Good morning. My name is Bobby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectrum Brands Fiscal 2014 Third Quarter Earnings Call Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, July 30, 2014. Thank you. I would like to now introduce Mr. David Prichard, Vice President of Investor Relations. Mr. Prichard, you may begin your conference.

Good morning, and welcome to Spectrum Brands Holdings Fiscal 2014 Third Quarter Earnings Conference Call and Webcast. I'm Dave Prichard, Vice President of Investor Relations for Spectrum Brands, and I'll be moderator for today's call. Now to help you follow along with our comments, as some of you know, we have placed a slide presentation on the Event Calendar page in the Investor Relations section of our website at www.spectrumbrands.com. This document will remain there following our call. Now let's start with Slide 2 of the presentation. Our call, again, will be led today by Dave Lumley, our Chief Executive Officer; Andreas Rouvé, Chief Operating Officer and President, International; and Tony Genito, our Chief Financial Officer. Dave, Andreas and Tony will deliver opening remarks and then conduct the Q&A session. Now turning to Slides 3 and 4. Our comments today include forward-looking statements, including our outlook for fiscal 2014 and beyond. These statements 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 that are outlined in our press release dated July 30, 2014, and our most recent SEC filings and Spectrum Brands Holdings' most recent 10-K. We assume no obligation to update any forward-looking statement. Also, please note we will discuss certain non-GAAP financial measures in this call. Reconciliations on a GAAP basis for these measures are included in this morning's press release and our 8-K filing, which are both available on our website in the Investor Relations section. Now for the third quarter of fiscal 2014, Spectrum Brands reported net income of $78 million or $1.47 diluted income per share on average shares and common stock equivalents outstanding of 53 million. This compared to net income of $36.1 million or $0.69 diluted income per share on average shares and common stock equivalents outstanding of 52.7 million last year. By segment, for the third quarter of fiscal 2014, the Global Batteries & Appliances segment reported net income, as adjusted, of $44.4 million versus $32.2 million a year ago. The Global Pet Supplies segment reported net income, as adjusted, of $22.3 million versus $24.5 million in fiscal 2013. The Home and Garden segment reported net income, as adjusted, of $47.8 million compared to $42.8 million last year. And finally, the Hardware & Home Improvement segment reported net income, as adjusted, of $48.3 million versus $40.1 million a year ago. With that, I am now pleased to turn the call over to our Chief Executive Officer, Dave Lumley.

Thanks, Dave, and thank you all for joining us this morning. Let's turn to Slide 6. We're pleased to report a record third quarter, which follows record results in our first 2 quarters and maintains our momentum to deliver a fifth consecutive year of growth and record financial performance. Our Home and Garden, HHI and battery businesses had especially good results this quarter. We have achieved consistent sales growth every quarter this year or about 3.5%, this in spite of what we believe remains a challenging retail environment, with consumer takeaway that is very sluggish and, in some areas, flat to declining, especially in North America, a market that has slow store traffic and very tight retailer inventory levels and, especially as of late, very tight reorder rates. As we have emphasized before, our Spectrum Value Model continues to work effectively and resonate with retailers and consumers in a difficult global economy. Our same or better performance/less price, value-branded and largely nondiscretionary Spectrum Brands products continue to win in the marketplace with today's smart shoppers, who are focusing more on value. This is the right place to be, we believe, in an environment with unusual discounting, both in terms of price to the retailer and price to the consumer. Let's now move to Slide 7. Here, you'll see our sales increase was 3.6%, with our North America, Europe and Latin America regions all contributing to the growth. This followed a 3.4% sales increase in our second quarter. Our adjusted EPS of $1.30 grew a strong 44%. Adjusted EBITDA increased 7.3%, about twice the rate of our sales growth, which is similar to the leverage in the first 2 quarters. This was our 15th consecutive quarter of year-over-year adjusted EBITDA growth. We are pleased that our adjusted EBITDA margin increased again…

Well, thank you, Andreas, and good morning, everyone. If we could turn to your Slide 18. Let me first comment on our gross profit and margin for the third quarter. Our gross profit of $417 million and margin of 37% compared very favorable to $383 million and 35.1% a year ago. Third quarter operating expenses were essentially flat, as lower acquisition, integration and restructuring-related charges offset higher SG&A, really driven by increased volume in sales and timing. Third quarter interest expense of $47 million decreased $15 million from $62 million last year, principally as a result of savings from the refinancing of our 9 1/2% notes last September. 2014 full year interest expense is now expected to be in the range of $199 million to $203 million, which includes $152 million in the first 9 months, of which $11 million was onetime items related to our term loan refinancing in the first quarter of this year. Regarding depreciation and amortization, we expect 2014 full year D&A to approximate $198 million to $202 million, which includes $145 million in the first 9 months. Our third quarter effective tax rate was 21% compared to 29% last year. We now expect our 2014 effective tax rate to be 20% to 25%, which is lower than last year due to the positive impact of recent entity simplifications and a rate change in Mexico. To calculate our adjusted EPS, of course, we continue to use a 35% tax rate. Let me highlight a few more key items in our financial statement. Cash payments for restructuring, acquisition and integration charges for the third quarter were $10 million versus $21 million in 2013. This $11 million decrease was primarily due to the winding down of acquisition-related expenses and legacy business restructuring initiatives. Cash interest for the third…

Okay, thank you very much. Operator, you may now begin the Q&A session, please.

[Operator Instructions] Your first question comes from the line of Bill Schmitz from Deutsche Bank.

[Audio Gap] model wrong on the lawn and garden segment. So can you just like sort of, in big picture, broad strokes, tell us what do you think it might decline in the fourth quarter?

Bill, could you restate your question? We only got the second half of it.

Yes, yes, of course. I was just wondering, like do you think the lawn and garden business will decline in the fourth quarter just because the comp is so hard given the weather shift? I just don't want to get the model wrong.

Well, all I can say is that was a very strong quarter last year, unusually strong. And I think you'd have to do the best you can on that. Obviously, our hope is to try to do as well as we did last year. Right now, the industry is not, overall, a positive on a POS basis. The reports just came out. I think it was down 2%.

It was all over.

Yes. So I would say that I think, most likely, it will probably be a normal season. Now we've gained share. We're doing pretty well with some of our products. So who knows? That's the best I could tell you.

That's fine. And then on the pet side, are there any signs of life? I mean, like are certain channels growing faster than others? I mean, I know it's probably your most macro sensitive...

Well, pet has been through this before in the aquatics business. It comes up. It comes down. We have some unusual activity going on in the pet business with retailers right now. For aquatics to go forward, there needs to be more fish tanks in stores. If there are no fish tanks in stores or there are a reduction of fish tanks in stores, you sell less aquatics. If you don't sell the tank, you don't sell the fish. You don't sell the fish, you don't sell the food. But I believe that the retailers we've talked to have recognized this, and I think we're going to see that turn around, like it has before. We also have some exciting new products. And even though we're down a little bit, we're pretty close to last year's sales. So this isn't that bad. I do think it will turn around. I think you'll see next year really do better, as there's a lot of new things we're doing there to stimulate, and the retailers are as well. On the companion animals side, we're doing quite well in a lot of our products there. So I think that you'll see pet rebound next year and do quite well. But this is an industry challenge right now, and it is a global basis. But again, these things go through cycles as the consumer makes choices and looks at things. And frankly, you have to give the consumer something new to get excited about, and I think we're doing that again.

Yes, in that regard -- Bill, this is Tony. Just to add on to what Dave said, which I agree with fully, so as Dave said in his prepared remarks, it's -- in this -- in the aquatics business, it's really about increasing startups, the trade-ups and then trying to decrease the dropout rates. And I have to say that our pet business has a lot of new products that's based at -- that's in the pipe to address those issues, which, let's face it, the first and foremost is the startups and then the -- avoiding the top-up [ph] rates, those 2. And then once you get beyond that, then it's about trade-ups. But clearly, some of the new products that we'll be launching are pretty darn exciting. So we're happy about that.

Great. And then, Tony, last one before you abandon us. The leverage ratio for 2005 (sic) [2015] , I know you haven't given any like 2005 (sic) [2015] guidance yet. But do you think you'll get into that 2.5 to 3.5 range? I mean, if you look at the run rate the last 3 years, it looks like a half a turn plus the debt coming out. So is it reasonable to assume that you could get within that range next year?

Yes, it's a great question, but I don't want to get ahead of my skis here because we haven't given any guidance for '15. But what I will tell you is that we're a cash flow-generating machine. We're very pleased with where we've been over the last couple of years and the increase in our cash flow. And as I like to state, and you've heard me say this before, a company that's trading $350 million, $400 million and then continuing to do that and more cash flow down the road, you have a lot of optionality. And optionality is a great thing. So it comes down to capital allocation and what is the best opportunity at a given time. And again, when you're generating that level of cash flow, you really do have some nice optionality. So we're continuing to stay focused on the core concepts of taking that cash flow and the allocation of capital to looking at smart tuck-in, bolt-on acquisitions, obviously servicing our dividend and growing that as our cash flow grows and looking at opportunities to stay focused on reducing our leverage. So I don't want to get, as I said, ahead of my skis here and give specific, quantitative numbers, since we haven't done that yet, but that's really where our focus remains.

Your next question comes from the line of Mike Dahl from Crédit Suisse. Michael Dahl - Crédit Suisse AG, Research Division: To ask a couple of questions on the HHI business, there's a bullet point in the slides talking about a focus being placed on large and attractive light commercial lock category. That's something where that business hasn't really been focused on in the past. So is that something that you think about as an organic opportunity or something that you may have to pursue via acquisition?

This is Dave Lumley. One of the key things in our acquisition of Tong Lung was their ability to be in light commercial. And I think that as we are integrating that into our system, we have the opportunity now soon to make a big bigger push into that organically. And of course, we are always looking for the right tuck-in acquisition for all the businesses on the HHI platform. But again, Tong Lung gives us the opportunity to do that. So I think we're feeling good about getting to that next step soon. Michael Dahl - Crédit Suisse AG, Research Division: Got it. And then second question, is there any color you can give us around what the contribution of new products, such as Kevo, have been to the HHI platform or maybe just the overall vitality index versus last year?

Well, I think that's a really good question, and I think you have to view this 2 ways. Why Kevo has provided double-digit millions of growth, it is a high-priced product. It is a what we would call umbrella product, which really sets the stage for the technology. What it really has done is push their new product vitality rate quite high or the highest it has been on Kwikset SmartKey locks, which cost less. Remember, when you buy a Kevo lock, you're not buying it for every door. You might be buying it for 1 door or 2 doors. But it also has highlighted our SmartKey technology, where people are seeing that as an advantage to our competitors' locks, which don't have that, and giving you great flexibility. So I can't give you an exact number, but I can tell you that it's a multiple of almost 5 on the sales of what it's been able to do to sell Kwikset and SmartKey technology. So it's quite high. And again, we talk a lot about umbrella products and how they can elevate the whole line. This is a perfect example of being able to do that. So it's been very successful on -- it not only has its own product and its technology but its ability to drive our everyday business.

Your next question comes from the line of Connie Maneaty from BMO Capital Markets.

Could you give us a bridge -- the bridge from last year's gross margin to this year's 37.1%? Because going back, I think, by quarter to when the company emerged from bankruptcy, you hit 37%, I think, only one time. So what was responsible for it? And is it sustainable?

Yes, Connie, it's a couple of items. One is we've been focused on exiting low-margin business and looking to obviously have -- we're all in favor of sales, but we want profitable sales. So that's one item. The other is we have a record level of CI, what we refer to as CI, which is cost improvement, continuous cost improvement initiatives, that we've been very focused on and bringing that into all -- and it's actually hitting in all of our businesses, for instance, pet, which did not really have a focused cost-improvement initiative several years ago, has been really adding value to that with the in-depth operations group that we have there now at pet; and also HHI. And I'd say the last element would be product mix in the third quarter. Keep in mind that the third quarter is our strongest quarter for the H&G business, our Home and Garden business, which enjoys extremely strong margins. You know that, that is our highest-margin business. And of course, HHI had a stellar quarter as well, which enjoyed some very nice margins. So it's really driven by those key elements.

That is helpful. Do you see any impact from the merger of the dollar stores? And where do they rank in terms of your customer base? Will there be an inventory impact as those 2 combine?

This is Dave Lumley. That particular merger should have little impact on our current business. However, I am encouraged by it because it will give us the opportunity to readdress that -- those 2 stores as they come together, where we think we have a compelling selling proposition, where when they were apart, they did things completely different and they used different types of suppliers. So I think, in our case, it's an opportunity for us to readdress that.

Okay. And just one last one, if I could. You said in your prepared remarks that retailers were tight on reorders. So could you tell us if your ship-in is above or below sell-through and what the outlook there is?

Yes, that's a really good question, and we put that comment in there on purpose. Especially in North America, retail is going through quite a transformation. You have the impact of e-commerce on certain businesses and the shift there. You have a movement to smaller store formats. You have a shift in the consumer themselves, who have less money to spend than they did before on even nondiscretionary items like ours. So what's happening is, as retail learns this, there is a movement right now to slow down reorder rates or what we would call fill rates or what's in the store. So in a perfect situation, on a store shelf, there would be 100% in stock. Everything would be on shelf, too, with 6 items. Lately, as stores are learning and changing and rebalancing, these are falling into the 90s and, at times, 80s. And we've seen as low as the high 70s, especially in seasonal businesses. So -- and that's usually caused by a few things. The store has maybe overbought one item that's not selling, so their total inventory shows up, but their fast sellers are sold out. So this is -- this rebalancing is really going through quite a dramatic change for all those reasons now. So on our case, because we tend to sell more units and sell them faster, same performance/less price, we actually have suffered a bit through that and not had the type of reorders as we wait for inventory to rebalance. I think we'll see that clean out. Retailers are very smart in how they do this as they rebalance in the coming quarter and especially the holiday quarter. So I'm optimistic that these rebalancing of inventories will help Spectrum Brands' products.

Your next question comes from the line of Bob Labick from CJS Securities.

I just wanted to start -- you've touched on it a little bit here. Obviously, we've all talked about and seen the tough retail environment out there. Could you talk more about your e-commerce exposure and your strategy for growth on the e-commerce side?

Yes. We've done better than we thought. We started a little slow on this, like most manufacturers did. We explored going direct to some extent. We explored how to work the best way with our key customers as they brought their dot-com sites up. And of course, we have learned how to deal with what I would call a pure play, someone like the biggest Internet seller in the world, right? And what we've found is that we have found a model that works best for Spectrum Brands products. And that is that we're going to get as much content as we can on the Internet, coordinate with our retailers between what they need in-store and online, get the reviews out. And our growth has been better than we thought. And that's because if you have a product that's same performance/less price and you can get a lot of reviews on it and you can get good ratings on it, it forms as a better and more effective advertising than if we were to put a whole bunch of consumer advertising out there, which actually isn't our strategy. So we are growing quite well on that, and we have invested a lot more people in it, a lot more emphasis on it. And we're going to continue to do that as we drive these reviews, drive these star ratings right through to retail, into the stores where those customers always want us to do that. So again, I'm really enthused with it. And we're going to continue to disproportionally invest in sales, marketing products and ways to do that, and especially in our appliance and personal care, pet business and even HHI does quite well online. I think we have some other businesses where the online really wants to gather information before they go to a store, take Home and Garden or batteries and like. So it's something to watch. It's here, it's real, and I think you're going to see -- you will see these same investments going out with our retailers, which we're working with very closely.

Okay, great. And is there any way, this may be difficult, but to quantify maybe your overall e-commerce exposure, not to any one but on an aggregate basis now and maybe where you expect that to be a few years down the road?

Well, yes. I think it's a percent of sales. I mean, when we started, we thought 1% of our sales or 2% would be good. We're much higher than that. I think that depending on the category, this will grow from the mid single digits maybe to 10% of sales in certain categories for people like us, and I think it will continue to grow at about a 20% to 30% rate for a while. And every market then will find a saturation point, right? And that -- and I think the challenge that e-commerce has to grow beyond that is the cost of distribution and transportation, correct? Yes, and not a lot of this is incremental. A lot of it is just simply a shift from brick-and-mortar to online. However, I think for a company like Spectrum Brands, it is more incremental than normal because we have the opportunity to launch higher-priced products than we can in the store at the moment and launch things, test things there that we couldn't do in the store. So that's another reason why it's very exciting for us. For instance, think of our Kevo products as a great example at that price point, our i-LIGHT product at Remington, which is instant hair removal, things like that. The web gives us a tremendous opportunity to do that, where you wouldn't really charge in to one of our key retailers with a $250 product, right. So again, a really good opportunity, I think, for people like Spectrum Brands' model. I'm not so sure how good of an opportunity it is for premium-priced product long term.

Your next question comes from the line of Kevin Grundy from Jefferies.

So Dave, 2-part question, I guess, on batteries. Talk a little bit about the opportunity with respect to distribution in North America because you seem to be doing well there and quite a bit at odds with what we see in the syndicated data. And then to the extent you could touch on the performance of that business internationally too, that would help. And then the second part is, philosophically, are you opposed to taking that portion of your business, from a mix perspective, significantly higher over time, whether that's through organic or through M&A?

Okay. Well, I'll answer the front part. I'll have Andreas talk about international, and then we'll come back to that last part. Batteries are sold everywhere. They're just not sold to stores that Nielsen tracks, and I guess that would be good if that -- for some of our competitors if that was the case. Our strategy has been to sell mass merchants, home centers, industrial and 2-steps. We have not been strong in grocery and drug, although we are starting to grow in drug, for the matter of that it's more difficult. The volumes are smaller. They tend to be more private label, and they tend to be more tied to companies that are strong in food business, okay? We're not in the food business. So our growth has come in those areas. Also, we have the ability in home centers, with our strength of HHI, Home and Garden and our merchandising forces, to do well. Now Nielsen doesn't track the home centers. They don't track the 2-step hardware. They don't track industrial sales. They don't track many of the people we sell to. However, they're in the top 10 of battery sales. So it's just 2 different approaches to the marketplace. Our share has grown into the 16, 17, 18, depending on the quarter. We believe we have a compelling selling proposition. Our batteries last as long as the 2 leaders, and they cost less. Batteries are an impulse item. Almost 65% are sold on impulse. So the more that the retailer puts it in the store, the more they sell. So we will continue to push forward on that. We'll continue to push forward on providing better margin to the retailer and a better deal for the consumer. Now we're still just that size of the market.…

Now your last part of the question is, would we like it as a greater percentage of our sales? You can see all of the things that are growing for us have higher growth rates than batteries, HHI, Home and Garden. I think you'll see appliances and personal care have a much better year next year. Yes, pet is a little challenged now. But if batteries were to grow $50 million or $100 million on sales of $4.5 million at a 19% EBITDA margin, would we like that? Vote? Yes. But I don't think you'll see it growing as a giant percentage of our sales, right? In fact, we're down now, as a percentage of sales, with batteries. We used to be as high as, Tony, 35%, 40% back in the day.

Oh yes, at one time, yes.

Not that long ago, and I think we're down into the high teens now.

Yes, 20%.

Yes, 20%.

And Dave, the second part of that, just from an M&A perspective, would that be something you see more positive on the business than some of the commentary that's out there, from an M&A perspective? Would you be willing to increase the mix?

Well, that's a good question. I guess you'd have to wait and see what happens there. There's a lot of talk about what they say they're going to do. Let's see what they do, and then we'll react to that. We -- batteries is something that you can grow organically as well. You don't necessarily have to merge to get the growth, especially depending on how the competition structures itself. I mean, I'm not -- I'd say, let's just stay tuned and see what happens. Until something actually -- yes, until something actually happens, I don't know what to say, okay?

Your next question comes from the line of Ian Zaffino from Oppenheimer. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: My question would be on the new products you're rolling out on the appliance side. When do we think we're going to see some traction? Or maybe when could we start gauging the success of that? And how long does it take to kind of penetrate the marketplace? And when we do you expect good things to come from that?

Well, as soon as Santa Claus gets in his sleigh, I think it's going to do a lot better. We just had a meeting here to show our board and our -- probably the most -- I mean, I know you hear this, but this is really true. We've spent 3 years integrating Russell Hobbs and going to global in the hope of new product development and listening to our customers and consumers. We have those appliances. We really do. It was in my text, and we've got a bunch of stuff I didn't put in there that we've shown customers. We have the products now, faster toast, faster pizzas, faster cheeseburgers, better coffeemakers, better blenders. We're here, and we're competitive, and we're ready. And personal care side, we've spent 2 years. Our new shaver, our new Smart Edge foil shaver is our best ever. Our new Hyper shaver is as good as that $200 one out there that moves all around your face. It's really cool. Ours is $79. I mean, we're going to post sales numbers next year. I'm very confident in North America. Andreas has even better news, I think, in the international market. Andreas Rouvé: Yes, especially in Europe, we have systematically rolled out the Russell Hobbs brand. And we have not only the regional expansion taking it from the U.K. across all of Continental Europe but also broadening the product offering. Like we mentioned earlier, the Illumina range, which we are launching, is a huge success, very well accepted. So I think it will continue to grow by continuously launching our new products. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Okay. So I'll be putting that on my Christmas list.

There you go. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Sharon's going to think I'm crazy, but I think you've found [indiscernible]...

Yes. You can go onto russelhobbs.com for... Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: And then the other question would be, as you look at -- and this might be a follow-up to the last question, is it seems like you're delevering, you're delevering very quickly. And I know you did mention this bolt-on acquisitions. But the idea of a large acquisition, can you kind of give us maybe your thoughts on your acquisition criteria for a larger acquisition? Is it something where you're willing to do a deal if the synergies are large? Or does there need to be some other type of intangible or tangible that you could potentially capitalize on? Because I guess we kind of all know there'd be large synergies if that deal would happen, but I don't know if there's anything above and beyond that. And would synergy alone be enough for you? So just give us some insight on how you think.

Well, we have said publicly, we obviously like the small tuck-in acquisitions, highly synergistic where we can manufacture it. And we've had some success with that. We've actually done some large acquisitions. I mean, Russell Hobbs was quite a large acquisition. And of course, HHI, Tong Lung was quite large. And I think we're seeing much better synergies there, as I said and you thought. We, as a company, don't want to take on too much too soon. At the same token, we have a primary stockholder. And they have been with us a long time, and they want to be with us a long time. And they want to see us grow, but I think that those big acquisitions have to be right. I know you know. You cover us. We have quite a bit of NOLs that are attractive as well, but I think that acquisition has to be, in this market, really right. We have brought the multiples. We have a lot of expectations out there. And at the end of the day, good acquisitions are one that -- where everybody wins. So I think that our eyes are open, right? We're always open to it, but we're going to have to wait and see. And it's going to have to be good. And again, that would also play a big part with our shareholders' and our owners' vision on that as well. But right now, we run the business day in, day out. We want to post free cash flow and pay down the debt. We want to keep growing our EBITDA margin. We don't want to overpay for anything. We don't want to try to make something fit that isn't right. And that kind of discipline has taken us over the last 5 -- it was just 5 years ago we kind of emerged from something and where we are today. And I think we follow the plan, we stay the course, keep doing what we're doing. And we went through half of it [ph].

Okay. Your last question comes from the line of Lee Giordano from CRT Capital.

Can you talk a little more about where you're taking your pricing actions that you mentioned in the prepared remarks and what categories you're seeing some pricing power?

We could make that a short or a long one. I'm going to have Andreas jump in. We have been quite successful pricing, especially like in Latin America end markets. Well, just jump in, and then I'll come back to North America. Andreas Rouvé: Yes, I think in the pricing, it's really as soon as the competitive environment are all under the same pressure, it will trickle through the market, like, for instance, what Dave alluded in Latin America with the devaluations. All the competitors are on the same situation. Therefore, pricing is possible. In other markets like Europe, there, it can go the other way because, again, the euro being strong against the pound, so there's more price pressure. However, there, we are coming back to our strategy of continuously launching new products because, again, if you bring new improved products, it will help you to raise also prices.

The marketplace is so global now that most of the people we compete with, we compete with globally. Clearly, that's in North America, Home and Garden would be the only exception. So -- but the cost increases, guys and gals, aren't as big as they've been around the world, and the commodities aren't as big as they have been.

Commodities have been relatively...

Yes, yes. So that's good news. The -- however, the consumer takeaway is much tougher right now. And you can read all the same stuff we read. The top 1% of Americans are doing really well. The rest aren't, okay? So that plays to our model. Those people want to still buy what they used to, but they're spending more for food and gas and taxes, which is a big deal. And we're getting those people. But when we get them, they still have less money. But in that environment, why pricing is difficult on existing products is people are discounting. We have competitors giving money to retailers to hold their share, right, above and beyond what I would call consumer discount, right? So that compresses pricing. So to get pricing in that market, you need new products, which is why you're seeing probably the greatest number of new products that we have introduced in the last 5 years in most of our product lines. And I could go through a big commercial, but if you want to call back, we'll tell you all that. In addition, the Internet provides some pricing opportunities for high price for people like us. That's good news. But I think you're going to see a market share war for a while in some of these products. And if you have a good model and you have good cost improvement, you can do the things we talked about, you're going to do okay, and you will actually realize some price. If you don't have new products and you're, perhaps, a premium-priced product just trying to hold on to share, you're going to have margin erosion against it, which is exactly what you're seeing in the marketplace, okay? So I think we're going to go through this readjustment over the next years. Remember how I talked earlier about smaller store formats, what's the mix of Internet, what's your mix of value-branded products versus premium? Does the retailer really want to stay involved in private label and take the risks on currency and sell-through and packaging and returns? We're seeing a shift in that. So I think that the companies that can do that are going to do well. And our model works best when we're next to a premium-priced product, right? So that's what they do in the Internet. So that's really good. So I think you're going to see some pricing across-the-board. You're going to see good cost improvement across-the-board, but the new products and the new channels is where you're going to see realized pricing of that. That make sense?

That's very helpful. And just a quick follow-up. Can you talk about your thoughts on the residential lockset market? And then the housing market, in general, is it helping or hurting you right now?

Well, there, we just had our leader of HHI, Greg Gluchowski, here the other day. And I think he would tell you if he was on the line that, overall, they're both healthy. Clearly, let's go back 2 years ago. Residential and housing market is better than it was, right? That's healthy, right? That's healthy, especially when you have new technology that says we have a SmartKey lock where you can go away for the weekend, your neighbor can get a key, and Monday -- and you can turn the key off. Or you have a keyhole lock where you can do it with your smartphone, right? So I think that housing is helping. But what's really growing, which is buried in those numbers, is multi-family, which we're strong in. And we can sell in that hospitality. That's got double-digit growth rates. In addition, 75% of our sales there are in retrofit, redo, put in the new SmartKey lock, put in the new Kevo. Oh, they all got to match now. And quietly, they're doing quite well in Pfister and U.S. plumbing in matching all the products up in the bathroom in there to sell. In fact, we have a very successful program where we select all that ahead of time, display it at a key home center, and they're doing really well at that. So I think that HHI's promise is coming to fruition. The numbers speak for themselves. Who was it? Bill Parcells said, "You are what your record says you are." So the record is pretty good. Tony, do you want to add anything?

Yes, just real quickly, as everything David said is spot on. Just to reinforce, when we built our assumptions for this year, we did not assume as fraught a housing start market because we just didn't think it was real to the extent that the market itself was saying. So we were about half of what -- of the expectational growth from -- say, they were shooting at low 20s, and we were like in the 10%, 11% range. On top of that, as Dave said, 75-25 replacement model versus new construction. And has the housing market been helping us? Absolutely. But probably, I think it's -- the growth is below expectations of what the industry experts had expected. That's definitely been a tailwind for us. But our home -- our Hardware & Home Improvement business, when they build their expectations for this year and go forward, they attempt to do that without having a reliance on a strong, robust housing market. If that happens, that's wonderful. And we hope it does happen, and we pray that it happens. But with that being said, we -- through the enhanced technology that Dave talked about, with Kevo and SmartKey and -- yes, we're just taking share, which is what we've been doing. So we're pretty pleased with the performance since the acquisition.

Your next question comes from the line of Karru Martinson from Deutsche Bank.

I just wanted to touch on the sluggish consumer, and the takeaway is tight reorders. I mean, where are their market share gains coming from then? Is that coming from -- on your end from the branded players? Do you feel that you're taking it from the private-label guys?

Yes, this is Dave Lumley. We didn't hear the first part of your question. For some reason, we're having -- are you talking about batteries?

Well, just in general, across your categories, I mean, I guess, putting aside Home and Hardware...

Well, yes, I could answer -- I'll answer that. Most of our market share gains in listings are coming from our premium-price competitors in most categories, and the data would show that. In private label, we tend to do a lot more private label than our premium-priced guys. So we don't get credit for private label in the market share numbers. But if we did, we would have higher shares in all of our categories. But it's mostly the premium-priced player, and that would especially be true -- well, in -- and especially in some of our businesses, that's true. So that's why we like to say, put us side-by-side, and it's just a matter of mix for the retailer. Clearly, premium products are good products. I mean, they need to be there. It's just not our mix. How much on the shelf of those versus ours? Are we next to them? Give the consumer a choice. And again, that's what's great about the Internet. Let's read the reviews.

Okay. And then in terms of -- you mentioned unusual discounting or promotions in the market. I guess, could you provide a little more color on kind of what you were referencing? And how long do you think those will continue?

Unusual discounting is usually a function of having too much inventory, if you're a manufacturer, or emotional or share or maybe an unusual opportunity at a retailer who wants to make a statement. They don't tend to last that long for the very nature that the market will flush it out. So if you did an unusual deal at retailer A, when the other 6 retailers find out, you have to lower it due to [indiscernible]. So I think that we're going to see some of this balance out again as we go forward. Christmas is kind of set. You're going to have your Black Friday crazy stuff, but that's usually for a day. And like I've said before, I think in most cases, it balances out, and you have to win on the merit of your selling proposition and your product performance and your -- where you have distribution. So I don't think that you should worry about a wholesale war. Most of the categories we're talking about, especially batteries, Home and Garden, HHI, these are categories where everyone does well. And there is no reason to do that. Some of the other categories that are lower margin, we've all learned, like appliances, that those don't work. They don't work for the retailer. They don't work for the company. They don't work for the supplier. You can't sell things below cost and think you're going to do all right. So I'm optimistic that it will get better. Now that said, that doesn't mean that retailers and manufacturers don't need to offer compelling promotions this Christmas and this back-to-school with the right products. For instance, you don't take a $100 product and sell it for $30 and lose money on it, but you can certainly take a $50 product and sell it for $39, which is a great deal. Or you can value-add a lot. I think that's also a key to success in the future. You buy this, you get all these other things. And I think the Internet is proving that to be the case as well. So again, the only point I was trying to make is changing landscape with the consumer. I think we're well positioned to do well in it, but people are adapting, and people have to adapt. And those who adapt will win. I don't want to sound like a philosopher, but Darwin didn't -- Darwin's quote wasn't the survival of the fittest. The beginning of that quote said, "Those with the ability to change will lead to the survival." And I think that's where we all are.

Okay. And just lastly, I would have hoped that the warm Wisconsin summer would have persuaded Tony to stay, but neither was in the -- an update on the CFO search here?

Well, we said that Tony is staying until the end of the calendar year. And I don't know. Unless you were in Wisconsin some day when it was warm, I don't know. But I haven't seen that yet. I think it's going to hit 73 today. But no, we have announced we are well into an exhaustive search. And we've made progress, and we're getting to our goal of being able to come back to you and tell you where we are on that pretty soon, clearly, hopefully, by the end of the summer. And as you said, there's -- we have until December 31 to also create the illusion it's warm in Wisconsin for Tony. So -- but I'm confident we're going to do okay, do pretty well there. We've seen some very, very great candidates and many who would, more -- most importantly, fit our culture, fit our model and believe in what we do, which is a little different than other people's models. So I would say it's good on both sides.

With that, we will now conclude our conference call. I certainly want to thank Dave, Andreas and Tony. And on behalf of Spectrum Brands, we want to thank all of you for participating in our fiscal 2014 third quarter earnings call. Have a great day. Thank you.

This concludes today's conference call. You may now disconnect.