Madison Callinan

Madison Callinan asked about the pet market's recovery, specifically if it has reached a bottom, and inquired about retailer commitment to the Home and Garden category for the upcoming season, including Spectrum Brands' ability to meet increased demand.

Answer

David Maura, Chairman and CEO, stated he would not call a market bottom but expressed satisfaction with Global Pet Care's new leadership, investments, and market share gains. For Home and Garden, he conveyed bullishness due to operational improvements, innovation, and value pricing, expecting Q2 to be flat to slightly up with strong performance in the second half of the year.

Madison Callinan asked about the current state of the pet market, specifically if it has reached a bottom, and inquired about retailer commitment to the Home and Garden category for the upcoming season, including Spectrum Brands' capacity to meet higher demand.

Answer

David Maura, Chairman and CEO, declined to call a bottom for the pet market but expressed satisfaction with new leadership, investments, and market share gains in key companion animal brands. For Home and Garden, he conveyed bullishness due to new leadership, operational improvements, and consumer-endorsed innovation, expecting a soft Q1 due to prior year inventory shifts but strong POS trends and a big back half for the business. Faisal Qadir, CFO, added that Q2 for Home and Garden is expected to be flat or slightly up.

Madison Callinan of Canaccord Genuity inquired about the quantifiable sales impact from stopped shipments in Q3, any lingering effects into Q4, and the rationale for withholding guidance when peers have reinstated theirs.

Answer

CFO Jeremy Smeltzer estimated the Q3 sales impact at approximately $30 million, with a significantly smaller effect expected in Q4. CEO David Maura defended the decision to withhold guidance, citing the ongoing fluidity and unpredictability of global trade, stating it would be irresponsible to forecast in such an environment. He emphasized the company's focus on its strong start to Q4 and setting up for a better fiscal 2026.

Madison Callanan asked about a large competitor's new strategy and negative volumes, noting the smallest gap in Rollins' relative outperformance. She questioned if this changes Rollins' actions and who would lose market share if the competitor's revival gains traction.

Answer

Ken Krause (EVP and CFO) affirmed Rollins' strong business performance, with over 7% organic revenue growth and improvements across all segments in Q3. He stated that Rollins does not see any shifts in market share impacting its business and remains focused on executing its long-standing strategy. Jerry Gahlhoff (President and CEO) emphasized Rollins' internal focus and non-reactive approach to competitors, relying on its experienced management team.

Madison Callinan of Canaccord Genuity, on behalf of Brian McNamara, asked about the path for the Garden segment to return to consistent growth and the rationale for prioritizing share repurchases over M&A.

Answer

JD Walker, President of Garden Consumer Products, stated that favorable weather is a key factor for growth, but noted the underlying business is strong with growth in branded and private label products. CEO Niko Lahanas added that strong POS data on good weather days shows high consumer engagement. Regarding capital allocation, Lahanas explained that given a lack of quality M&A opportunities, the company viewed its own stock as the best value for returning capital to shareholders.

On behalf of Brian McNamara, Madison Callinan asked why the net new unit guidance was not adjusted despite increased visibility and whether there is an internal timeline to return to pre-pandemic levels of 200+ annual openings.

Answer

CFO Jay Stasz emphasized the focus is on steady, sustainable growth rather than a single 'bumper crop' year. CEO Colleen Keating added that while they have good visibility into the guided range, the high concentration of openings in Q4 introduces execution risk, making the current guidance appropriate.

Madison Callinan, on for Brian McNamara, asked when the announced price increases are expected to be reflected on retail shelves and whether competitors have already raised prices. She also inquired about how current macroeconomic uncertainty is affecting the M&A landscape.

Answer

President and CEO Jon Michael Adinolfi stated he couldn't specify the timing of retail shelf price changes but confirmed transparent collaboration with retail partners. Regarding M&A, he noted the pipeline is strong with potential for inbound interest, but active acquisitions are on hold as it is 'virtually impossible' to value businesses accurately amidst the current tariff uncertainty.

Madison Callinan asked for details on the maintenance CapEx for the U.S. Carwash business, the drivers behind the collision segment's outperformance versus the industry, and the reason for higher corporate costs in Q4.

Answer

EVP & CFO Michael Diamond explained that U.S. Carwash CapEx will be in discontinued operations and was elevated in 2024 due to asset sale preparations. President & CEO Jonathan Fitzpatrick attributed collision outperformance to strong franchisee execution on Direct Repair Programs (DRPs). Michael Diamond added that higher Q4 corporate costs were due to performance-based compensation and lapped share-based compensation from the IPO.

Speaking on behalf of Brian McNamara, Madison Callinan of Canaccord Genuity asked if there was evidence of consumers delaying oil changes due to macro pressures outside of hurricane-affected areas, and whether future comp growth would rely more on ticket or car counts from new stores.

Answer

CEO Jonathan Fitzpatrick responded that the company is not observing any major changes in consumer behavior and expressed confidence by reiterating full-year guidance. He emphasized that Take 5 Oil Change continues to be a 'juggernaut' with a clear growth path to 2,000 units, driven by sales and traffic across its entire store base.

Madison Callinan, on for Brian McNamara, questioned the drivers behind the significant 'hockey stick' improvement in sales guided for Q4 and inquired about the long-term strategy to achieve sustainable growth.

Answer

Executive Laurence Winoker and Executive Robert Kay explained that the Q4 sales growth is primarily due to the timing of retailer programs that were delayed and are now expected to ship in the fourth quarter. For long-term growth, Robert Kay cited consumer confidence, continued market share gains, an expected rebound in the foodservice market, and potential economic stimulus as key drivers. He also noted that the company's international growth is driven by market share expansion, which positions it well for when those end markets recover.

Asked for an update on the Solo Stove wholesale channel, including partner relationships and retailer order sentiment, and for details on new marketing initiatives aimed at strengthening DTC sales.

Answer

The Solo Stove wholesale channel has significant growth potential in new channels (like home improvement) and with existing partners, supported by investments in a dedicated sales team. Marketing is being revamped with an earlier, more comprehensive 360-degree campaign and a major website platform upgrade to Salesforce.com planned for next year to improve the DTC experience.