Bob Labick: Okay. Great. And then so how do you determine the right amount to spend? Is fiscal ’24 right? Or is fiscal ’25 going to be higher? And what’s the form of investment that is higher this year and the expected ROI on that?
David Maura: Look, Bob, I think — let me hit a couple of just broad points. I mean, it’s a very recent history, right? But we only closed the deal and got liquid in June of this year. And running the business a year ago, leverage was 6 times, 6.5 times, running a business for cash. We took a lot of fixed cost out of the company. Two of the three remaining businesses, we’ve replaced the entire leadership team. I mean, brand-new leaders. We’ve got a new salesperson that just started in Home & Garden. We recently just hired a new marketing person there. I just put a North American lead into the appliance business. I got a brand-new president there that’s taken over from Europe. I mean you’re talking about a business that just didn’t get a lot of capital to it because of the leverage situation and the pressure from the DOJ challenging the sale of HHI.
And it’s a brand-new day. We’ve got $1.8 billion in the checking account and we think the markets are going to deteriorate. We want to go play offense. And I just think that’s the best way to get after it is to jump start this thing with some real investments in people, talent, brands, and we want to make a lot of noise and bring the consumers really great product here and create a base of earnings that is sustainable and growable into the future. So look, I think we’re putting a lot of money in marketing. There’s a lot of money going into e-com, doing a lot of real-time testing, test and learn, we call it, on the dot-com partners, and it’s all the way from Chewy Amazon, walmart.com, you name it. And we really want to drive the business to a much healthier level and then be able to compound from there as we get healthy.
I would say we’re going to get healthy in ‘24, and then we’re going to try to accelerate that in ‘25 with what we’re doing here with these investments today.
Bob Labick: Okay, super. I’ll jump back into you. Thank you.
Jeremy Smeltser: Thanks, Bob.
Operator: Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Brian McNamara with Canaccord Genuity. Your line is open. Please go ahead.
Brian McNamara: Good morning, guys. Thanks for taking our questions. Thanks, my first question is regarding the HPC business. There’s a large player in the space that recently went public and appears to be the exception of the rule in terms of growing the top line in this tough market. With your outlook for increased pressure in 2024, particularly in kitchen appliances, I guess, what is this competitor doing differently that the rest of the industry appears to be struggling with?
David Maura: Yes. I think that particular entity has been particularly good at innovating, but then spending very large amounts of money advertising. 50, 100 –, hundreds of millions of dollars. And we clearly don’t have that size or scale. But that was kind of the thesis behind what we’re trying to do with DRTV and DTC with the studio we got through TriStar and that’s part of what we’re trying to do here with fewer, bigger, better bets. And it’s part of what we’re trying to do here with the new Remington launch that we just did here in New York City on Monday. So it’s get product, it’s driven by consumer insight and it’s — test that product, try to make it a fatter pitch and then put real money behind it. And that’s definitely a strategy that has worked for them, and we’re going to try that playbook where we think it can work for us.
Brian McNamara: Great. That’s helpful. And then secondly, what are your capital allocation priorities this year, particularly share buybacks as you move towards your target net leverage ratio of 2x to 2.5x.
David Maura: Yes. We’re in the middle of completing a $500 million repurchase program now, and that will wrap up soon. And we’re going to get off this call and see where the world is next week. But I think if we can continue to shrink our float and grow our earnings, I think good things tend to happen, if you can do that consistently. So — we’ve obviously got some bonds outstanding, and there’s an obligation there. June, July next year if we don’t do an acquisition. But I think we really want to invest in our organic businesses. And never say never. If there’s some tuck-in out there that is a slam dunk for Pet and Home & Garden, we probably look at it. But right now, I just want to continue to buy in shares that I think are undervalued. And get our earnings stream growing.
Brian McNamara: Great. Thanks a lot. Best of luck, guys.
David Maura: Thank you.
Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Chris Carey with Wells Fargo Securities. Your line is open. Please go ahead.
Chris Carey: Hi, everyone, thanks for the question. Can I start on Garden, please. So the outlook for retailers to build inventories later in the season with pressure in Q1 and that continuing into Q2, is that based on — you’ve had these conversations with the retailers by this point, being so late in the calendar year. And there’s a lot of visibility into that comment. Or is that a level of conservatism given what’s happened in the category this year, uncertainty on weather and these sorts of things. I’m trying to balance the two?
