What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-06 compared with 2022-02-04 · 249 added, 99 removed, 330 unchanged (51% of the section changed)

10 unchanged sentences

Global and geographic strategic initiatives and financial objectives are determined at the corporate level.

Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president responsible for sales and marketing initiatives and the financial results for all product lines within that segment.

The segments are supported through center-led shared service operations consisting of finance and accounting, information technology, legal, human resources, supply chain and commercial operations.

Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president responsible for sales and marketing initiatives and financial results for all product lines within that segment, on a global basis.

The segments are supported through center-led shared service operations and enabling functions consisting of finance and accounting, information technology, legal, human resources, supply chain, and commercial operations.

See Note 18 – Segment Information for more information pertaining to segments of continuing operations.

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Home Appliances:

Small kitchen appliances including toaster ovens, coffeemakers, slow cookers, blenders, hand mixers, grills, food processors, juicers, toasters, irons, kettles, and bread makers.

Small kitchen appliances including toaster ovens, coffeemakers, slow cookers, blenders, hand mixers, grills, food processors, juicers, toasters, irons, kettles, bread makers, cookware, and cookbooks.

Personal Care:

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Home Appliances:

Black & Decker®, Russell Hobbs®, George Foreman®, Toastmaster®, Juiceman®, Farberware®, and Breadman®

Black & Decker®, Russell Hobbs®, George Foreman®, PowerXL®, Emeril Legasse®, Copper Chef ®, Toastmaster®, Juiceman®, Farberware®, and Breadman®

Personal Care:

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See Note 5 – Revenue Recognition for further detail on revenue concentration from B&D branded products.

On February 18, 2022, the Company acquired the home appliances and cookware products sold under the PowerXL®, Emeril Legasse®, and Copper Chef® brands from Tristar Products, Inc.

(the "Tristar Business").

As part of the acquisition, the PowerXL® and Copper Chef® brands were acquired outright by the Company while the Emeril Legasse® brand remains subject to a trademark license agreement with the license holder (the "Emeril License").

Pursuant to the Emeril License, the Company will continue to license the Emeril Lagasse® brands within the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances within the HPC segment, including small kitchen food preparation products, indoor and outdoor grills and grill accessories, and cookbooks.

The Emeril License is set to expire effective December 31, 2022 with options up to three one-year renewal periods following the initial expiration.

Under the terms of the agreement, we agreed to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.5 million, increasing to $1.8 million in subsequent renewal periods.

See Note 3 - Acquisitions for further detail on the Tristar Business acquisition.

On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement with ASSA ABLOY AB ("ASSA") to sell its Hardware and Home Improvement ("HHI") segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments.

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The Company's assets and liabilities associated with the HHI disposal group have been classified as held for sale and the HHI operations have been classified as discontinued operations for all periods presented and notes to the consolidated financial statements have been updated for all periods presented to exclude information pertaining to discontinued operations and reflect only the continuing operations of the Company.

Refer to Note 2 – Divestitures for more information on the HHI divestiture including the assets and liabilities classified as held for sale and income from discontinued operations.

Refer to Note 2 – Divestitures for more information on the HHI divestiture

including the assets and liabilities classified as held for sale and income from discontinued operations.

The Company is engaged with antitrust regulators in the ongoing regulatory review of the transaction and the Company is currently working to respond to such regulators' requests for additional information.

Although the timing and outcome of the regulatory process cannot be predicted, the Company currently expects the merger review process to last for several months.

As such, though there can be no assurance when the transaction will close, if at all, the Company does not expect the transaction to close before June 2022.

As such, though there can be no assurance when the transaction will close, if at all, the Company does not expect the transaction to close before September 2022.

SB/RH is a wholly owned subsidiary of SBH.

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The following acquisition activity may have a significant impact on the comparability of the financial results on the condensed consolidated financial statements.

• On May 28, 2021, the Company acquired all ownership interests in For Life Products, LLC ("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 Condensed Consolidated Statements of Income and reported within the H&G reporting segment for the three month period ended January 2, 2022.

• On February 18, 2022, the Company acquired 100% of the Tristar Business for a purchase price of $325.0 million, net of customary purchase price adjustments and transaction costs.

The Tristar Business includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Legasse®, and Copper Chef® brands.

The net assets and operating results of the Tristar Business are included in the Company’s Condensed Consolidated Statements of Income and reported within the HPC reporting segment for the three and six month period ended April 3, 2022.

• On May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP") for a purchase price of $301.5 million.

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

• On October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("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 Condensed Consolidated Statements of Income and reported within the GPC reporting segment for the three month period ended January 2, 2022 and the three month period ended January 3, 2021, effective as of the acquisition date of October 26, 2020.

The net assets and results of operations of Armitage are included in the Company’s Condensed Consolidated Statements of Income and reported within the GPC reporting segment for the three and six month periods ended April 3, 2022 and April 4, 2021, effective as of the acquisition date of October 26, 2020.

See Note 3 – Acquisitions in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for more information.

Restructuring Activity

We continually seek to improve our operational efficiency, match our manufacturing capacity, and product costs to market demand and better utilize our manufacturing resources.

We continually seek and develop operating strategies to improve our operational efficiency, match our capacity and product costs to market demand and better utilize our manufacturing and distribution resources in order to reduce costs, increase revenues, increase or maintain our current profit margins.

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 condensed consolidated financial statements.

See Note 4 – Restructuring and Related Charges in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information.

These changes and updates are inherently difficult and are made even more difficult by current global economic conditions.

Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors such as COVID-19, or inflation increased interest rates many of which are beyond or control.

Refinancing Activity

Financing activity during and between comparable periods may have a significant impact on the comparability of financial results on the condensed consolidated financial statements.

• On February 3, 2022, the Company entered into the third amendment to the Credit Agreement that provides for incremental capacity on the Revolver Facility of $500 million that was used to support the acquisition of the Tristar Business and the continuing operations and working capital requirements of the Company.

Borrowings under the incremental capacity are subject to a borrowing rate which is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date.

• 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.

Russia-Ukraine War

The impacts of the Russia-Ukraine war and the sanctions imposed by other nations in response to the conflict are evolving and may have an impact on the Company's consolidated operations and cash flow attributable to operations and distribution within the region.

The Company does not maintain a significant level of operations within Ukraine and continues to evaluate its strategy with Russia and the existing operations within the territory.

The Company does not maintain material assets within Russia, and the Company's assets in Russia consist mostly of working capital associated with the in-country distribution operations.

In response to matters within the territory, we have adjusted our risks associated with the collectibility and realizable value for working capital within the region.

Depending on the strategic direction we take towards our existing operations in Russia, there may be incremental restructuring costs or potential impairments to remediate.

The COVID-19 pandemic and the resulting regulations continue to cause economic and social disruptions that contribute to ongoing uncertainties and may have an impact on the operations, cash flow and net assets of the Company.

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and significant changes to the political and economic environments in which we manufacture, sell, and distribute our products.

The Company expects a continuing inflationary environment, marked with higher manufacturing and logistics costs as well as continued constraints with transportation and supply chain disruptions.

Despite the supply implications, the Company has experienced increased demand for our products compared to pre-pandemic levels.

There have also been changes in consumer needs and spending during the COVID-19 pandemic, and while demand for our products remain strong, our teams continue to monitor demand shifts and there can be no assurance as to the level of demand that will prevail throughout the fiscal year.

The Company expects a significant continuing inflationary environment, marked with higher manufacturing, employment, and logistics costs as well as continued constraints with transportation and supply chain disruptions.

Additionally, there have also been changes in consumer needs and spending during the COVID-19 pandemic, and while demand for our products remain strong, our teams continue to monitor demand shifts and there can be no assurance as to the level of demand that will prevail throughout the fiscal year.

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.

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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, the emergence of variants and the effectiveness of vaccines against these variants, and any governmental and public actions taken in response.

Inflation and Supply Chain Constraint s

While certain aspects of our financial results have been favorably impacted by increased demand attributable to the COVID-19 pandemic, in addition to favorable consumer conditions including incremental financial assistance provided by various government agencies, our business continues to experience challenges towards product availability to meet customer demand.

We have experienced increased labor shortages in the wake of the COVID-19 pandemic resulting in transportation and supply chain disruptions.

Together with labor shortages and higher demand for talent, the current economic environment is driving higher wages.

Our ability to meet labor needs, control wage and labor-related costs and minimize labor disruptions will be key to our success of operating our business and executing our business strategies.

Furthermore, our business is experiencing an inflationary environment, which has negatively impacted our gross margin rates.

We are unable to predict how long the current inflationary environment, including increased energy costs, will continue.

Additionally, we have experienced further supply chain disruptions from unanticipated shutdowns in our supply base and limitations within transportation and logistics impacting availability and increasing freight costs within the overall global supply chain.

We expect the economic environment to remain uncertain as we navigate the current geopolitical environment, the COVID-19 pandemic, labor challenges, supply chain constraints and the current inflationary environment, including increasing energy and commodity prices.

Non-GAAP Measurements

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We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior year.

The following is a reconciliation of reported net sales to organic net sales for the three month period ended January 2, 2022 compared to net sales for the three month period ended January 3, 2021:

The following is a reconciliation of reported net sales to organic net sales for the three and six month periods ended April 3, 2022 compared to net sales for the three and six month periods ended April 4, 2021:

Three Month Periods Ended

(in millions, except %) January 2, 2022

(in millions, except %) April 3, 2022

Effect of Changes in Currency

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Effect of Acquisitions

January 3, 2021

April 4, 2021

$ 316.1 $ 11.4 $ 327.5 $ (35.8) $ 291.7 $ 297.9 $ (6.2) (2.1) %

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$ 807.8 $ 17.0 $ 824.8 $ (49.1) $ 775.7 $ 760.3 15.4 2.0 %

Six Month Periods Ended

(in millions, except %)

April 3, 2022

Effect of Changes in Currency

Net Sales Excluding Effect of Changes in Currency

Effect of Acquisitions

April 4, 2021

$ 695.8 $ 16.4 $ 712.2 $ (35.8) $ 676.4 $ 676.4 $ — — %

597.3 7.8 605.1 (8.8) 596.3 569.1 27.2 4.8 %

271.9 — 271.9 (21.1) 250.8 251.0 (0.2) (0.1) %

$ 1,565.0 $ 24.2 $ 1,589.2 $ (65.7) $ 1,523.5 $ 1,496.5 27.0 1.8 %

Adjusted EBITDA and Adjusted EBITDA Margin.

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• Stock based compensation costs consist of costs associated with long-term incentive compensation arrangements that generally consist of non-cash, stock-based compensation.

During the three month period ended January 3, 2021, compensation costs included incentive bridge awards previously issued due to changes in the Company’s LTIP that allowed for cash based payment upon employee election but do not qualify for shared-based compensation, which were fully vested in November 2020.

During the six month period ended April 4, 2021, compensation costs included incentive bridge awards previously issued due to changes in the Company’s LTIP that allowed for cash based payment upon employee election but do not qualify for shared-based compensation, which were fully vested in November 2020.

See Note 14 – Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;

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See Note 1 – Basis of Presentation & Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;

• Incremental costs towards the SAP S/4 HANA ERP transformation to implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis.

This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as capital expenditures or deferred costs in accordance with applicable accounting policies, with certain costs recognized as operating expense associated with project development and management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software implementation costs.

The Company has substantially completed the design phase of the project and is currently moving into the build phase:

• Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions 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.

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See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

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

• Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in ROU operating lease assets with below market rent, among others;

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

• Gains attributable to the Company investment in Energizer common stock during the three month period ended January 3, 2021.

which the Company subsequently sold its remaining shares in January 2021.

• Gains attributable to the Company's investment in Energizer common stock during the three and six month periods ended April 4, 2021.

with such remaining shares sold in January 2021.

See Note 12 – Fair Value of Financial Instruments in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;

• Incremental reserves for non-recurring litigation or environmental remediation activity including the 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 three month period ended January 3, 2021 and the subsequent remeasurement during the three month period ended January 2, 2022;

• Incremental reserves for non-recurring litigation or environmental remediation activity including the 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 six month period ended April 4, 2021 and the subsequent remeasurement during the six month period ended April 3, 2022;

• 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 the GPC commercial operations and distribution in Europe;

• Other adjustments are primarily attributable to (1) incremental fines and penalties realized for delayed shipments following the transition of third-party logistics service provider in GPC during the three month period ended January 2, 2022;

and (2) costs associated with Salus as they are not considered a component of the continuing commercial products company.

• Other adjustments are primarily attributable to:

(1) incremental trade spend reserves realized from the transition and integration of the Rejuvenate business into the H&G segment and the Company's systems and processes during the three and six month periods ended April 3, 2022, (2) incremental fines and penalties for delayed shipments attributable to the GPC distribution transition initiative during the three and six month periods ended April 3, 2022, and (3) costs associated with Salus as they are not considered a component of the continuing commercial products company.

Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of reported net sales for the respective period and segment.

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended January 2, 2022 and January 3, 2021 for SBH.

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 3, 2022 and April 4, 2021 for SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended January 2, 2022

Three Month Period Ended April 3, 2022

Net (loss) income from continuing operations $ (19.1) $ 19.0 $ 30.4 $ (55.4) $ (25.1)

Income tax benefit — — — (6.8) (6.8)

Interest expense — — — 24.7 24.7

Depreciation and amortization 8.1 9.3 4.7 3.6 25.7

EBITDA (11.0) 28.3 35.1 (33.9) 18.5

Share and incentive based compensation — — — 6.6 6.6

Restructuring and related charges 3.7 8.2 — 4.5 16.4

Transaction related charges 14.4 1.2 1.9 2.7 20.2

Global ERP Transformation — — — 3.2 3.2

Unallocated shared costs — — — 6.9 6.9

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Coevorden tolling related charges — 1.5 — — 1.5

Other — 1.4 0.7 0.1 2.2

Adjusted EBITDA $ 10.6 $ 40.6 $ 37.7 $ (9.9) $ 79.0

Net Sales $ 316.1 $ 295.1 $ 196.6 $ — $ 807.8

Adjusted EBITDA Margin 3.4 % 13.8 % 19.2 % — 9.8 %

Three Month Period Ended April 4, 2021

Net income (loss) from continuing operations $ 11.0 $ 38.7 $ 29.9 $ (84.2) $ (4.6)

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Unallocated shared costs — — — 6.7 6.7

Non-cash purchase accounting adjustments — 2.6 — — 2.6

Gain on Energizer investment — — — (0.9) (0.9)

Coevorden tolling related charges — 1.5 — — 1.5

Other — — — 0.2 0.2

Adjusted EBITDA $ 25.4 $ 55.6 $ 34.8 $ (8.3) $ 107.5

Net Sales $ 297.9 $ 293.6 $ 168.8 $ — $ 760.3

Adjusted EBITDA Margin 8.5 % 18.9 % 20.6 % — 14.1 %

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 3, 2022 and April 4, 2021 for SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Six Month Period Ended April 3, 2022

Net income (loss) from continuing operations $ — $ 30.6 $ 14.6 $ (100.5) $ (55.3)

Income tax benefit — — — (22.8) (22.8)

Interest expense — — — 46.4 46.4

Depreciation and amortization 15.8 18.6 9.3 7.4 51.1

EBITDA 15.8 49.2 23.9 (69.5) 19.4

Share and incentive based compensation — — — 12.2 12.2

Restructuring and related charges 4.3 19.6 — 9.9 33.8

Transaction related charges 14.4 3.6 6.3 10.8 35.1

Global ERP Transformation — — — 3.2 3.2

Unallocated shared costs — — — 13.8 13.8

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Legal and environmental remediation reserves — — (0.5) — (0.5)

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Adjusted EBITDA Margin 5.5 % 13.3 % 11.2 % — 8.2 %

Three Month Period Ended January 3, 2021

Six Month Period Ended April 4, 2021

Net income (loss) from continuing operations $ 49.2 $ 72.7 $ 29.4 $ (140.2) $ 11.1

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Unallocated shared costs — — — 13.4 13.4

Inventory acquisition step-up — 0.8 — — 0.8

Non-cash purchase accounting adjustments — 3.4 — — 3.4

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

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Adjusted EBITDA Margin 11.3 % 19.2 % 18.0 % — 14.3 %

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended January 2, 2022 and January 3, 2021 for SB/RH.

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 3, 2022 and April 4, 2021 for SB/RH.

SB/RH HOLDINGS, LLC

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended January 2, 2022

Three Month Period Ended April 3, 2022

Net (loss) income from continuing operations $ (19.1) $ 19.0 $ 30.4 $ (54.9) $ (24.6)

Income tax benefit — — — (6.6) (6.6)

Interest expense — — — 24.8 24.8

Depreciation and amortization 8.1 9.3 4.7 3.6 25.7

EBITDA (11.0) 28.3 35.1 (33.1) 19.3

Share and incentive based compensation — — — 6.2 6.2

Restructuring and related charges 3.7 8.2 — 4.5 16.4

Transaction related charges 14.4 1.2 1.9 2.7 20.2

Global ERP Transformation — — — 3.2 3.2

Unallocated shared costs — — — 6.9 6.9

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Coevorden tolling related charges — 1.5 — — 1.5

Other — 1.4 0.7 — 2.1

Adjusted EBITDA $ 10.6 $ 40.6 $ 37.7 $ (9.6) $ 79.3

Net Sales $ 316.1 $ 295.1 $ 196.6 $ — $ 807.8

Adjusted EBITDA Margin 3.4 % 13.8 % 19.2 % — 9.8 %

Three Month Period Ended April 4, 2021

Net income (loss) from continuing operations $ 11.0 $ 38.7 $ 29.9 $ (83.8) $ (4.2)

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Unallocated shared costs — — — 6.7 6.7

Non-cash purchase accounting adjustments — 2.6 — — 2.6

Gain on Energizer investment — — — (0.9) (0.9)

Coevorden tolling related charges — 1.5 — — 1.5

Other — — — 0.1 0.1

Adjusted EBITDA $ 25.4 $ 55.6 $ 34.8 $ (8.1) $ 107.7

Net Sales $ 297.9 $ 293.6 $ 168.8 $ — $ 760.3

Adjusted EBITDA Margin 8.5 % 18.9 % 20.6 % — 14.2 %

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 3, 2022 and April 4, 2021 for SB/RH.

SB/RH HOLDINGS, LLC

(in millions) HPC GPC H&G Corporate Consolidated

Six Month Period Ended April 3, 2022

Net income (loss) from continuing operations $ — $ 30.6 $ 14.6 $ (99.9) $ (54.7)

Income tax benefit — — — (22.4) (22.4)

Interest expense — — — 46.7 46.7

Depreciation and amortization 15.8 18.6 9.3 7.4 51.1

EBITDA 15.8 49.2 23.9 (68.2) 20.7

Share based compensation — — — 11.8 11.8

Restructuring and related charges 4.3 19.6 — 9.9 33.8

Transaction related charges 14.4 3.6 6.3 10.8 35.1

SAP S/4 HANA ERP Transformation — — — 3.2 3.2

Unallocated shared costs — — — 13.8 13.8

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Legal and environmental remediation reserves — — (0.5) — (0.5)

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Adjusted EBITDA Margin 5.5 % 13.3 % 11.2 % — 8.2 %

Three Month Period Ended January 3, 2021

Six Month Period Ended April 4, 2021

Net income (loss) from continuing operations $ 49.2 $ 72.7 $ 29.4 $ (139.3) $ 12.0

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Unallocated shared costs — — — 13.4 13.4

Inventory acquisition step-up — 0.8 — — 0.8

Non-cash purchase accounting adjustments — 3.4 — — 3.4

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

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Coevorden tolling related charges — 3.1 — — 3.1

Other — — — 0.1 0.1

Adjusted EBITDA $ 76.3 $ 109.2 $ 45.3 $ (16.7) $ 214.1

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Consolidated Results of Operations

The following is summarized consolidated results of operations for SBH for the three month periods ended January 2, 2022 and January 3, 2021.

The following is summarized consolidated results of operations for SBH for the three and six month periods ended April 3, 2022 and April 4, 2021.

(in millions, except %)

Three Month Periods Ended Variance

January 2, 2022 January 3, 2021

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net sales $ 807.8 $ 760.3 $ 47.5 6.2 % $ 1,565.0 $ 1,496.5 $ 68.5 4.6 %

Gross profit 255.6 261.0 (5.4) (2.1) % 474.9 513.8 (38.9) (7.6) %

Gross profit margin 29.0 % 34.3 % (530) bps

Gross profit margin 31.6 % 34.3 % (270) bps 30.3 % 34.3 % (400) bps

Operating expenses 263.7 215.7 48.0 22.3 % 506.9 442.6 64.3 14.5 %

Interest expense 24.7 52.8 (28.1) (53.2) % 46.4 76.0 (29.6) (38.9) %

Other non-operating expense (income), net 0.6 (8.9) 9.5 n/m

Other non-operating income, net (0.9) (2.2) 1.3 (59.1) % (0.3) (11.1) 10.8 (97.3) %

Income tax benefit (6.8) (0.7) (6.1) 871.4 % (22.8) (4.8) (18.0) 375.0 %

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n/m = not meaningful

The following is a summary of net sales by segment for the three month periods ended January 2, 2022 and January 3, 2021 and the principal components of changes in net sales for the respective periods.

The following is a summary of net sales by segment for the three and six month periods ended April 3, 2022 and April 4, 2021 and the principal components of changes in net sales for the respective periods.

(in millions, except %)

Three Month Periods Ended Variance

January 2, 2022 January 3, 2021

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

$ 316.1 $ 297.9 $ 18.2 6.1 % $ 695.8 $ 676.4 $ 19.4 2.9 %

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(in millions)

Three Month Periods Ended

Net Sales for the period ended January 3, 2021

Three Month Periods Ended Six Month Periods Ended

Net Sales for the period ended April 4, 2021

$ 760.3 $ 1,496.5

Increase in GPC

Increase in HPC

Decrease in H&G (14.7)

Decrease in HPC

Increase (decrease) in H&G 14.5 (0.2)

Acquisition sales

Foreign currency impact, net

Net Sales for the period ended January 2, 2022

(17.0) (24.2)

Net Sales for the period ended April 3, 2022

$ 807.8 $ 1,565.0

Gross Profit.

Gross profit for the three month period decreased primarily due to accelerated freight and input cost inflation pacing ahead of pricing actions, lower volume compared to prior year post-COVID volume growth and product mix, partially offset by lower productivity.

Gross profit and gross profit margin for the three and six month periods decreased primarily due to accelerated freight and input cost inflation pacing ahead of pricing actions, lower volume compared to prior year reopening trends and stimulus spending, with constrained supply chain reducing product availability to meet customer demands, partially offset by productivity and product mix improvements.

Operating Expenses.

Operating expenses for the three month period increased due to an increase in selling, general and administrative expenses of $10.9 million from higher distribution costs and operating inefficiencies from labor inflation and turnover with continued investment in marketing and new product development, offset by lower incentive compensation costs, including share based compensation, with an increase in restructuring and related charges of $8.2 million and decrease in transaction related costs of $4.1 million.

Operating expenses for the three month period increased due to an increase in selling, general and administrative expenses of $23.4 million from higher distribution and transportation costs, operating inefficiencies from labor inflation and turnover with continued investment in marketing and new product development, offset by lower incentive compensation costs, with an increase in restructuring and related charges of $12.2 million and an increase in transaction related costs of $12.0 million for further investments in strategic transactions and restructuring initiatives.

See Note 4 – Restructuring and Related Charges and Note 1 – Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail on restructuring initiatives and transaction-related charges, respectively.

Operating expenses for the six month period increased due to an increase in selling and general and administrative expenses of $34.6 million attributable to higher distribution and transportation costs, operating inefficiencies from labor inflation and turnover, continued investment in marketing and new product development, offset by lower incentive compensation costs, with an increase in restructuring and related charges of $20.4 million and increase in transaction related costs of $7.9 million for further investments in strategic transactions and restructuring initiatives.

Interest Expense.

Interest expense for the three month period decreased due to a lower average borrowing rate following refinancing activities in the prior year.

Interest expense for the three and six month periods decreased due to the refinancing activity in the prior year resulting in a make whole premium of $23.4 million and write-off of unamortized debt issuance costs of $7.9 million recognized the prior year.

See Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Other Non-Operating Income, Net.

Other non-operating income for the three month period decreased due to realized gains on our investment in Energizer common stock in the prior year which the Company sold its remaining investment in January 2021.

Other non-operating income for the three and six month periods decreased due to realized gains on our investment in Energizer common stock in the prior year which the Company sold its remaining investment in January 2021.

Income Taxes.

Our estimated annual effective tax rate was impacted for the three month period by income earned outside the U.S.

Our estimated annual effective tax rate was impacted for the three and six month periods by income earned outside the U.S.

that is subject to U.S.

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tax on global intangible low taxed income, certain nondeductible expenses, foreign rates that differ from the US federal statutory rate, and state income taxes.

During the three month period ended January 2, 2022, the Company recorded a $3.2 million benefit due to the impact of an amended return filed during the quarter and the Company also recognized an additional $2.5 million benefit due to windfalls associated with the vesting of share compensation during the quarter.

During the six month period ended April 3, 2022, the Company recorded a $3.2 million benefit due to the impact of an amended return filed during the year and the Company also recognized an additional $2.5 million benefit due to windfalls associated with the vesting of share compensation during the year.

Income From Discontinued Operations.

Income or loss attributable to discontinued operations primarily reflect the income from the discontinued operations of the HHI segment and the incremental changes to tax and legal indemnifications associated with the Company's divestitures of its GBL and GAC divisions to Energizer during the year ended September 30, 2019.

Income from discontinued operations attributable to the HHI segment decreased during the three month period ended January 2, 2022 due to lower sales volume following post pandemic volumes in the prior year, increasing inflationary costs and higher freight spend, partially offset by pricing actions and lower depreciation and amortization while held for sale.

Income from discontinued operations attributable to the HHI segment increased during the three month period ended April 3, 2022 due to pricing increases offsetting increasing inflationary costs and freight spend and lower depreciation and amortization while held for sale.

Income from discontinued operations attributable to the HHI segment decreased during the six month period ended April 3, 2022 due to lower sales volume following post-pandemic volumes in the prior year, increasing inflationary costs and higher freight spend outpacing pricing actions and lower depreciation and amortization while held for sale.

Noncontrolling Interest.

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Such amount varies in relation to such subsidiary’s net income or loss for the period and the percentage interest not owned by SBH.

The following is summarized consolidated results of operations for SB/RH for the three month periods ended January 2, 2022 and January 3, 2021:

The following is summarized consolidated results of operations for SB/RH for the three and six month periods ended April 3, 2022 and April 4, 2021:

(in millions, except %)

Three Month Periods Ended Variance

January 2, 2022 January 3, 2021

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Net sales $ 807.8 $ 760.3 $ 47.5 6.2 % $ 1,565.0 $ 1,496.5 $ 68.5 4.6 %

Gross profit 255.6 261.0 (5.4) (2.1) % 474.9 513.8 (38.9) (7.6) %

Gross profit margin 29.0 % 34.3 % (530) bps

Gross profit margin 31.6 % 34.3 % (270) bps 30.3 % 34.3 % (400) bps

Operating expenses 262.9 215.0 47.9 22.3 % 505.7 441.2 64.5 14.6 %

Interest expense 24.8 52.9 (28.1) (53.1) % 46.7 76.1 (29.4) (38.6) %

Other non-operating expense (income), net 0.6 (8.9) 9.5 n/m

Other non-operating income, net (0.9) (2.2) 1.3 (59.1) % (0.4) (11.1) 10.7 (96.4) %

Income tax benefit (6.6) (0.5) (6.1) 1,220.0 % (22.4) (4.4) (18.0) 409.1 %

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n/m = not meaningful

The changes in SB/RH for the three month periods are primarily attributable to the changes in SBH previously discussed.

The changes in SB/RH for the three and six month periods are primarily attributable to the changes in SBH previously discussed.

Segment Financial Data

Home and Personal Care

(in millions, except %)

Three Month Periods Ended

January 2, 2022 January 3, 2021

(in millions, except %) Three Month Periods Ended

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

$ 316.1 $ 297.9 $ 18.2 6.1 % $ 695.8 $ 676.4 $ 19.4 2.9 %

Operating income 20.4 36.7 (16.3) (44.4) %

Operating income margin 5.4 % 9.7 % (430) bps

Operating (loss) income (19.8) 11.5 (31.3) n/m 0.6 48.2 (47.6) (98.8) %

Operating (loss) income margin (6.3 %) 3.9 % n/m 0.1 % 7.1 % (700) bps

Adjusted EBITDA

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Adjusted EBITDA margin

7.2 % 13.4 % (620) bps

Net sales for the three month period increased driven by growth in the LATAM region from expanded distribution and strong holiday volumes, partially offset by product availability issues related to supply chain constraints to match continued demand and comparison to post COVID volume growth from replenishment orders and reopening trends in the prior year.

Organic net sales increased $6.3 million, or 1.7%, excluding unfavorable foreign exchange impact.

Operating income, adjusted EBITDA and margins for the three month period decreased due to accelerated freight and input cost inflation ahead of incremental pricing actions and continued investments in marketing and new product development initiatives, partially offset by productivity improvements.

3.4 % 8.5 % (510) bps 5.5 % 11.3 % (580) bps

n/m = not meaningful

Net sales for the three month period increased primarily as a result of the Tristar Business acquisition sales of $35.8 million, with a decrease in organic net sales of $6.2 million, or 2.1%, excluding unfavorable foreign exchange impact and acquisition sales, due to slower demand in small kitchen appliances and personal care appliances categories compared to prior year reopening trends, offset by expanded distribution and consumer demand in the LATAM region and growth in garment care products.

Net sales for the six month period increased from Tristar Business acquisition sales of $35.8 million, with organic net sales flat compared to the prior year, excluding unfavorable foreign currency impact and acquisition sales, due to product availability issues related to supply chain constraints and product category demands compared to prior year reopening trends, offset by expanded distribution in the LATAM region and growth in garment care products.

Operating income, adjusted EBITDA and margins for the three month period decreased driven by accelerated freight and input cost inflation ahead of incremental pricing actions and continued investments in marketing and new product development initiatives partially offset by productivity improvements with incremental transaction related costs attributable to the Tristar Business acquisition and related non-cash purchase accounting adjustments further impacting operating income and margin.

Operating income, adjusted EBITDA and margins for the six month period decreased driven by accelerated freight and input cost inflation ahead of incremental pricing actions and continued investments in marketing and new product development initiatives partially offset by productivity improvements with incremental transaction related costs attributable to the Tristar Business acquisition and related non-cash purchase accounting adjustments further impacting operating income and margin.

Global Pet Care

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Three Month Periods Ended Variance

January 2, 2022 January 3, 2021

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

$ 295.1 $ 293.6 $ 1.5 0.5 % $ 597.3 $ 569.1 $ 28.2 5.0 %

Operating income 19.9 39.8 (19.9) (50.0) % 32.2 74.0 (41.8) (56.5) %

Operating income margin 4.1 % 12.4 % (830) bps

Operating income margin 6.7 % 13.6 % (690) bps 5.4 % 13.0 % (760) bps

Adjusted EBITDA

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Adjusted EBITDA margin

12.8 % 19.5 % (670) bps

Net sales for the three month period increased due to continued volume growth in most product categories across regions with increased demand in dog chews and treats and aquatic consumables primarily within mass market retail, acquisition sales of $8.8 million from Armitage, mitigated by COVID related supply disruptions including temporary shut-down of key supplier manufacturing facilities and continued supply chain constraints negatively impacting product availability.

Organic net sales increased $20.2 million, or 7.3%, excluding unfavorable foreign currency exchange impact and acquisition sales.

Operating income, adjusted EBITDA, and margins for the three month period decreased due to lower volumes and incremental operating costs and inefficiencies from labor inflation and turnover, higher freight and input cost inflation ahead of incremental pricing actions, supply chain constraints, and continued investment in marketing and new product initiatives, partially offset by productivity improvements.

13.8 % 18.9 % (510) bps 13.3 % 19.2 % (590) bps

Net sales for the three month period increased due to positive pricing with growth in companion animals offset by softness in aquatics compared to higher than usual category sales in the prior year from stimulus spending, further impacted by supply chain capacity constraints and late inventory receipts for supplier manufacturing shut-down earlier in the year impacting product availability to meet customer demands, plus larger than anticipated customer fines and penalties from delayed shipments.

Organic net sales increased $7.1 million, or 2.4%, excluding unfavorable foreign currency exchange.

Net sales for the six month period increased due to positive pricing and Armitage acquisition sales of $8.8 million with increased demand in dog chews and treats, mitigated by temporary shut-down of key supplier manufacturing facilities and supply chain capacity constraints impacting product availability to meet customer demand.

Organic net sales increased $27.2 million, or 4.8% excluding unfavorable foreign exchange impact and acquisition sales.

Operating income, adjusted EBITDA, and margins for the three month period decreased due to higher freight and input cost inflation pacing ahead of pricing actions, operating cost inefficiencies from distribution and labor turnover, continued investment in marketing and new product initiatives, partially offset by productivity improvements, with incremental costs incurred to facilitate the transition of its U.S.

distribution operations further impacting operating income and margin.

Operating income, adjusted EBITDA, and margins for the six month period decreased due to higher freight and input cost inflation ahead of pricing actions, operating cost inefficiencies from distribution transitions and labor turnover, unfavorable product mix, and continued investment in marketing and new product initiatives, partially offset by productivity improvements, with incremental costs to facilitate the transition of its U.S.

distribution operations further impacting operating income and margin.

Home and Garden

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Three Month Periods Ended Variance

January 2, 2022 January 3, 2021

Six Month Periods Ended Variance

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

$ 196.6 $ 168.8 $ 27.8 16.5 % $ 271.9 $ 251.0 $ 20.9 8.3 %

Operating loss (15.7) (0.5) (15.2) 3,040.0 %

Operating loss margin (20.8) % (0.6) % (2,020) bps

Operating income 30.4 29.9 0.5 1.7 % 14.7 29.4 (14.7) (50.0) %

Operating income margin 15.5 % 17.7 % (220) bps 5.4 % 11.7 % (630) bps

Adjusted EBITDA

$ (7.3) $ 10.4 $ (17.7) n/m

$ 37.7 $ 34.8 $ 2.9 8.3 % $ 30.4 $ 45.3 $ (14.9) (32.9) %

Adjusted EBITDA margin

(9.7) % 12.6 % (2,230) bps

n/m = not meaningful

Net sales for the three month period decreased across all product categories due to higher replenishment orders to address lower year-end retailer inventory levels in the prior year coupled with supply chain and transportation challenges in the current period shifting customer product delivery past quarter-end, offset by acquisition sales of $7.7 million from Rejuvenate.

Organic net sales decreased $14.7 million, or 17.9%, excluding acquisition sales.

Operating income, adjusted EBITDA and margins for the three month period decreased due to freight and input cost inflation, continued marketing and product development investments, and product mix shift towards lower margin product, partially offset by pricing actions and productivity improvements.

19.2 % 20.6 % (140) bps 11.2 % 18.0 % (680) bps

Net sales for the three month period increased from the impact of price adjustments plus acquisition sales of $13.3 million, partially offset by unfavorable weather across most of the U.S.

which reduced category POS during the quarter and caused slowed retail inventory build which delayed our shipments to customers.

Organic net sales increased $14.5 million, or 8.6%, excluding acquisition sales.

Net sales for the six month period increased from the impact of price adjustments plus acquisition sales of $21.1 million.

Organic net sales decreased $0.2 million, or 0.1% excluding acquisition sales, attributable to comparably higher off-season replenishment orders in the prior year to address lower year-end retail inventory levels coupled with the unfavorable spring weather and delayed shipments to customers.

Operating income and adjusted EBITDA for the three month period increased due to pricing adjustments with decreased margins attributable to higher freight and input cost inflation outpacing price increases and continued marketing and product development investment.

Operating income and adjusted EBITDA and margins decreased for the six month period ended due to freight and input cost inflation outpacing pricing actions, continued marketing and product development investment and unfavorable product mix.

Liquidity and Capital Resources

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the three month periods ended January 2, 2022 and January 3, 2021, respectively.

Three Month Periods Ended (in millions)

January 2, 2022 January 3, 2021 January 2, 2022 January 3, 2021

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the six month periods ended April 3, 2022 and April 4, 2021, respectively.

Six Month Periods Ended (in millions)

April 3, 2022 April 4, 2021 April 3, 2022 April 4, 2021

Operating activities

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Cash Flows from Operating Activities

Cash flows used in SBH's continuing operations increased $145.1 million primarily due to a decrease in operating results with an increase in cash paid towards working capital for inventory and inflationary costs, coupled with an increase in cash paid for taxes, transaction and restructuring related charges, partially offset by lower cash paid for interest.

Cash flows used in SBH's continuing operations increased $105.1 million primarily due to a decrease in operating results with an increase in cash paid towards working capital for inventory and inflationary costs on raw materials and products, labor and freight, coupled with an increase in cash paid towards for taxes, strategic transactions and restructuring initiatives.

Cash flows used in SB/RH continuing operations increased $131.0 million primarily due to the items previously 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 in the prior year.

Cash Flows from Investing Activities

Cash flows used in investing activities for SBH continuing operations decreased $62.8 million primarily due to cash paid for the acquisition of Armitage of $129.8 million net proceeds from the sale of Energizer common stock of $60.5 million in the prior year, with an increase in capital expenditures of $6.5 million predominantly due to incremental investments in updating the Company's enterprise-wide operating system to SAP S/4 HANA.

Cash flows used in investing activities for SBH continuing operations increased $265.0 million primarily due to the cash paid for the acquisition, net cash acquired, for the purchase of the Tristar Business of $314.3 million compared to the purchase of Armitage of $129.8 million in the prior year, the net proceeds from the sale of Energizer common stock of $73.1 million in the prior year, with an increase in capital expenditures of $7.7 million predominantly due to incremental investments in updating the Company's enterprise-wide operating system to SAP S/4 HANA.

Cash flows used in investing activities of SB/RH decreased primarily due to the items previously discussed.

Cash Flows from Financing Activities

Cash flows provided by financing activities for continuing operations increased $430.4 million primarily due to increased borrowings on the Revolver Facility, partially offset by increase in stock repurchase activity and higher share based stock award withholding payments from vesting on LTIP grants.

During the three month period ended January 2, 2022, the Company realized $465.0 million of proceeds from the Revolver Facility with amortizing payments on other outstanding debt of $3.2 million.

Cash flows provided by financing activities for continuing operations increased $647.0 million primarily due to increased borrowings on the Revolver Facility to support the Tristar Business acquisition and working capital requirements from continued supply disruptions, partially offset by increase in stock repurchase activity and higher share based stock award withholding payments from the vesting on LTIP grants.

During the six month period ended April 3, 2022, the Company realized $775.0 million of proceeds from the Revolver Facility with amortizing payments on other outstanding debt of $6.5 million.

Refer to Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on debt borrowings.

During the three month period ended January 2, 2022, the Company repurchased $110.0 million of treasury stock at an average cost of $97.44 with no issuance of common stock, other than through the Company’s share-based compensation plans.

See Note 15 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

During the three month periods ended January 2, 2022 and January 3, 2021, SBH made cash dividend payments of $17.3 million and $17.8 million, respectively, or $0.42 per share.

During the six month period ended April 3, 2022, the Company repurchased $134.0 million of treasury stock at an average cost of $97.34, primarily through the Company's 10b5-1 repurchase plan which the Company completed during the six month period ended April 3, 2022.

There was no issuance of common stock, other than through the Company’s share-based compensation plans and which is recognized non-cash financing activities.

See Note 13 – Shareholders’ Equity and Note 14 - Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

During the six month periods ended April 3, 2022 and April 4, 2021, SBH made cash dividend payments of $34.4 million and $35.7 million, respectively, or $0.42 per share.

Cash flows from financing activity of SB/RH increased $670.8 million and is highly dependent upon the financing cash flow activities of SBH.

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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 January 2, 2022, the Company had borrowing availability of $116.0 million, net of outstanding letters of credit, under our credit facility.

As of April 3, 2022, the Company had borrowing availability of $308.4 million, net of outstanding letters of credit, under our credit facility.

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

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

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.

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

During the fourth quarter ended September 30, 2021, SBH entered into a $150.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through September 16, 2022, until the cap set forth in the plan was reached or until the plan was terminated.

The Company completed share repurchases of $150.0 million under the rule 10b5-1 repurchase plan during the three month period ended April 3, 2022.

Any further repurchase activity, if any, will dependent on prevailing market conditions, our liquidity requirements and other factors.

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

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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.

At January 2, 2022, we were in compliance with all covenants under the Senior Credit Agreement and the indentures governing the 3.875% Notes, 5.00% Notes, 5.50% Notes, 5.75% Notes, and 4.00% Notes.

At April 3, 2022, 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.

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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.

From time to time 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 Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow.

Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements.

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.

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However, the economic and social disruption attributable to the COVID-19 pandemic could lead to disruption and volatility in the global capital markets, which, depending on future developments, could impact our capital resources and liquidity in the future.

During the three month period ended January 2, 2022, there has been no material changes to our debt obligations, lease obligations, employee benefit obligations or other contractual obligations or commercial commitments previously discussed in our Annual Report on Form 10-K for the year ended September 30, 2021.

During the three month period ended April 3, 2022, there has been no material changes to our debt obligations, lease obligations, employee benefit obligations or other contractual obligations or commercial commitments previously discussed in our Annual Report on Form 10-K for the year ended September 30, 2021 other than the increased revolver capacity and borrowings under the Company's Credit Agreement, which have a maturity date of June 30, 2025 and are subject to repayment or re-borrowing by the Company without penalty.

See Note 10 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

We do 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.

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Investments in non-guarantor subsidiaries and the earnings or losses from those non-guarantor subsidiaries have been excluded.

Three Month Period Ended Year Ended

(in millions) January 2, 2022 September 30, 2021

Six Month Period Ended Year Ended

(in millions) April 3, 2022 September 30, 2021

Statements of Operations Data

12 unchanged sentences

Noncurrent Liabilities 3,846.1 2,881.7

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of January 2, 2022 and September 30, 2021 are as follows:

(in millions) January 2, 2022 September 30, 2021

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of April 3, 2022 and September 30, 2021 are as follows:

(in millions) April 3, 2022 September 30, 2021

Statements of Financial Position Data

4 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis