What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-11 compared with 2023-05-12 · 239 added, 209 removed, 510 unchanged (47% of the section changed)

6 unchanged sentences

We manage the businesses in three vertically integrated, product-focused segments:

(i) Home and Personal Care (“HPC”), (ii) Global Pet Care (“GPC”), and (iii) Home and Garden (“H&G”).

(i) Global Pet Care (“GPC”), (ii) Home and Garden (“H&G”), and (iii) Home and Personal Care (“HPC”).

The Company manufactures, markets and/or distributes its products globally in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors.

6 unchanged sentences

Segment Products Brands

HPC Home Appliances:

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:

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

Personal Care :

Hair dryers, flat irons and straighteners, rotary and foil electric shavers, personal groomers, mustache and beard trimmers, body groomers, nose and ear trimmers, women's shavers, and haircut kits.

Personal Care:

GPC Companion Animal:

19 unchanged sentences

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

HPC Home Appliances:

Home Appliances:

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

Personal Care :

Hair dryers, flat irons and straighteners, rotary and foil electric shavers, personal groomers, mustache and beard trimmers, body groomers, nose and ear trimmers, women's shavers, and haircut kits.

Personal Care:

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;

1 unchanged sentence

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.

On June 20, 2023, the Company completed its divestiture of its HHI segment resulting in the recognition of a gain on sale of $2,824.9 million included as a component of Income From Discontinued Operations, Net of Tax.

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.

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

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 periods ended July 2, 2023 and July 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.

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

On June 20, 2023, the Company completed its divestiture of its HHI segment.

The operating results of the HHI divestiture are included as Income From Discontinued Operations, Net of Tax for all periods presented through the date of the divestiture, including the gain on sale from the HHI divestiture recognized during the three and nine month period ended July 2, 2023 and July 3, 2022.

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 project costs attributable to the divestiture, consisting of legal and professional fees to effect the realization of the Purchase Agreement, preparation for separation and transition of systems and processes supporting the divested business and operations of enabling functions within a transition services agreement ("TSA"), plus incremental retention costs for personnel supporting such 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 Transaction costs directly attributable to the close of the transaction including certain compensatory costs contingent upon the successful completion of the sale are included as a component of the gain on sale of discontinued operations.

• 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.

Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations for a separation, including potential tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from the commingled operations of the Company, plus the segregation of systems and processes.

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 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.

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.

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

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 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 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.

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.

• 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").

2 unchanged sentences

• 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 six month periods ended April 2, 2023 and April 3, 2022.

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 2, 2023 and July 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.

1 unchanged sentence

• 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 six month periods ended April 2, 2023 and April 3, 2022.

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 2, 2023 and July 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.

1 unchanged sentence

• 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 six month periods ended April 2, 2023 and April 3, 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 nine month periods ended July 2, 2023 and July 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 and six month periods ended April 2, 2023 and April 3, 2022.

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 2, 2023 and July 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 Six Month Periods Ended

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

Three Month Periods Ended Nine Month Periods Ended

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

Tristar acquisition and integration $ 1.0 $ 5.6 $ 10.7 $ 20.0

9 unchanged sentences

Cost of goods sold — 1.5 2.7 5.0

Selling expense 5.7 13.4 22.0 49.4

General & administrative expense — 4.3 — 4.3

5 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.

• Fiscal 2023 Restructuring - During the nine month period ending July 2, 2023, the Company entered into an 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 further of headcount reductions.

Remaining costs attributable to project are expected to be approximately $3 million and anticipated to be incurred through September 30, 2023 with adjustments attributable 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.

• 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 and six months period ended April 2, 2023 due to change in estimates, headcounts and timing of communication.

• Fiscal 2022 Restructuring - During the year ended September 30, 2022, the Company entered into an 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 nine month period ended July 2, 2023 due to change in estimates, headcounts and timing of communication.

5 unchanged sentences

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 liquidated substantially all assets.

Remaining costs are anticipated to be incurred through September 30, 2023.

• Russia Closing Initiative - The Company initiated the close of its in-country commercial operations in Russia, predominantly supporting the HPC segment.

The Company has recognized impairment costs on working capital assets such as inventory and receivables that were not considered recoverability due to the restriction and suspension of commercial activity in Russia and has liquidated substantially all assets.

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.

10 unchanged sentences

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

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 nine month periods ended July 2, 2023 and July 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

Three Month Periods Ended Nine Month Periods Ended

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

Fiscal 2023 restructuring $ 0.9 $ — $ 5.3 $ —

13 unchanged sentences

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 June 20, 2023, following the close of the HHI divestiture, the Company paid down its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche.

The Company recognized $8.6 million as interest expense for the three and nine month periods ended July 2, 2023 from the write-down of deferred financing costs and original issuance discount.

• 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 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.

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.

The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the nine month period ended July 2, 2023.

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 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.

The impacts of the Russia-Ukraine conflict and the sanctions imposed in response to the conflict 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 initiated the closing of its in-country commercial operations within Russia to reduce the relative risk and exposure within the region.

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 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.

The Company has experienced an inflationary environment on a global basis in the wake of the COVID-19 pandemic and supply chain constraints such as increased labor shortages, increased freight and distribution costs from transportation and logistics, higher commodity costs, rising energy pricing, and foreign currency volatility.

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

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

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

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.

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.

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

While we have seen more stability in the recent economic environment, we are unable to predict how long the current inflationary environment will continue and we expect the economic environment to remain uncertain as we navigate the current geopolitical environment, post-pandemic volatility, labor challenges, changes in supply chain and the overall current economic environment.

Non-GAAP Measurements

6 unchanged sentences

Organic growth is calculated by comparing organic net sales to net sales in the prior year.

The effect of changes in currency exchange rates is determined by translating the period’s net sales using the currency exchange rates that were in effect during the prior comparative period.

The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior comparative period.

Net sales are attributed to the geographic regions based on the country of destination.

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 six month periods ended April 2, 2023 compared to net sales for the three and six month periods ended April 3, 2022:

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

Three Month Periods Ended

(in millions, except %) April 2, 2023

(in millions, except %) July 2, 2023

Effect of Changes in Currency

1 unchanged sentence

Effect of Acquisitions

April 3, 2022

$ 272.3 $ (0.8) $ 271.5 $ — $ 271.5 $ 290.2 $ (18.7) (6.4) %

186.6 — 186.6 — 186.6 198.5 (11.9) (6.0) %

153.3 — 153.3 — 153.3 196.6 (43.3) (22.0) %

HPC 276.6 4.3 280.9 — 280.9 329.3 (48.4) (14.7) %

$ 735.5 $ 3.5 $ 739.0 $ — $ 739.0 $ 818.0 (79.0) (9.7) %

Six Month Periods Ended

Nine Month Periods Ended

(in millions, except %)

April 2, 2023

Effect of Changes in Currency

1 unchanged sentence

Effect of Acquisitions

April 3, 2022

$ 846.5 $ 20.7 $ 867.2 $ — $ 867.2 $ 887.5 $ (20.3) (2.3) %

18 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 six month periods ended April 2, 2023, associated with the Tristar Business acquisition in the prior year on February 18, 2022;

• Non-cash gain from the reduction in the contingent consideration liability associated with the Tristar Business acquisition in the prior year;

• 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.

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

See Note 7 - Property, Plant and Equipment and Note 8 - Goodwill and intangible Assets in Notes to the Condensed Consolidated Financial Statements 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 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 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 six month period ended April 3, 2022;

• Other adjustments are primarily attributable to:

• Incremental reserves for non-recurring litigation or environmental remediation activity, including the proposed settlement of outstanding litigation at our H&G and HPC segments attributable to significant and unusual nonrecurring matters with no previous history or precedent, and any subsequent changes in estimate or remeasurement realized upon settlement;

• Other adjustments primarily attributable to:

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

(2) key executive severance related costs;

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.

and (3) insurable losses associated with hurricane damages at a key supplier of our Glofish business and loss realized from misapplied funds during the three and nine month periods ended July 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 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 April 2, 2023

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

Income tax benefit — — — (34.8) (34.8)

The following is a reconciliation of net income to Adjusted EBITDA for SBH for the three month period ended July 2, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 38.0 $ 26.2 $ (156.5) $ (79.9) $ (172.2)

Income tax expense — — — 13.9 13.9

Interest expense — — — 38.9 38.9

6 unchanged sentences

HPC separation initiatives — — — 0.5 0.5

Coevorden operations separation — 1.4 — — 1.4

Fiscal 2023 restructuring 0.5 — 0.4 — 0.9

Fiscal 2022 restructuring — — — 0.1 0.1

Russia closing initiatives — — 0.2 — 0.2

4 unchanged sentences

Non-cash purchase accounting adjustments — — 0.5 — 0.5

Impairment of equipment and operating leases 1.5 2.7 — — 4.2

Impairment of equipment and operating lease assets 5.2 — (1.6) — 3.6

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 8.0 45.7 — 53.7

Early settlement of foreign currency cash flow hedges — — 0.7 — 0.7

Legal and environmental — (0.2) 1.7 — 1.5

HPC product recall — — 1.9 — 1.9

Salus and other — 0.4 — 0.2 0.6

Adjusted EBITDA $ 53.6 $ 38.6 $ 11.4 $ (5.1) $ 98.5

1 unchanged sentence

Adjusted EBITDA margin 19.7 % 20.7 % 4.1 % — 13.4 %

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)

The following is a reconciliation of net income to Adjusted EBITDA for SBH for the three month period ended July 3, 2022.

(in millions) GPC H&G HPC Corporate Consolidated

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

Income tax expense — — — 2.0 2.0

Interest expense — — — 26.0 26.0

3 unchanged sentences

Share based compensation — — — (0.7) (0.7)

Tristar acquisition 14.4 — — (1.7) 12.7

Rejuvenate integration — — 2.6 — 2.6

Tristar integration — — 5.6 — 5.6

Armitage integration 0.1 — — — 0.1

3 unchanged sentences

Coevorden operations separation 1.9 — — — 1.9

Fiscal 2022 restructuring 3.1 0.6 3.7 0.7 8.1

Russia closing initiatives (1.4) — 1.8 — 0.4

Global ERP transformation — — — 3.4 3.4

HPC brand portfolio transition — — 0.3 — 0.3

GPC distribution center transition 8.4 — — — 8.4

3 unchanged sentences

Non-cash purchase accounting adjustments — — 4.3 — 4.3

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

Early settlement of foreign currency cash flow hedges — — (8.2) — (8.2)

Salus and other — 1.3 — 0.1 1.4

2 unchanged sentences

Adjusted EBITDA margin 14.1 % 21.6 % 1.1 % — 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 SBH.

SPECTRUM BRANDS HOLDINGS, INC.

(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)

The following is a reconciliation of net income to Adjusted EBITDA for SBH for the nine month period ended July 2, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 91.3 $ (20.8) $ (198.2) $ (159.5) $ (287.2)

Income tax benefit — — — (33.0) (33.0)

16 unchanged sentences

Non-cash purchase accounting adjustments — — 1.4 — 1.4

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

Impairment of equipment and operating leases 1.8 2.7 — — 4.5

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

Impairment of equipment and operating lease assets 7.9 — 0.2 — 8.1

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 56.0 64.7 — 120.7

Early settlement of foreign currency cash flow hedges — — 4.6 — 4.6

Legal and environmental — (0.2) 1.7 — 1.5

HPC product recall — — 3.8 — 3.8

3 unchanged sentences

Adjusted EBITDA margin 16.2 % 12.5 % 2.5 % — 8.7 %

Six Month Period Ended April 3, 2022

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

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 49.1 $ 50.7 $ 12.7 $ (164.8) $ (52.3)

5 unchanged sentences

Share based compensation — — — 11.4 11.4

Tristar acquisition 14.4 — — — 14.4

Tristar acquisition and integration — — 20.0 — 20.0

Rejuvenate integration — 7.0 — — 7.0

4 unchanged sentences

Coevorden operations separation 7.3 — — — 7.3

Fiscal 2022 restructuring 3.1 0.6 3.7 0.7 8.1

Russia closing initiatives 0.2 — 3.8 — 4.0

Global ERP transformation — — — 9.4 9.4

HPC brand portfolio transitions — — 0.3 — 0.3

GPC distribution center transition 28.3 — — — 28.3

3 unchanged sentences

Non-cash purchase accounting adjustments — — 7.8 — 7.8

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

Early settlement of foreign currency cash flow hedges — — (8.2) — (8.2)

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

3 unchanged sentences

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

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)

The following is a reconciliation of net income to Adjusted EBITDA for SB/RH for the three month period ended July 2, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 38.0 $ 26.2 $ (156.5) $ (81.5) $ (173.8)

Income tax expense — — — 17.0 17.0

Interest expense — — — 38.2 38.2

6 unchanged sentences

HPC separation initiatives — — — 0.5 0.5

Coevorden operations separation — 1.4 — — 1.4

Fiscal 2023 restructuring 0.5 — 0.4 — 0.9

Fiscal 2022 restructuring — — — 0.1 0.1

Russia closing initiatives — — 0.2 — 0.2

4 unchanged sentences

Non-cash purchase accounting adjustments — — 0.5 — 0.5

Impairment of equipment and operating leases 1.5 2.7 — — 4.2

Impairment of equipment and operating lease assets 5.2 — (1.6) — 3.6

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 8.0 45.7 — 53.7

Early settlement of foreign currency cash flow hedges — — 0.7 — 0.7

Legal and environmental — (0.2) 1.7 — 1.5

HPC product recall — — 1.9 — 1.9

Other — 0.4 — 0.2 0.6

Adjusted EBITDA $ 53.6 $ 38.6 $ 11.4 $ (4.8) $ 98.8

1 unchanged sentence

Adjusted EBITDA margin 19.7 % 20.7 % 4.1 % — 13.4 %

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)

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

(in millions) GPC H&G HPC Corporate Consolidated

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

Income tax expense — — — 2.0 2.0

Interest expense — — — 26.1 26.1

4 unchanged sentences

Tristar acquisition — — 5.6 — 5.6

Rejuvenate integration — — 2.6 — 2.6

Armitage integration 0.1 — — — 0.1

3 unchanged sentences

Coevorden operations separation 1.9 — — — 1.9

Fiscal 2022 restructuring 3.1 0.6 3.7 0.7 8.1

Russia closing initiatives (1.4) — 1.8 — 0.4

Global ERP transformation — — — 3.4 3.4

HPC brand portfolio transition — — 0.3 — 0.3

GPC distribution center transition 8.4 — — — 8.4

3 unchanged sentences

Non-cash purchase accounting adjustments — — 4.3 — 4.3

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

Early settlement of foreign currency cash flow hedges — — (8.2) — (8.2)

Other — 1.3 — 0.2 1.5

Adjusted EBITDA $ 40.9 $ 42.8 $ 3.6 $ (6.7) $ 80.6

1 unchanged sentence

Adjusted EBITDA margin 14.1 % 21.6 % 1.1 % — % 9.9 %

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)

The following is a reconciliation of net income to Adjusted EBITDA for SB/RH for the nine month period ended July 2, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 91.3 $ (20.8) $ (198.2) $ (161.1) $ (288.8)

Income tax benefit — — — (29.3) (29.3)

4 unchanged sentences

Share based compensation — — — 11.4 11.4

Tristar acquisition and integration 9.7 — — — 9.7

Tristar integration — — 10.7 — 10.7

HHI divestiture — — — 6.9 6.9

9 unchanged sentences

Non-cash purchase accounting adjustments — — 1.4 — 1.4

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

Impairment of equipment and operating leases 1.8 2.7 — — 4.5

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

Impairment of equipment and operating lease assets 7.9 — 0.2 — 8.1

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 56.0 64.7 — 120.7

Early settlement of foreign currency cash flow hedges — — 4.6 — 4.6

Legal and environmental — (0.2) 1.7 — 1.5

HPC product recalls — — 3.8 — 3.8

3 unchanged sentences

Adjusted EBITDA margin 16.2 % 12.5 % 2.5 % — 8.7 %

Six Month Period Ended April 3, 2022

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

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 49.1 $ 50.7 $ 12.7 $ (163.5) $ (51.0)

5 unchanged sentences

Share based compensation — — — 10.7 10.7

Tristar acquisition 14.4 — — — 14.4

Tristar acquisition and integration — — 20.0 — 20.0

Rejuvenate integration — 7.0 — — 7.0

4 unchanged sentences

Coevorden operations separation 7.3 — — — 7.3

Fiscal 2022 Restructuring 3.1 0.6 3.7 0.7 8.1

Russia closing initiatives 0.2 — 3.8 — 4.0

Global ERP transformation — — — 9.4 9.4

HPC brand portfolio transitions — — 0.3 — 0.3

GPC distribution center transition 28.3 — — — 28.3

3 unchanged sentences

Non-cash purchase accounting adjustments — — 7.8 — 7.8

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

Early settlement of foreign currency cash flow hedges — — (8.2) — (8.2)

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

4 unchanged sentences

Consolidated Results of Operations

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.

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

(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

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net sales $ 735.5 $ 818.0 $ (82.5) (10.1) % $ 2,178.1 $ 2,383.0 $ (204.9) (8.6) %

3 unchanged sentences

Interest expense 38.9 26.0 12.9 49.6 % 103.9 72.4 31.5 43.5 %

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 %

Net loss from continuing operations (75.0) (25.1) (49.9) 198.8 % (115.0) (55.3) (59.7) 108.0 %

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 (53.6) 16.0 (69.6) n/m (74.1) 24.6 (98.7) n/m

Interest income (5.4) (0.1) (5.3) n/m (5.6) (0.5) (5.1) n/m

Other non-operating expense, net 0.1 7.8 (7.7) n/m 0.1 7.9 (7.8) (98.7) %

Income tax expense (benefit) 13.9 2.0 11.9 595.0 % (33.0) (20.8) (12.2) 58.7 %

Net (loss) income from continuing operations (172.2) 3.0 (175.2) n/m (287.2) (52.3) (234.9) 449.1 %

Income from discontinued operations, net of tax 2,031.8 29.9 2,001.9 n/m 2,072.7 109.8 1,962.9 n/m

Net income 1,859.6 32.9 1,826.7 n/m 1,785.5 57.5 1,728.0 n/m

n/m = not meaningful

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.

The following is a summary of net sales by segment for the three and nine month periods ended July 2, 2023 and July 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) %

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

$ 272.3 $ 290.2 $ (17.9) (6.2) % $ 846.5 $ 887.5 $ (41.0) (4.6) %

186.6 198.5 (11.9) (6.0) % 411.3 470.3 (59.0) (12.5) %

HPC 276.6 329.3 (52.7) (16.0) % 920.3 1,025.2 (104.9) (10.2) %

$ 735.5 $ 818.0 (82.5) (10.1) % $ 2,178.1 $ 2,383.0 (204.9) (8.6) %

(in millions)

Three Month Periods Ended Six Month Periods Ended

Net Sales for the period ended April 3, 2022

Three Month Periods Ended Nine Month Periods Ended

Net Sales for the period ended July 3, 2022

$ 818.0 $ 2,383.0

Increase (Decrease) in GPC

Decrease in HPC

Decrease in GPC

(18.7) (20.3)

Decrease in H&G (11.9) (59.1)

Decrease in HPC (48.4) (153.1)

Acquisition sales

Foreign currency impact, net

(19.4) (59.0)

Net Sales for the period ended April 2, 2023

Net Sales for the period ended July 2, 2023

$ 735.5 $ 2,178.1

Gross Profit.

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.

Gross profit for the three month period decreased primarily due to lower sales volume and profit margin increased from positive pricing adjustments, cost improvements and favorable mix.

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

Operating Expenses.

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

Operating expenses for the three and nine month period increased due to the recognition of an impairment of goodwill with the HPC segment of $111.1 million, impairment of intangible assets of $53.7 million and $120.7 million for the three and nine month periods, respectively, with lower sales volumes reducing selling costs offset by operating savings and restructuring initiatives, plus a prior year gain from remeasurement of a million gain contingency of $25.0 million associated with the Tristar Business acquisition.

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.

Excluding the impairments, selling expense for the three and nine month periods decreased $24.9 million and $56.5 million, respectively, from a reduction in distribution and transportation costs with improved operating effectiveness plus initiatives to reduce operating spend, with partial offset from an 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.

General and administrative expenses for the three and nine month periods decreased $13.2 million and $35.9 million, respectively, from operating spend initiatives and lower project cost towards strategic transactions and restructurings.

Interest Expense.

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.

Interest expense for the three and nine month periods increased due to a higher level of outstanding borrowings on the Revolver Facility during the periods with increased borrowing rates on variable rate debt plus additional costs for the amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio and write-off of deferred financing costs and original issuance discount with the extinguishment of the Term Loans and termination of the Incremental Revolving Credit Facility Tranche.

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

Interest Income.

Interest income for the three and nine month periods increased due to interest realized on the cash proceeds received from the closing of the HHI divestiture.

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

Proceeds received from the HHI Divestiture not used towards the pay down of debt or repurchase of stock are being temporarily held in various deposits and investments.

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.

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

Our estimated annual effective tax rate was impacted for the three and nine 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, foreign currency impact, and foreign rates that differ from the U.S.

tax on global intangible low taxed income, certain nondeductible expenses, foreign currency impact, state income taxes 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.

During the three and nine month periods ended July 2, 2023, the Company recorded a $56.1 million tax benefit related to the impairment of goodwill and 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 and six month periods due to lower volumes offset by pricing increases and unfavorable mix from higher inventoried costs accumulated in the prior year.

Income or loss attributable to discontinued operations primarily reflect the income from the discontinued operations of the HHI segment and the resulting gain on sale from the completion of the HHI Divestiture during the three and nine month period ended July 2, 2023.

Income from discontinued operations attributable to the HHI segment increased during the three and nine month periods due the resulting gain on sale from the HHI divestiture offset by lower operating income from the HHI segment prior to disposition 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 and six month periods ended April 2, 2023 and April 3, 2022:

(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

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

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

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net sales $ 735.5 $ 818.0 $ (82.5) (10.1) % $ 2,178.1 $ 2,383.0 $ (204.9) (8.6) %

3 unchanged sentences

Interest expense 38.2 26.1 12.1 46.4 % 103.3 72.7 30.6 42.1 %

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 %

Net loss from continuing operations (75.2) (24.6) (50.6) 205.7 % (115.0) (54.7) (60.3) 110.2 %

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 (53.3) 16.5 (69.8) n/m (73.6) 25.2 (98.8) n/m

Interest income (5.4) (0.1) (5.3) n/m (5.6) (0.5) (5.1) n/m

Other non-operating expense, net 0.1 7.8 (7.7) n/m 0.1 7.8 (7.7) (98.7) %

Income tax expense (benefit) 17.0 2.0 15.0 750.0 % (29.3) (20.4) (8.9) 43.6 %

Net (loss) income from continuing operations (173.8) 3.7 (177.5) n/m (288.8) (51.0) (237.8) 466.3 %

Income from discontinued operations, net of tax 2,034.7 29.8 2,004.9 n/m 2,076.1 109.7 1,966.4 n/m

Net income 1,860.9 33.5 1,827.4 n/m 1,787.3 58.7 1,728.6 n/m

n/m = not meaningful

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

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

Segment Financial Data

Home and Personal Care

(in millions, except %) Three Month Periods Ended

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 (13.4 %) (6.3 %) (710) bps (6.5) % 0.1 % (660) bps

Adjusted EBITDA

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

Adjusted EBITDA margin

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

n/m = not meaningful

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

Six Month Periods Ended Variance

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

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

$ 272.3 $ 290.2 $ (17.9) (6.2) % $ 846.5 $ 887.5 $ (41.0) (4.6) %

5 unchanged sentences

19.7 % 14.1 % 560 bps 16.2 % 13.5 % 270 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.

Net sales for the three month period decreased due to continued softness in the aquatics category across all regions, especially in the subcategory of equipment and environments.

Companion animals category grew in EMEA and LATAM regions but declined in North America due to aggressive portfolio management which resulted in the decision to exit several non-strategic categories.

Sales in EMEA increased due to growth in companion animal category driven by strong growth in dog and cat food.

Net sales were helped by prior year price increases and new positive pricing adjustments in EMEA.

Organic net sales for three month period decreased $18.7 million, or 6.4%, excluding favorable foreign currency impact of $0.8 million.

Net sales for the nine month period decreased due to reduction in aquatics sales, higher retail inventory levels earlier in the year and unfavorable foreign exchange rates offset by pricing adjustments.

Organic net sales for the nine month period decreased $20.3 million, or 2.3%, excluding unfavorable foreign currency impact of $20.7 million.

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

Operating income and adjusted EBITDA were further benefited by a one-time gain on sale of property of $2.7 million from the sale of buildings within the EMEA region.

Home and Garden

1 unchanged sentence

Three Month Periods Ended Variance

Six Month Periods Ended Variance

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

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

$ 186.6 $ 198.5 $ (11.9) (6.0) % $ 411.3 $ 470.3 $ (59.0) (12.5) %

Operating income (loss) 26.2 36.2 (10.0) (27.6) % (20.8) 50.8 (71.6) n/m

Operating income (loss) margin 14.0 % 18.2 % (420) bps (5.1) % 10.8 % (1,590) bps

Adjusted EBITDA

$ 38.6 $ 42.8 $ (4.2) (9.8) % $ 51.4 $ 73.1 $ (21.7) (29.7) %

Adjusted EBITDA margin

20.7 % 21.6 % (90) bps 12.5 % 15.5 % (300) bps

n/m = not meaningful

Net sales for the three and nine month periods decreased due to adverse weather conditions leading to lower POS and lower replenishment orders for the pest control category and also drove retailers to continue to be conservative with their inventory planning and to further reduce inventory.

Cleaning product sales marginally increased from the prior year, but the category POS remained challenged.

Decrease in net sales for the nine month period were further impacted by a strong early season inventory build in the prior year and slow spring season cleaning impacting cleaning products category contributed by the POS decline.

Operating income, adjusted EBITDA, and margins for the three month period decreased driven by the decline in sales volume and inflation partially offset by positive pricing, benefits of prior year fixed cost restructuring and operational cost reduction from cost improvement initiatives, with operating income further impacted by the recognition of an impairment of intangible assets of $8.0 million.

Operating loss for the nine month period is due to the recognition of a cumulative impairment of intangible assets of $56.0 million with a decrease in adjusted EBITDA and margins due to lower volumes, the realization of high inventoried costs accumulated in the prior year, partially mitigated by fixed cost restructuring and operational cost reductions.

Home and Personal Care

(in millions, except %) Three Month Periods Ended

Nine Month Periods Ended Variance

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

$ 276.6 $ 329.3 $ (52.7) (16.0) % $ 920.3 $ 1,025.2 $ (104.9) (10.2) %

Operating (loss) income (156.8) 14.4 (171.2) n/m (198.4) 14.9 (213.3) n/m

5 unchanged sentences

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.

Net sales for the three and nine periods decreased due to decrease in product category POS with kitchen appliances, predominantly in NA, from lower consumer demand, increased competitive activities and continued retailer inventory management with incremental reductions during the three month period further impacted by increased promotional spending and reduced placements, most significantly impacting our PowerXL products which continue to be challenged with high retail inventory levels, and slower direct to consumer sales.

Sales in international markets increased for the three month period across for personal care and kitchen appliances categories.

Organic net sales for the three month period decreased $48.4 million, or 14.7%, excluding and unfavorable foreign currency of $4.3 million.

Net sales for the nine 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 nine month period decreased $153.1 million, or 14.9%, excluding acquisition sales of $89.9 million and unfavorable foreign currency of $41.7 million.

Operating loss and margins for the three and nine month periods decreased due to the impairment of goodwill of $111.1 million, impairment of intangible assets of $45.7 million and $64.7 million for the three and nine month periods, respectively, lower volumes, and realization of higher cost inventory accumulated in the prior year, partially offset by cost savings initiatives and reduction of operating expenses initiated in the prior year and first half of the current fiscal year.

Adjusted EBITDA and margin for the three month period increased primarily due to cost improvement initiatives, including reduction of operating expenses initiated in the prior year and first half of the current fiscal year, positive pricing and favorable cost environment from freight decreases, partially offset by unfavorable foreign currency in LATAM and lower volume.

Adjusted EBITDA and margin for the nine month period decreased due to lower volume, sale of high cost inventory accumulated in the prior year and unfavorable foreign currency, offset by previously mentioned cost reduction initiatives and positive pricing.

Liquidity and Capital Resources

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

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

Nine Month Periods Ended (in millions)

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Operating activities

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Cash Flows from Investing Activities

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 provided by investing activities for SBH continuing operations increased $4,610.7 million, from the net cash proceeds of $4,334.7 million from the HHI divestiture, cash used in the prior year of $272.1 million for the acquisition of the Tristar Business and reduced capital expenditures.

Cash flows used in investing activities of SB/RH decreased due to the items previously discussed, including a loan of $500.0 million to the parent company for a borrowing to support the repurchase of treasury stock under the accelerate share repurchase agreement by SBH.

Cash Flows from Financing Activities

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.

Cash flows used by financing activities for continuing operations increased $2,252.0 million primarily due to the pay down of debt and treasury share repurchases following the HHI divestiture.

During the nine month period ended July 2, 2023, the Company paid down the outstanding Revolver Facility of $794.0 million and the Term Loan of $394.0 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 six month period ended April 2, 2023, the Company did not repurchase any treasury stock.

During the nine month period ended July 2, 2023, the Company entered into an accelerated share repurchase agreement and incurred $500.0 million towards the repurchase any treasury stock under an accelerated share repurchase agreement.

See Note 12 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on share repurchase activity.

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 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.

During the nine month periods ended July 2, 2023 and July 3, 2022, SBH made cash dividend payments of $51.6 million, or $0.42 per share.

Cash flows from financing activity of SB/RH decreased $1,773.2 million and is highly dependent upon the financing cash flow activities of SBH.

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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.

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.

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, 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 April 2, 2023, the Company had borrowing availability of $362.1 million, net of outstanding letters of credit, under our credit facility.

As of July 2, 2023, the Company had borrowing availability of $586.9 million, net of outstanding letters of credit, under our credit facility.

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

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

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

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

During the three and nine month period ended July 2, 2023, the Company completed the HHI divestiture resulting in a significant inflow of net cash of $4,334.7 million.

The Company used a portion of the proceeds to repay the outstanding balance on the Term Loan of $392.0 million and the Revolver Facility of $715.0 million, as well as called its 5.75% Notes with a balance of $450.0 million that were subsequently repaid on July 20, 2023 , resulting in a reduction to its overall debt obligation and commitments previously discussed in our Annual Report on Form 10-K for the year ended September 30, 2022.

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

The Company does not have any further immediate obligations to pay down any remaining debt in the short-term following the close of the HHI divestiture.

We have made, and may from time to time in the future, make optional repayments on our debt obligations, which may include repayments, redemptions, repurchases, refinancings or exchanges of our outstanding notes, which will be dependent on various factors, including market conditions.

Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise.

The Company also used a portion of proceeds from the HHI divestiture to fund $500.0 million towards the repurchase of common shares through an accelerated share repurchase agreement.

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

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

The accelerated share repurchase is expected to result in a net delivery settlement of shares by its maturity in December 2023 and does not require any further obligation for cash payment at settlement.

We may, from time to time, seek to repurchase additional shares of our common stock and any further repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors.

The Company will continue to evaluate the deployment of cash proceeds from the HHI divestiture, including the consideration of further debt reduction and share buybacks, but also intends to use a portion of the transaction proceeds to invest in its long-term operating performance and free cash flow generating capacity, seek opportunities to invest in its employees and talent base, marketing, advertising and innovation of new products and infrastructure, as well as consideration towards opportunistic, attractive and synergistic acquisition opportunities within its continuing segments.

During such time, the Company intends to temporarily invest a portion of its cash proceeds in short-term investments until such expenditures are considered required or necessary to the Company in executing its strategic plans and initiatives.

As of July 2, 2023, the Company has an outstanding obligation to ASSA of $34.3 million, which is primarily for the estimated purchase price settlement, cash flow settlement for subsequent commingled operations and net TSA charges including amounts subject to repayment by the Company.

Additionally, during the nine month period ended July 2, 2023, the Company entered into a significant lease renewal with our HPC distribution center in Redlands, CA, resulting in an obligation of $61.8 million with a five-year term expiring in August 2028, increasing the amount of lease obligations and commitments previously discussed in our Annual Report on Form 10-K for the year ended September 30, 2022.

Other than the changes to debt and lease obligations previously noted, there have been no material changes to our debt obligations, lease obligations, employee benefit obligations, or other contractual obligations or commercial commitments previously disclosed.

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

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

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

At 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;

At July 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;

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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 waiver remained in effect as of July 2, 2023 and expired 10 business days after the close of the HHI divestiture, subsequent to July 2, 2023.

The maximum permitted consolidated total net leverage in subsequent periods will be 6.0 to 1.0.

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

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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 month period ending April 2, 2023.

Following the closing of the HHI divestiture and receipt of related proceeds, the Company has temporarily suspended some of its receivable factoring activity.

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.

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.

Critical Accounting Policies and Estimates

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

Six Month Period Ended Year Ended

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

Nine Month Period Ended Year Ended

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

Statements of Operations Data

4 unchanged sentences

Operating loss (306.1) (190.4)

Net loss from continuing operations (176.4) (263.2)

Net loss (153.2) (174.7)

Net loss attributable to controlling interest (153.2) (174.7)

Net income (loss) from continuing operations (51.2) (263.2)

Net income (loss) 1,995.0 (174.7)

Net income (loss) attributable to controlling interest 1,995.0 (174.7)

Statements of Financial Position Data

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Noncurrent Liabilities 2,125.3 3,423.4

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

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

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

Statements of Financial Position Data

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis