What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-02-10 compared with 2022-08-12 · 211 added, 387 removed, 363 unchanged (62% of the section changed)

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HPC Home Appliances:

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

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

Home Appliances:

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Personal Care:

Remington®, and LumaBella®

GPC Companion Animal:

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Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes and markers.

On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement ("ASPA") 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 (the "HHI Transaction").

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

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

HHI consists of residential locksets and door hardware, including knobs, levers, deadbolts, handle sets, and electronic and connected locks under the Kwikset®, Weiser®, Baldwin®, Tell Manufacturing®, and EZSET® brands;

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and builders' hardware consisting of hinges, metal shapes, security hardware, rack and sliding door hardware, and gate hardware under the National Hardware® and FANAL® brands.

The Company's assets and liabilities associated with the HHI disposal group have been classified as held for sale, HHI operations have been classified as discontinued operations, and notes to the condensed 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 included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information on the HHI divestiture.

Pursuant to the ASPA either party may terminate the ASPA if the HHI Transaction has not occurred on or prior to December 8, 2022 (the “End Date”).

On July 14, 2022, the parties entered into an amendment to the ASPA (the “Amendment”) pursuant to which the End Date was extended to June 30, 2023.

Except for the foregoing amendment to the End Date, the ASPA remains in full force and effect as written, including with respect to a termination fee of $350 million.

The Company continues to engage with antitrust regulators in the regulatory review of the HHI Transaction and the extension is intended to provide the parties with additional time (to the extent needed) to satisfy the conditions related to receipt of governmental clearances.

The parties are committed to closing the HHI Transaction and the Company and ASSA both continue to expect that they will obtain all the required governmental clearances and will close the HHI Transaction.

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

(the "Tristar Business").

The net assets and operations of the Tristar Business are integrated within the HPC segment.

As part of the acquisition, the PowerXL® and Copper Chef® brands were acquired outright by the Company while the Emeril 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 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 included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail.

Substantially all brands and tradenames are directly owned by the Company with the exception of the Black & Decker® ("B&D") and Emeril Legasse® ("Emeril") brands used by the HPC segment.

Refer to Note 2 - Divestitures included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further discussion pertaining the HHI divestiture.

All brands and tradenames are directly owned by the Company with the exception of the Black & Decker® ("B&D") and Emeril Legasse® ("Emeril") brands used by the HPC segment.

The Company has a trademark license agreement (the "License Agreement") with Stanley Black & Decker ("SBD") pursuant to which we license the B&D brand in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances within the Company's HPC segment:

beverage products, food preparation products, garment care products and cooking products.

The Company renewed the License Agreement through June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025 whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement.

The License Agreement has a term ending June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025, whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement.

Under the terms of the License Agreement, we agree to pay SBD royalties based on a percentage of sales, with minimum annual royalty payments of $15.0 million, with the exception of the minimum annual royalty will no longer be applied effective January 1, 2024, through the expiration of the agreement.

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See Note 4 – Revenue Recognition included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on revenue concentration from B&D branded products.

Pursuant to the Emeril License, the Company licenses the Emeril 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 has a current expiration of December 31, 2023, with options for one-year renewal periods following the initial expiration through December 31, 2025.

Under the terms of the agreement, we agreed to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.6 million, increasing to $1.8 million in subsequent renewal periods.

SB/RH is a wholly owned subsidiary of SBH.

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(“SBI”), a wholly-owned subsidiary of SB/RH incurred certain debt guaranteed by SB/RH and domestic subsidiaries of SBI.

See Note 10 – Debt for more information pertaining to debt.

See Note 9 – Debt included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to debt.

The reportable segments of SB/RH are consistent with the segments of SBH.

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• Tristar Business Acquisition - On February 18, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril, and Copper Chef® brands.

The net assets and operating results of the Tristar Business are included in the Company’s condensed consolidated financial statements and reported within the HPC reporting segment for the three and nine month period ended July 3, 2022 effective as of the transaction date.

See Note 3 - Acquisitions included in Notes to the Condensed Consolidated Financial Statement, included elsewhere in this Quarterly Report, for further detail.

In addition to the transaction costs of $13.5 million to effect the close of the transaction, recognized during the nine month period ended July 3, 2022, the Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts after the transaction date.

Costs attributable to the integration of the Tristar Business were initiated with the close of the transaction and are projecting to continue through the year ending September 30, 2023.

• Rejuvenate Acquisition - On May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP"), a 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 financial statements and reported within the H&G reporting segment for the three and nine month periods ended July 3, 2022 and July 4, 2021, effective as of the transaction date.

See Note 3 - Acquisitions included in Notes to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended September 30, 2021, for further detail.

In addition to the transaction costs of $5.3 million to effect the close of the transaction, recognized during the three and nine month period ended July 4, 2021, the Company incurred incremental costs to combine and integrate the acquired business with the H&G segment, primarily towards the integration of systems and processes, transfer of inventory and integration to an existing H&G distribution center, retention costs for personnel supporting transition and integration efforts after the transaction date, plus incremental trade spend realized from the transition of commercial operations practices and policies (recognized as a reduction in net sales).

Costs attributable to the integration of the Rejuvenate business have been substantially complete.

• Armitage Acquisition - On October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, United Kingdom including a portfolio of brands that include the 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 financial statements and reported within the GPC reporting segment for the three and nine month periods ended July 3, 2022 and July 4, 2021, effective as of the transaction date.

See Note 3 - Acquisitions included in Notes to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended September 30, 2021, for further detail.

In addition to the transaction costs of $5.1 million to effect the close of the transaction recognized during the nine month period ended July 4, 2021, the Company incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts after the transaction date.

Costs attributable to the integration of the Armitage business have been substantially complete.

• Omega Acquisition - 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.

The net assets and results of operations of Omega are included in the Company's condensed consolidated financial statements and reported within GPC segment for the three and nine month periods ended July 3, 2022 and July 4, 2021.

The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and process, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date.

Costs attributable to the integration of the Omega business will be substantially realized by end of the fiscal year ending September 30, 2022.

• HHI Divestiture - On September 8, 2021, the Company entered into a ASPA with ASSA to sell its HHI segment.

The consummation of the transaction is pending and subject to customary conditions, including the absence of a material adverse effect of HHI and certain antitrust conditions or other governmental restrictions, amongst others.

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.

See Note 2 - Divestitures included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail.

The Company has incurred incremental costs attributable to the pending divestiture, primarily consisting of legal and professional fees to effect the realization of the ASPA, facilitate antitrust or other governmental restrictions to consummate the transaction, preparation for separation of systems and processes supporting the divested business and enabling functions under a TSA, plus incremental retention costs for personnel supporting the transition efforts.

Incremental costs are expected to be incurred through the consummation of the pending transaction to support TSA processes and mitigation following the close of the sale, which are expected to be incurred for the transition period of approximately 12-24 months following the close of the transaction.

The net assets and operating results of the Tristar Business are included in the Company’s condensed consolidated financial statements and reported within the HPC reporting segment for the three month period ended January 1, 2023 effective as of the transaction date.

During the three month period ended January 1, 2023, the Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.

Costs attributable to the integration of the Tristar Business are projecting to continue through the year ending September 30, 2023.

• HPC Separation - The Company has initiated projects to facilitate a strategic separation of the Company's ownership in the HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or sale of the business and the retained GPC and H&G businesses of the consolidated group.

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The realization of the transaction, if any, is likely not to occur until after completion of the HHI divestiture.

Costs attributable to the initiative are expected to be incurred until a transaction is realized or otherwise cancelled.

Costs attributable to the initiative are expected to be incurred until a transaction is realized or otherwise canceled.

• HHI Divestiture - On September 8, 2021, the Company entered into an Asset and Stock Purchase Agreement ("ASPA") with ASSA ABLOY AB ("ASSA") to sell its HHI segment.

On September 15, 2022, the DOJ filed a complaint seeking to enjoin the transaction and block the acquisition of the HHI division by ASSA.

The Company expects that the trial will occur in April 2023.

Both the Company and ASSA have stated their disagreement with the DOJ's concerns.

The Company and ASSA will jointly defend the transaction in the litigation.

On December 2, 2022, ASSA announced an agreement to sell its Emtek and the Smart Residential Business in the U.S.

and Canada to Fortune Brand, which are believed to resolve any conceivable competitive concerns of the DOJ.

The Company continues to recognize the HHI division as held for sale and as a component of our discontinued operations and are reported separately for all periods presented.

The parties are committed to closing the HHI transaction and the Company and ASSA both continue to expect that they will obtain all the required governmental clearances and will close the HHI transaction.

See Note 2 - Divestitures in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail.

The Company has incurred incremental costs attributable to the pending transaction, primarily consisting of legal and professional fees to effect the realization of the ASPA, facilitate antitrust or other governmental restrictions to consummate the transaction, preparation for separation of systems and processes supporting the divested business and enabling functions under a transition services agreement ("TSA"), plus incremental retention costs for personnel supporting the transition efforts.

Incremental costs are expected to be incurred through the consummation of the pending transaction to support TSA processes and mitigation following the close of the sale, which are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction.

• Coevorden Operations - On March 29, 2020, the Company completed the sale of its dog and cat food ("DCF") production facility and distribution center in Coevorden, Netherlands with United Petfood Producers NV ("UPP").

See Note 2 - Divestitures included in Notes to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended September 30, 2021, for further detail.

Following the separation of the Coevorden Operations, the Company has incurred incremental costs attributable to a tolling charge for the continued production of dog and cat food products through a three-year manufacturing agreement with the buyer entered into concurrent with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period following the sale, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations to a new distribution center supporting GPC operations in EMEA.

Costs attributable to the tolling arrangement are expected to be completed in March 2023.

The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during three and nine month periods ended July 3, 2022 and July 4, 2021.

Following the separation of the Coevorden Operations, the Company has incurred incremental costs attributable to a tolling charge for the continued production of DCF products through a three-year manufacturing agreement with the buyer entered into concurrently with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period following the sale, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations from the Coevorden facility to a new distribution center supporting GPC operations in EMEA during the prior year.

Incremental costs attributable to the three-year tolling arrangement are expected to be completed in March 2023.

The net assets and operating results of FLP are included in the Company’s condensed consolidated financial statements and reported within the H&G reporting segment for the three month periods ended January 1, 2023 and January 2, 2022.

During the three month period ended January 2, 2022, the Company incurred incremental costs to combine and integrate the acquired business with the H&G segment, primarily towards the integration of systems and processes, transfer of inventory and integration to an existing H&G distribution center, retention costs for personnel supporting transition and integration efforts.

Costs attributable to the integration of the Rejuvenate business were completed in the prior year.

• Armitage Acquisition - On October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, United Kingdom, including a portfolio of brands that include the 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 financial statements and reported within the GPC reporting segment for the three month periods ended January 1, 2023 and January 2, 2022.

During the three month period ended January 2, 2022, the Company incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts.

Costs attributable to the integration of the Armitage business were completed in the prior year.

The net assets and results of operations of Omega are included in the Company's condensed consolidated financial statements and reported within GPC segment for the three month periods ended January 1, 2023 and January 2, 2022.

The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date.

Costs attributable to the integration of the Omega business were completed in the prior year.

The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during three month periods ended January 1, 2023 and January 2, 2022.

In addition to the initiatives discussed above, the Company regularly engages in other business development initiatives that may incur incremental costs which may not result in a realized transaction or are less significant and therefore have been separately disclosed and recognized as other project costs.

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

Tristar acquisition and integration $ 5.7 $ 1.7

Rejuvenate acquisition and integration — 5.8 7.0 5.8

Armitage acquisition and integration 0.1 1.0 1.4 7.7

Omega integration 0.1 — 1.5 —

HHI divestiture 0.6 — 6.1 —

HPC separation initiatives 2.4 1.7

HHI divestiture 1.5 4.3

Coevorden operations separation 1.3 3.2

Rejuvenate integration — 4.3

Armitage integration — 0.7

Omega integration — 0.9

Other project costs 0.2 0.5

Total $ 11.1 $ 17.3

Net sales $ — $ — $ 0.7 $ —

Cost of goods sold $ 1.3 $ 1.8

General & administrative expense 9.8 15.5

Other non-operating expense, net 4.3 — 4.3 —

Restructuring and Optimization Initiatives

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.

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.

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, or inflation increased interest rates, many of which are beyond our control.

The following initiatives have been considered as having a significant impact on the comparability of the financial results on the condensed consolidated financial statements and segment financial information.

• Fiscal 2022 Restructuring - The Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction.

Substantially all costs associated with the initiative have been recognized.

See Note 4 - Restructuring Charges for further detail on related exit or disposal costs attributable to this initiative.

• Fiscal 2022 Restructuring - During the year ended September 30, 2022, the Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction.

Substantially all costs associated with the initiative had been recognized in the prior year with amounts during the three month period ended January 1, 2023 due to change in estimates, headcounts and timing of communication.

See Note 3 - Restructuring Charges in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on related exit or disposal costs attributable to this initiative.

• Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and 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 project management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software configuration and implementation costs.

The Company has substantially completed the design phase of the project and is currently moving into the building and design phase.

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

The Company has substantially completed the design phase of the project and has moved into the build phase.

Costs are anticipated to be incurred through various deployments expected through September 30, 2024.

• HPC Brand Portfolio Transitions - In light of the acquisition of the Tristar Business and the PowerXL® brand, the Company has initiated a project within its HPC segment to assess and evaluate the current utilization of tradenames and brands across its portfolio of home and kitchen appliance products.

The project will require incremental costs to facilitate potential transitions of branded product offerings on global basis, including potential investment with our supply base and retail partners to manage inventory and transition new branded products to market.

• Russia Closing Initiative - The Company initiated an assessment of its in-country commercial operations in Russia, predominantly supporting the HPC segment, and other commercial activity directly impacted by the Russia-Ukraine conflict.

The Company has recognized impairment costs on inventory and receivables that are at risk of recoverability as the Company has discontinued importing products directly into Russia, has suspended its commercial activity and has begun liquidating remaining assets.

Additionally, the initiative is subject to exit and disposal costs for severance benefits of personnel associated with the operations.

Costs are anticipated to be incurred through September 30, 2023.

• GPC Distribution Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the U.S.

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Incremental costs include one-time transition, implementation and start-up cost with the new 3PL service provider, including the integration of provider systems and technology, incentive-based compensation to maintain performance during transition, duplicative and redundant costs, and incremental costs for various disruptions in the operations during the transition period including supplemental transportation and storage costs, incremental detention and demurrage costs.

See Note 4 - Restructuring Charges for further detail on costs attributable to the program.

The project has been substantially completed with no significant anticipated future costs.

Additionally, the Company experienced an increase in customer fines and penalties during the transition period (recognized as a reduction in net sales).

Costs attributable to the initiative are expected to be incurred through the end of the fiscal year ending September 30, 2022.

Costs attributable to the initiative were completed during the year ended September 30, 2022.

• Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce overall operational complexity across the Company.

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The initiative includes review of global processes and organization design and structures, headcount reductions and transfers, and rightsizing the Company’s shared operations and commercial business strategy and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity.

See Note 4 - Restructuring Charges for further detail on costs attributable to the program.

The project has been substantially completed with no significant anticipated future costs.

The Company has recognized impairment costs on inventory and receivables that are at risk of recoverability as the Company has discontinued importing products directly into Russia.

The initiative may be subject to further exit and disposal costs based upon future actions taken.

The following is a summary of impact to operating results attributable to restructuring initiatives and other optimization projects, incurred for the respective projects during three and nine month periods ended July 3, 2022 and July 4, 2021.

Costs attributable to the initiative were completed during the year ended September 30, 2022.

The following is a summary of impact to operating results attributable to restructuring initiatives and other optimization projects, incurred for the respective projects during three month periods ended January 1, 2023 and January 2, 2022.

In addition to the projects and initiatives discussed above, the Company regularly incurs cost and engages in less significant restructuring and optimization initiatives that individually are not substantial and occur over a shorter time period (generally less than 12 months).

Three Month Periods Ended Nine Month Periods Ended

(in millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Month Periods Ended

(in millions) January 1, 2023 January 2, 2022

Fiscal 2022 restructuring $ 0.6 $ —

Global ERP transformation 1.6 2.9

GPC distribution center transition 8.4 7.7 28.3 7.7

Global productivity improvement program 1.2 4.8 5.2 15.7

HPC brand portfolio transitions 1.0 —

Russia closing initiative 2.9 —

GPC distribution center transition — 12.8

Global productivity improvement program — 1.8

Other project costs 2.9 1.6

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General & administrative expense 8.6 6.3

Refinancing Activity

Financing 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.

• On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.

The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the three month period ended January 1, 2023.

• During the year ended September 30, 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.

See Note 9 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for additional detail regarding debt and financing activity.

Russia-Ukraine Conflict

The impacts of the Russia-Ukraine conflict 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 collectability 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 costs or potential impairments to remediate.

The COVID-19 pandemic and the resulting regulations have caused 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.

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.

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 we experienced an increase in demand for our products resulting from changes driven by the pandemic, 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.

The COVID-19 pandemic has not had a materially negative impact on the Company’s liquidity position and we have not observed any material impairments.

We continue to actively monitor our global cash and liquidity, and if necessary, could reinitiate mitigating efforts to manage non-critical spending and assess operating spend to preserve cash and liquidity.

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 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.

The Company does not maintain a significant level of operations within Ukraine and does not maintain material assets within Russia, which mostly consist 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 collectability and realizable value for working capital within the region and we have initiated the closing of the in-country commercial operations in Russia.

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.

We experienced increased labor shortages in the wake of the COVID-19 pandemic along with increased freight and distribution costs from transportation and logistics and disruptions within our supply chain.

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

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

In response to inflation, our segments have taken pricing actions to address rising costs and mitigate impacts to our margins.

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.

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

Non-GAAP Measurements

9 unchanged sentences

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 and nine month periods ended July 3, 2022 compared to net sales for the three and nine month periods ended July 4, 2021:

The following is a reconciliation of reported net sales to organic net sales for the three month periods ended January 1, 2023 compared to net sales for the three month periods ended January 2, 2022:

Three Month Periods Ended

(in millions, except %) July 3, 2022

Effect of Changes in Currency

Net Sales Excluding Effect of Changes in Currency

Effect of Acquisitions

$ 329.3 $ 17.8 $ 347.1 $ (65.8) $ 281.3 $ 274.4 $ 6.9 2.5 %

290.2 11.7 301.9 — 301.9 257.3 44.6 17.3 %

198.5 — 198.5 (5.5) 193.0 212.1 (19.1) (9.0) %

$ 818.0 $ 29.5 $ 847.5 $ (71.3) $ 776.2 $ 743.8 32.4 4.4 %

Nine Month Periods Ended

(in millions, except %)

(in millions, except %) January 1, 2023

Effect of Changes in Currency

1 unchanged sentence

Effect of Acquisitions

January 2, 2022

$ 364.4 $ 25.7 $ 390.1 $ (67.8) $ 322.3 $ 379.7 $ (57.4) (15.1) %

9 unchanged sentences

• 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 nine month period ended July 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 13 – Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;

7 unchanged sentences

• 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 operating lease assets with below market rent, among others;

• Non-cash gain from the reduction in the contingent consideration liability recognized during the three and nine month periods ended July 3, 2022 associated with the Tristar Business acquisition.

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

• Non-cash gain from the reduction in the contingent consideration liability recognized during the three month period ended January 1, 2023, associated with the Tristar Business acquisition in the prior year on February 18, 2022;

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

• Gains attributable to the Company's investment in Energizer common stock during the nine month period ended July 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 nine month period ended July 4, 2021 and the subsequent remeasurement during the nine month period ended July 3, 2022;

• Proforma adjustment for operating losses of the Company's in-country Russia operations that were directly attributable to the Company's closing initiatives in Russia and constraints applied to the in-country commercial operations resulting in a substantial decrease to in-country sales and incremental operating losses being realized;

• Realized gain from early settlement on certain cash flow hedges in our EMEA region prior to their stated maturity during the three and nine month periods ended July 3, 2022 due to change in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region.

See Note 11- Derivatives in Notes to the Condensed Consolidated Financial Statement, included elsewhere in this Quarterly Report for further details;

• Impact from the early settlement of foreign currency cash flow hedges in the prior year, resulting in subsequent assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early in the prior year due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in the recognition of excluded gains in the prior year intended to mitigate costs through the year ending September 30, 2023.

• Incremental costs recognized by the HPC segment attributable to the realization of product recalls initiated by the Company in the prior year.

See Note 16 - Commitments and Contingencies in 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 with remeasurements during the three month period ended January 2, 2022;

• Other adjustments are primarily attributable to:

(1) costs associated with Salus as they are not considered a component of the continuing commercial products company and (2) other key executive severance related costs.

(1) costs associated with Salus as they are not considered a component of the continuing commercial products company;

(2) key executive severance related costs;

(3) impairment charges from the exit of certain operating leases at our HPC segment;

and (4) insurable losses and cost recovery associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the three month period ended January 1, 2023.

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 July 3, 2022 and July 4, 2021 for SBH.

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended January 1, 2023 and January 2, 2022, for SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended July 3, 2022

Net income (loss) from continuing operations $ 12.6 $ 18.8 $ 36.3 $ (64.7) $ 3.0

Income tax expense — — — 2.0 2.0

Three Month Period Ended January 1, 2023

Net (loss) income from continuing operations $ (4.2) $ 23.0 $ (7.2) $ (51.6) $ (40.0)

Income tax benefit — — — (12.1) (12.1)

Interest expense — — — 33.4 33.4

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Share based compensation — — — 3.3 3.3

Tristar acquisition and integration 5.6 — — — 5.6

Armitage integration — 0.1 — — 0.1

Omega integration — 0.1 — — 0.1

Tristar integration 5.7 — — — 5.7

HHI divestiture — — — 1.5 1.5

3 unchanged sentences

Global ERP transformation — — — 1.6 1.6

GPC distribution center transition — 8.4 — — 8.4

Global productivity improvement program 0.5 0.2 — 0.5 1.2

HPC brand portfolio transitions 1.0 — — — 1.0

3 unchanged sentences

Non-cash purchase accounting adjustments 0.5 — — — 0.5

Gain from contingent consideration liability (25.0) — — — (25.0)

Proforma in-country Russia operations 0.4 — — — 0.4

Gain on early settlement of cash flow hedges (8.2) — — — (8.2)

Gain from remeasurement of contingent consideration liability (1.5) — — — (1.5)

Early settlement of foreign currency cash flow hedges 2.6 — — — 2.6

HPC product recall 0.3 — — — 0.3

Salus and other 0.6 2.9 — 0.8 4.3

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Adjusted EBITDA Margin 3.6 % 13.4 % (3.4) % — 5.6 %

Three Month Period Ended July 4, 2021

Net (loss) income from continuing operations $ (2.7) $ 27.2 $ 41.7 $ (68.1) $ (1.9)

Income tax expense — — — 10.0 10.0

Interest expense — — — 20.4 20.4

Depreciation 3.4 4.1 1.7 3.6 12.8

Amortization 8.3 6.3 2.8 — 17.4

EBITDA 9.0 37.6 46.2 (34.1) 58.7

Share based compensation — — — 7.7 7.7

Rejuvenate acquisition and integration — — 5.8 — 5.8

Armitage integration — 1.0 — — 1.0

HPC separation initiatives — — — (0.5) (0.5)

Coevorden operations separation — 2.9 — — 2.9

Global ERP transformation — — — 0.9 0.9

GPC distribution center transition — 7.7 — — 7.7

Global productivity improvement program 2.1 — — 2.7 4.8

Other project costs 0.7 — 0.1 1.6 2.4

Unallocated shared costs — — — 6.7 6.7

Non-cash purchase accounting adjustments — — 1.3 — 1.3

Adjusted EBITDA $ 11.8 $ 49.2 $ 53.4 $ (15.0) $ 99.4

Net Sales $ 274.4 $ 257.3 $ 212.1 $ — $ 743.8

Adjusted EBITDA margin 4.3 % 19.1 % 25.2 % — 13.4 %

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

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Nine Month Period Ended July 3, 2022

Three Month Period Ended January 2, 2022

Net income (loss) from continuing operations $ 19.0 $ 11.7 $ (15.8) $ (45.1) $ (30.2)

5 unchanged sentences

Share based compensation — — — 5.6 5.6

Tristar acquisition and integration 20.0 — — — 20.0

Tristar acquisition — — — 1.7 1.7

Rejuvenate integration — — 4.3 — 4.3

1 unchanged sentence

Omega integration — 0.9 — — 0.9

HHI divestiture — — — 6.1 6.1

HPC separation initiatives — — — 1.7 1.7

Coevorden operations separation — 7.3 — — 7.3

Fiscal 2022 restructuring 3.7 3.1 0.6 0.7 8.1

Global ERP transformation — — — 9.4 9.4

GPC distribution center transition — 28.3 — — 28.3

Global productivity improvement program 2.5 0.9 — 1.8 5.2

HPC brand portfolio transitions 0.3 — — — 0.3

Russia in-country closing initiatives 3.4 0.2 — — 3.6

Other project costs 0.6 0.2 — 9.9 10.7

Unallocated shared costs — — — 20.7 20.7

Non-cash purchase accounting adjustments 7.8 — — — 7.8

Gain from contingent consideration liability (25.0) — — — (25.0)

Legal and environmental — — (0.5) — (0.5)

Proforma in-country Russia operations 0.4 — — — 0.4

Gain on early settlement of cash flow hedges (8.2) — — — (8.2)

Salus and other — — 1.3 0.4 1.7

Adjusted EBITDA $ 41.6 $ 120.2 $ 73.1 $ (26.5) $ 208.4

Net sales $ 1,025.2 $ 887.5 $ 470.3 $ — $ 2,383.0

Adjusted EBITDA margin 4.1 % 13.5 % 15.5 % — 8.7 %

Nine Month Period Ended July 4, 2021

Net income (loss) from continuing operations $ 46.4 $ 99.9 $ 71.1 $ (208.2) $ 9.2

Income tax expense — — — 5.3 5.3

Interest expense — — — 96.4 96.4

Depreciation 10.5 11.6 6.2 10.9 39.2

Amortization 21.8 18.2 8.2 — 48.2

EBITDA 78.7 129.7 85.5 (95.6) 198.3

Share and incentive based compensation — — — 21.9 21.9

Rejuvenate acquisition and integration — — 5.8 — 5.8

Armitage acquisition and integration — 7.7 — — 7.7

HPC separation initiatives — — — 14.2 14.2

HHI divestiture — — — 4.3 4.3

Coevorden operations separation — 3.2 — — 3.2

4 unchanged sentences

Unallocated shared costs — — — 6.8 6.8

Non-cash purchase accounting adjustments — 3.4 1.3 — 4.7

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

Legal and environmental — — 6.0 — 6.0

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

Salus and other — — — (0.1) (0.1)

2 unchanged sentences

Adjusted EBITDA margin 7.2 % 12.8 % (9.7) % — 6.5 %

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

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended January 1, 2023 and January 2, 2022, for SB/RH.

SB/RH HOLDINGS, LLC

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended July 3, 2022

Net income (loss) from continuing operations $ 12.6 $ 18.8 $ 36.3 $ (64.0) $ 3.7

Income tax expense — — — 2.0 2.0

Three Month Period Ended January 1, 2023

Net (loss) income from continuing operations $ (4.2) $ 23.0 $ (7.2) $ (51.4) $ (39.8)

Income tax benefit — — — (12.2) (12.2)

Interest expense — — — 33.4 33.4

2 unchanged sentences

EBITDA 1.1 32.2 (2.6) (26.7) 4.0

Share and incentive based compensation — — — (1.1) (1.1)

Tristar acquisition and integration 5.6 — — — 5.6

Armitage integration — 0.1 — — 0.1

Omega integration — 0.1 — — 0.1

Share based compensation — — — 3.1 3.1

Tristar integration 5.7 — — — 5.7

HHI divestiture — — — 1.5 1.5

3 unchanged sentences

Global ERP transformation — — — 1.6 1.6

GPC distribution center transition — 8.4 — — 8.4

Global productivity improvement program 0.5 0.2 — 0.5 1.2

HPC brand portfolio transitions 1.0 — — — 1.0

3 unchanged sentences

Non-cash purchase accounting adjustments 0.5 — — — 0.5

Gain from contingent consideration liability (25.0) — — — (25.0)

Proforma in-country Russia operations 0.4 — — — 0.4

Gain on early settlement of cash flow hedges (8.2) — — — (8.2)

Gain from remeasurement of contingent consideration liability (1.5) — — — (1.5)

Early settlement of foreign currency cash flow hedges 2.6 — — — 2.6

HPC product recall 0.3 — — — 0.3

Other 0.6 2.9 — 0.8 4.3

2 unchanged sentences

Adjusted EBITDA margin 3.6 % 13.4 % (3.4) % — 5.6 %

Three Month Period Ended July 4, 2021

Net (loss) income from continuing operations $ (2.7) $ 27.2 $ 41.7 $ (67.2) $ (1.0)

Income tax expense — — — 10.6 10.6

Interest expense — — — 20.5 20.5

Depreciation 3.4 4.1 1.7 3.6 12.8

Amortization 8.3 6.3 2.8 — 17.4

EBITDA 9.0 37.6 46.2 (32.5) 60.3

Share and incentive based compensation — — — 7.1 7.1

Rejuvenate acquisition and integration — — 5.8 — 5.8

Armitage integration — 1.0 — — 1.0

HPC separation initiatives — — — (0.5) (0.5)

Coevorden operations separation — 2.9 — — 2.9

Global ERP transformation — — — 0.9 0.9

GPC distribution center transition — 7.7 — — 7.7

Global productivity improvement program 2.1 — — 2.7 4.8

Other project costs 0.7 — 0.1 1.6 2.4

Unallocated shared costs — — — 6.7 6.7

Non-cash purchase accounting adjustments — — 1.3 — 1.3

Adjusted EBITDA $ 11.8 $ 49.2 $ 53.4 $ (14.0) $ 100.4

Net Sales $ 274.4 $ 257.3 $ 212.1 $ — $ 743.8

Adjusted EBITDA margin 4.3 % 19.1 % 25.2 % — 13.5 %

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

SB/RH HOLDINGS, LLC

(in millions) HPC GPC H&G Corporate Consolidated

Nine Month Period Ended July 3, 2022

Three Month Period Ended January 2, 2022

Net income (loss) from continuing operations $ 19.0 $ 11.7 $ (15.8) $ (45.0) $ (30.1)

5 unchanged sentences

Share based compensation — — — 5.6 5.6

Tristar acquisition and integration 20.0 — — — 20.0

Tristar acquisition — — — 1.7 1.7

Rejuvenate integration — — 4.3 — 4.3

1 unchanged sentence

Omega integration — 0.9 — — 0.9

HHI divestiture — — — 6.1 6.1

HPC separation initiatives — — — 1.7 1.7

Coevorden operations separation — 7.3 — — 7.3

Fiscal 2022 restructuring 3.7 3.1 0.6 0.7 8.1

Global ERP transformation — — — 9.4 9.4

GPC distribution center transition — 28.3 — — 28.3

Global productivity improvement program 2.5 0.9 — 1.8 5.2

HPC brand portfolio transitions 0.3 — — — 0.3

Russia dissolution 3.4 0.2 — — 3.6

Other project costs 0.6 0.2 — 9.9 10.7

Unallocated shared costs — — — 20.7 20.7

Non-cash purchase accounting adjustments 7.8 — — — 7.8

Gain from contingent consideration liability (25.0) — — — (25.0)

Legal and environmental — — (0.5) — (0.5)

Proforma in-country Russia operations 0.4 — — — 0.4

Gain on early settlement of cash flow hedges (8.2) — — — (8.2)

Other — — 1.3 0.1 1.4

Adjusted EBITDA $ 41.6 $ 120.2 $ 73.1 $ (25.5) $ 209.4

Net sales $ 1,025.2 $ 887.5 $ 470.3 $ — $ 2,383.0

Adjusted EBITDA margin 4.1 % 13.5 % 15.5 % — 8.8 %

Nine Month Period Ended July 4, 2021

Net income (loss) from continuing operations $ 46.4 $ 99.9 $ 71.1 $ (206.4) $ 11.0

Income tax expense — — — 6.1 6.1

Interest expense — — — 96.6 96.6

Depreciation 10.5 11.6 6.2 10.9 39.2

Amortization 21.8 18.2 8.2 — 48.2

EBITDA 78.7 129.7 85.5 (92.8) 201.1

Share and incentive based compensation — — — 20.7 20.7

Rejuvenate acquisition and integration — — 5.8 — 5.8

Armitage acquisition and integration — 7.7 — — 7.7

HPC separation initiatives — — — 14.2 14.2

HHI divestiture — — — 4.3 4.3

Coevorden operations separation — 3.2 — — 3.2

4 unchanged sentences

Unallocated shared costs — — — 6.8 6.8

Non-cash purchase accounting adjustments — 3.4 1.3 — 4.7

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

Legal and environmental — — 6.0 — 6.0

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

Other — — — (0.2) (0.2)

3 unchanged sentences

Consolidated Results of Operations

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

The following is summarized consolidated results of operations for SBH for the three month periods ended January 1, 2023 and January 2, 2022.

(in millions, except %)

Three Month Periods Ended Variance

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

Net sales $ 713.3 $ 757.2 $ (43.9) (5.8) %

Gross profit 201.9 219.3 (17.4) (7.9) %

Gross profit margin 33.7 % 35.3 % (160) bps 31.5 % 34.7 % (320) bps

Gross profit margin 28.3 % 29.0 % (70) bps

Operating expenses $ 222.1 $ 243.1 $ (21.0) (8.6) %

Interest expense 33.4 21.8 11.6 53.2 %

Other non-operating expense (income), net 7.7 1.4 6.3 450.0 % 7.4 (9.8) 17.2 n/m

Income tax expense (benefit) 2.0 10.0 (8.0) (80.0) % (20.8) 5.3 (26.1) n/m

Net income (loss) from continuing operations 3.0 (1.9) 4.9 n/m (52.3) 9.2 (61.5) n/m

Other non-operating (income) expense, net (1.5) 0.6 (2.1) n/m

Income tax benefit (12.1) (16.0) 3.9 (24.4) %

Net loss from continuing operations (40.0) (30.2) (9.8) 32.5 %

Income from discontinued operations, net of tax 19.5 38.8 (19.3) (49.7) %

Net income 32.9 30.7 2.2 7.2 % 57.5 139.3 (81.8) (58.7) %

Net (loss) income (20.5) 8.6 (29.1) n/m

n/m = not meaningful

The following is a summary of net sales by segment for the three and nine month periods ended July 3, 2022 and July 4, 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 month periods ended January 1, 2023 and January 2, 2022, and the principal components of changes in net sales for the respective periods.

(in millions, except %)

Three Month Periods Ended Variance

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

$ 364.4 $ 379.7 $ (15.3) (4.0) %

3 unchanged sentences

(in millions)

Three Month Periods Ended Nine Month Periods Ended

Net Sales for the period ended July 4, 2021

$ 743.8 $ 2,240.3

Increase in GPC

Increase in HPC

Three Month Periods Ended

Net Sales for the period ended January 2, 2022

Decrease in GPC

Decrease in HPC

Decrease in H&G (3.9)

1 unchanged sentence

Foreign currency impact, net

(29.5) (53.7)

Net Sales for the period ended July 3, 2022

$ 818.0 $ 2,383.0

Net Sales for the period ended January 1, 2023

Gross Profit.

Gross profit for the three month period increased primarily from acquisitions and positive pricing adjustments with a decrease in gross profit margin due to reduced volumes and absorption losses with increased supply chain costs from higher inventory and continued supply chain challenges.

Gross profit and gross profit margin for the nine month period decreased primarily due to accelerated freight and input cost inflation pacing ahead of pricing actions earlier in the period, lower volumes compared to prior year reopening trends and stimulus spending, as well as increased supply chain costs from higher inventory and constrained supply chain reducing product availability to meet customer demands.

Gross profit and gross profit margin for the three month period decreased primarily due to lower sales volume offset by improved pricing compared to prior year, plus the realization of higher inventoried costs accumulated in the prior year and an unfavorable mix to reduce excess inventory levels.

Operating Expenses.

Operating expenses for the three month period increased due to an increase in selling expenses of $25.9 million from higher distribution and transportation costs, higher warehousing and inventory management costs, operating inefficiencies from labor inflation and turnover;

increase in general and administrative expenses of $5.4 million with increased investment in strategic transactions and restructuring related project costs offset by reduced incentive compensation;

offset by realized gain of $25.0 million from the contingent consideration liability associated with the Tristar Business acquisition.

See Note 3 - Acquisitions in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Operating expenses for the nine month period increased due to an increase in selling expenses of $85.3 million from higher distribution and transportation costs, increase in warehousing and inventory management costs, operating inefficiencies from labor inflation and turnover, and increased investment in marketing and new product development earlier in the period;

increase in general and administrative expenses of $8.8 million with increased investment in strategic transactions and restructuring related project costs, partially offset by lower incentive compensation costs;

offset by realized gain of $25.0 million from the contingent consideration liability associated with the Tristar Business acquisition.

See Note 3 - Acquisitions in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Operating expenses for the three month period decreased due to a decrease in selling expenses of $15.0 million from a reduction in distribution and transportation costs with improved operating effectiveness and initiatives from the prior year to reduce operating spend;

with a decrease in general and administrative expenses of $4.6 million from operating spend initiatives and lower cost towards strategic transactions and restructurings, plus a gain of $1.5 million from the remeasurement of the contingent consideration liability associated with the Tristar Business acquisition.

Interest Expense.

Interest expense for the three month period increased due to a higher level of outstanding borrowings on the Revolver Facility used to fund the Tristar Business acquisition and working capital requirements with increased borrowing rates on variable rate debt.

Interest expense for the nine month period 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 in the prior year, partially offset by the higher level of outstanding borrowings on the Revolver Facility and increased borrowing rates on variable rate debt.

Interest expense for the three month period increased due to a higher level of outstanding borrowings on the Revolver Facility with increased borrowing rates on variable rate debt plus an incremental $2.3 million for the amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio during the year ending September 30, 2023.

See Note 9 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Other Non-Operating Expense, Net.

Other non-operating expense for the three month period increased due to unfavorable foreign currency exchange predominantly with the decrease in Euro and Pound Sterling, Other non-operating expense for the nine month period increased due to unfavorable foreign currency exchange and realized gains on our investment in Energizer common stock in the prior year, which was sold in January 2021.

Other Non-Operating (Income) Expense, Net.

Other non-operating income for the three month period increased due to changes in foreign currency compared to the prior year.

Income Taxes.

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

Our estimated annual effective tax rate was impacted for the three month period 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, certain nondeductible expenses, foreign rates that differ from the U.S.

federal statutory rate, and state income taxes.

During the nine month period ended July 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.

The Company also recognized $2.2 million of tax expense during the three and nine month periods ended July 3, 2022 for taxes associated with preparing the Company for a strategic separation of the HPC segment.

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

federal statutory rate.

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 previous divestitures of its GBL and GAC divisions.

Income from discontinued operations attributable to the HHI segment decreased during the three month period ended July 3, 2022 due to lower volumes offset by pricing increases to address 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 nine month period ended July 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 earlier in the period, partially offset by lower depreciation and amortization while held for sale.

Income or loss attributable to discontinued operations primarily reflect the income from the discontinued operations of the HHI segment.

Income from discontinued operations attributable to the HHI segment decreased during the three month period ended January 1, 2023, due to lower volumes offset by pricing increases to address inflationary costs and freight spend.

See Note 2 -Divestitures in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Noncontrolling Interest.

The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the accounting interest.

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 and nine month periods ended July 3, 2022 and July 4, 2021:

Such amount varies in relation to such a 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 1, 2023 and January 2, 2022:

(in millions, except %)

Three Month Periods Ended Variance

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

Net sales $ 713.3 $ 757.2 $ (43.9) (5.8) %

Gross profit 201.9 219.3 (17.4) (7.9) %

Gross profit margin 33.7 % 35.3 % (160) bps 31.5 % 34.7 % (320) bps

Gross profit margin 28.3 % 29.0 % (70) bps

Operating expenses $ 222.0 $ 242.8 $ (20.8) (8.6) %

Interest expense 33.4 21.8 11.6 53.2 %

Other non-operating expense (income), net 7.7 1.4 6.3 450.0 % 7.3 (9.8) 17.1 n/m

Income tax expense (benefit) 2.0 10.6 (8.6) (81.1) % (20.4) 6.1 (26.5) n/m

Net income (loss) from continuing operations 3.7 (1.0) 4.7 n/m (51.0) 11.0 (62.0) n/m

Other non-operating (income) expense, net (1.5) 0.6 (2.1) n/m

Income tax benefit (12.2) (15.8) 3.6 (22.8) %

Net loss from continuing operations (39.8) (30.1) (9.7) 32.2 %

Income from discontinued operations, net of tax 19.5 38.8 (19.3) (49.7) %

Net income 33.5 31.7 1.8 5.7 % 58.7 141.3 (82.6) (58.5) %

Net (loss) income (20.3) 8.7 (29.0) n/m

n/m = not meaningful

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

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

Segment Financial Data

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(in millions, except %) Three Month Periods Ended

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

$ 364.4 $ 379.7 $ (15.3) (4.0) %

Operating income (loss) 14.4 (2.4) 16.8 n/m 14.9 45.8 (30.9) (67.5) %

Operating income (loss) margin 4.4 % (0.9 %) 530 bps 1.5 % 4.8 % (330) bps

Operating (loss) income (4.3) 20.4 (24.7) n/m

Operating (loss) income margin (1.2 %) 5.4 % (660) bps

Adjusted EBITDA

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Adjusted EBITDA margin

1.1 % 4.3 % (320) bps 4.1 % 9.3 % (520) bps

3.6 % 7.2 % (360) bps

n/m = not meaningful

Net sales for the three month period increased primarily driven by Tristar Business acquisition sales of $65.8 million with significant unfavorable foreign currency impact of $17.8 million during the period with an increase in organic net sales of $6.9 million, or 2.5% attributable to positive pricing adjustments on inflationary costs, growth and expansion in LATAM markets, and growth in garment care and personal care product categories, offset by declines from high retail inventory levels and reduced replenishment orders from significant retailers, predominantly in the U.S.

Net sales for the nine month period increased from Tristar Business acquisition sales of $101.6 million, with significant unfavorable foreign currency impact of $34.2 million resulting in an increase in organic net sales of $7.0 million, or 0.7% due to positive pricing adjustments on inflationary costs, growth and expansion in LATAM and garment care product sales, offset by product availability issues from supply chain constraints, lower product category demands compared to prior year reopening trends, and high retail inventory levels and reduced replenishment orders from significant retailers, predominantly in the U.S.

Operating income and margin increased due to the recognition of a $25.0 million gain from the contingent consideration liability associated with the Tristar Business acquisition despite increase in related restructuring and integration costs, lower volume, unfavorable foreign currency and incremental distribution and inventory management costs due to supply chain challenges also contributing to the decrease in adjusted EBITDA and margins for the three month period.

Operating income, adjusted EBITDA and margins for the nine month period decreased driven by accelerated freight and input cost inflation ahead of incremental pricing actions, incremental distribution and inventory management costs due to supply chain challenges, investments in marketing and new product development initiatives earlier in the period, with incremental transaction, restructuring, and integration related costs attributable to the Tristar Business acquisition and related non-cash purchase accounting adjustments further impacting operating income and margin, partially offset by the recognition of a $25.0 million gain from the contingent consideration liability associated with the Tristar Business acquisition.

Net sales decreased due to slower product category retail sales with an increasingly competitive landscape and high retail inventory levels limiting replenishment orders during the holiday season.

Prior year pricing adjustments positively impacted net sales compared to the prior year.

Sale volumes in EMEA were further impacted by Russia-Ukraine war and closing of our Russia commercial operations.

Organic net sales decreased 57.4 million, excluding acquisition sales of $67.8 million and an unfavorable foreign currency impact of $25.7 million.

Operating income, adjusted EBITDA and margins decreased due to lower volume, the realization of higher inventoried costs accumulated in the prior year and unfavorable foreign currency in our EMEA markets, partially mitigated through cost savings to reduce operating expenses initiated in the prior year.

Operating income was further impacted by incremental costs towards the integration of the Tristar Business, dissolution of the Russia commercial operations and strategic investment to transition the segment brand portfolio.

Global Pet Care

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Three Month Periods Ended Variance

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

$ 277.5 $ 302.2 $ (24.7) (8.2) %

Operating income 22.7 12.3 10.4 84.6 %

Operating income margin 6.9 % 10.8 % (390) bps 5.9 % 12.3 % (640) bps

Operating income margin 8.2 % 4.1 % 410 bps

Adjusted EBITDA

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Adjusted EBITDA margin

14.1 % 19.1 % (500) bps 13.5 % 19.2 % (570) bps

Net sales for the three month period increased due to positive pricing adjustments on inflationary costs, improving product availability and fulfillment compared to prior year supply chain challenges, with continued demand in companion animals and aquatics consumables offset by softness in aquatics systems and equipment.

EMEA sales were negatively impacted by unfavorable foreign exchange rates, with sales remaining consistent, excluding unfavorable foreign exchange rates, despite pressure on consumers from high inflation and impact of the Russia-Ukraine conflict.

Organic net sales increased $44.6 million, or 17.3%, excluding unfavorable foreign currency exchange.

Net sales for the nine month period increased due to positive pricing adjustments on inflationary costs, improvement in product availability and fulfillment in the U.S.

distribution center with increased demand in dog chews and treats, mitigated by temporary shut-down of key supplier manufacturing facilities and supply chain capacity constraints impacting fulfillment earlier in the period.

Organic net sales increased $71.9 million, or 8.7% excluding unfavorable foreign exchange impact and Armitage acquisition sales of $8.8 million.

Operating income, adjusted EBITDA, and margins for the three month period decreased due to additional distribution and inventory management costs as the distribution footprint was expanded to support higher inventory to continue to drive customer fill rates, unfavorable foreign currency exchange, unfavorable product mix, 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 nine month period decreased due to higher freight and input cost inflation ahead of pricing actions, additional distribution and inventory management costs, operating cost inefficiencies from distribution transitions and labor turnover, unfavorable product mix, and investment in marketing and new product initiatives earlier in the period with incremental costs to facilitate the transition of its U.S.

distribution operations further impacting operating income and margin.

13.4 % 12.8 % 60 bps

Net sales decreased from higher retail inventory levels limiting replenishment orders and lower retail sales in certain categories, primarily with pet specialty retailers, offset by new positive pricing adjustments in EMEA and impact of prior year price increases.

Sales and distribution for the chews & treats category continue to grow from the prior year with declines in other hard goods and aquatic environments as we compare to prior year elevated levels.

EMEA sales were negatively impacted by unfavorable foreign exchange rates and lower aquatic sales offset by growth in companion animal sales including dog & cat food.

Organic net sales decreased $10.8 million, or 3.6%, excluding unfavorable foreign currency impact of $13.9 million

Operating income and margin increased due to lower distribution costs compared to prior year disruptions, positive pricing adjustments and operating expense savings initiatives, offset by lower volumes and unfavorable foreign currency exchange.

Adjusted EBITDA decreased due to lower volume with margin increase due to pricing adjustments and operating expense savings.

Home and Garden

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Three Month Periods Ended Variance

Nine Month Periods Ended Variance

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

January 1, 2023 January 2, 2022

$ 71.4 $ 75.3 $ (3.9) (5.2) %

Operating income 36.2 41.7 (5.5) (13.2) % 50.8 71.1 (20.3) (28.6) %

Operating income margin 18.2 % 19.7 % (150) bps 10.8 % 15.3 % (450) bps

Operating loss (7.2) (15.7) 8.5 (54.1) %

Operating loss margin (10.1) % (20.8) % 1,070 bps

Adjusted EBITDA

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Adjusted EBITDA margin

21.6 % 25.2 % (360) bps 15.5 % 21.3 % (580) bps

Net sales for the three month period decreased primarily from unfavorable weather conditions across the U.S.

with a cold, wet start to the period and drought conditions during the period driving reduction in category POS, high retail inventory levels and reduced retailer replenishment, most significantly with our repellent product category, partially offset by positive price adjustments and Rejuvenate acquisition sales of $5.5 million.

Organic net sales decreased $19.1 million, or 9.0%, excluding acquisition sales.

Net sales for the nine month period increased primarily from acquisition sales of $26.6 million with a decrease in organic net sales of $19.5 million, or 4.2% excluding acquisition sales, attributable to unfavorable weather conditions, reduced category POS, and high retail inventory levels reducing retailer replenishment;

partially offset by positive pricing adjustments on inflationary costs.

Operating income and adjusted EBITDA and margins for the three month period decreased due to the reduced volumes, related absorption losses and unfavorable product mix.

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

(3.4) % (9.7) % 630 bps

Net sales decreased primarily due to higher retail inventory reducing replenishment needs and lower early seasonal inventory investment across most all pest control product categories, offset by positive pricing adjustments initiated in the prior year.

Cleaning products realized year-over-year growth with increased distribution and price increases following integration related disruption in the prior year.

Operating loss improvement with increases in adjusted EBITDA and margins for the three month period were due to pricing, operational performance and annualization of operating cost savings initiatives from the prior year, plus higher integration costs in the prior year following the Rejuvenate acquisition further benefiting operating income.

Liquidity and Capital Resources

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

Nine Month Periods Ended (in millions)

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the three month periods ended January 1, 2023 and January 2, 2022, respectively.

Three Month Periods Ended (in millions)

January 1, 2023 January 2, 2022 January 1, 2023 January 2, 2022

Operating activities

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Cash Flows from Operating Activities

Cash flows used in SBH's continuing operations increased $108.2 million primarily due to a decrease in operating results with an increase in cash paid towards inflationary costs on raw materials and products, labor and freight, increased supply chain costs from higher inventory, plus higher retail inventory driving down replenishment orders, coupled with an increase in cash paid towards strategic transactions and restructuring initiatives.

Cash flows used in SB/RH continuing operations increased $133.9 million primarily due to the items previously discussed above.

Cash flows used in SBH's continuing operations decreased $198.8 million, primarily due to the reduction of cash used towards working capital compared to the prior year, primarily with the reduced purchasing and overall reduction of inventory compared to the prior year spending and higher supply chain costs, plus a decrease in cash paid towards strategic transactions and restructuring initiatives.

Cash flows used in SB/RH continuing operations decreased $220.7 million primarily due to the items previously discussed above.

Cash Flows from Investing Activities

Cash flows used in investing activities for SBH continuing operations decreased $65.6 million primarily due to the decreased use of cash paid for the acquisitions, net of cash acquired, for the purchase of the Tristar Business of $272.1 million compared to the purchases of Armitage and Rejuvenate for $429.5 million in the prior year, offset by 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 $19.1 million predominantly due to incremental investments in updating the Company's enterprise-wide operating systems.

Cash flows used in investing activities for SBH continuing operations decreased $4.0 million, primarily from reduced capital expenditures.

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

Cash Flows from Financing Activities

Cash flows provided by financing activities for continuing operations increased $558.5 million primarily due to increased borrowings on the Revolver Facility to support the Tristar Business acquisition and working capital requirements, partially offset by an increase in stock repurchase activity earlier in the period and higher share based stock award withholding payments from the vesting of LTIP grants.

During the nine month period ended July 3, 2022, the Company realized $775.0 million of proceeds from the Revolver Facility with amortizing payments on other outstanding debt of $9.8 million.

Cash flows provided by financing activities for continuing operations decreased $253.2 million primarily due to the decrease in incremental borrowings required from the Revolver Facility offset by the lower treasury share repurchases.

During the three month period ended January 1, 2023, the Company realized $90.0 million of proceeds from the Revolver Facility with amortizing payments on other outstanding debt of $3.3 million.

Refer to Note 9 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on debt borrowings.

During the nine month period ended July 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 earlier in the period.

During the three month period ended January 1, 2023, the Company did not repurchase any treasury stock.

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

See Note 12 – Shareholders’ Equity and Note 13 - Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

During the nine month periods ended July 3, 2022 and July 4, 2021, SBH made cash dividend payments of $51.5 million and $53.6 million, respectively, or $0.42 per share.

Cash flows from financing activity of SB/RH increased $582.3 million and is highly dependent upon the financing cash flow activities of SBH.

During the three month periods ended January 1, 2023 and January 2, 2022, SBH made cash dividend payments of $17.1 million and $17.3 million, respectively, or $0.42 per share.

Cash flows from financing activity of SB/RH decreased $275.3 million and is highly dependent upon the financing cash flow activities of SBH.

Liquidity Outlook

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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.

Despite the recent reduction in operating cash flow, we believe the negative operating cash flow recognized for the nine month period ended July 3, 2022 is not indicative of the ongoing near-term operations of the Company and based upon our current and anticipated level of operations, existing cash balances 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.

We believe the negative operating cash flow recognized for the three month period ended January 1, 2023, is not indicative of the ongoing near-term operations of the Company and based upon our current and anticipated level of operations, existing cash balances, the anticipated proceeds from the HHI divestiture 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.

It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital.

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 July 3, 2022, the Company had borrowing availability of $307.3 million, net of outstanding letters of credit, under our credit facility.

As of January 1, 2023, the Company had borrowing availability of $252.5 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.

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.

Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other related projects.

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

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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 earlier in the fiscal year.

During the three month period ended January 1, 2023, the Company did not repurchased any shares.

See Note 12 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

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

Any repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors.

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

2 unchanged sentences

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 July 3, 2022, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 5.75% Notes, due July 15, 2025, the 4.00% Notes, due October 1, 2026, the 5.00% Notes, due October 1, 2029, the 5.50% Notes due July 15, 2030, and the 3.875% Notes, due March 15, 2031.

At January 1, 2023, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 5.75% Notes, due July 15, 2025;

the 4.00% Notes, due October 1, 2026;

the 5.00% Notes, due October 1, 2029;

the 5.50% Notes due July 15, 2030;

and the 3.875% Notes, due March 15, 2031.

On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0, before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.

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

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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.

This seasonality requires the Company to ship large quantities of products 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.

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.

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

The Company factored certain of its trade receivables during the three and nine month periods ending July 3, 2022.

The Company factored certain of its trade receivables during the three month period ending January 1, 2023.

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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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 Condensed 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 and cash flows and has not had a materially negative impact on the Company’s liquidity position, although 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 spending and assess operating spend to preserve cash and liquidity.

Despite recent inflationary costs and rising freight costs, we continue to generate operating cash flows to meet our short-term liquidity needs, although inflationary pressures have cause pressure on cash flow generation in the three and nine month periods ending July 3, 2022.

We expect to maintain access to the capital markets, although there can be no assurance of our ability to do so.

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 July 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.

During the three month period ended January 1, 2023, there have 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, 2022, 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 9 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

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New Accounting Pronouncements

See Note 1 – Basis of Presentation and Significant Accounting Policies of Notes to the Condensed Consolidated Financial Statements elsewhere included in this Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.

See Note 1 – Basis of Presentation and Significant Accounting Policies in Notes to the Condensed Consolidated Financial Statements elsewhere included in this Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.

Guarantor Statements – SB/RH

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

Nine Month Period Ended Year Ended

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

Three Month Period Ended Year Ended

(in millions) January 1, 2023 September 30, 2022

Statements of Operations Data

5 unchanged sentences

Net loss from continuing operations (72.7) (263.2)

Net (loss) income (126.1) 28.6

Net (loss) income attributable to controlling interest (126.1) 28.6

Net loss (64.9) (174.7)

Net loss attributable to controlling interest (64.9) (174.7)

Statements of Financial Position Data

3 unchanged sentences

Noncurrent Liabilities 3,523.8 3,423.4

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

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

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of January 1, 2023 and September 30, 2022 are as follows:

(in millions) January 1, 2023 September 30, 2022

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