What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2023-02-10 · 272 added, 127 removed, 447 unchanged (47% of the section changed)

72 unchanged sentences

• 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 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.

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 six month period ended April 2, 2023 and April 3, 2022, effective as of the transaction date.

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 projected 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.

5 unchanged sentences

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.

and Canada to Fortune Brands in response to competitive concerns raised by the DOJ in their complaint.

On May 5, 2023, the Company agreed to a stipulation with the DOJ to settle the DOJ's challenge of the HHI transaction, pursuant to which ASSA will proceed with the divestment of Emtek and its Smart Residential business in the U.S> and Canada to Fortune Brands.

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.

The Company and ASSA both continue to expect that they will close the HHI transaction on or prior to June 30, 2023.

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

3 unchanged sentences

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.

Incremental costs attributable to the three-year tolling arrangement were completed in March 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 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.

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 six month periods ended April 2, 2023 and April 3, 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.

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 six month periods ended April 2, 2023 and April 3, 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.

• 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 month periods ended January 1, 2023 and January 2, 2022.

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 six month periods ended April 2, 2023 and April 3, 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.

The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during three and six month periods ended April 2, 2023 and April 3, 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

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

Three Month Periods Ended Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Tristar acquisition and integration $ 4.0 $ 12.7 $ 9.7 $ 14.4

HPC separation initiatives 2.4 1.7

HHI divestiture 1.4 1.2 2.9 5.5

HPC separation initiatives 1.1 3.0 3.5 4.7

Coevorden operations separation 1.4 2.1 2.7 5.3

4 unchanged sentences

Total $ 8.0 $ 22.9 $ 19.1 $ 40.1

Net sales $ — $ 0.7 $ — $ 0.7

Cost of goods sold — 1.7 — 3.5

6 unchanged sentences

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 2023 Restructuring - During the three month period ending April 2, 2023, the Company entered into a new initiative in response to the continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of another round of headcount reductions.

Substantially all costs associated with the initiative had been recognized.

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.

• 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.

Substantially all costs associated with the initiative had been recognized in the prior year with amounts during the three and six months period ended April 2, 2023 due to change in estimates, headcounts and timing of communication.

1 unchanged sentence

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.

The Company has substantially completed the build phase and initiated data transfer and testing for its initial implementation.

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

2 unchanged sentences

• 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.

The initiative is subject to exit and disposal costs for severance benefits of personnel associated with the operations, see Note 3 - Restructuring Charges in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail.

Remaining costs primarily cost of administrative cost to dissolve the entity and 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.

8 unchanged sentences

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

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

The following is a summary of impacts to operating results attributable to restructuring initiatives and other optimization projects incurred for the respective projects during three and six month periods ended April 2, 2023 and April 3, 2022.

In addition to the projects and initiatives discussed above, the Company regularly incurs costs 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 Six Month Periods Ended

(in millions) April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Fiscal 2023 restructuring $ 4.5 $ — $ 4.5 $ —

Fiscal 2022 restructuring 0.1 — 0.6 —

Global ERP transformation 3.3 3.2 4.9 6.0

12 unchanged sentences

• 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.

The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the six month period ended April 2, 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.

25 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 month periods ended January 1, 2023 compared to net sales for the three month periods ended January 2, 2022:

The following is a reconciliation of reported net sales to organic net sales for the three and six month periods ended April 2, 2023 compared to net sales for the three and six month periods ended April 3, 2022:

Three Month Periods Ended

(in millions, except %) January 1, 2023

(in millions, except %) April 2, 2023

Effect of Changes in Currency

1 unchanged sentence

Effect of Acquisitions

January 2, 2022

April 3, 2022

$ 279.2 $ 11.8 $ 291.0 $ (22.1) $ 268.9 $ 316.1 $ (47.2) (14.9) %

2 unchanged sentences

$ 729.2 $ 19.4 $ 748.6 $ (22.1) $ 726.5 $ 807.8 (81.3) (10.1) %

Six Month Periods Ended

(in millions, except %)

April 2, 2023

Effect of Changes in Currency

Net Sales Excluding Effect of Changes in Currency

Effect of Acquisitions

April 3, 2022

$ 643.6 $ 37.5 $ 681.1 $ (89.9) $ 591.2 $ 695.8 $ (104.6) (15.0) %

574.3 21.5 595.8 — 595.8 597.3 (1.5) (0.3) %

224.6 — 224.6 — 224.6 271.9 (47.3) (17.4) %

$ 1,442.5 $ 59.0 $ 1,501.5 $ (89.9) $ 1,411.6 $ 1,565.0 (153.4) (9.8) %

Adjusted EBITDA and Adjusted EBITDA Margin.

4 unchanged sentences

Adjusted EBITDA further excludes:

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

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

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 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;

• Non-cash gain from the reduction in the contingent consideration liability recognized during the six month periods ended April 2, 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, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets;

• 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.

1 unchanged sentence

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 unchanged sentence

(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.

and (3) insurable losses associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the six month period ended April 2, 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 January 1, 2023 and January 2, 2022, for SBH.

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 2, 2023 and April 3, 2022, for SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended January 1, 2023

Three Month Period Ended April 2, 2023

Net (loss) income from continuing operations $ (37.7) $ 30.2 $ (39.8) $ (27.7) $ (75.0)

10 unchanged sentences

Fiscal 2023 restructuring 2.4 2.1 — — 4.5

Fiscal 2022 restructuring — — — 0.1 0.1

Russia closing initiatives (0.1) — — — (0.1)

Global ERP transformation — — — 3.3 3.3

HPC brand portfolio transitions 0.5 — — — 0.5

Russia closing initiatives 2.9 — — — 2.9

Other project costs 0.1 0.2 2.1 2.2 4.6

1 unchanged sentence

Non-cash purchase accounting adjustments 0.5 — — — 0.5

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

Impairment of equipment and operating leases 1.5 2.7 — — 4.2

Impairment of intangible assets 19.0 — 48.0 — 67.0

Early settlement of foreign currency cash flow hedges 1.3 — — — 1.3

4 unchanged sentences

Adjusted EBITDA Margin (0.7) % 15.6 % 9.8 % — 7.0 %

Three Month Period Ended January 2, 2022

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

Three Month Period Ended April 3, 2022

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

Income tax benefit — — — (6.8) (6.8)

8 unchanged sentences

Omega integration — 0.5 — — 0.5

HPC separation initiatives — — — 1.7 1.7

HHI divestiture — — — 1.2 1.2

HPC separation initiatives — — — 3.0 3.0

Coevorden operations separation — 2.1 — — 2.1

4 unchanged sentences

Unallocated shared costs — — — 6.9 6.9

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

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Salus and other — — — 0.1 0.1

2 unchanged sentences

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

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

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 2, 2023 and April 3, 2022 for SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(in millions) HPC GPC H&G Corporate Consolidated

Three Month Period Ended January 1, 2023

Six Month Period Ended April 2, 2023

Net (loss) income from continuing operations $ (41.8) $ 53.3 $ (47.0) $ (79.5) $ (115.0)

10 unchanged sentences

Fiscal 2023 restructuring 2.4 2.1 — — 4.5

Fiscal 2022 restructuring — — 0.2 0.4 0.6

Russia closing initiatives 2.8 — — — 2.8

Global ERP transformation — — — 4.9 4.9

HPC brand portfolio transitions 1.4 — — — 1.4

Other project costs 0.2 0.9 2.1 4.6 7.8

Unallocated shared costs — — — 12.5 12.5

Non-cash purchase accounting adjustments 0.9 — — — 0.9

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

Impairment of equipment and operating leases 1.8 2.7 — — 4.5

Impairment of intangible assets 19.0 — 48.0 — 67.0

Early settlement of foreign currency cash flow hedges 3.9 — — — 3.9

HPC product recall 1.9 — — — 1.9

Salus and other 0.3 3.3 0.1 1.3 5.0

Adjusted EBITDA $ 11.3 $ 83.5 $ 12.8 $ (16.8) $ 90.8

Net Sales $ 643.6 $ 574.3 $ 224.6 $ — $ 1,442.5

Adjusted EBITDA Margin 1.8 % 14.5 % 5.7 % — 6.3 %

Six Month Period Ended April 3, 2022

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

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

Interest expense — — — 46.4 46.4

Depreciation 6.3 7.1 3.6 7.4 24.4

Amortization 9.5 11.5 5.7 — 26.7

EBITDA 15.8 49.2 23.9 (69.5) 19.4

Share based compensation — — — 12.2 12.2

Tristar acquisition 14.4 — — — 14.4

Rejuvenate integration — — 7.0 — 7.0

Armitage integration — 1.2 — — 1.2

Omega integration — 1.4 — — 1.4

HHI divestiture — — — 5.5 5.5

HPC separation initiatives — — — 4.7 4.7

Coevorden operations separation — 5.3 — — 5.3

Global ERP transformation — — — 6.0 6.0

GPC distribution center transition — 19.9 — — 19.9

Global productivity improvement program 2.1 0.7 — 1.3 4.1

Other project costs 2.2 1.6 — 6.4 10.2

Unallocated shared costs — — — 13.8 13.8

Non-cash purchase accounting adjustments 3.5 — — — 3.5

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

Salus and other — — — 0.2 0.2

Adjusted EBITDA $ 38.0 $ 79.3 $ 30.4 $ (19.4) $ 128.3

Net sales $ 695.8 $ 597.3 $ 271.9 $ — $ 1,565.0

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

The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended April 2, 2023 and April 3, 2022, for SB/RH.

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

Three Month Period Ended April 2, 2023

Net (loss) income from continuing operations $ (37.7) $ 30.2 $ (39.8) $ (27.9) $ (75.2)

Income tax benefit — — — (34.0) (34.0)

Interest expense — — — 31.7 31.7

Depreciation 2.9 3.8 1.9 3.3 11.9

Amortization 2.1 5.5 2.9 — 10.5

EBITDA (32.7) 39.5 (35.0) (26.9) (55.1)

Share based compensation — — — 4.0 4.0

Tristar integration 4.0 — — — 4.0

HHI divestiture — — — 1.4 1.4

HPC separation initiatives — — — 1.1 1.1

Coevorden operations separation — 1.4 — — 1.4

Fiscal 2023 restructuring 2.4 2.1 — — 4.5

Fiscal 2022 restructuring — — — 0.1 0.1

Russia closing initiatives (0.1) — — — (0.1)

Global ERP transformation — — — 3.3 3.3

HPC brand portfolio transitions 0.5 — — — 0.5

Other project costs 0.1 0.2 2.1 2.2 4.6

1 unchanged sentence

Non-cash purchase accounting adjustments 0.5 — — — 0.5

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

Impairment of equipment and operating leases 1.5 2.7 — — 4.2

Impairment of intangible assets 19.0 — 48.0 — 67.0

Early settlement of foreign currency cash flow hedges 1.3 — — — 1.3

4 unchanged sentences

Adjusted EBITDA margin (0.7) % 15.6 % 9.8 % — 7.0 %

Three Month Period Ended January 2, 2022

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

Three Month Period Ended April 3, 2022

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

Income tax benefit — — — (6.6) (6.6)

8 unchanged sentences

Omega integration — 0.5 — — 0.5

HHI divestiture — — — 1.2 1.2

HPC separation initiatives — — — 3.0 3.0

Coevorden operations separation — 2.1 — — 2.1

Global ERP transformation — — — 3.2 3.2

GPC distribution center transition — 7.1 — — 7.1

Global productivity improvement program 1.5 0.5 — 0.3 2.3

Other project costs 2.2 1.6 — 4.4 8.2

Unallocated shared costs — — — 6.9 6.9

Non-cash purchase accounting adjustments 3.5 — — — 3.5

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

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

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

The following is a reconciliation of net income to Adjusted EBITDA for the six month periods ended April 2, 2023 and April 3, 2022, for SB/RH.

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

Six Month Period Ended April 2, 2023

Net (loss) income from continuing operations $ (41.8) $ 53.3 $ (47.0) $ (79.5) $ (115.0)

Income tax benefit — — — (46.3) (46.3)

Interest expense — — — 65.1 65.1

Depreciation 6.1 7.5 3.7 6.8 24.1

Amortization 4.2 11.0 5.7 — 20.9

EBITDA (31.5) 71.8 (37.6) (53.9) (51.2)

Share based compensation — — — 7.1 7.1

Tristar acquisition and integration 9.7 — — — 9.7

HHI divestiture — — — 2.9 2.9

HPC separation initiatives — — — 3.5 3.5

Coevorden operations separation — 2.7 — — 2.7

Fiscal 2023 restructuring 2.4 2.1 — — 4.5

Fiscal 2022 restructuring — — 0.2 0.4 0.6

Russia closing initiatives 2.8 — — — 2.8

Global ERP transformation — — — 4.9 4.9

HPC brand portfolio transitions 1.4 — — — 1.4

Other project costs 0.2 0.9 2.1 4.6 7.8

Unallocated shared costs — — — 12.5 12.5

Non-cash purchase accounting adjustments 0.9 — — — 0.9

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

Impairment of equipment and operating leases 1.8 2.7 — — 4.5

Impairment of intangible assets 19.0 — 48.0 — 67.0

Early settlement of foreign currency cash flow hedges 3.9 — — — 3.9

HPC product recalls 1.9 — — — 1.9

Other 0.3 3.3 0.1 1.3 5.0

Adjusted EBITDA $ 11.3 $ 83.5 $ 12.8 $ (16.7) $ 90.9

Net sales $ 643.6 $ 574.3 $ 224.6 $ — $ 1,442.5

Adjusted EBITDA margin 1.8 % 14.5 % 5.7 % — 6.3 %

Six Month Period Ended April 3, 2022

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

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

Interest expense — — — 46.7 46.7

Depreciation 6.3 7.1 3.6 7.4 24.4

Amortization 9.5 11.5 5.7 — 26.7

EBITDA 15.8 49.2 23.9 (68.2) 20.7

Share based compensation — — — 11.8 11.8

Tristar acquisition 14.4 — — — 14.4

Rejuvenate integration — — 7.0 — 7.0

Armitage integration — 1.2 — — 1.2

Omega integration — 1.4 — — 1.4

HHI divestiture — — — 5.5 5.5

HPC separation initiatives — — — 4.7 4.7

Coevorden operations separation — 5.3 — — 5.3

Global ERP transformation — — — 6.0 6.0

GPC distribution center transition — 19.9 — — 19.9

2 unchanged sentences

Unallocated shared costs — — — 13.8 13.8

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

Non-cash purchase accounting adjustments 3.5 — — — 3.5

Legal and environmental — — (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 month periods ended January 1, 2023 and January 2, 2022.

The following is summarized consolidated results of operations for SBH for the three and six month periods ended April 2, 2023 and April 3, 2022.

(in millions, except %)

Three Month Periods Ended Variance

January 1, 2023 January 2, 2022

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net sales $ 729.2 $ 807.8 $ (78.6) (9.7) % $ 1,442.5 $ 1,565.0 $ (122.5) (7.8) %

Gross profit 214.5 255.6 (41.1) (16.1) % 416.4 474.9 (58.5) (12.3) %

Gross profit margin 28.3 % 29.0 % (70) bps

Gross profit margin 29.4 % 31.6 % (220) bps 28.9 % 30.3 % (140) bps

Operating expenses $ 291.5 $ 263.7 $ 27.8 10.5 % $ 513.6 $ 506.9 $ 6.7 1.3 %

Interest expense 31.6 24.7 6.9 27.9 % 65.0 46.4 18.6 40.1 %

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

Other non-operating expense (income), net 1.2 (0.9) 2.1 n/m (0.3) (0.3) — — %

Income tax benefit (34.8) (6.8) (28.0) 411.8 % (46.9) (22.8) (24.1) 105.7 %

1 unchanged sentence

Income from discontinued operations, net of tax 21.4 41.1 (19.7) (47.9) % 40.9 79.9 (39.0) (48.8) %

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

Net (loss) income (53.6) 16.0 (69.6) n/m (74.1) 24.6 (98.7) n/m

n/m = not meaningful

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

January 1, 2023 January 2, 2022

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

(in millions, except %) Three Month Periods Ended Variance

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

$ 279.2 $ 316.1 $ (36.9) (11.7) % $ 643.6 $ 695.8 $ (52.2) (7.5) %

3 unchanged sentences

(in millions)

Three Month Periods Ended

Net Sales for the period ended January 2, 2022

Decrease in GPC

Three Month Periods Ended Six Month Periods Ended

Net Sales for the period ended April 3, 2022

$ 807.8 $ 1,565.0

Increase (Decrease) in GPC

Decrease in HPC

(47.2) (104.6)

Decrease in H&G (43.3) (47.3)

1 unchanged sentence

Foreign currency impact, net

Net Sales for the period ended January 1, 2023

(19.4) (59.0)

Net Sales for the period ended April 2, 2023

$ 729.2 $ 1,442.5

Gross Profit.

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.

Gross profit and gross profit margin for the three and six month periods decreased primarily due to lower sales volume plus unfavorable mix from the realization of higher inventoried costs accumulated in the prior year offset by positive pricing compared to the prior year.

Operating Expenses.

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.

Operating expenses for the three and six month periods increased due to the recognition of an impairment on intangible assets of $67 million.

See Note 8 - Goodwill and Intangible Assets in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Excluding the impairment, selling expense for the three and six month periods decreased $16.7 million and $31.7 million, respectively, from a reduction in distribution and transportation costs with improved operating effectiveness plus initiatives to reduce operating spend, with partial offset from the impairment of equipment and operating lease assets.

See Note 7 - Property, Plant and Equipment in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

General and administrative expenses for the three and six month periods decreased $19.5 million and $24.2 million, respectively, from operating spend initiatives and lower project 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 during the six month period.

Interest Expense.

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.

Interest expense for the three and six month periods 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 during the six month period 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 (Income) Expense, Net.

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

Other Non-Operating Expense (Income), Net.

Other non-operating income for the three and six month periods 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 month period by income earned outside the U.S.

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

that is subject to U.S.

tax, including the U.S.

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

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

federal statutory rate.

During the three and six month periods ended April 2, 2023, the Company recorded a $16.8 million tax benefit related to the impairment of certain intangible assets.

Income From Discontinued Operations.

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.

Income from discontinued operations attributable to the HHI segment decreased during the three and six month periods due to lower volumes offset by pricing increases and unfavorable mix from higher inventoried costs accumulated in the prior year.

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

2 unchanged sentences

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:

The following is summarized consolidated results of operations for SB/RH for the three and six month periods ended April 2, 2023 and April 3, 2022:

(in millions, except %)

Three Month Periods Ended Variance

January 1, 2023 January 2, 2022

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Net sales $ 729.2 $ 807.8 $ (78.6) (9.7) % $ 1,442.5 $ 1,565.0 $ (122.5) (7.8) %

Gross profit 214.5 255.6 (41.1) (16.1) % 416.4 474.9 (58.5) (12.3) %

Gross profit margin 28.3 % 29.0 % (70) bps

Gross profit margin 29.4 % 31.6 % (220) bps 28.9 % 30.3 % (140) bps

Operating expenses $ 290.8 $ 262.9 $ 27.9 10.6 % $ 512.9 $ 505.7 $ 7.2 1.4 %

Interest expense 31.7 24.8 6.9 27.8 % 65.1 46.7 18.4 39.4 %

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

Other non-operating expense (income), net 1.2 (0.9) 2.1 n/m (0.3) (0.4) 0.1 (25.0) %

Income tax benefit (34.0) (6.6) (27.4) 415.2 % (46.3) (22.4) (23.9) 106.7 %

1 unchanged sentence

Income from discontinued operations, net of tax 21.9 41.1 (19.2) (46.7) % 41.4 79.9 (38.5) (48.2) %

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

Net (loss) income (53.3) 16.5 (69.8) n/m (73.6) 25.2 (98.8) n/m

n/m = not meaningful

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

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

Segment Financial Data

1 unchanged sentence

(in millions, except %) Three Month Periods Ended

January 1, 2023 January 2, 2022

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

$ 279.2 $ 316.1 $ (36.9) (11.7) % $ 643.6 $ 695.8 $ (52.2) (7.5) %

Operating (loss) income (37.3) (19.8) (17.5) 88.4 % (41.6) 0.6 (42.2) n/m

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

Operating (loss) income margin (13.4 %) (6.3 %) (710) bps (6.5) % 0.1 % (660) bps

Adjusted EBITDA

$ 13.2 $ 27.4 $ (14.2) (51.8) %

$ (1.9) $ 10.6 $ (12.5) n/m $ 11.3 $ 38.0 $ (26.7) (70.3) %

Adjusted EBITDA margin

3.6 % 7.2 % (360) bps

(0.7) % 3.4 % (410) bps 1.8 % 5.5 % (370) bps

n/m = not meaningful

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.

Net sales for the three and six month periods decreased due to category decline from lower consumer demands, particularly in kitchen appliances, and continued retailer inventory management in Americas.

Sales in EMEA were further impacted by unfavorable foreign currency and the Russia-Ukraine war.

Organic net sales for the three month period decreased $47.2 million, or 14.9%, excluding acquisition sales of $22.1 million and unfavorable foreign currency of $11.8 million.

Net sales for the six month period were further impacted by the high competitive landscape during the holiday season and closing of our Russia commercial operations.

Organic net sales for the six month period decreased $104.6 million, or 15.0%, excluding acquisition sales of $89.9 million and unfavorable foreign currency of $37.5 million.

Operating loss for the three and six month periods were driven by impairment of the Power XL tradename of $19.0 million with lower adjusted EBITDA and margins driven by lower volume, the sale of higher cost inventory accumulated in the prior year and unfavorable foreign currency in EMEA, which were partially mitigated by cost savings from the reduction of operating expenses initiated in the prior year and additional actions undertaken during the second quarter.

Global Pet Care

1 unchanged sentence

Three Month Periods Ended Variance

January 1, 2023 January 2, 2022

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

$ 296.7 $ 295.1 $ 1.6 0.5 % $ 574.3 $ 597.3 $ (23.0) (3.9) %

Operating income 30.3 19.9 10.4 52.3 % 53.0 32.2 20.8 64.6 %

Operating income margin 8.2 % 4.1 % 410 bps

Operating income margin 10.2 % 6.7 % 350 bps 9.2 % 5.4 % 380 bps

Adjusted EBITDA

1 unchanged sentence

Adjusted EBITDA 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.

15.6 % 13.8 % 180 bps 14.5 % 13.3 % 120 bps

Net sales for the three month period increased due to strong growth in companion animals, including chews in Americas and dog and cat food in EMEA, partially offset by decrease in other goods and aquatic environments as compared to prior year elevated levels.

Net sales were further helped by prior year price increases with new positive pricing adjustments in EMEA partially overcoming the unfavorable impact of foreign exchange rates.

Organic net sales for three month period increased $9.2 million, or 3.1%, excluding unfavorable foreign currency impact of $7.6 million.

Net sales for the six month period decreased due to higher retail inventory levels and unfavorable foreign exchange rates offset by pricing adjustments from the prior year.

Organic net sales for the six month period decreased $1.5 million, or 0.3%, excluding unfavorable foreign currency impact of $21.5 million.

Operating income, adjusted EBITDA and margins increased due to lower distribution costs and improved fulfillment compared to prior year disruptions, positive pricing adjustments and savings from prior year cost reduction initiatives and from additional cost reduction actions in the current year offset by lower volumes and unfavorable foreign currency impact.

Home and Garden

1 unchanged sentence

Three Month Periods Ended Variance

January 1, 2023 January 2, 2022

Six Month Periods Ended Variance

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

$ 153.3 $ 196.6 $ (43.3) (22.0) % $ 224.6 $ 271.9 $ (47.3) (17.4) %

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

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

Operating (loss) income (39.8) 30.4 (70.2) n/m (47.0) 14.7 (61.7) n/m

Operating (loss) income margin (26.0) % 15.5 % (4,150) bps (20.9) % 5.4 % (2,630) bps

Adjusted EBITDA

1 unchanged sentence

Adjusted EBITDA margin

(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.

9.8 % 19.2 % (940) bps 5.7 % 11.2 % (550) bps

n/m = not meaningful

Net sales for the three and six month periods decreased due to reduction in retail inventory compared to a strong prior year inventory build ahead of the season, as well as retail inventory reduction during the quarter, partially offset by positive pricing increases.

Adverse weather conditions late in the periods also negatively impacted the pest controls category POS (point of sale) and resulted in lower replenishment orders.

Cleaning products sales decreased as a slow start to the spring cleaning season contributed to the POS decline in our relevant categories as well as comparison to last year inventory loads during the quarter.

Operating loss and margin for the three and six month periods decreased due to the recognition of an impairment on the Rejuvenate tradename of $48.0 million with a decrease in adjusted EBITDA and margins for the three and six month periods due to lower volumes, the realization of high inventoried costs accumulated in the prior year, and fixed cost restructuring and operational cost reductions initiated during the second half of the prior year.

Liquidity and Capital Resources

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the three month periods ended January 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

The following is a summary of the SBH and SB/RH cash flows from continuing operations for the six month periods ended April 2, 2023 and April 3, 2022, respectively.

Six Month Periods Ended (in millions)

April 2, 2023 April 3, 2022 April 2, 2023 April 3, 2022

Operating activities

5 unchanged sentences

Cash Flows from Operating Activities

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 provided by SBH's continuing operations increased $360.8 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 provided by SB/RH continuing operations increased $382.8 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 $4.0 million, primarily from reduced capital expenditures.

Cash flows used in investing activities for SBH continuing operations decreased $312.7 million, primarily from the cash used in the prior year of $314.3 million for the acquisition of the Tristar Business.

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 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.

Cash flows used by financing activities for continuing operations increased $637.8 million primarily due to the incremental borrowings in the prior year from the Revolver Facility and Term Loans to support the Tristar Business acquisition and working capital needs, offset by the lower treasury share repurchases.

During the six month period ended April 2, 2023, the Company reduced outstanding Revolver Facility with amortizing payments on other outstanding debt of $21.7 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 three month period ended January 1, 2023, the Company did not repurchase any treasury stock.

During the six month period ended April 2, 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 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.

During the six month periods ended April 2, 2023 and April 3, 2022, SBH made cash dividend payments of $34.4 million, or $0.42 per share.

Cash flows from financing activity of SB/RH decreased $659.8 million and is highly dependent upon the financing cash flow activities of SBH.

2 unchanged sentences

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.

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.

We believe the negative operating cash flow recognized in the prior year 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 January 1, 2023, the Company had borrowing availability of $252.5 million, net of outstanding letters of credit, under our credit facility.

As of April 2, 2023, the Company had borrowing availability of $362.1 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.

4 unchanged sentences

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

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

During the three and six month periods ended April 2, 2023, the Company did not repurchase 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.

4 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 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;

At April 2, 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;

15 unchanged sentences

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 month period ending January 1, 2023.

The Company factored certain of its trade receivables during the three month period ending April 2, 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.

1 unchanged sentence

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.

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.

During the three month period ended April 2, 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 increase in our operating lease liabilities due to significant lease renewal with our HPC distribution center in Redlands, CA, resulting in an obligation of of $61.8 million with a five-year term expiring in August 2028.

and changes to borrowings in our revolver 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.

13 unchanged sentences

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

Three Month Period Ended Year Ended

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

Six Month Period Ended Year Ended

(in millions) April 2, 2023 September 30, 2022

Statements of Operations Data

12 unchanged sentences

Noncurrent Liabilities 3,515.1 3,423.4

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

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of April 2, 2023 and September 30, 2022 are as follows:

(in millions) April 2, 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