once you buy a pet, like, that's a unit pet, you're not going to get rid of that. You're going to keep buying food, products, whatever for it. But home and garden, I do wonder, this was a massive COVID beneficiary. And if we're looking at 2021 earnings, are we kind of missing the forest for the trees?

Because 2023, maybe people don't care as much as their garden. maybe people are traveling, they're not as much of home care. Was this too much of a COVID beneficiary pull forward? And I do think back to you mentioned in your write-up, Scott's Miracle Grow, right, which has seen their stock come down a lot. Part of that is marijuana-driven. There's other stuff. But part of it is people were buying fertilizer like crazy a year ago,

and maybe they're not buying quite so much this year. Yeah, you know, I saw your question when you sent me just before the interview. I pulled up a Scott's Miracle Bro presentation, and actually the one area where they have seen increase in point of sale has been in the control space, which is the weed killer. So, and obviously, Spectrum competes there with their spectracide business. So a lot of unpack with Home and Garden. It's a very seasonal business, very weather dependent business. Look, Central Garden and Pets had recently that it was, I don't know, if it was a horrific May or just a horrific weather start to this quarter.

I think, but, you know, a good week in May can more than make up for it, right? It's lawn season, it's time, you know, it's warmer out, there's more insects, you know, there's more weeds, et cetera. So I think 20 and 21 probably had some really good weather, and I think 21 saw some restocking. So I think 22's up on a tough comp. In terms of the future of gardening, I mean, look, I think it's a hobby, it's outdoor living. I think some people view those as positive secular trends. There's movement from blue to red states, you know, going from cooler environments to warmer environments.

And in fairness to spectrum, they're actually focused on a pretty narrow area, really focusing on pest control. You know, 39% is weed control. And then a smaller amount in cleaning and personal repellents. So I find that that is probably a little less subject to sort of a large bounds because people want to grow new things. But I think there are some secular trends that probably keep this, you know, growing better than the 1 to 2%. You know, I mentioned Scott's Miracle Bro took up their guidance long term to 2 to 4%. Obviously, they've had some issues this year to what you were saying. So that's kind of how I think about it.

That's great. I did have one question. You mentioned this earlier and it's in your write-up that I think it was millennials are actually a little more likely than boomers to, I'll just say invest in their lawn, right? Like they do a little bit more lawn care. It's not like millennials are 7x more likely or something, right? But it is, they are more likely. And that would be a tailwind just as you think about boomers continue to age up, millennials continue to buy. And look, maybe it's my New York centric lifestyle. or maybe it's just, but I was a little surprised by that just because, you know, I feel like, again, maybe I'm interpreting the story too much. Like, the American dream was such a thing in the 60s and 70s. And I feel like now it's a lot more people rent or maybe they're willing to move a little more so they don't kind of put that same TLC in their yard. So do you think that there's real legs to the millennials are more likely to invest into their, into their kind of home? And that's a long-term tail win for these guys, the Scarks Miracle Grow, 2 to 4%. or is maybe that there's a misinterpretation of the data there? Well, I think there's some good data that says that millennial homeownership has grown. You know, homeownership, I would think predominantly a single-family housing.

There is a notion of de-urbanization to a small extent. I don't know if it's going to offset the longer-term trend of urbanization, but that has both positive implications for global pet. You know, people who rent in apartments may not be able to have a pet, but you can have when you have a home, and likewise, when you have a home, you have some sort of lawn that you want to take care of. Another piece of data I didn't mention, but came from Central Garden and pet, was there were actually 18 million new gardeners in 2020. So that's that. I mean, I think gardening is largely viewed as an older person sport, so to say. That's kind of what I was driving

at, yeah. Yes, I think it's been encouraging that millennials have kind of stepped up and taken more care of their gardens. I think, again, it is a concept of outdoor living, which I think has become a bigger factor in COVID. I think people get to spend more time at home because of work from home. And I think people want to be outside to interact with friends and do things. And so I think it is a really fair, I think between the global pet and home and garden, I think the secular story is probably a little stronger for global pet. You know, home and garden will also benefit long term from global warming, in my view, just given the increased number of insects you'll have over time and more rain and during warmer weather would help with weed control.

But all that was mentioned in the write-up. But that's more or less how I think about it. Let's talk global pet, and I want to be cognizant in a time, but there are some good brands here, right? Like, oh, no, they only have Europe imes, if I remember correctly. But nature's miracle, which I was laughing at the front page of their investor web, side is nature miracle, stain and odor remover for pets, is somebody spraying it?

And I am certainly familiar with that product from when Fennie was a puppy, but they're good brands in here. Let's just talk about, when I say global pet, right? Like the things that pop to mine would be like something like Purina. They're good brands here, but they don't have like the Purina or the Blue Buffalo brand

or stuff, like the really top top brand. So can you talk to me just a little bit about how good their brands are, what are the competitive moats in global pet care? Yeah, I would say first, competitive moats. They aren't as robust as they are in Home and Garden. We didn't really talk, but in Home and Garden, there's the EPA, and that kind of helps with structurally higher margins. And they're usually only a few key players in the categories, S.C. Johnson,

lesser extent, Central Garden, and pet. You know, look, dog food is a competitive business, and it's typically dominated by bigger players, like General Mills, or Buffalo Blue, as you said. So I think that's probably why they don't play in that space and to agree to which they played in that space with the European transaction, it just didn't work out well for them. So really they are focused on the dog treat space, you know, Dreambone, a few others that I'll pull up in a second. They play in, like you said, the dog or pet cleanup space with Nature's Miracle, which is a real brand. and they play Inferminator, which is a dog grooming. And so there's 70% companion pet, which means dog and cat, 30% fish. They also own the tetra brand, which is a pretty dominant business in the fish business,

as well as in the fish tank business. So there is a real private label place in global pet. I think interestingly, Central Garden and Pet said that during the crisis, people actually went more for brands than for professional. private label. I don't know if it's just trusting that the manufacturing process was better and pet wouldn't get COVID or whatever it might be. That's interesting. Yeah. Yeah. So that was kind of a big, that was kind of an interesting data point. And look, private label is is a real player. And Central Garden and Pet does make private label. But I do think people want to give their dogs treats. These

are all really consumable things. And there's the humanization of pets. There's the proliferation of more pets. I think someone said 57% of existing pet owners actually got a second pet, which might be hard in your apartment, Andrew, but people have done that. It's not the apartment that's the whole back. It's the wife that's the holdback for the second pet, but I do. Exactly. So lower barriers to entry, but still high teen margins. I think spectrum as a whole likes to play in certain niches where they have a good position. I will know General Mills bought Tyson's pet tree business, which was a sizable, but not massive business. And SPB said it was rumored to have gone in the high teens.

Let me, so home, actually, why don't we just cover Holman Gardens at the competitive veg as well? So, like, we just did pets, and I'm with you, like, once you get a dog, there is some barrier to entry here. Once you get a dog and you start giving it treats, like they do play a lot of treats, the nice thing is that's really renewable. And, you know, you tend to. want to give your dog the same thing, because if you've ever with kibbles, if you've ever switched

kibbles brands and all of a sudden your dog has diarrhea or something, like, that is awful. So, you know, these tend to be very, very sticky products, similar to if you chew gum, you tend to stick with the same thing. Let's go over to Home and Garden. You mentioned briefly, but I think this is kind of the crown jewel business, nice long-term tailwind, nice regulatory mode. Why don't we just cover that real quick? Yeah, there's a two-year EPA registration process.

You know, these are chemicals that are in these products. whether it's on your lawn or for killing insects inside your house or other pests. So really, that's the barrier to entry. It's not easy. It takes a while and it's not that easy to get into. So I haven't seen a huge amount of private label in that space. There may be some, but I think really, you know, it's generally dominated by really a few select players.

So I haven't really seen precedent transactions in that space. I don't mention any of my write-up, but I did see Green Garden, was acquired by Central Garden and Pet. That's more seeds on the herb side, vegetable, and flour. Central Garden and Pet didn't disclose that multiple for the $532 million transaction, but they said it was in the teens. So I think, you know, insect repellent business, pest control, I think there would be an appeal from a cash flow business. Doesn't require a lot of cap-backs. But it's really the EPA that probably keeps people, you know, out of that business. Makes a total sense.

Makes total sense. So let's talk valuation real quick. So in your write-up, you say, hey, look, I think the stock is trading for maybe seven times, let's call it 2003, EBITDA, 10 times 2023, unlevered cash flow, which are really attractive multiples, right? Like, we've talked about how they're selling HHI, but, you know, I would think GPC would be worth a probably 12 plus multiple on the, if you put it for sale. We talked about how you thought HPC is worth 10.

We talked about, you know, a home and garden, but probably worth 12, 14. It depends on the environment, everything. But the whole company, bottom line, whole company trading for what you think is seven times forward. And we just talked about how the sum of the parts are worth almost double that EBITDA multiple, right? So my two questions there are like, 2003 earnings are going to be a lot higher than trailing earnings because trillion earns some impact by inflation. So how do you see the path to getting there and then be like, why that multiple discrepancy?

Like what kind of closes it? Why do you think you're right and the market's wrong? I know that's a lot to toss out to you in one question. No, no, no, no, look, I think in the write-up, it's not, you know, we're talking three different scenarios where the multiples vary and the financials vary. So it's, it's, I'm happy to unpack it here. So basically, first to kind of restate it, the seven times EBAT, for Remaenco is assuming that HHI sells for 10.5 times EBITDA.

If it sells for $3.5 billion, Remain Co is like sub-6 times EBITDA. Now, the point of comparison between the EBITDA and the unleaver free cash, the unlever free cash refers to 2024, where we see less restructuring expenses, which really has been part of the Achilles heel of spectrum. I see them stepping down next year to 20 million. lane, although it really depends on whether the transaction closes before their fiscal year, which begins 930 or 10-1, rather. But really, you also see a huge per share jump because of all the buybacks, which, you know,

doesn't really impact the EV to EBIT does. So I used unlevered free cash because this business is going to be effectively net cash, and I think you want to give it credit for that. And so, you know, look at some of competitors. I looked at Central Garden and Pet, and they trade it like 20 times, EV to underline. levered free cash. It's a little bit of a quirky type multiple. So I only really mentioned it in the one pager, but that's, that is one way to kind of see the cash flow relative to how big the company is. Unrelated question. I actually do want to come back to Central Garden and pet, but it's

top of my mind and I want to make sure I got it in because it was actually one of the questions I really had when looking to this. The company historically has spent about 2% of revenue on advertising. And they said, hey, maybe that was too low. We're going to take it up to two and a half percent over time. And I didn't competent anything or anything. So maybe I'm just being a fool throwing a question out. But it did strike me both Holman Garden and pets. Those are very much brand. Like you build that brand loyalty. And I did think like two percent on two and a half percent on advertising even. That does seem small for a kind of consumer brand. Are they under investing in advertising, or am I kind of missing something on that side?

No, it's a great question. And it's one that I still have. Historically, they spend around 1%, now they're moving it closer to 2. You know, I'm just, I think normal consumer packaging brands may spend more than double of that. So I think maybe it just comes down to the spaces they play and the recognition of the brands they have and whether, you know, I don't see insecticide commercials. I mean, I used to see Roundup commercials, but some of these products just maybe generically don't require as much advertising.

Similarly, with Global Pet, I think you made a really good point that you want to give your pet consistent food or treats or things just because the pet, it will be agreeable with the pet. So I haven't been able to speak with the company. I did reach out. That would have been one of the questions I wanted to focus on. Yeah, no, it's just because, look, advertising is an expense. It's a pre-sure line, but it just did strike me as these are pretty, you know, once you're pretty sticky, you get a pretty nice multiple. It just seemed low just in a vacuum.

You've mentioned Central Garden and Pet a few times, and I have not looked at them in a while. I do think I remember that this is a, it's got a super voting structure, but I think I remember that there was someone from Liberty Media on the board, which is why I looked at it. Look, that company trades, it's in the name, right? Central Garden and Pet. That's going to be a pretty nice comp for the pets and the garden market for SBB. That company trades for, I'm just looking at Bloomberg, 10 times EBDA. You mentioned the unlebored free cash flow number.

But when I look at that trading net 10 times EBITDA, and I look at Spectrum brands trading at if HHS goes through maybe nine times trailing EBITDA. We've talked about how the trailing EBITDA has been impacted by inflation, but you know, Central Garden should be running through some of the same issues. I don't see that big of multiple discrepancy. So two questions for you here. Is Spectrum Brands remaining businesses? Are these just better business than Central Garden?

Do you think Central Garden is getting maybe a control multiple discount? And long term, it sounds like you think these two businesses might kind of be met for each other? Yeah. So look, I'm not an expert on Central Garden and Pet, but I certainly studied it in the context of Spectrum. Look, I think Central Garden and Pet was just picked their pet. business first. They do focus on, quote, unquote, a little more durable stuff like dog toys, their nylon bone brand. They also do dog pads. They do warming things for pets. And they also focus a little bit more on bird seed. I don't have their breakdown between aquatics and companion

pet, but I'm sure it's similar to spectrum. But I just, I think their margins are lower in part because they do do private label, but I think even before that, if you look at some earlier reports, I think you would see that. So I think on the pet side, I think spectrum would definitely skew to have more consumables, and I think they have more recognizable brands. In terms of the garden side, look, I think central garden and pet has some exposure to controls, albeit, you know, it's, I think, more of a distant third versus SC Johnson and Spectrum. But they also do have a grass seed business, a fertilizer business. So it's actually a complementary business to what Spectrum has.

And so I do think there's a control premium discount. I think, you know, the company does have some leverage. But again, it trades it 10 times Epita. I do think, you know, that is, if you slapped on that multiple to the remaining businesses of Spectrum and assume that they got the base case of $3 billion, really, or $3.1 billion of proceeds from H.H.I. The stock would be worth $1.25 for the same time. And as you said, Central Garden, probably a worst business. Like, you mentioned the private label that they do, but also if you're selling dog toys,

those are generally one-time purchases. It depends how quickly your dog's going through the chewing booth and stuff. But those are one-time purchases that are going to have a lot less loyalty. than something like dog treats, dog food, all that type of stuff, which is more heavily where SPB's businesses are. So, you know, you said it. It trades for 10 times even slap that on to SPB and you get a really nice number. But then you adjust for the control premium, the voting control discount that Central Garden would get. Plus the fact that it seems like SPB's businesses are probably a little bit better. So you could say CNETs 10 is SPBs 12, which, you know, that gets you

a nice place. Central spectrum brands, their pet business. You know, I've got Penny. I'm a dog lover, obviously, so I tend to focus on the nature's garden, all that type of stuff. But if I remember correctly, they're aquatics business, which I don't think about, because I don't think about fish a lot, but they've got glowfish, Tetra, Merlin. I mean, I think these are like the best aquatic businesses out there. Am I misremembering that? No. Tetra is a leader in food. to their leader in, I think, tank related equipment, filtration. That used to be a bigger part of their business. And again, fish tanks are not as is a much more durable good.

Glove fish, I believe, is actually the ability to create fish that glow in the dark, which is pretty cool. But yes, I think they are really the leader in the aquatic space, which is really not really a growth business. I think we highlight that the number of pet fish is not grown over a pretty large. long period of time when compared to other pets. But yes, I would say it's bigger, it's a niche business, but it is that they are the player. And I think there's a little bit of, that was going to be one of my questions.

I do think fish at best have like kind of sold out and at worst, they're probably in decline because people just, they've got a lot of other, they've got a lot of Fortnite to watch. There's no time to take care of a fish. But, you know, that that is a pretty stable business. And I do think there's like, there's engineering components to it, right? If you go to a family and you say, hey, you're getting a fish for your kid, do you want the name brand filtration system or do you want the knockoff? You know, generally knockoffs are just as good as the name brands,

but this is keeping the fish alive, right? Like you might have to explain to your kid while you're flushing the fish down the toilet two weeks earlier if you get the knockoff. Like, that's no bueno, man. That's no bueno. So I do think there's engineering components, obviously distribution, all that. But I would not be surprised if these are pretty nice, pretty moody businesses. And as we've talked about the multiple, they're not really getting

credit for it. I think we've walked through the majority of my questions. Oh, last question. We've got to talk capital allocation. Everyone who listens to this podcast knows my first question, my second question is generally like, why isn't the company buying back stock if they're so cheap? I think the company is buying back stock here. But I've been really impressed by how they've talked about capital allocation. So I'll stop ranting. I'll let you talk about capital allocation. M&A here, buybacks, all that type of stuff. I just want to go back to Central Garden and Pet. I do think one of the questions you asked is why would it be a good fit for Spectrum?

I do think they do complement each other in the sense that the fertilizer part, the wild bird seed for Central Garden and Pet in their garden business. And again, on the dog side, we've highlighted certain complementary businesses. it's worth noting that David Mora, as part of HRG, did bid for Central Guard and PEP back in 2014. And so once interested, always interested, I think that that is a real consideration, plus this chairman with the majority control is 81. So I think those are two additional pieces I'd highlight. The question of capital allocation, look, I remember when you asked me about Brunswick, you were surprised by the pathetic insider ownership. no offense to Brunswick.

Here, look, they bought back a lot of stock. They bought back a lot of stock after they sold Energizer and Global AutoCare. They've been more cautious in terms of buying back stock now to a lesser degree only because really they know that the downside here is they get the $350 million break fee and they probably figure let's get closer to the deal and let's have more certainty and then we'll make it happen. So you can read all the quotes in the write-up and you'll see how aggressive they feel. feel about it. Insider ownership, David Moore owns a lot of stock. I'd say almost one and a half

percent of the company on a beneficial basis. So a lot of his wealth is here. I don't know what other outside interest he has, but he has also bought stock and he's acquired stock through grants. So capital allocation, I think, is one of the most interesting aspects here. I say that they can buy anywhere from $700 million to $1.2 billion of worth of stock. In a bulk case, obviously they're buying stock at a higher price. In a bare case, they're buying stock at a much lower price or maybe not too far from where it is today. And that's really what juices the per share earnings and free cash. And really, you know, it will be a big shift. You go from, you know, today four times levered to going net cash, which is unheard of in the space from what I can tell.

Yeah. And then you're, you know, you're going to back up the truck for buying stock because, frankly, M&A and the pet in home and garden space is just really expensive. That's one of the things that's so interesting here. Look, you've said through this podcast, you've been consisted in saying your base case is that HHI doesn't go through. It's worth $3.1 billion in some form or fashion, right? That's been your base case. But it's so funny to say that.

I hear you're being conservative and everything. But like the base case should probably be they have assigned contract to get $3.5 billion in proceeds. Once they do that, as you said, like they have net cash. on the balance sheet, which you do not find stable consumer brands with net cash on the balance sheet for very good reasons. They are stable consumer brands. Private equity would love to lever them up and just run that thing. And I think they're going to, they said, hey, our long-term target, it's two or two and a half times net leverage, I think. You can get there real quickly by taking

$400 million of EBITDA, $300,000, whatever number you want to say, bring it to $600 times two. That buys you 20% of the company, right? So you could just do a big. tender right off the bat. You could just get real aggressive with an ASR. But again, the math works and it creates a really interesting out-year free cash flow per share number, as you said, if the deal goes through and they buy back 10, 15, 20 percent of shares at anywhere close to these prices. All right. I think we've hit all my questions, but I always want to turn it over to you. Anything we didn't hit that you wish we had hit, anything that we kind of glanced over that you think we should have hit a little harder?

I think we cover a lot of things. I would say tactically, if someone is looking to trade this stock, look, if the deal doesn't go through, the stock will go down before it goes up. So, you know, that's just how, you know, trading happens. And obviously they have to secure another buyer. You know, if it's a P.E. buyer, there shouldn't really be any time issues there in terms of how long that will take.

But that's just, I want to just caveat everything with that deal. everything's risk reward, right? But yes, if the HHI deal doesn't go through, the stock probably goes down the next day. But that's because there was an event path, 50% chance that the deal went through, 50% chance that the deal didn't go through. But the fact is, like, as you've walked through, even if the deal doesn't go through, slap a conservative multiple on HHI, they get the 350 million in break proceeds, right? Like the stock still looks very cheap. And yeah, it sucks. They can't buy back 20% of shares tomorrow. But that doesn't change that the math still works, even if HHI's worth $2.5 billion, not the $4 billion they were going to sell it for or something. Yeah, I think

the only things I would highlight, you know, we got some questions on Twitter. I think I tried to address them as quickly as I could. Look, in terms of pricing power, these guys in the year were anticipating taking down 70 to 80% of inflation. Inflation has stepped up from their previous guidance because of ocean freight. But that said, in their recent call, they said they've gotten 98% of their price increases approved by their channel partners. And so I think that speaks to their ability to get some price on their products. As you said, Andrew, they've claimed that they've replaced 400 million of inflation over the past 18 months, roughly, with price. So, look, I don't know if 2023 itself is set up for an amazing year.

in terms of the, excuse me, 2022, rather. Just as you said, Andrew, a lot of inflation. In terms of global pet, it's not a seasonal business, but there was a lot of issues shipping from Vietnam and Cambodia. They're raw hides, and so now they feel they have the right product. They're good to go. TriStar will benefit HPC as well pricing in the back half the year. And Home and Garden, you know, we'll see where weather shakes out.

but obviously this quarter is the big moneymaker, Q1 is their least interesting quarter. So if someone really wants to trade earnings, I think you'll see in recent analyst reports that people are down, you know, are kind of taking down numbers for this quarter, just given the de-stock we've talked about, just given the questions about whether, I think that's really, I think that's helpful. Obviously, the stock may trade a little down on that, but I think it's helpful for expectations going into the call where some people think that they may take down guidance. I don't have a strong view on that. But yeah, I think the management team has gotten a lot better with communication. I think they've executed well in their productivity program,

which I can't say I'm an expert on, but anytime you're able to raise the net benefit from 100 to 200 million, I think you're doing something right. And I think everything they're saying makes a good deal of sense. And Randy Lewis, interesting guy, sounds like a real operator. David Moore, a good portfolio manager, as we said, buying a business seven and a half times EBTA, selling a business at now 14 times EBTA. I think he's learned a few lessons. I don't know him personally, but I think he's doing the right things. Not only did they buy the business, but they grew it a lot at 10 and sell 14, but they grew it a lot in the midterm, which, you know, that's really where you get the true magic of they

bought it for a little over a billion and they're selling it for a little over four, right? That's where you get the true magic. No, look, all that makes sense. I mean, the environment's scary, but the thing to me, with both BC and this, obviously different drivers, different, all that. But to me, it's, you found companies that, hey, right now people are worried about cycle. People are worried about inflation. But these are fundamentally good businesses with fundamentally some type of moat. Like, yes, they're not Apple, but they have modes, they should have competitive advantages. And if you're willing to look past the next two to three weeks, two to three months, if you're willing to look two years out to when the cycle fully normalizes, like you're buying for BC,

you're buying it for six or seven times EPS. For this, you're buying it for seven times EBITDA, which good consumer brands do not go for seven times EBITDA. And with both of them, you've got a line management, hopefully aligned management teams who have shown that they will buy back a lot of stock when companies are cheap. So, yeah, I don't know if you want to add anything to that. If you agree, if I put the words in your balance.

Yeah, yeah, yeah. I think insider ownership is a little better here. I do think SPB management can sometimes be a little promotional. but I do think it often lines up with the activities they want to deal. Just two other things I want to note. I was just doing this today. If you take HPC, you add up how much they paid for TriStar, how much they paid for Russell Hobbs.

That's about a billion dollars. And then you're getting Remington, which I say is a $4 to $500 million business, assuming it has average margins. You're getting a $40 million EBITDA business, quote unquote, for free. if you assume that what they paid for was worth today, maybe you argue Russell Hobbs is worth less because of margins, but that's just another way to kind of back into, what is it, $800, a billion worth for HPC.

Yes, I think we covered a lot of bases. Perfect. Well, PJ, look, I'll include a link. PJ, I love what he does where he does a full write-up and then he publishes a one-pageer. So if you just want the summary, you can go check the one-pager out. If you want the full write-up, you can check that out. I'll include links to both them in the show notes.

And then you've obviously got the whole podcast to discuss all the different issues. But PJ, thanks so much for coming on and looking forward to having you on for Pod 3, hopefully in the not too distant future. Good. Andrew, one last thing. I know I mentioned quarterly earnings. I think the reason to be in the stock now, though, is I do believe whether it's Asa Ablo's call on a week from or this past Tuesday or in Spectrum's call, there will be some

updates, whether it's providing HPC's carved out financial. which I think is a precedent to them being able to sell it or spin it or whether it's an update on HHI. I think that's where investors are going to be focused on. Perfect. Perfect. All right. Well, hey, thanks again, PJ, and we'll chat soon. Take care.