What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-11-23 compared with 2020-11-18 · 327 added, 286 removed, 307 unchanged (67% of the section changed)

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Refer to Item 1 - Business and Note 1 – Description of Business in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for an overview of our business.

For a discussion of our fiscal 2018 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2019 filed with the SEC on November 15, 2019.

The COVID-19 pandemic and the resulting regulations and other disruptions to both demand and supply may have a substantial impact on the commercial operations of the Company or impairment of the Company’s net assets.

Such impacts may include, but are not limited to, volatility of demand for our products, disruptions and cost implications in manufacturing and supply arrangements, inability of third parties to meet obligations under existing arrangements, and significant changes to the political and economic environments in which we manufacture, sell, and distribute our products.

During the year ended September 30, 2020 and as of the date of this report, we have been and continue to be classified as an essential business in the jurisdictions that have mandated closures of non-essential businesses, and therefore have been allowed to remain open.

The Company did experience temporary shutdowns at certain operating facilities in response to government mandated restrictions or to address and implement preventative safety measures.

During the second quarter ended March 29, 2020, there were certain HHI operating facilities, primarily within China and the Philippines, that experienced a temporary limit on production in response to the COVID-19 outbreak, but such facilities were operating at or near full capacity by the end of the second quarter.

Subsequently, during the third quarter ended June 28, 2020, additional governmental operating restrictions were announced in Mexico temporarily suspending or limiting production for our HHI operating facilities, with facilities operating and ramping up productions by the end of the third quarter.

Moreover, our H&G facility in St.

Louis was temporarily closed in April 2020 to provide for additional cleaning and implementation of preventative measures in response to confirmed cases of COVID-19.

These facilities continue to operate to the extent possible under existing regulations and may be subject to future closure depending upon unforeseeable duration and severity of the COVID-19 pandemic and any governmental and public action.

Despite the supply implications, the Company continued to experience strong customer demand.

While demand in general for our products remains strong, our teams continue to monitor demand disruption and there can be no assurance as to the level of demand that will prevail following the year ended September 30, 2020.

A large portion of our customers continue to operate and sell our products, with some customers reducing operations during the year ended September 30, 2020 due to closures or reduced store hours.

The Company has experienced both positive and negative consumer behavior which may or may not continue.

During the years ended September 30, 2020 and 2021, and as of the date of this report, we have been and continue to be classified as an essential business in the jurisdictions that have mandated closures of non-essential businesses, and therefore have been allowed to remain open and continue to operate to the extent possible under existing regulations with any limitation in production output being short-term in nature.

Despite the supply implications in the prior year, the Company has experienced continued customer demand.

While demand for our products generally has not been negatively impacted, our teams continue to monitor demand disruption and there can be no assurance as to the level of demand that will prevail following the year ended September 30, 2021.

A large portion of our customers continue to operate and sell our products, with some customers having experienced reduced operations due to closures or reduced store hours.

There have also been changes in consumer needs and spending during the COVID-19 pandemic, which have resulted in a limited number of change orders and reduced spending.

Currently, we have not identified, and will continue to monitor for, any substantive risk attributable to customer credit and have not experienced a significant impact from permanent store closures or retail bankruptcies.

We believe the severity and duration of the COVID-19 pandemic to be uncertain and we expect it to continue to contribute to retail volatility and consumer purchase behavior changes.

Currently, we have not identified, and will continue to monitor for, any substantive risk attributable to customer credit and have not experienced a significant impact from store closures or retail bankruptcies.

We believe the severity and duration of the COVID-19 pandemic to be uncertain and may contribute to retail volatility and consumer purchase behavior changes.

The magnitude of the financial impact on our results is highly dependent on the duration of the COVID-19 pandemic and how quickly the U.S.

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The sweeping nature of COVID-19 pandemic makes it extremely difficult to predict the long-term ramifications on our financial condition and results of operations.

However, the likely overall economic impact of the COVID-19 pandemic is viewed as highly negative to the U.S.

and global economies.

During the year ended September 30, 2020, we have implemented mitigating efforts to manage non-critical capital spending, assess operating spend, preserve cash and liquidity.

However, the likely overall economic impact of the COVID-19 pandemic to the U.S.

and global economies remains uncertain.

We continue to generate operating cash flows to meet our short-term liquidity needs, and we expect to maintain access to the capital markets, although there can be no assurance of our ability to do so.

We have also not observed any material impairments of our assets due to the COVID-19 pandemic.

We expect the ultimate significance of the impact on our financial condition, results of operations, and cash flows will be dictated by the length of time that such circumstances continue, which will ultimately depend on the unforeseeable duration and severity of the COVID-19 pandemic, any governmental and public actions taken in response and any related economic disruption.

On March 10, 2020, the Company aquired Omega Sea, LLC ("Omega"), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consisting of the Omega brand, for a purchase price of approximately $16.9 million.

The results of Omega's operations since March 10, 2020 are included in the Company's Consolidated Statements of Income and reported within the GPC reporting segment for the year ended September 30, 2020.

See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for more information.

• Coevorden Operations - On March 29, 2020, the Company completed the sale of its DCF production facility and distribution center in Coevorden, Netherlands for cash proceeds of $29.0 million subject to working capital and other typical closing adjustments, resulting in a loss on assets held for sale of $26.8 million during the year ended September 30, 2020.

We expect the ultimate significance of the impact on our financial condition, results of operations, and cash flows will be dictated by the length of time that such circumstances continue, which will ultimately depend on the unforeseeable duration and severity of the COVID-19 pandemic and any governmental and public actions taken in response.

The Company periodically evaluates strategic transactions that may result in the acquisition of a business or assets that qualify as recognition of a business combination.

Acquisitions may impact the comparability of the consolidated or segment financial information with the inclusion of operating results for the acquired business in periods subsequent to acquisition date, the inclusion of acquired assets, both tangible and intangible (including goodwill), and the related amortization or depreciation of acquired assets.

Moreover, the comparability of consolidated or segment financial information may be impacted by incremental costs to facilitate the transaction and supporting integration activities of the acquired operations with the consolidated group.

During the year ended September 30, 2021, the Company entered into the following acquisition activity:

• On May 28, 2021, the Company acquired all ownership interests in FLP for a purchase price of $301.5 million.

FLP is a leading manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand.

The net assets and operating results of FLP are included in the Company’s Consolidated Statements of Income and reported within the H&G reporting segment for the year ended September 30, 2021, effective the acquisition date of May 28, 2021.

• On October 26, 2020, the Company completed the acquisition of Armitage for $187.7 million.

Armitage is a premium pet treats and toys business in Nottingham, United Kingdom including a portfolio of brands that include Armitage's dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the United Kingdom.

The net assets and results of operations of Armitage are included in the Company’s Consolidated Statements of Income and reported within the GPC reporting segment for the year ended September 30, 2021, effective the acquisition date of October 26, 2020.

During the year ended September 30, 2020, the Company entered into the following acquisition activity:

• On March 10, 2020, the Company acquired Omega Sea, LLC ("Omega"), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consisting of the Omega brand, for a purchase price of approximately $16.9 million.

The net assets and results of operations of Omega are included in the Company's Consolidated Statements of Income and reported within GPC reporting segment for the years ended September 30, 2020 and September 30, 2021, effective the acquisition date of March 10, 2020.

There was no acquisition activity during the year ended September 30, 2019.

See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining to the referenced acquisition activity.

The Company periodically evaluates strategic transactions that may result in the divestiture of a business or assets that may impact the comparability of consolidated or segment financial information.

Certain divestitures may be classified separately from continuing operations if they are considered a strategic shift to the consolidated group, which results in the operating results and any realized gain or loss from the divestiture to be presented as a component of income from discontinued operations for all comparable periods in the Consolidated Financial Statements.

Divestitures that do not qualify as discontinued operations result in he gain or loss from the divestiture being recognized as part of continuing operations.

Further, the comparability of consolidated or segment financial information may be impacted by incremental costs to facilitate the transaction and related separation activities of the divested business, including any subsequent restructuring of the consolidated group.

During the year ended September 30, 2021, the Company entered into the following divestiture activity:

• On September 8, 2021, the Company entered into the Purchase Agreement with ASSA to sell its HHI segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments.

The consummation of the transaction is subject to customary conditions, including the absence of a material adverse effect of HHI and certain antitrust conditions or other governmental restrictions, amongst others, and is anticipated to be consummated during the year ended September 30, 2022.

The Company's assets and liabilities associated with HHI have been classified as held for sale and the HHI operations have been classified as discontinued operations and are reported separately for all periods presented.

During the year ended September 30, 2020, the Company entered into the following divestiture activity:

• On March 29, 2020, the Company completed the sale of its DCF production facility and distribution center in Coevorden, Netherlands with United Petfood Producers NV ("UPP") for cash proceeds of $29.0 million, resulting in a loss on assets held for sale of $26.8 million during the year ended September 30, 2020.

The loss was recognized as a component of continuing operations and operating income within the Company's GPC segment.

• Global Batteries & Lighting (“GBL”) – On January 2, 2019, the Company completed the sale of its GBL business pursuant to the GBL acquisition agreement with Energizer for cash proceeds of $1,956.2 million, resulting in the recognition of a pre-tax gain on sale of $989.8 million, including the estimated settlement of customary purchase price adjustments for working capital and assumed indebtedness, recognition of tax and legal indemnifications under the acquisition agreement and an estimated contingent purchase price adjustment for the settlement with the planned divestiture of the Varta® consumer batteries business by Energizer of $200.0 million in accordance with the GBL acquisition agreement.

The results of operations and gain on sale for disposal of the GBL business are recognized as a component of discontinued operations.

• Global Auto Care (“GAC”) – On January 28, 2019, the Company completed the sale of its GAC business pursuant to the GAC acquisition agreement with Energizer for $1.2 billion, consisting of $938.7 million in cash proceeds and $242.1 million in stock consideration of common stock of Energizer, resulting in the write-down of net assets held for sale of $111.0 million, including the estimated settlement of customary purchase price adjustments for working capital and assumed indebtedness, recognition of tax and legal indemnifications in accordance with the GAC acquisition agreement.

Unrealized gains and losses realized for changes in the fair value of the Company’s common stock investment in Energizer are recognized as Other Non-Operating Expense (Income), net on the Company’s Consolidated Statement of Income.

The results of operations and write-down of net assets held for sale for the disposal of the GAC business are recognized as a component of discontinued operations.

• Home and Personal Care (“HPC”) – During the year ended September 30, 2018, the Company initiated a plan to sell its GBA segment, consisting of its GBL business and HPC business, and classified the GBA operations as held for sale and discontinued operations.

During the first quarter ended December 30, 2018, the Company changed its plans to sell its HPC business and classified the net assets of HPC as held for use and the HPC operations have been classified as continuing operations for all periods presented.

During the period in which the HPC business was held for sale, the Company incurred divestiture related expenses to market and sell the business that were previously recognized as a component of discontinued operations and ceased the recognition of depreciation and amortization on long-lived assets of the HPC disposal group, impacting the comparability of financial results when classified as continuing operations, resulting in the recognition of $29.0 million in incremental depreciation and amortization charges during the year ended September 30, 2019.

See Note 3 – Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining to the divestitures.

The Company continues to operate its commercial DCF business following the divestiture and is supplied by UPP through a manufacturing agreement and distribution agreement.

Additionally, the Company recognized an impairment on intangible assets of $7.6 million due to the incremental cash flow risk associated with the commercial DCF business following the divestiture.

During the year ended September 30, 2019, the Company entered into the following divestiture activity:

• On January 2, 2019, the Company completed the sale of its GBL business pursuant to the GBL acquisition agreement with Energizer for cash proceeds of $1,956.2 million, resulting in the recognition of a pre-tax gain on sale of $989.8 million during the year ended September 30, 2019.

The results of operations and gain on sale for disposal of the GBL business are recognized as a component of income from discontinued operations for all comparable periods.

Prior to the completion of the GBL divestiture, the Company changed its plan to sell its GBA segment, consisting of both the GBL and HPC businesses, and recognized the net assets of HPC as held for use and included component of continuing operations as a separate reporting segment for all comparable periods.

As a result, the Company recognized $29.0 million of incremental depreciation and amortization for cumulative depreciation and amortization on HPC long-lived assets not previously recognized while held for sale.

• On January 28, 2019, the Company completed the sale of its GAC business pursuant to the GAC acquisition agreement with Energizer for $1.2 billion, consisting of $938.7 million in cash proceeds and $242.1 million in stock consideration of common stock of Energizer, resulting in the loss on sale of business of $111.0 million.

The results of operations and write-down of net assets held for sale for the disposal of the GAC business were recognized as a component of discontinued operations.

Realized and unrealized gains and losses on the common stock investment in Energizer was recognized as Other Non-Operating Expense (Income), net on the Company’s Consolidated Statement of Income.

See Note 3 – Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining to the referenced divestiture activity.

Restructuring Activity

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We have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the consolidated financial statements.

The most significant of these initiatives is the Global Productivity Improvement Program, which began during the year ended September 30, 2019.

The most significant of these initiatives is the Global Productivity Improvement Program, which began during the year ended September 30, 2019 and is anticipated to continue through the fiscal year ending September 30, 2022.

See Note 5 - Restructuring and Related Charges in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining to restructuring and related activity.

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The following recent financing activity has a significant impact on the comparability of financial results on the consolidated financial statements.

• During the year ended September 30, 2021, the Company completed its offering of $500.0 million aggregate principal amount of its 3.875% Notes and entered into a new Term Loan Facility in the aggregate principal amount of $400.0 million on March 3, 2021.

The Company also redeemed $250.0 million of the 6.125% Notes and $550.0 million of the 5.75% Notes, with a call premium of $23.4 million and non-cash write-off of unamortized debt issuance costs of $7.9 million recognized as interest expense.

• During the year ended September 30, 2020, the Company (1) entered into the Amended and Restated Credit Agreement (the "Credit Agreement"), which refinanced the Company's previously existing credit facility, extending the maturity, reducing the revolving facility under the Credit Agreement from $890 million to $600 million, and changing interest rate margins;

(2) issued $300 million of its 5.50% Senior Unsecured Notes;

and (3) completed the tender and call of its 6.625% Notes with an outstanding principal of $117.4 million initiated at the end of the year ended September 30, 2019.

• During the year ended September 30, 2019, the Company (1) repaid $452.6 million of its 6.625% Notes with an outstanding principal of $570.0 million, consisting of a repayment of $285.0 million on March 31, 2019 plus a repayment of $167.6 million on September 24, 2019 using proceeds from the GAC divestitures;

and (3) completed the tender and call of its 6.625% Notes with an outstanding principal of $117.4 million initiated in the previous year, with a premium of $1.5 million and non-cash write-off of unamortized debt issue costs of $1.1 million recognized as interest expense.

(2) issued $300.0 million of 5.00% Senior Unsecured Notes due September 2029;

(3) repaid its 7.75% Senior Unsecured Notes in full on January 30, 2019 using proceeds received from the GBL and GAC divestitures;

(4) repaid its USD Term Loan in full on January 4, 2019 using proceeds received from the divestiture of GBL;

(3) repaid $890.0 million of its 7.75% Senior Unsecured Notes in full on January 30, 2019 using proceeds received from the GBL and GAC divestitures with a premium of $17.2 million and non-cash write-off of unamortized debt issue costs and discounts of $24.0 million recognized as interest expense;

(4) repaid its USD Term Loan in full on January 4, 2019 using proceeds received from the divestiture of GBL with a non-cash write-off of unamortized debt issue costs of $6.6 million recognized as interest expense;

and (5) repaid its CAD Term Loan in full on October 31, 2018.

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See Note 12 - Debt in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for more information.

Adoption of New Lease Accounting Standard

On October 1, 2019, the Company adopted ASU No.

2016-02, Leases (Topic 842) , and all the related amendments using the modified retrospective transition method, which resulted in the recognition of additional right-of-use (“ROU”) lease assets of $107.5 million and additional lease liabilities of $113.0 million, with no material cumulative effect adjustment to equity as of the date of adoption.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

See Note 2 – Significant Accounting Policies and Practices and Note 13 – Leases in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for more information.

Subsequent Event

On October 26, 2020, the Company acquired Armitage Pet Care Ltd ("Armitage") for approximately $187 million.

Located in Nottingham, United Kingdom, Armitage is a premium provider of pet treats and toys including a portfolio of brands that includes dog treats brand, Good Boy®, and cat treats brand, Meowee!®, among others, that are predominantly sold within the United Kingdom.

The net assets and operating results of Armitage will be included in the financial statements subsequent to the balance sheet date of September 30, 2020 and included within the GPC reporting segment for all subsequent periods.

Non-GAAP Measurements

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Effect of Acquisitions

$ 1,342.1 $ 0.4 $ 1,342.5 $ — $ 1,342.5 $ 1,355.7 $ (13.2) (1.0 %)

1,107.6 18.9 1,126.5 — 1,126.5 1,068.1 58.4 5.5 %

962.6 1.1 963.7 (7.5) 956.2 870.2 86.0 9.9 %

551.9 0.1 552.0 — 552.0 508.1 43.9 8.6 %

$ 3,964.2 $ 20.5 $ 3,984.7 $ (7.5) $ 3,977.2 $ 3,802.1 175.1 4.6 %

HPC $ 1,260.1 $ (31.1) $ 1,229.0 $ — $ 1,229.0 $ 1,107.6 $ 121.4 11.0 %

GPC 1,129.9 (18.4) 1,111.5 (99.5) 1,012.0 962.6 49.4 5.1 %

H&G 608.1 — 608.1 (23.2) 584.9 551.9 33.0 6.0 %

Total $ 2,998.1 $ (49.5) $ 2,948.6 $ (122.7) $ 2,825.9 $ 2,622.1 $ 203.8 7.8 %

The following is a reconciliation of net sales to organic net sales of SBH and SB/RH for the year ended September 30, 2020 compared to net sales for the year ended September 30, 2019:

September 30, 2020 Net Sales September 30, 2019 Variance

(in millions, except %) Net Sales

Effect of Changes in Currency

Net Sales Excluding Effect of Changes in Currency

Effect of Acquisitions

HPC $ 1,107.6 $ 18.9 $ 1,126.5 $ — $ 1,126.5 $ 1,068.1 $ 58.4 5.5 %

GPC 962.6 1.1 963.7 (7.5) 956.2 870.2 86.0 9.9 %

H&G 551.9 0.1 552.0 — 552.0 508.1 43.9 8.6 %

Total $ 2,622.1 $ 20.1 $ 2,642.2 $ (7.5) $ 2,634.7 $ 2,446.4 $ 188.3 7.7 %

Adjusted EBITDA.

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Adjusted EBITDA further excludes:

• Stock based and other incentive compensation costs that consist of costs associated with long-term compensation arrangements and other equity based compensation based upon achievement of long-term performance metrics;

and generally consist of non-cash, stock-based compensation.

During the years ended September 30, 2021, 2020, and 2019, other incentive compensation also includes incentive bridge awards issued due to changes in the Company's LTIP that allowed for cash based payment upon employee election but does not qualify for share-based compensation.

All bridge awards fully vested in November 2020.

See Note 19 - Share Based Compensation in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

Additionally, the Company issued certain incentive bridge awards due to changes in the Company’s long-term compensation plans that allow for cash based payment upon employee election which have been included in the adjustment but do not qualify for shared-based compensation.;

• Restructuring and related charges, which consist of project costs associated with the restructuring initiatives across the Company's segments.

See Note 5 - Restructuring and Related Charges in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Transaction related charges that consist of (1) transaction costs from qualifying acquisition transactions during the period, or subsequent integration related project costs directly associated with an acquired business;

and (2) divestiture related transaction costs that are recognized in continuing operations and post-divestiture separation costs consisting of incremental costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred as part of the divestitures and exiting of transition service arrangements (TSAs) and reverse TSAs.

• Transaction related charges that consist of (1) transaction costs from acquisitions or subsequent project costs directly associated with integration of an acquired business with the consolidated group;

and (2) transaction costs from divestitures and subsequent project costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred, and exiting of transition service arrangements (TSAs) and reverse TSAs.

See Note 2 – Significant Accounting Policies and Practices in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Gains and losses attributable to the Company’s investment in Energizer common stock, acquired as part of consideration received from the Company’s sale and divestiture of GAC during the year ended September 30, 2019.

See Note 3 – Divestitures and Note 7 – Fair Value of Financial Instruments in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations (when applicable);

• Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations after an acquisition (when applicable);

• Foreign currency gains and losses attributable to multicurrency loans for the years ended September 30, 2020 and 2019, that were entered into with foreign subsidiaries in exchange for the receipt of divestiture proceeds by the parent company and the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures.

The Company has entered into various hedging arrangements to mitigate the volatility of foreign exchange risk associated with such loans;

• Incremental reserves associated with environmental remediation activity of legacy properties and former manufacturing sites assumed by the organization which had previously been exited by the Company, plus legal settlement costs associated with retained litigation from the Company's divested GAC operations realized during the year ended September 30, 2019.

See Note 20 – Commitments and Contingencies in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion;

• Legal and litigation costs associated with Salus during the years ended September 30, 2020 and 2019 as it is not considered a component of the continuing commercial products company, but continues to be consolidated by the Company after completion of the Spectrum Merger until the Salus operations can be wholly dissolved and/or deconsolidated;

• Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions supporting the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.

Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, TSAs, elimination of extraneous costs or re-allocation or absorption by existing continuing operations following the completed sale of the discontinued operations.

See Note 3 - Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details;

• Gains and losses attributable to the Company’s investment in Energizer common stock.

During the year ended September 30, 2021, the Company sold its remaining shares in Energizer common stock.

See Note 7 – Fair Value of Financial Instruments in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations;

• Non-cash purchase accounting inventory adjustments recognized in earnings from continuing operations after an acquisition;

• Incremental reserves for non-recurring litigation or environmental remediation activity including (1) proposed settlement on outstanding litigation matters at our H&G division attributable to significant and unusual nonrecurring claims with no previous history or precedent recognized during the year ended September 30, 2021, (2) environmental remediation reserves realized during the year ended September 30, 2019 on legacy properties and former manufacturing sites assumed by the organization which had previously been exited by the Company, and (3) legal settlement costs associated with retained litigation from the Company's divested GAC operations realized during the year ended September 30, 2019.

See Note 21 – Commitments and Contingencies in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail;

• Incremental costs realized under a three-year tolling agreement entered into with the buyer in consideration with the divestiture of the Coevorden Operations on March 29, 2020, for the continued production of dog and cat food products purchased to support GPC commercial operations and distribution in Europe.

See Note 3 - Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further detail;

• Gain on extinguishment of the Salus CLO debt due to the discharge of the obligation during the year ended September 30, 2020.

See Note 12 - Debt in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Other adjustments primarily consisting of costs attributable to (1) expenses and cost recovery for flood damage at the Company's facilities in Middleton, Wisconsin recognized during the years ended September 30, 2020 and 2019;

• Foreign currency gains and losses attributable to multicurrency loans for the year ended September 30, 2020 and 2019, that were entered into with foreign subsidiaries in exchange for the receipt of divestiture proceeds by the parent company and the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures;

• Other adjustments primarily consisting of costs attributable to (1) incremental fines and penalties realized for delayed shipments following the transition of a third-party logistics service provider in GPC during the year ended September 30, 2021;

(2) costs associated with Salus operations during the years ended September 30, 2021, 2020 and 2019 as they are not considered a component of continuing commercial products company;

(3) expenses and cost recovery for flood damage at the Company's facilities in Middleton, Wisconsin recognized during the years ended September 30, 2020 and 2019;

(4) incremental costs for separation of a key executives during the years ended September 30, 2020 and 2019;

(3) incremental costs associated with a safety recall in GPC during the year ended September 30, 2019;

(5) costs associated with a safety recall in GPC during the year ended September 30, 2019;

(6) operating margin on H&G sales to GAC discontinued operations during the year ended September 30, 2019;

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SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HHI HPC GPC H&G Corporate Consolidated

(in millions) HPC GPC H&G Corporate Consolidated

Year Ended September 30, 2021

Net income from continuing operations $ 46.1 $ 127.7 $ 83.7 $ (242.2) $ 15.3

Income tax benefit — — — (26.4) (26.4)

Interest expense — — — 116.5 116.5

Depreciation and amortization 44.0 39.3 19.2 14.5 117.0

EBITDA 90.1 167.0 102.9 (137.6) 222.4

Share and incentive based compensation — — — 29.4 29.4

Restructuring and related charges 9.1 15.2 0.4 15.6 40.3

Transaction related charges 3.4 16.5 10.8 25.6 56.3

Unallocated shared costs — — — 26.9 26.9

Gain on Energizer investment — — — (6.9) (6.9)

Inventory acquisition step-up — 3.4 3.9 — 7.3

Legal and environmental remediation reserves — — 6.0 — 6.0

Coevorden tolling related charges — 6.2 — — 6.2

Other — 3.8 — 0.1 3.9

Adjusted EBITDA $ 102.6 $ 212.1 $ 124.0 $ (46.9) $ 391.8

Net Sales $ 1,260.1 $ 1,129.9 $ 608.1 $ — $ 2,998.1

Adjusted EBITDA Margin 8.1 % 18.8 % 20.4 % — 13.1 %

Year Ended September 30, 2020

Net income (loss) from continuing operations $ 42.9 $ 44.9 $ 91.2 $ (231.4) $ (52.4)

Income tax expense — — — 27.3 27.3

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Transaction related charges 8.8 10.8 — 3.5 23.1

Unallocated shared costs — — — 17.4 17.4

Loss on Energizer investment — — — 16.8 16.8

Loss on assets held for sale — — 26.8 — — 26.8

Loss on sale of Coevorden operations — 26.8 — — 26.8

Write-off from impairment of intangible assets — 24.2 — — 24.2

Foreign currency loss on multicurrency divestiture loans 0.6 — — 3.2 3.8

Salus — — — — 0.6 0.6

Salus CLO debt extinguishment — — — (76.2) (76.2)

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Year Ended September 30, 2019

Net income (loss) from continuing operations $ 214.6 $ (127.8) $ 63.4 $ 84.9 $ (421.8) $ (186.7)

Net (loss) income from continuing operations $ (127.8) $ 63.4 $ 84.9 $ (322.7) $ (302.2)

Income tax benefit — — — (52.0) (52.0)

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Transaction related charges 7.4 2.5 — 11.0 20.9

Unallocated shared cost — — — 15.7 15.7

Loss on Energizer investment — — — 12.1 12.1

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Write-off from impairment of intangible assets 18.8 16.6 — — 35.4

Foreign currency loss on multicurrency divestiture loans — — — — 36.2 36.2

Legal and environmental remediation reserves — — — 10.0 10.0

GPC safety recall — — 0.7 — — 0.7

Salus — — — — 1.6 1.6

Foreign currency loss on multicurrency divestiture loans — — — 36.2 36.2

Other 0.1 3.7 (0.5) 3.6 6.9

3 unchanged sentences

The following is a reconciliation of net income to Adjusted EBITDA for the years ended September 30, 2021, 2020 and 2019 for SB/RH:

SB/RH HOLDINGS, LLC (in millions) HHI HPC GPC H&G Corporate Consolidated

SB/RH HOLDINGS, LLC (in millions) HPC GPC H&G Corporate Consolidated

Year Ended September 30, 2021

Net income from continuing operations $ 46.1 $ 127.7 $ 83.7 $ (240.2) $ 17.3

Income tax benefit — — — (25.0) (25.0)

Interest expense — — — 116.8 116.8

Depreciation and amortization 44.0 39.3 19.2 14.5 117.0

EBITDA 90.1 167.0 102.9 (133.9) 226.1

Share and incentive based compensation — — — 27.7 27.7

Restructuring and related charges 9.1 15.2 0.4 15.6 40.3

Transaction related charges 3.4 16.5 10.8 25.6 56.3

Unallocated shared costs — — — 26.9 26.9

Gain on Energizer investment — — — (6.9) (6.9)

Inventory acquisition step-up — 3.4 3.9 — 7.3

Legal and environmental remediation reserves — — 6.0 — 6.0

Coevorden tolling related charges — 6.2 — — 6.2

Other — 3.8 — 0.1 3.9

Adjusted EBITDA $ 102.6 $ 212.1 $ 124.0 $ (44.9) $ 393.8

Net Sales $ 1,260.1 $ 1,129.9 $ 608.1 $ — $ 2,998.1

Adjusted EBITDA Margin 8.1 % 18.8 % 20.4 % — 13.1 %

Year Ended September 30, 2020

Net income (loss) from continuing operations $ 42.9 $ 44.9 $ 91.2 $ (287.4) $ (108.4)

Income tax expense — — — 14.5 14.5

5 unchanged sentences

Transaction related charges 8.8 10.8 — 3.5 23.1

Unallocated shared costs — — — 17.4 17.4

Loss on Energizer investment — — — 16.8 16.8

Loss on assets held for sale — — 26.8 — — 26.8

Loss on sale of Coevorden operations — 26.8 — — 26.8

Write-off from impairment of intangible assets — 24.2 — — 24.2

Foreign currency translation on multicurrency divestiture loans — 0.6 — — 3.2 3.8

Foreign currency loss on multicurrency divestiture loans 0.6 — — 3.2 3.8

Other 0.1 0.1 — (3.9) (3.7)

3 unchanged sentences

Year Ended September 30, 2019

Net income (loss) from continuing operations $ 214.6 $ (127.8) $ 63.4 $ 84.9 $ (375.0) $ (139.9)

Income tax expense — — — — 10.7 10.7

Net (loss) income from continuing operations $ (127.8) $ 63.4 $ 84.9 $ (281.8) $ (261.3)

Income tax benefit — — — (36.1) (36.1)

Interest expense — — — 106.1 106.1

4 unchanged sentences

Transaction related charges 7.4 2.5 — 11.0 20.9

Unallocated shared cost — — — 15.7 15.7

Loss on Energizer investment — — — 12.1 12.1

1 unchanged sentence

Write-off from impairment of intangible assets 18.8 16.6 — — 35.4

Foreign currency loss on multicurrency divestiture loans — — — — 36.2 36.2

Legal and environmental remediation reserves — — — 10.0 10.0

GPC safety recall — — 0.7 — — 0.7

Foreign currency loss on multicurrency divestiture loans — — — 36.2 36.2

Other 0.1 3.7 (0.5) 0.8 4.1

4 unchanged sentences

The following section provides an analysis of our operations for the years ended September 30, 2021, 2020 and 2019.

The following is summarized consolidated results of operations for SBH for the years ended September 30, 2021, 2020 and 2019, respectively:

Year Ended September 30,

(in millions, except %)

2021 2020 Variance

$ 3,964.2 $ 3,802.1 $ 162.1 4.3 %

1,369.9 1,306.9 63.0 4.8 %

2020 2019 Variance

Net sales $ 2,998.1 $ 2,622.1 $ 376.0 14.3 % $ 2,622.1 $ 2,446.4 $ 175.7 7.2 %

Gross profit 1,034.6 878.1 156.5 17.8 % 878.1 819.6 58.5 7.1 %

Gross profit margin 34.5 % 33.5 % 100 bps 33.5 % 33.5 % — bps

Operating expenses 937.5 869.5 68.0 7.8 % 869.5 972.0 (102.5) (10.5) %

1,126.5 1,234.7 (108.2) (8.8 %)

Interest expense 116.5 93.7 22.8 24.3 % 93.7 158.4 (64.7) (40.8) %

144.5 222.1 (77.6) (34.9 %)

Other non-operating expense, net 19.7 43.9 (24.2) (55.1 %)

Income tax expense (benefit) 70.9 (7.1) 78.0 (1,098.6 %)

Net income (loss) from continuing operations 84.5 (186.7) 271.2 (145.3 %)

Other non-operating (income) expense, net (8.3) 16.2 (24.5) n/m 16.2 43.4 (27.2) (62.7) %

Income tax (benefit) expense (26.4) 27.3 (53.7) n/m 27.3 (52.0) 79.3 n/m

Net income (loss) from continuing operations 15.3 (52.4) 67.7 n/m (52.4) (302.2) 249.8 n/m

Income from discontinued operations, net of tax 174.3 150.9 23.4 15.5 % 150.9 798.0 (647.1) (81.1) %

Net income 189.6 98.5 91.1 92.5 % 98.5 495.8 (397.3) (80.1) %

Net sales for the year ended September 30, 2020 increased $162.1 million, or 4.3%, with an increase in organic sales of $175.1 million, or 4.6%.

The following sets forth net sales by segment for the years ended September 30, 2020 and 2019:

Year Ended September 30,

n/m = not meaningful

The following is a summary of net sales by segment for the years ended September 30, 2021, 2020 and 2019 and the principal components of changes in net sales for the respective periods.

(in millions, except %)

2021 2020 Variance

$ 1,342.1 $ 1,355.7 $ (13.6) (1.0 %)

2020 2019 Variance

$ 1,260.1 $ 1,107.6 $ 152.5 13.8 % $ 1,107.6 $ 1,068.1 $ 39.5 3.7 %

2 unchanged sentences

$ 2,998.1 $ 2,622.1 376.0 14.3 % $ 2,622.1 $ 2,446.4 175.7 7.2 %

The following sets forth the principal components of the change in net sales from the year ended September 30, 2020 to the year ended September 30, 2019:

(in millions)

Net Sales for the year ended September 30, 2019 $ 3,802.1

Net Sales for the year ended September 30, 2020 and 2019, respectively $ 2,622.1 $ 2,446.4

Increase due to acquisition

Increase in GPC 86.0

Increase in HPC 121.4 58.4

Increase in GPC 49.4 86.0

Increase in H&G 33.0 43.9

Decrease in HHI (13.2)

Foreign currency impact, net 49.5 (20.1)

Net Sales for the year ended September 30, 2020 $ 3,964.2

Net Sales for the year ended September 30, 2021 and 2020, respectively $ 2,998.1 $ 2,622.1

Gross Profit.

Gross profit for the year ended September 30, 2020 increased $63.0 million with an increase in gross profit margin from 34.4% to 34.6% primarily due to increased sales volume with incremental product and input costs including tariffs, offset by productivity, favorable product mix and pricing adjustments.

Gross profit for the year ended September 30, 2021 increased primarily due to higher sales volume with increased productivity, favorable mix with incremental product and input costs partially offset by pricing adjustments.

Gross profit for the year ended September 30, 2020 increased with no change in margin, primarily due to increased sales volume with incremental product and input costs including tariffs, offset by productivity, favorable product mix and pricing adjustments.

Operating Expenses.

Operating expenses for the year ended September 30, 2020 decreased $108.2 million, or 8.8%, due to the impairment of HPC goodwill of $116.0 million and impairment of intangible assets of $35.4 million in the prior year with offsets by the recognition of loss on assets held for sale of $26.8 million and impairment of intangible assets of $24.2 million associated with the Coevorden Operations divestiture.

Additionally, the Company recognized a decrease in restructuring and related charges of $4.6 million and a decrease in selling and general and administrative expenses of $2.8 million primarily from higher depreciation and amortization in the prior year associated with HPC business being de-recognized from held for sale offest by increased marketing and advertising spend.

Operating expenses for the year ended September 30, 2021 increased due to higher selling expenses of $78.3 million attributable to higher freight and distribution costs and higher marketing and advertising spend, increased general and administrative costs of $26.3 million and increased transaction related charges of $33.2 million due to strategic acquisition and divestiture activities;

offset by a decrease in restructuring costs of $19.4 million with loss from sale of Coevorden facility of $26.8 million and impairment of related intangible assets of $24.2 million in the prior year.

Operating expenses for the year ended September 30, 2020 decreased due to the impairment of HPC goodwill of $116.0 million and impairment of intangible assets of $35.4 million in the previous year with offsets by the recognition of loss from sale of Coevorden facility of $26.8 million and impairment of related intangible assets $24.2 million.

See Note 2 - Significant Accounting Policies and Practices and Note 5 - Restructuring and Related Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail on transaction and restructuring related charges.

Interest Expense.

Interest expense for the year ended September 30, 2020 decreased $77.6 million, or 34.9%, due to lower borrowings and average interest rates during the period attributable to refinancing activities.

Interest expense for the year ended September 30, 2021 increased due to one-time refinancing charges offset by lower average borrowing rates.

Interest expense for the year ended September 30, 2020 decreased due to lower borrowings and average interest rates during the period.

See Note 12 - Debt in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Other Non-Operating Expense, Net.

Other non-operating expense for the year ended September 30, 2020 decreased $24.2 million primarily due to foreign currency losses in the prior year related to multicurrency loans with foreign subsidiaries associated with the GBL and GAC divestitures.

Other non-operating expense, net for the year ended September 30, 2021 decreased due to realized gains on the investment in Energizer common stock which was fully liquidated in January 2021.

Other non-operating expense, net for the year ended September 30, 2020 decreased primarily due to foreign currency losses in the previous year related to multicurrency loans with foreign subsidiaries associated with the GBL and GAC divestitures and realized and unrealized losses on the investment in Energizer common stock.

See Note 7 - Fair Value of Financial Instruments in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

Income Taxes.

The effective tax rate was 45.6% for the year ended September 30, 2020 compared to 3.7% for the year ended September 30, 2019.

Our effective tax rate for the year ended September 30, 2020 was significantly impacted by income earned outside the U.S.

The effective tax rate was 237.8% for the year ended September 30, 2021 compared to 108.8% for the year ended September 30, 2020 and 14.7% for the year ended September 30, 2019.

Pretax income from continuing operations in the year ended September 30, 2021 was close to breakeven and therefore many items have a sizeable impact on the effective tax rate.

Our annual effective tax rate is significantly impacted by income earned outside the U.S.

that is subject to U.S.

tax including the U.S.

tax on global intangible low taxed income, losses that more likely than not will not result in tax benefits, certain nondeductible expenses, an increase to state deferred tax rates, and foreign rates that differ from the U.S.

tax on global intangible low taxed income, certain nondeductible expenses, state income taxes, and foreign rates that differ from the U.S.

federal statutory rate.

The year ended September 30, 2021 tax expense was significantly impacted by valuation allowance release, tax expense due to an increase to the United Kingdom's future tax rate, and tax benefits from retroactive law changes for global intangible low taxed income.

See Note 16 – Income Taxes in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.

Income From Discontinued Operations.

During the year ended September 30, 2020, the Company recognized a $10.5 million tax benefit to discontinued operations from the return to provision adjustments related to the divestitures of GBL, primarily from changes to US GILTI on the non-US portions of the sold business, in addition to other adjustments to tax indemnifications following the GBL and GAC divestitures.

Discontinued operations includes the results of operations, financial position and cash flows for the GBL and GAC divisions sold during the year ended September 30, 2019, effective January 2, 2019 and January 28, 2019, respectively, plus the operations, financial position and cash flows for HHI for all comparable periods, with the HHI disposal group being held for sale as of September 30, 2021.

Income from discontinued operations, net of tax increased during the year ended September 30, 2021 due to increased income from operations of HHI driven by strong consumer demand and new product innovation driving sales growth across retail, e-commerce and new build channels coupled with fulfillment of prior year retail inventory rebuild when the prior year was impacted by COVID-19 supply related disruptions;

partially offset by higher freight and input cost inflation and higher marketing investments.

Income from discontinued operations, net of tax, decreased during the year ended September 30, 2020 due to the net gain realized from the disposition of the GBL and GAC divestitures during the year ended September 30, 2019, offset by the decrease in income from operations of HHI.

Decrease in HHI operations was attributable to lower sales volumes driven by COVID-19 supply constraints coupled with higher input costs and tariffs, offset by improved productivity, pricing and mix, retrospective tariff exclusions and reduced restructuring spend;

and lower allocation of interest costs from corporate debt allocated to discontinued operations attributable to the paydown of debt following the disposition of the GBL and GAC divestitures.

See Note 3 – Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for more information on the divestitures and the assets and liabilities classified as held for sale.

3 unchanged sentences

The following is summarized consolidated results of operations for SB/RH for the years ended September 30, 2021, 2020 and 2019:

Year Ended September 30,

(in millions, except %)

2021 2020 Variance

$ 3,964.2 $ 3,802.1 $ 162.1 4.3 %

1,369.9 1,306.9 63.0 4.8 %

2020 2019 Variance

Net sales $ 2,998.1 $ 2,622.1 $ 376.0 14.3 % $ 2,622.1 $ 2,446.4 $ 175.7 7.2 %

Gross profit 1,034.6 878.1 156.5 17.8 % 878.1 819.6 58.5 7.1 %

Gross profit margin 34.5 % 33.5 % 100 bps 33.5 % 33.5 % — bps

Operating expenses 933.8 862.5 71.3 8.3 % 862.5 967.3 (104.8) (10.8 %)

1,119.6 1,229.9 (110.3) (9.0 %)

Interest expense 116.8 93.2 23.6 25.3 % 93.2 106.1 (12.9) (12.2 %)

144.0 162.0 (18.0) (11.1 %)

Other non-operating expense, net 19.7 44.2 (24.5) (55.4 %)

Income tax expense 58.1 10.7 47.4 443.0 %

Net income (loss) from continuing operations 28.5 (139.9) 168.4 (120.4 %)

Other non-operating (income) expense, net (8.3) 16.3 (24.6) n/m 16.3 43.6 (27.3) (62.6 %)

Income tax (benefit) expense (25.0) 14.5 (39.5) n/m 14.5 (36.1) 50.6 n/m

Net income (loss) from continuing operations 17.3 (108.4) 125.7 n/m (108.4) (261.3) 152.9 (58.5 %)

Income from discontinued operations, net of tax 174.3 150.9 23.4 15.5 % 150.9 803.9 (653.0) (81.2 %)

Net income 191.6 42.5 149.1 350.8 % 42.5 542.6 (500.1) (92.2 %)

For the year ended September 30, 2020, the change in net sales, gross profit, operating expenses and other non-operating expenses are primarily attributable to changes in SBH previously discussed.

The change interest expense are primarily attributable to the changes in SBH previously discussed except for the non-cash gain on extinguishment of Salus CLO debt.

The effective tax rate was 67.1% for the year ended September 30, 2020 compared to (8.3%) for the year ended September 30, 2019.

Our effective tax rate for the year ended September 30, 2020 was significantly impacted by income earned outside the U.S.

that is subject to U.S.

tax including the U.

federal statutory rate.

n/m = not meaningful

For the years ended September 30, 2021 and 2020, the change in net sales, gross profit, operating expenses and other non-operating expenses are primarily attributable to changes in SBH previously discussed.

The change in interest expense is primarily attributable to the changes in SBH previously discussed except for the non-cash gain on extinguishment of Salus CLO debt.

Income from discontinued operations is attributable to SBH previously discussed.

The effective tax rate was 324.7% for the year ended September 30, 2021 compared to (15.4%) for the year ended September 30, 2020 and 12.1% for the year ended September 30, 2019.

The change in tax rate is primarily attributable to the changes in SBH previously discussed.

Segment Financial Data

1 unchanged sentence

For a discussion of our fiscal 2019 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2020 filed with the SEC on November 15, 2019.

Hardware & Home Improvement (HHI)

Year Ended September 30,

(in millions, except %)

2020 2019 Variance

$ 1,342.1 $ 1,355.7 $ (13.6) (1.0 %)

Operating income

224.8 215.0 9.8 4.6 %

Operating income margin

16.7 % 15.9 % 80 bps

Adjusted EBITDA

$ 256.3 $ 253.7 $ 2.6 1.0 %

Adjusted EBITDA margin

19.1 % 18.7 % 40 bps

Net sales for the year ended September 30, 2020 decreased $13.6 million, or 1.0%, with a decrease in organic net sales of $13.2 million, or 1.0%.

• Security decreased $52.7 million due to supply constraints driven by temporary government mandated COVID-19 related shutdowns limiting supply levels despite strong consumer demand in response to the COVID-19 pandemic and volume reduction from customer loss, partially offset by favorable pricing.

• Plumbing increased $19.1 million due to strong consumer demand in response to the COVID-19 pandemic, promotional related volume and increased placement in retail channel, market share gains in the multifamily development channel and favorable pricing.

• Hardware increased $20.5 million due to strong consumer demand in response to the COVID-19 pandemic, new product introductions in the home center channel, increased volume through online retail channels and favorable pricing.

Operating income for the year ended September 30, 2020 increased $9.8 million with a margin increase of 80 bps due to improved productivity, pricing and mix, retrospective tariff exclusions and reduced restructuring expense despite lower sales volume plus higher input costs driven by tariffs and our COVID-19 response.

Adjusted EBITDA for the year ended September 30, 2020 increased $2.6 million with an increase in margin of 40 bps due to improved productivity, pricing and mix, retrospective tariff exclusions despite lower sales volume plus higher input costs driven by tariffs and our COVID-19 response.

Home & Personal Care (HPC)

Year Ended September 30,

(in millions, except %)

2021 2020 Variance

2020 2019 Variance

Net sales $ 1,260.1 $ 1,107.6 $ 152.5 13.8 % $ 1,107.6 $ 1,068.1 $ 39.5 3.7 %

Operating income (loss) 46.4 42.9 3.5 8.2 % 42.9 (127.5) 170.4 n/m

Operating income margin 3.9 % (11.9 %) 1,580 bps

Operating income margin 3.7 % 3.9 % (20) bps 3.9 % (11.9) % 1,580 bps

Adjusted EBITDA $ 102.6 $ 92.2 $ 10.4 11.3 % $ 92.2 $ 87.2 $ 5.0 5.7 %

Adjusted EBITDA margin 8.3 % 8.2 % 10 bps

Net sales from the year ended September 30, 2020 increased $39.5 million, or 3.7%, with an organic net sales increase of $58.4 million, or 5.5%.

• Home appliances sales increased $43.9 million, including an increase in NA of $26.0 million due to new product introductions and distribution in grocery, mass and online retail channels, coupled with an increase in response to the COVID-19 pandemic partially offset by supply constraints and store closures in response to the COVID-19 pandemic;

an increase in EMEA of $11.7 million from promotional volumes with traditional and online retailers during holiday season with increased consumer demand partially offset by lower distribution from store closures in response to COVID-19 pandemic;

an increase in LATAM of $1.7 million from new product distribution and increase in APAC of $4.5 million from consumer demand.

• Personal care sales increased $14.6 million, including an increase in EMEA of $11.1 million due to promotional volumes with traditional and online retailers during the holiday season, increased growth in e-commerce channels coupled with increased demand in response to the COVID-19 pandemic partially offset by supply constraints;

an increase in NA of $4.0 million due to increased volume and demand in mass retail and e-commerce channels primarily with hair care and personal grooming products primarily in response to the COVID-19 pandemic despite supply constraints and store closures attributable to the COVID-19 pandemic;

and an increase in APAC of $2.2 million from consumer demand and a decrease in LATAM of $2.7 million from store closures during COVID-19 pandemic.

Operating income for the year ended September 30, 2020 increased $170.4 million with an increase in margin of 1,580 bps due to higher sales volumes with favorable product mix and productivity with benefit from retrospective tariff exclusions, the recognition of goodwill impairment of $116.0 million and write-off of indefinite lived intangible assets of $18.8 million in the prior year, plus incremental depreciation and amortization of $29.0 million in the prior year associated with HPC business being de-recognized from held for sale, offset by incremental input costs driven by tariffs, increased marketing and advertising spend, plus incremental foreign currency transaction loss.

Adjusted EBITDA for the year ended September 30, 2020 increased $5.0 million with an increase in margin of 10 bps due to higher sales volume with favorable product mix and productivity with benefit from retrospective tariff exclusions, offset by incremental input costs driven by tariffs, increased marketing and advertising spend, plus incremental foreign currency transaction loss.

Adjusted EBITDA margin 8.1 % 8.3 % (20) bps 8.3 % 8.2 % 10 bps

n/m = not meaningful

Net sales for the year ended September 30, 2021 increased driven by strong growth in hair care products as part of the personal care appliance category and strong growth in cooking, food preparation and garment within the small home appliance category;

coupled with a strong holiday season earlier in the year, new product introductions, continued e-commerce growth, expanded distribution in LATAM markets, re-opening of traditional retail channels and pricing adjustments in response to higher material input costs partially mitigated by supply chain constraints limiting distribution.

Organic net sales increased $121.4 million, or 11.0%, excluding favorable foreign exchange impact.

Operating income and Adjusted EBITDA for the year ended September 30, 2021 increased with a decrease in margin due to increased sales from volume and pricing with favorable foreign currency offset by increased material and input cost inflation, freight costs and increased marketing investments;

with higher depreciation and amortization expense impacting operating income and margin.

Net sales for the year ended September 30, 2020 increased driven by growth in both small appliances and personal care including strong net sales growth in the U.S.

from e-commerce and mass channels with continued strength in convenience cooking including new product introductions from George Foreman grills, holiday season promotional volumes, coupled with demand increase partially offset by supply constraints and store closures in response to the COVID-19 pandemic.

Organic net sales increased $58.4 million or 5.5% excluding unfavorable foreign exchange impact.

Operating income and Adjusted EBITDA for the year ended September 30, 2020 increased with an increase in margin due to higher sales volumes with favorable product mix and productivity with benefit from retrospective tariff exclusions, offset by incremental input costs driven by tariffs, increased marketing and advertising spend, plus incremental foreign currency transaction loss.

Operating income and margin for the year ended September 30, 2019 was further impacted by the recognition of goodwill impairment of $116.0 million, write-off of indefinite lived intangible assets of $18.8 million, and incremental depreciation and amortization of $29.0 million in the prior year associated with HPC business being de-recognized from held for sale.

Global Pet Care (GPC)

Year Ended September 30,

(in millions, except %)

2021 2020 Variance

$ 962.6 $ 870.2 $ 92.4 10.6 %

2020 2019 Variance

Net sales $ 1,129.9 $ 962.6 $ 167.3 17.4 % $ 962.6 $ 870.2 $ 92.4 10.6 %

Operating income 129.9 47.1 82.8 175.8 % 47.1 65.6 (18.5) (28.2) %

47.1 65.6 (18.5) (28.2 %)

Operating income margin

4.9 % 7.5 % (260) bps

Operating income margin 11.5 % 4.9 % 660 bps 4.9 % 7.5 % (260) bps

Adjusted EBITDA $ 212.1 $ 172.0 $ 40.1 23.3 % $ 172.0 $ 142.6 $ 29.4 20.6 %

$ 172.0 $ 142.6 $ 29.4 20.6 %

Adjusted EBITDA margin

17.9 % 16.4 % 150 bps

Net sales for the year ended September 30, 2020 increased $92.4 million, or 10.6%, with an organic net sales increase of $86.0 million, or 9.9%.

• Companion animal sales increased $62.2 million, including an increase in NA of $56.7 million from increased demand in dollar, mass and online retail channels driven by consumer demand in response to the COVID-19 pandemic;

an increase in EMEA of $6.1 million from dog and cat food sales and increased distribution through online retail channels in response to the COVID-19 pandemic;

an increase in LATAM of $0.4 million and a decrease in APAC of $0.9 million.

• Aquatics increased $31.3 million, exclusive of acquisition sales of $7.5 million, including an increase in NA of $25.6 million from increased demand through online retail and pet specialty channels;

an increase in EMEA of $5.2 million due to increased distribution through online retail channels;

a decrease in APAC of $0.3 million and increase in LATAM of $0.7 million.

Operating income for the year ended September 30, 2020 decreased $18.5 million with a margin decrease of 260 bps due to the recognition of a loss on assets held for sale of $26.8 million associated with the Coevorden Operations divestiture, and a $24.2 million write-off from impairment of intangible assets;

Adjusted EBITDA margin 18.8 % 17.9 % 90 bps 17.9 % 16.4 % 150 bps

Net sales for the year ended September 30, 2021 increased due to acquisition sales of $99.5 million coupled with continued growth in aquatics and companion animal categories highlighted by dog chews and treats, with strong development across distribution channels led by expanded e-commerce, partially mitigated by lower than anticipated fulfillment levels attributable to distribution center transitions during the year.

Organic net sales increased $49.4 million, or 5.1% excluding favorable foreign exchange impact and acquisition sales.

Operating income and Adjusted EBITDA for the year ended September 30, 2021 increased with an increase in margins due to higher volume, favorable product mix, pricing and productivity, offset by higher material input costs, freight and distribution costs, and incremental costs and inefficiencies with distribution center transition, including higher than normal customer fines and penalties further impacting operating income and margin.

Net sales for the year ended September 30, 2020 increased due to continued growth in aquatics and companion animal products driven by broad based demand across all aquatic product types, including significant demand for hard goods through e-commerce and pet specialty channels, plus growth in companion animal categories driven by strong consumables demand in the dollar, mass and e-commerce channels and increased consumer demand experienced during the COVID-19 pandemic.

Organic net sales increased $86.0 million or 9.9% due to unfavorable foreign exchange impact and acquisition sales.

Operating income for the year ended September 30, 2020 decreased with a decline in margin due to the recognition of a loss on assets held for sale of $26.8 million associated with the Coevorden Operations divestiture, and a $24.2 million write-off from impairment of intangible assets;

incremental transaction costs associated with the Omega acquisition and Coevorden Operations divestiture, plus restructuring costs and accelerated depreciation as part of the Global Productivity Improvement Program, tariffs and additional investment in marketing and advertising, offset by increased sales volume, product cost improvements, and positive pricing.

Adjusted EBITDA in the year ended September 30, 2020 increased $29.4 million with a margin increase of 150 bps due to increased sales volume, productivity, and positive pricing, offset by tariffs and additional investment in marketing and advertising.

Adjusted EBITDA increased with an increase in margin due to increased sales volume, productivity, and positive pricing, offset by tariffs and additional investment in marketing and advertising.

Home & Garden (H&G)

Year Ended September 30,

(in millions, except %)

2021 2020 Variance

2020 2019 Variance

$ 608.1 $ 551.9 $ 56.2 10.2 % $ 551.9 $ 508.1 $ 43.8 8.6 %

1 unchanged sentence

83.7 91.2 (7.5) (8.2 %) 91.2 85.0 6.2 7.3 %

Operating income margin

16.5 % 16.7 % (20) bps

Operating income margin 13.8 % 16.5 % (270) bps 16.5 % 16.7 % (20) bps

Adjusted EBITDA

$ 124.0 $ 112.1 $ 11.9 10.6 % $ 112.1 $ 105.5 $ 6.6 6.3 %

Adjusted EBITDA margin

20.3 % 20.8 % (50) bps

Net sales for the year ended September 30, 2020 increased $43.8 million, or 8.6%, with an organic net sales increase of $43.9 million, or 8.6%.

• Lawn & garden control products increased $22.7 million due to seasonal demand and favorable weather, increased online retail and home center volumes, new retail customer distribution with continued strong consumer demand.

• Repellent products increased $10.3 million due to continued replenishment orders due to strong consumer demand.

• Household insect control products increased $11.0 million due to continued replenishment orders due to strong consumer demand.

• Other net sales to GAC discontinued operations were $18.9 million and $19.1 million for the years ended September 30, 2020 and 2019, respectively.

Operating income for the year ended September 30, 2020 increased $6.2 million, or 7.3%, with a decline in margin of 20 bps due to increased sales volume offset by higher material and input costs including tariffs, plus higher marketing and advertising investment spending.

Adjusted EBITDA in the year ended September 30, 2020 increased $6.6 million, or 6.3%, with a decrease in margin of 50 bps due to increased sales volume offset by higher material and input costs including tariffs, plus higher marketing and advertising investment spending.

Adjusted EBITDA margin 20.4 % 20.3 % 10 bps 20.3 % 20.8 % (50) bps

Net sales for the year ended September 30, 2021 increased across product categories driven by strong early season orders across channels and strong early season POS coupled with strong late season consumer demand and acquisition sales.

Organic net sales increased $33.0 million, or 6.0% excluding acquisition sales.

Operating income for the year ended September 30, 2021 decreased with a decline in margin due to increased material input costs, advertising and marketing investment, and higher distribution expenses, partially offset by higher sales volumes and positive pricing and productivity improvements;

with increased acquisition related costs and legal reserves.

Adjusted EBITDA increased with an increase in margin attributable to increased material input costs, advertising and marketing investment, and higher distribution expenses, partially offset by higher sales volumes and positive pricing and productivity improvements

Net sales for the year ended September 30, 2020 increased driven by growth across all three major product categories of controls, household insecticides and repellents;

and benefited from strong point of sale and replenishment as retailers supported the extended selling season.

Operating income and Adjusted EBITDA for the year ended September 30, 2020 increased with a decline in margin due to increased sales volume offset by higher material and input costs including tariffs, plus higher marketing and advertising investment spending.

Liquidity and Capital Resources

This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended September 30, 2021, 2020, and 2019.

For a discussion of our fiscal 2018 cash flows, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2019 filed with the SEC on November 15, 2019.

This section also provides a discussion of our contractual operations and other commercial commitments as well as our ability to fund future commitments and operating activities through sources of capital as of September 30, 2021.

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Cash flows from operating activities

Cash flows from SBH continuing operations increased $206.6 million for the year ended September 30, 2020 due to:

• Increase in cash provided by continuing operations of $153.6 million, with an increase in cash provided by working capital of $110.0 million mainly primarily attributable to timing of accounts payable;

• Decrease in cash paid for interest of $81.0 million from debt repayment activity in the prior year;

• Increase in net corporate expenditures of $13.4 million;

• Increase in cash paid for restructuring and integration related activities of $26.2 million;

• Decrease in cash paid for income taxes of $11.8 million;

Cash flows from operating activities from continuing operations of SB/RH decreased $17.2 million during the year ended September 30, 2020 primarily due to the items discussed above except for an incremental operating cash outflow to its parent company for federal net operating losses under the Company's tax sharing agreement.

Depreciation and amortization

Depreciation and amortization for the Company was $148.5 million and $180.8 million for the years ended September 30, 2020 and 2019, respectively.

The decrease in depreciation and amortization is primarily attributable to the cumulative adjustment to depreciation and amortization from the change in plan to sell the HPC division in the prior year.

Cash flows from operating activities by SBH continuing operations for the year ended September 30, 2021 decreased $112.6 million.

primarily attributable to the increased use in cash spend towards working capital, particularly from inventory build-up, and cash paid towards strategic transaction activity with increased cash generated by operations from continuing operations and lower spending on restructuring activities

Cash flows from operating activities by SBH continuing operations for the year ended September 30, 2020 increased $244.4 million due to cash provided by continuing operations with cash contributed by working capital primarily attributable to timing of accounts payable, reduction in cash paid for interest and taxes, lower spending towards strategic transaction, offset by increase in cash used towards restructuring activities during the year.

Changes in cash flows from operating activities by SB/RH continuing operations are primarily due to the SBH items discussed above except for an incremental operating cash outflow to its parent company for payments to SBH for the use of federal net operating losses, as provided under the Company's tax sharing agreement.

Cash flows from investing activities

Cash flows from investing activities from SBH continuing operations decreased $2,694.6 million for the year ended September 30, 2020 primarily due the cash receipts attributable to the divestitures of GBL and GAC in the prior year of $1,924.1 million and $935.4 million, respectively;

offset by the cash proceeds received from the Coevorden Operations divestiture of $29.0 million and proceeds from the sale of Energizer common stock investment of $147.1 million, net cash used for business acquisition of Omega for $16.9 million for the year ended September 30, 2020.

Cash flows from investing activities from SB/RH continuing operations increased $2,694.6 million for the year ended September 30, 2020 primarily due to the SBH items discussed above.

Capital Expenditures

Capital expenditures for SBH totaled $61.0 million and $58.4 million for the years ended September 30, 2020 and 2019, respectively.

We expect to make incremental investments in capital projects slightly above historical experience related to investment in high return cost reduction projects and related restructuring initiatives.

Capital expenditures of SB/RH are consistent with those of SBH.

Energizer Investment

As part of the consideration received for the GAC divestiture, the Company received 5.3 million shares of Energizer common stock, valued at $242.1 million on the effective close date of the GAC divestiture.

During the year ended September 30, 2020, the Company sold 3.6 million shares of Energizer common stock for proceeds of $147.1 million.

As of September 30, 2020, the company holds 1.7 million shares of Energizer common stock, valued at $66.9 million.

The Company may dispose of additional shares of Energizer common stock from time to time and use proceeds toward high return projects or investments.

Cash flows used in investing activities by SBH continuing operations for the year ended September 30, 2021 increased $525.9 million primarily due to increase in cash used for acquisitions of $413.0 million from the acquisitions of Rejuvenate and Armitage and higher cash proceeds in the prior year from divestiture activity of $32.6 million attributable to the Coevorden Facility, and the sale of Energizer common stock of $74.0 million, The Company sold its remaining investment in Energizer common stock in January 2021.

Cash flow from investing activities for SB/RH continuing operations for the year ended September 30, 2021 are primarily due to the SBH items previously discussed.

Cash flows from investing activities by SBH continuing operations for the year ended September 30, 2020 decreased $2,695.7 million primarily due to higher proceeds in the prior year from divestitures of $2,826.9 million attributable to the divestitures of GBL and GAC, offset by the cash proceeds from the Coevorden Operations divestiture, increase in cash used for acquisition of $16.9 million from the acquisition of Omega, offset by proceeds from the sale of Energizer common stock of $147.1 million.

Capital expenditures increased $3.7 million primarily towards investment in higher return cost reduction projects and related restructuring initiatives.

Cash flows from investing activities for SB/RH continuing operations for the year ended September 30, 2020 are primarily due to the SBH items previously discussed.

Cash flows from financing activities

Cash flows used by financing activities for SBH continuing operations decreased $2,225.3 million for the year ended September 30, 2020 due to the debt repayment activity in the prior year following the GBL and GAC divestitures, offset by the payment of the Varta contingent payment to Energizer subsequent to the GBL divestiture and incremental treasury share repurchase activity.

Cash flows used by financing activities for SB/RH continuing operations decreased $2,408.4 million for the year ended September 30, 2020 due to the debt repayment activity in the prior year following the GBL and GAC divestitures, offset by the payment of the Varta contingent payment to Energizer subsequent to the GBL divestiture.

Cash flows used in financing activities by SBH continuing operations decreased $288.2 million for the year ended September 30, 2021 primarily due to lower stock repurchase activity, payment of contingent consideration associated with the GBL divestiture of $197.0 million in the prior year;

partially offset by reduced cash inflow from debt financing of $157.9 million primarily due to premiums and loss on extinguishment from refinancing activity.

During the year ended September 30, 2021, the Company realized $899.0 million of proceeds from the new Term Loan Facility and issuance of the 3.875% Notes, net discount, with payment of $891.2 million of outstanding principal on the 6.125% Notes and the 5.75% Notes including make whole premiums of $23.4 million, plus paydown of assumed debt from the acquisition of Armitage.

Refer to Note 12 - Debt in Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

There has been no issuance of common stock, other than through the Company's share-based compensation plan, with reduced spending on common stock repurchases of $239.0 million from the accelerated share repurchase arrangement and open market purchases in the prior year.

See Note 18 - Shareholder's Equity in Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

Cash dividend payments decreased due to lower shares outstanding with a consistent dividend rate of $0.42 per shares.

Cash flows from financing activities for SB/RH continuing operations for the year ended September 30, 2021 are highly dependent upon the financing cash flow activity of SBH.

Cash flows used in financing activities by SBH continuing operations decreased $2,226.5 million for the year ended September 30, 2020 primarily due to the debt repayment activity in the prior year following the GBL and GAC divestitures, offset by the payment of the Varta contingent payment to Energizer subsequent to the GBL divestiture and incremental treasury share repurchase activity.

During the year ended September 30, 2020, SBH recognized net proceeds of $300.0 million from the issuance of 5.50% Notes.

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The Company made $134.3 million payment on debts for the outstanding balance of 6.625% Notes of $117.4 million with premium of early extinguishment of $1.3 million, and other debt payments of $15.6 million.

During the year ended September 30, 2019, the Company made $2,649.9 million of payment on debts, including the redemption of the USD Term Loans of $1,231.7 million, 7.75% Notes of $890.0 million with a premium on extinguishment of $26.4 million, partial paydown of 6.625% Notes of $452.6 million with payment of early extinguishment of $9.2 million, CAD Term Loan of $32.6 million, and other debt payments of $16.6 million.

During the year ended September 30, 2019, the Company recognized incremental proceed from the issuance of debt due to the issuance of $300 million of 5.00% Senior Notes.

In addition to the outstanding principal on our debt obligations, we have annual interest payment obligations of approximately $124.5 million in the aggregate and includes interest under our:

(i) 4.00% Notes of approximately $20.0 million;

(ii) 6.125% Notes of approximately $15.3 million;

(iii) 5.75% Notes of $57.5 million;

(iv) 5.0% Notes of approximately $15.0 million;

(v) 5.50% Notes of approximately $16.5 million.

Interest on the notes is payable semi-annually in arrears and interest under the Revolver Facility is payable on various interest payment dates as provided in the Senior Credit Agreement.

During the year ended September 30, 2020, the Company entered into the Credit Agreement, which refinanced the Company’s previously existing credit facility, reduced the revolving facility under the Credit Agreement from $890 million to $600 million and extended the Credit Agreement's maturity date to June 30, 2025.

The Company may borrow funds at a variable interest rate.

As a result of borrowings and payments under the Revolver Facility, at September 30, 2020, the Company had borrowing availability of $579.3 million, net of outstanding letters of credit of $20.7 million.

Certain fees are required to be paid in connection with our outstanding debt obligations including a quarterly commitment fee of up to 0.45% on the unused portion of the Revolver Facility and certain additional fees with respect to the letter of credit sub-facility under the Revolver Facility.

At September 30, 2020, we were in compliance with all covenants under the Senior Credit Agreement and the indentures governing the 5.50% Notes, 6.125% Notes, 5.75% Notes, 5.00% Notes, and 4.00% Notes.

There has been no issuance of common stock, other than through the Company's share-based compensation plan, with increased spending on common stock repurchase activity of $364.8 million from the accelerated share repurchase arrangement and open market purchases during the year.

See Note 18 - Shareholder's Equity in Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

Cash dividend payments decreased due to lower shares outstanding with a consistent dividend rate of $0.42 per shares.

Cash flows from financing activities for SB/RH continuing operations are highly dependent upon the financing cash flow activity of SBH.

Liquidity Outlook

Our ability to generate significant cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders.

Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions.

Based upon our current level of operations, existing cash balances, the anticipated proceeds from HHI divestitures and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months.

Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans.

As of September 30, 2021, the Company had borrowing availability of $575.4 million, net of outstanding letters of credit of $24.6 million, under our credit facility.

Liquidity and capital resources of SB/RH are highly dependent upon the cash flow activities of SBH.

Short-term financing needs primarily consist of working capital requirements, restructuring initiatives, capital spending, and periodic principal and interest payments on our long-term debt.

Long-term financing needs depend largely on potential growth opportunities, including acquisition activity, repayment or refinancing of our long-term obligations, and repurchases of our common stock.

We may, from time-to-time, seek to repurchase shares of our common stock.

Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, and other factors.

During the fourth quarter ended September 30, 2021, SBH entered into a $150 million rule 10b5-1 repurchase to facilitate daily market share repurchases through September 2022 or until the cap is reached or agreement is terminated, of which $16.0 million was executed as of September 30, 2021.

Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us.

We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group.

We maintain a capital structure that we believe provides us with sufficient access to credit markets.

When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders.

The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings.

On March 26, 2020, S&P downgraded the Company’s corporate credit rating to ‘B’ from ‘B+’, senior secured debt ratings to ‘BB-‘ from ‘BB’ and senior unsecured debt to ‘B’ from ‘B+’ , with a negative outlook in response to the changing economic environment and risks attributable to COVID-19.

The Company's credit ratings and outlook with Moody's and Fitch remain unchanged.

None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings.

The Company believes that its current credit arrangements are sound and that the strength of its balance sheet affords the company the financial flexibility, including through access to financial markets for potential new financing, to respond to both internal growth opportunities and those available through acquisitions.

Refer to Note 12 - Debt of Notes in Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

During the year ended September 30, 2020 and 2019, SBH did not issue additional shares of common stock other than pursuant to the Company’s share-based compensation plans.

SBH made cash dividend payments of $75.2 million and $85.5 million, or $0.42 per share, during the years ended September 30, 2020 and 2019, respectively.

From time to time, SBH will repurchase outstanding shares common stock in the open market or otherwise.

During the year ended September 30, 2020, the Company repurchased $355.6 million or 6.1 million shares as part of its $1 billion common stock repurchase program, including $125.0 million through an accelerated share repurchase.

During the year ended September 30, 2019, the Company repurchased $250.0 million or 4.6 million shares.

The Company issues share based awards to our employees and our directors as a component of their compensation.

All vesting is subject to the recipient’s continued employment, except as otherwise permitted by our Compensation Committee or Board of Directors or in certain cases if the employee is terminated without cause or as otherwise provided in an applicable employment agreement.

See Note 19 - Share Based Compensation of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

During the years ended September 30, 2020 and 2019 the Company paid $12.6 million and $4.4 million, respectively, in tax withholding payments on share based compensation plans, net of proceeds received upon vesting.

Liquidity Outlook

The Company’s ability to make principal and interest payments on its senior notes and borrowings under its U.S.

and foreign credit facilities and its ability to fund planned capital expenditures will depend on its ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions.

Based on its current level of operations, the Company believes that its existing cash balances and expected cash flows from operations will be sufficient to meet its operating requirements for at least the next 12 months.

However, the Company may request borrowings under its credit facilities and seek alternative forms of financing or additional investments to achieve its longer-term strategic plans.

At September 30, 2021, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.875% Notes, 5.00% Notes, 5.50% Notes, 5.75% Notes, and 4.00% Notes.

A portion of our cash balance is located outside the U.S.

given our international operations.

We manage our worldwide cash requirements centrally by reviewing available cash balances across our worldwide group and the cost effectiveness with which this cash can be accessed.

We generally repatriate cash from non-U.S.

subsidiaries, provided the cost of the repatriation is not considered material.

The counterparties that hold our deposits consist of major financial institutions.

At September 30, 2021, we believe there is approximately $50-75 million of foreign cash available for repatriation.

Because the COVID-19 pandemic has not, as of the date of this report, materially impacted our operations or demand for our products, it has not had a materially negative impact on the Company's liquidity position.

We have initiated mitigating efforts to manage non-critical capital spending, assess operating spend, preserve cash and improve liquidity.

Additionally we temporarily suspended treasury repurchase activity.

The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.

H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity.

This seasonality requires the Company to ship large quantities of product ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.

The Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions.

The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow.

Additionally, the Company facilitates a voluntary supply chain financing program to provide certain of its suppliers with the opportunity to sell receivables due from the Company (the Company's trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution.

There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation.

The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution, and continue to be recognized as accounts payable on the Company's Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.

The COVID-19 pandemic has not, as of the date of this report, materially impacted our operations or demand for our products and has not had a materially negative impact on the Company’s liquidity position.

The Company has realized supply chain disruptions which has impacted our cash flow to facilitate increased investment in inventory to ensure timely supply to meet customer demands along with shortened payment dates for some suppliers to account for longer shipping cycles.

There can be no assurance that it won't have a material negative impact on us in the future.

Nonetheless, we continue to actively monitor our global cash balances and liquidity, and if necessary, could reinitiate mitigating efforts to manage non-critical capital spend and assess operating spend to preserve cash and liquidity, including the suspension of our share repurchase activity.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Contractual Obligations & Other Commercial Commitments

The following table summarizes our contractual obligations as of September 30, 2020 and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

Contractual Payments Due by Period

(in millions)

Less than 1 year

Debt, excluding finance lease obligations(1) $ 2,352.3 $ 3.2 $ — $ 1,250.0 $ 1,099.1

Interest payments excluding finance lease obligations 649.6 124.5 248.6 225.1 51.4

Finance lease obligations(2) 253.9 20.1 35.1 36.3 162.4

Operating lease obligations(2) 130.9 27.2 42.4 32.0 29.3

Employee benefit obligations(3) 100.8 9.0 17.2 19.3 55.3

Other obligations(4) 17.9 1.7 6.2 10.0 —

Letters of credit(5) 20.7 20.7 — — —

Total Contractual Obligations $ 3,526.1 $ 206.4 $ 349.5 $ 1,572.7 $ 1,397.5

(1) See Note 12 - Debt of the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report.

(2) Finance and operating lease payments due by fiscal year include executory costs and imputed interest not reflected in the Consolidated Statements of Financial Position.

See Note 13 – Leases of the Notes to the Consolidated Financial Statements included elsewhere in the Annual Report.

(3) Employee benefit obligations represent the sum of our estimated future minimum required funding for our qualified defined benefit plans based on actuarially determined estimates and projected future benefit payments from our unfunded postretirement plans.

See Note 15 - Employee Benefit Plans of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

(4) Other obligations include the mandatory repatriation liability of $6.6 million payable over 8 years, recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position as of September 30, 2020.

The remaining balance due is net of refundable tax credits and overpayments that must be applied to the mandatory repatriation tax installments, and due to the credits and overpayments, the Company does not expect to make an additional payment for mandatory repatriation until Fiscal 2025.

See Note 16 – Income Taxes of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

(5) Standby letters of credit that back the performance of our entities under various credit facilities, insurance policies and lease arrangements.

At September 30, 2020, our Consolidated Statements of Financial Position includes reserves for uncertain tax positions.

However, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future.

Debt obligations

Our debt obligations, excluding finance leases, have varying maturity dates with no material outstanding principal payments due within the following 12 months.

Our Term Loan Facility is subject to quarterly amortizing payments of $1.0 million.

Refer to Note 12-Debt in notes to Consolidated Financial Statements included elsewhere in this Annual Report for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.

In addition to the outstanding principal on our debt, we anticipate annual interest payments of $117.4 million in the aggregate and includes interest under our:

(i) Term Loan and Revolver Facility of $20.9 million, subject to variable interest rates;

(ii) 5.75% Notes of $25.9 million;

(iii) 4.00% Notes of $19.7 million;

(iv) 5.00% Notes of $15.0 million;

(v) 5.50% Notes of $16.5 million;(v) 3.875% Notes of $19.4 million.

Interest on the notes is payable semi-annually in arrears and interest under the Term Loan and Revolver Facility is payable on various interest payment dates as provided in the Senior Credit Agreement.

Lease obligations

The Company enters into leases primarily pertaining to real estate for manufacturing facilities, distribution centers, office space, warehouses, and various equipment including automobiles, machinery, computers, and office equipment, amongst others.

Lease obligations with a term in excess of 12 months are recognized on the Company's Consolidated Statement of Financial Position.

See Note 13 - Leases of Notes to the Consolidated Financial Statement included elsewhere in the Annual Report for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position.

Employee benefit plan obligations

The Company and its subsidiaries are sponsors to various defined benefit pension plans covering some of its employees that provide post-employment benefits of stated amounts for each year of service, including a number of other non-U.S.

pension arrangements, including various retirement and termination benefit plans, some of which are covered by local law or coordinated with government-sponsored plans.

The Company's recognizes an actuarial determined unfunded projected benefit obligation recognized as Other Long-Term Liabilities on the Company's Consolidated Statement of Financial Position, net fair value of dedicated plan assets.

See Note 15 - Employee Benefit Plans of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail included projected payments towards the future obligation for the following 5 years and thereafter.

The Company anticipates that benefit obligations will be predominantly paid through dedicated plan assets.

Future contributions to defined benefit plans are not expected to be material to the operations and cash flow for the Company.

Other commitments and obligations

Other commitments and obligations include an outstanding mandatory repatriation tax liability of $18.9 million that is payable over the next 5 years, with $2.0 million due and payable in the next 12 months but will be offset by previous payments and credits.

The remaining balance due is net of refundable tax credits and overpayments that must be applied to the mandatory tax installments, and due to the credits and overpayments, the Company does not expect to make an additional payment for mandatory repatriation until Fiscal 2025.

See Note 16 - Income Taxes of Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Our Consolidated Statements of Financial Position also includes reserves for uncertain tax positions;

however, it is not possible to predict or estimate the amount and timing of payments for uncertain tax positions and those liabilities have been excluded from the obligations above.

The Company cannot reasonably predict the ultimate outcome of income tax audits currently in progress for certain of our companies.

however, it is reasonably possible that during the next 12 months, some portion of our unrecognized tax benefits could be recognized.

See Note 16 – Income Taxes of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Additionally, other payables associated with indemnifications following the divestitures of GBL and GAC, including tax indemnifications, are not included as we cannot reasonably predict the ultimate outcome of our obligation;

It is reasonably possible that during the next 12 months, some portion of our unrecognized tax benefits could be recognized.

See Note 16 – Income Taxes of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional discussion on uncertain tax positions.

The Company has recognized other payables associated with indemnifications following divestitures, including tax indemnifications, that we cannot reasonably predict the ultimate outcome of our obligation;

however it is reasonably possible that during the next 12 months, some portion of our indemnification payable could be recognized.

As of September 30, 2020, there are $33.0 million of indemnification liabilities to Energizer recognized as current and $17.2 million recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position.

As of September 30, 2021, there are $17.3 million of indemnification liabilities recognized as Other Current Accruals and $19.2 million recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position.

See Note 3 – Divestitures of the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Guarantor Statements - SB/RH

SBI has issued the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, the 6.125% Notes under the 2024 Indenture, the 5.75% Notes under the 2025 Indenture, and the 4.00% Notes under the 2026 Indenture (collectively, the “Notes”).

SBI has issued the 5.75% Notes under the 2025 Indenture, the 4.00% Notes under the 2026 Indenture, the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, and the 3.875% Notes under the 2031 Indentures (collectively, the “Notes”).

The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SB/RH and SBI’s domestic subsidiaries.

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Gross profit 555.5

Operating income 187.4

Operating loss (79.5)

Net loss from continuing operations (116.2)

Net loss (32.8)

Net loss attributable to controlling interest (32.8)

Net income 28.6

Net income attributable to controlling interest 28.6

Statement of Financial Position Data

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Refer to Note 2 - Significant Accounting Policies and Practices of Notes to the Consolidated Financial Statements for more information about useful lives.

On an annual basis, during the fourth quarter of the fiscal year, or more frequently if triggering events occur, the Company compares the estimated fair value of its reporting units to the carrying value to determine if potential goodwill impairment exists.

On an annual basis, during the fourth quarter of the fiscal year, or more frequently if triggering events occur, the Company tests for impairment of goodwill by either performing a qualitative assessment or quantitative test for some or all reporting units.

Our reporting units are consistent with our operating segments.

See Note 22 - Segment Information of Notes to the Consolidated Financial Statements for further discussion of operating and reporting segments.

The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

In performing a qualitative assessment, the Company considers events and circumstances, including, but not limited to macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in market value, composition or carrying amount of a reporting unit's net asset, and considering change in the market price of the Company's common stock.

If we determine that it is more likely than not the carrying value is greater than the fair value of a reporting unit after assessing the totality of facts and circumstances, a quantitative assessment is performed to determine the reporting unit fair value and measure the impairment.

If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded for the difference between the fair value of the reporting unit goodwill and its carrying value.

The estimated fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between willing parties on an arms-length basis.

In estimating the fair value of the reporting unit, we used a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.

In estimating the fair value of the reporting unit, we use a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.

We test the aggregate estimated fair value of our reporting units by comparison to our total market capitalization, including both equity and debt capital.

The fair value of HHI, GPC, and H&G reporting units exceeded their carrying value by 32 %, 52 %, and 134 %, respectively, and did not recognize an impairment or deem the respective reporting units as ‘at risk’ of impairment.

For the year ended September 30, 2021, we did not recognize an impairment of goodwill or deem any reporting units as ‘at risk’ of impairment.

In addition to goodwill, the Company has indefinite-lived intangible assets that consist of acquired tradenames.

On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company compares the estimated fair value of the identified trade names to the carrying value to determine if potential impairment exists.

On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.

The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the indefinite lived intangible assets is less than its carrying amount.

In performing a qualitative assessment, the Company considers events and circumstances including, but not limited to, macroeconomic conditions, industry and market conditions, cost factors, changes in strategy and overall financial performance.

If we determine that it is more likely than not the carrying value is greater than the fair value of an indefinite lived intangible asset, a quantitative assessment is performed to determine the fair value and measure the impairment.

If the fair value is less than its carrying value, an impairment loss is recorded for the excess.

The fair value of indefinite-lived intangible assets is determined using an income approach, the relief-from-royalty methodology, which requires us to make estimates and assumptions about future revenues, royalty rates, and the discount rate, among others.

During the first quarter of the year ended September 30, 2020, the Company recognized $ 16.6 million impairment on indefinite life intangible assets of tradenames associated with the commercial DCF business due to the reduced value of the associated tradenames following the divestiture of the Coevorden Operations.

With the recognition of the impairment, the respective intangible assets were adjusted to their determined fair value, leaving no excess fair value as of the measurement date.

As of September 30, 2020, there are approximately $ 136.9 million of intangible assets that could be deemed at risk of future impairment due to the limited excess fair value.

There was no impairment on indefinite life intangible assets for the year ended September 30, 2021.

As of September 30, 2021, there were no material intangible assets that could be deemed at risk of future impairment due to the limited excess fair value.

The Company also reviews other definite-lived intangible assets and tangible fixed assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

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If impairment is determined to exist, any related impairment loss is calculated based on fair value.

During the year ended September 30, 2020, the Company recognized an impairment of $7.6 million on definite-lived intangible assets due to the incremental cash flow risk associated with the commercial DCF business following the divestiture of the Coevorden Operations, which consisted of the remaining carrying cost of the definite lived intangibles assets associated with the commercial DCF business.

During the year ended September 30, 2021, there was no impairment of definite-lived intangible assets or tangible fixed assets.

A considerable amount of judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and assets subject to impairment testing.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis