Spectrum Brands Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q. Unless the context indicates otherwise, the term the “Company,” “we,” “our,” or “us” are used to refer to Spectrum Brands Holdings, Inc. and its subsidiaries ("SBH") and SB/RH Holdings, LLC and its subsidiaries (“SB/RH”), collectively. Business Overview The Company is a diversified global branded consumer products company. We manage the businesses in three vertically integrated, product-focused segments: (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. We enjoy strong name recognition in our regions under our various brands and patented technologies across multiple product categories. Global and geographic strategic initiatives and financial objectives are determined at the corporate level. Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president responsible for sales and marketing initiatives and financial results for all product lines within that segment, on a global basis. The segments are supported through center-led shared service operations and enabling functions consisting of finance and accounting, information technology, legal, human resources, supply chain, and commercial operations. See Note 17 – Segment Information included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to segments of continuing operations. The following is an overview of the consolidated business, by segment, summarizing product types and brands: Segment Products Brands GPC Companion Animal: Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog treats, and wet and dry pet food for dogs and cats. Companion Animal: 8IN1® (8-in-1), Dingo®, Nature's Miracle®, Wild Harvest™, Littermaid®, Jungle®, Excel®, FURminator®, IAMS® (Europe only), Eukanuba® (Europe only), Healthy-Hide®, DreamBone®, SmartBones®, ProSense®, Perfect Coat®, eCOTRITION®, Birdola®, Good Boy®, Meowee!®, Wildbird®, and Wafcol® Aquatics: Consumer and commercial aquarium kits, stand-alone tanks; aquatics equipment such as filtration systems, heaters and pumps; and aquatics consumables such as fish food, water management and care. Aquatics: Tetra®, Marineland®, Whisper®, Instant Ocean®, GloFish®, OmegaOne® and OmegaSea® H&G Household: Household pest control solutions such as spider and scorpion killers; ant and roach killers; flying insect killers; insect foggers; wasp and hornet killers; and bedbug, flea and tick control products. Household: Hot Shot®, Black Flag®, Real-Kill®, Ultra Kill®, The Ant Trap® (TAT), and Rid-A-Bug®. Controls: Outdoor insect and weed control solutions, and animal repellents such as aerosols, granules, and ready-to-use sprays or hose-end ready-to-sprays. Controls: Spectracide®, Garden Safe®, Liquid Fence®, and EcoLogic®. Repellents: Personal use pesticides and insect repellent products, including aerosols, lotions, pump sprays and wipes, yard sprays and citronella candles. Repellents: Cutter® and Repel®. Cleaning: Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes and markers. Cleaning: Rejuvenate® 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: Remington® 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. 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; kitchen and bath faucets and accessories under the Pfister® brand; 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. All brands and tradenames are directly owned by the Company with the exception of the Black & Decker® ("B&D") and Emeril Legasse® ("Emeril") brands used by the HPC segment. The Company has a trademark license agreement (the "License Agreement") with Stanley Black & Decker ("SBD") pursuant to which we license the B&D brand in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances within the Company's HPC segment: beverage products, food preparation products, garment care products and cooking products. The License Agreement has a term ending June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025, whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement. Under the terms of the License Agreement, we agree to pay SBD royalties based on a percentage of sales, with minimum annual royalty payments of $15.0 million, with the exception of the minimum annual royalty will no longer be applied effective January 1, 2024, through the expiration of the agreement. The License Agreement also requires us to comply with maximum annual return rates for products. Subsequent to the completion of the License Agreement, there are no non-competition provisions or restrictions provided following its expiration. See Note 4 – Revenue Recognition included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on revenue concentration from B&D branded products. 31 Table of Contents Pursuant to the Emeril License, the Company licenses the Emeril brands within the US, Canada, Mexico, and the United Kingdom for certain designated product categories of household appliances within the HPC segment, including small kitchen food preparation products, indoor and outdoor grills and grill accessories, and cookbooks. The Emeril License has a current expiration of December 31, 2023, with options for one-year renewal periods following the initial expiration through December 31, 2025. Under the terms of the agreement, we agreed to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.6 million, increasing to $1.8 million in subsequent renewal periods. SB/RH is a wholly owned subsidiary of SBH. Spectrum Brands, Inc. (“SBI”), a wholly-owned subsidiary of SB/RH, incurred certain debt guaranteed by SB/RH and domestic subsidiaries of SBI. See Note 9 – Debt included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to debt. The reportable segments of SB/RH are consistent with the segments of SBH. Acquisitions, Divestitures and Other Business Development Initiatives The Company periodically evaluates strategic transactions that may result in the acquisition of a business or assets that qualify as a business combination, or a divestiture of a business or assets that may be recognized as either a component of continuing operations or discontinued operations, depending on the significance to the consolidated group. Acquisitions may impact the comparability of the consolidated or segment financial information with the inclusion of the operating results for the acquired business in periods subsequent to acquisition date, the inclusion of acquired assets, both tangible and intangible (including goodwill), and the related amortization, depreciation or other non-cash purchase accounting adjustments of acquired assets. Divestitures may impact the comparability of the consolidated or segment financial information with the recognition of an impairment loss when held for sale, gain or loss on disposition, or change in classification to discontinued operations for qualifying transactions. Moreover, the comparability of consolidated or segment financial information may be impacted by incremental costs to facilitate and effect such transactions and initiatives to integrate acquired business or separate divested operations and assets with the consolidated group. The following strategic transactions 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. • Tristar Business Acquisition - On February 18, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril, and Copper Chef® brands. The net assets and operating results of the Tristar Business are included in the Company’s condensed consolidated financial statements and reported within the HPC reporting segment for the three and nine month 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. Costs attributable to the initiative are expected to be incurred until a transaction is realized or otherwise canceled. • 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"). 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 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 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. 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 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. Costs attributable to the integration of the Armitage business were completed in the prior year. 32 Table of Contents • Omega Acquisition - On March 10, 2020, the Company acquired Omega Sea, LLC ("Omega"), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consisting of the Omega brand. The net assets and results of operations of Omega are included in the Company's condensed consolidated financial statements and reported within GPC segment for the three and nine month periods ended July 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 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 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 HHI divestiture 4.0 0.6 6.9 6.1 HPC separation initiatives 0.5 10.7 4.0 15.4 Coevorden operations separation — 1.9 2.7 7.3 Rejuvenate integration — — — 7.0 Armitage integration — 0.1 — 1.4 Omega integration — 0.1 — 1.5 Other project costs 0.2 0.2 0.4 0.7 Total $ 5.7 $ 19.2 $ 24.7 $ 59.4 Reported as: Net sales $ — $ — $ — $ 0.7 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 Restructuring and Optimization Initiatives We continually seek and develop operating strategies to improve our operational efficiency, match our capacity and product costs to market demand and better utilize our manufacturing and distribution resources in order to reduce costs, increase revenues, and increase or maintain our current profit margins. We have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the condensed consolidated financial statements. These changes and updates are inherently difficult and are made even more difficult by current global economic conditions. Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors, or inflation increased interest rates, many of which are beyond our control. The following initiatives have been considered as having a significant impact on the comparability of the financial results on the condensed consolidated financial statements and segment financial information. • Fiscal 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 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. See Note 3 - Restructuring Charges in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail on related exit or disposal costs attributable to this initiative. • Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis. This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as 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 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. • HPC Brand Portfolio Transitions - In light of the acquisition of the Tristar Business and the PowerXL® brand, the Company has initiated a project within its HPC segment to assess and evaluate the current utilization of tradenames and brands across its portfolio of home and kitchen appliance products. The project will require incremental costs to facilitate potential transitions of branded product offerings on global basis, including potential investment with our supply base and retail partners to manage inventory and transition new branded products to market. Remaining costs are anticipated to be incurred through September 30, 2023. 33 Table of Contents • 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. 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. to address capacity needs, optimize and improve fill rates attributable to recent growth in the business and consumer demand, and improve overall operational effectiveness and throughput. The initiative includes the transition of its third party logistics (3PL) service provider at its existing distribution center, incorporating new facilities into the distribution footprint by expanding warehouse capacity and securing additional space to support long-term distribution and fulfillment, plus updating engagement and processes with suppliers and its transportation and logistics handlers. Incremental costs include one-time transition, implementation and start-up cost with the new 3PL service provider, including the integration of provider systems and technology, incentive-based compensation to maintain performance during transition, duplicative and redundant costs, and incremental costs for various disruptions in the operations during the transition period including supplemental transportation and storage costs, incremental detention and demurrage costs. Additionally, the Company experienced an increase in customer fines and penalties during the transition period (recognized as a reduction in net sales). Costs attributable to the initiative were completed during the year ended September 30, 2022. • Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce overall operational complexity across the Company. With the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transition of the Company’s continuing operations in a post-divestiture environment and exiting of TSAs, which were fully exited in January 2022. The initiative includes review of global processes and organization design and structures, headcount reductions and transfers, and rightsizing the Company’s shared operations and commercial business strategy and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity. 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 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 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 $ — Fiscal 2022 restructuring — 8.1 0.7 8.1 Global ERP transformation 3.7 3.4 8.5 9.4 HPC brand portfolio transitions 0.7 0.3 2.1 0.3 Russia closing initiative 0.2 — 2.9 3.6 GPC distribution center transition — 8.4 — 28.3 Global productivity improvement program — 1.2 — 5.2 Other project costs 1.0 4.0 8.5 10.0 Total $ 6.5 $ 25.4 $ 28.0 $ 64.9 Reported as: Net sales $ — $ 0.3 $ (1.0) $ 4.2 Cost of goods sold 0.5 1.0 2.4 1.9 Selling expense — 8.1 0.4 24.1 General & administrative expense 6.0 16.0 26.2 34.7 Financing Activity Financing activity during and between comparable periods may have a significant impact on the comparability of financial results on the condensed consolidated financial statements. • On 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 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 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. 34 Table of Contents Inflation and Supply Chain Constraint s 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. 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 Our consolidated and segment results contain non-GAAP metrics such as organic net sales, and adjusted EBITDA (“Earnings Before Interest, Taxes, Depreciation, Amortization”) and adjusted EBITDA margin. While we believe organic net sales and adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results. Organic Net Sales. We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (when applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and acquisitions. We use organic net sales as one measure to monitor and evaluate our regional and segment performance. 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 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 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 %) July 2, 2023 Net Sales Effect of Changes in Currency Net Sales Excluding Effect of Changes in Currency Effect of Acquisitions Organic Net Sales Net Sales July 3, 2022 Variance GPC $ 272.3 $ (0.8) $ 271.5 $ — $ 271.5 $ 290.2 $ (18.7) (6.4) % H&G 186.6 — 186.6 — 186.6 198.5 (11.9) (6.0) % HPC 276.6 4.3 280.9 — 280.9 329.3 (48.4) (14.7) % Total $ 735.5 $ 3.5 $ 739.0 $ — $ 739.0 $ 818.0 (79.0) (9.7) % Nine Month Periods Ended (in millions, except %) July 2, 2023 Net Sales Effect of Changes in Currency Net Sales Excluding Effect of Changes in Currency Effect of Acquisitions Organic Net Sales Net Sales July 3, 2022 Variance GPC $ 846.5 $ 20.7 $ 867.2 $ — $ 867.2 $ 887.5 $ (20.3) (2.3) % H&G 411.3 (0.1) 411.2 — 411.2 470.3 (59.1) (12.6) % HPC 920.3 41.7 962.0 (89.9) 872.1 1,025.2 (153.1) (14.9) % Total $ 2,178.1 $ 62.3 $ 2,240.4 $ (89.9) $ 2,150.5 $ 2,383.0 (232.5) (9.8) % 35 Table of Contents Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management, which we believe provide useful information to investors because they reflect ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods. They also facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA further excludes: • 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; • Incremental amounts attributable to strategic transactions and business development initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards business development activities, incremental costs attributable to such transactions and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments; • Incremental amounts realized towards restructuring and optimization projects including, but not limited to, costs towards the development and implementation of strategies to optimize operations and improve efficiency, reduce costs, increase revenues, increase or maintain our current profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments; • Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, TSAs, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations following the completed sale of the discontinued operations. See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details; • Non-cash purchase accounting 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 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; 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 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; and • 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 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. 36 Table of Contents 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 Depreciation 4.1 1.8 2.8 3.4 12.1 Amortization 5.6 2.8 2.1 — 10.5 EBITDA 47.7 30.8 (151.6) (23.7) (96.8) Share based compensation — — — 4.8 4.8 Tristar integration — — 1.0 — 1.0 HHI divestiture — — — 4.0 4.0 HPC separation initiatives — — — 0.5 0.5 Fiscal 2023 restructuring 0.5 — 0.4 — 0.9 Russia closing initiatives — — 0.2 — 0.2 Global ERP transformation — — — 3.7 3.7 HPC brand portfolio transitions — — 0.7 — 0.7 Other project costs 0.2 — 0.7 0.3 1.2 Unallocated shared costs — — — 5.3 5.3 Non-cash purchase accounting adjustments — — 0.5 — 0.5 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 Adjusted EBITDA $ 53.6 $ 38.6 $ 11.4 $ (5.1) $ 98.5 Net sales $ 272.3 $ 186.6 $ 276.6 $ — $ 735.5 Adjusted EBITDA margin 19.7 % 20.7 % 4.1 % — 13.4 % 37 Table of Contents 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 Depreciation 4.0 1.8 2.9 3.6 12.3 Amortization 5.6 2.8 4.7 — 13.1 EBITDA 28.4 40.9 20.2 (33.1) 56.4 Share based compensation — — — (0.7) (0.7) Tristar integration — — 5.6 — 5.6 Armitage integration 0.1 — — — 0.1 Omega integration 0.1 — — — 0.1 HHI divestiture — — — 0.6 0.6 HPC separation initiatives — — — 10.7 10.7 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 Global productivity improvement program 0.2 — 0.5 0.5 1.2 Other project costs 0.1 — 0.4 3.6 4.1 Unallocated shared costs — — — 7.0 7.0 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 Adjusted EBITDA $ 40.9 $ 42.8 $ 3.6 $ (7.2) $ 80.1 Net sales $ 290.2 $ 198.5 $ 329.3 $ — $ 818.0 Adjusted EBITDA margin 14.1 % 21.6 % 1.1 % — 9.8 % 38 Table of Contents 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) Interest expense — — — 103.9 103.9 Depreciation 11.6 5.4 9.0 10.2 36.2 Amortization 16.6 8.6 6.2 — 31.4 EBITDA 119.5 (6.8) (183.0) (78.4) (148.7) Share based compensation — — — 12.5 12.5 Tristar integration — — 10.7 — 10.7 HHI divestiture — — — 6.9 6.9 HPC separation initiatives — — — 4.0 4.0 Coevorden operations separation 2.7 — — — 2.7 Fiscal 2023 restructuring 2.5 — 2.8 — 5.3 Fiscal 2022 restructuring 0.1 0.2 — 0.4 0.7 Russia closing initiatives — — 2.9 — 2.9 Global ERP transformation — — — 8.5 8.5 HPC brand portfolio transitions — — 2.1 — 2.1 Other project costs 1.1 2.1 0.9 4.8 8.9 Unallocated shared costs — — — 18.1 18.1 Non-cash purchase accounting adjustments — — 1.4 — 1.4 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 Salus and other 3.3 0.1 0.3 1.3 5.0 Adjusted EBITDA $ 137.1 $ 51.4 $ 22.7 $ (21.9) $ 189.3 Net sales $ 846.5 $ 411.3 $ 920.3 $ — $ 2,178.1 Adjusted EBITDA margin 16.2 % 12.5 % 2.5 % — 8.7 % 39 Table of Contents 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) Income tax benefit — — — (20.8) (20.8) Interest expense — — — 72.4 72.4 Depreciation 11.1 5.4 9.2 10.9 36.6 Amortization 17.1 8.6 14.2 — 39.9 EBITDA 77.3 64.7 36.1 (102.3) 75.8 Share based compensation — — — 11.4 11.4 Tristar acquisition and integration — — 20.0 — 20.0 Rejuvenate integration — 7.0 — — 7.0 Armitage integration 1.4 — — — 1.4 Omega integration 1.5 — — — 1.5 HHI divestiture — — — 6.1 6.1 HPC separation initiatives — — — 15.4 15.4 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 Global productivity improvement program 0.9 — 2.5 1.8 5.2 Other project costs 0.2 — 0.6 9.9 10.7 Unallocated shared costs — — — 20.7 20.7 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) Salus and other — 1.3 — 0.4 1.7 Adjusted EBITDA $ 120.2 $ 73.1 $ 41.6 $ (26.5) $ 208.4 Net sales $ 887.5 $ 470.3 $ 1,025.2 $ — $ 2,383.0 Adjusted EBITDA margin 13.5 % 15.5 % 4.1 % — % 8.7 % 40 Table of Contents 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 Depreciation 4.1 1.8 2.8 3.4 12.1 Amortization 5.6 2.8 2.1 — 10.5 EBITDA 47.7 30.8 (151.6) (22.9) (96.0) Share based compensation — — — 4.3 4.3 Tristar integration — — 1.0 — 1.0 HHI divestiture — — — 4.0 4.0 HPC separation initiatives — — — 0.5 0.5 Fiscal 2023 restructuring 0.5 — 0.4 — 0.9 Russia closing initiatives — — 0.2 — 0.2 Global ERP transformation — — — 3.7 3.7 HPC brand portfolio transitions — — 0.7 — 0.7 Other project costs 0.2 — 0.7 0.3 1.2 Unallocated shared costs — — — 5.3 5.3 Non-cash purchase accounting adjustments — — 0.5 — 0.5 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 Adjusted EBITDA $ 53.6 $ 38.6 $ 11.4 $ (4.8) $ 98.8 Net Sales $ 272.3 $ 186.6 $ 276.6 $ — $ 735.5 Adjusted EBITDA margin 19.7 % 20.7 % 4.1 % — 13.4 % 41 Table of Contents 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 Depreciation 4.0 1.8 2.9 3.6 12.3 Amortization 5.6 2.8 4.7 — 13.1 EBITDA 28.4 40.9 20.2 (32.3) 57.2 Share based compensation — — — (1.1) (1.1) Tristar acquisition — — 5.6 — 5.6 Armitage integration 0.1 — — — 0.1 Omega integration 0.1 — — — 0.1 HHI divestiture — — — 0.6 0.6 HPC separation initiatives — — — 10.7 10.7 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 Global productivity improvement program 0.2 — 0.5 0.5 1.2 Other project costs 0.1 — 0.4 3.6 4.1 Unallocated shared costs — — — 7.0 7.0 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 Net Sales $ 290.2 $ 198.5 $ 329.3 $ — $ 818.0 Adjusted EBITDA margin 14.1 % 21.6 % 1.1 % — % 9.9 % 42 Table of Contents 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) Interest expense — — — 103.3 103.3 Depreciation 11.6 5.4 9.0 10.2 36.2 Amortization 16.6 8.6 6.2 — 31.4 EBITDA 119.5 (6.8) (183.0) (76.9) (147.2) Share based compensation — — — 11.4 11.4 Tristar integration — — 10.7 — 10.7 HHI divestiture — — — 6.9 6.9 HPC separation initiatives — — — 4.0 4.0 Coevorden operations separation 2.7 — — — 2.7 Fiscal 2023 restructuring 2.5 — 2.8 — 5.3 Fiscal 2022 restructuring 0.1 0.2 — 0.4 0.7 Russia closing initiatives — — 2.9 — 2.9 Global ERP transformation — — — 8.5 8.5 HPC brand portfolio transitions — — 2.1 — 2.1 Other project costs 1.1 2.1 0.9 4.8 8.9 Unallocated shared costs — — — 18.1 18.1 Non-cash purchase accounting adjustments — — 1.4 — 1.4 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 Other 3.3 0.1 0.3 1.3 5.0 Adjusted EBITDA $ 137.1 $ 51.4 $ 22.7 $ (21.5) $ 189.7 Net sales $ 846.5 $ 411.3 $ 920.3 $ — $ 2,178.1 Adjusted EBITDA margin 16.2 % 12.5 % 2.5 % — 8.7 % 43 Table of Contents 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) Income tax benefit — — — (20.4) (20.4) Interest expense — — — 72.7 72.7 Depreciation 11.1 5.4 9.2 10.9 36.6 Amortization 17.1 8.6 14.2 — 39.9 EBITDA 77.3 64.7 36.1 (100.3) 77.8 Share based compensation — — — 10.7 10.7 Tristar acquisition and integration — — 20.0 — 20.0 Rejuvenate integration — 7.0 — — 7.0 Armitage integration 1.4 — — — 1.4 Omega integration 1.5 — — — 1.5 HHI divestiture — — — 6.1 6.1 HPC separation initiatives — — — 15.4 15.4 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 Global productivity improvement program 0.9 — 2.5 1.8 5.2 Other project costs 0.2 — 0.6 9.9 10.7 Unallocated shared costs — — — 20.7 20.7 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) Other — 1.3 — 0.1 1.4 Adjusted EBITDA $ 120.2 $ 73.1 $ 41.6 $ (25.5) $ 209.4 Net sales $ 887.5 $ 470.3 $ 1,025.2 $ — $ 2,383.0 Adjusted EBITDA margin 13.5 % 15.5 % 4.1 % — 8.8 % 44 Table of Contents Consolidated Results of Operations 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 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) % Gross profit 263.5 276.0 (12.5) (4.5) % 679.9 750.9 (71.0) (9.5) % Gross profit margin 35.8 % 33.7 % 210 bps 31.2 % 31.5 % (30) bps Operating expenses $ 388.2 $ 237.3 $ 150.9 63.6 % $ 901.7 $ 744.2 $ 157.5 21.2 % Interest expense 38.9 26.0 12.9 49.6 % 103.9 72.4 31.5 43.5 % 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 Net Sales. 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 Nine Month Periods Ended Variance July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 GPC $ 272.3 $ 290.2 $ (17.9) (6.2) % $ 846.5 $ 887.5 $ (41.0) (4.6) % H&G 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) % Net Sales $ 735.5 $ 818.0 (82.5) (10.1) % $ 2,178.1 $ 2,383.0 (204.9) (8.6) % (in millions) Three Month Periods Ended Nine Month Periods Ended Net Sales for the period ended July 3, 2022 $ 818.0 $ 2,383.0 Decrease in GPC (18.7) (20.3) Decrease in H&G (11.9) (59.1) Decrease in HPC (48.4) (153.1) Acquisition sales — 89.9 Foreign currency impact, net (3.5) (62.3) Net Sales for the period ended July 2, 2023 $ 735.5 $ 2,178.1 Gross Profit. 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 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 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 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 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. 45 Table of Contents Other Non-Operating Expense (Income), Net. 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 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, state income taxes and foreign rates that differ from the U.S. federal statutory rate. 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 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. Noncontrolling Interest. The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the accounting interest. Such amount varies in relation to such a subsidiary’s net income or loss for the period and the percentage interest not owned by SBH. SB/RH 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) % Gross profit 263.5 276.0 (12.5) (4.5) % 679.9 750.9 (71.0) (9.5) % Gross profit margin 35.8 % 33.7 % 210 bps 31.2 % 31.5 % (30) bps Operating expenses $ 387.4 $ 236.5 $ 150.9 63.8 % $ 900.2 $ 742.3 $ 157.9 21.3 % Interest expense 38.2 26.1 12.1 46.4 % 103.3 72.7 30.6 42.1 % 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 nine month periods are primarily attributable to the changes in SBH previously discussed. Segment Financial Data Global Pet Care (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 $ 272.3 $ 290.2 $ (17.9) (6.2) % $ 846.5 $ 887.5 $ (41.0) (4.6) % Operating income 38.2 19.9 18.3 92.0 % 91.2 52.1 39.1 75.0 % Operating income margin 14.0 % 6.9 % 710 bps 10.8 % 5.9 % 490 bps Adjusted EBITDA $ 53.6 $ 40.9 $ 12.7 31.1 % $ 137.1 $ 120.2 $ 16.9 14.1 % Adjusted EBITDA margin 19.7 % 14.1 % 560 bps 16.2 % 13.5 % 270 bps 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 (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 $ 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 Variance Nine Month Periods Ended Variance July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Net sales $ 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 Operating (loss) income margin (56.7 %) 4.4 % (6,110) bps (21.6) % 1.5 % (2,310) bps Adjusted EBITDA $ 11.4 $ 3.6 $ 7.8 216.7 % $ 22.7 $ 41.6 $ (18.9) (45.4) % Adjusted EBITDA margin 4.1 % 1.1 % 300 bps 2.5 % 4.1 % (160) bps n/m = not meaningful 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 nine month periods ended July 2, 2023 and July 3, 2022, respectively. SBH SB/RH Nine Month Periods Ended (in millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Operating activities $ 72.5 $ (180.8) $ 61.3 $ (213.1) Investing activities 4,293.3 (317.4) 3,793.3 (317.4) Financing activities (1,706.3) 545.7 (1,195.0) 578.2 Cash Flows from Operating Activities Cash flows provided by SBH's continuing operations increased $253.3 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 $274.4 million primarily due to the items previously discussed above. 46 Table of Contents Cash Flows from Investing Activities 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 $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 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. 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. Liquidity Outlook Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. 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 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. Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other related projects. Long-term financing needs depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term obligations. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group. 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. 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. 47 Table of Contents We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings. At July 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; the 5.00% Notes, due October 1, 2029; the 5.50% Notes due July 15, 2030; and the 3.875% Notes, due March 15, 2031. On November 17, 2022, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0, before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee. 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. given our international operations. We manage our worldwide cash requirements centrally by reviewing available cash balances across our worldwide group and the cost effectiveness with which this cash can be accessed. We generally repatriate cash from non-U.S. subsidiaries, provided the cost of the repatriation is not considered material. The counterparties that hold our deposits consist of major financial institutions. The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality requires the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season. From time to time the Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. 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. There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation. The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Company's Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow. Critical Accounting Policies and Estimates There have been no material changes to our critical accounting estimates as discussed in our Annual Report on Form 10-K for the year ended September 30, 2022. New Accounting Pronouncements See Note 1 – Basis of Presentation and Significant Accounting Policies in Notes to the Condensed Consolidated Financial Statements elsewhere included in this Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted. 48 Table of Contents Guarantor Statements – SB/RH SBI has issued the 5.75% Notes under the 2025 Indenture, the 4.00% Notes under the 2026 Indenture, the 5.00% Notes under the 2029 Indenture, the 5.50% Notes under the 2030 Indenture, and the 3.875% Notes under the 2031 Indentures (collectively, the “Notes”). The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SB/RH and SBI’s domestic subsidiaries. The Notes and the related guarantees rank equally in right of payment with all of SBI and the guarantors’ existing and future senior indebtedness and rank senior in right of payment to all of SBI and the guarantors’ future indebtedness that expressively provide for its subordination to the Notes and the related guarantees. Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries. The following financial information consists of summarized financial information of the Obligor, presented on a combined basis. The “Obligor” consists of the financial statements of SBI as the debt issuer, SB/RH as a parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors. Intercompany balances and transactions between SBI and the guarantors have been eliminated. Investments in non-guarantor subsidiaries and the earnings or losses from those non-guarantor subsidiaries have been excluded. Nine Month Period Ended Year Ended (in millions) July 2, 2023 September 30, 2022 Statements of Operations Data Third party net sales $ 1,383.0 $ 1,955.8 Intercompany net sales to non-guarantor subsidiaries 8.6 14.4 Net sales 1,391.6 1,970.2 Gross profit 408.1 551.2 Operating loss (306.1) (190.4) 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 Current Assets $ 3,699.9 $ 2,634.4 Noncurrent Assets 1,989.0 2,169.9 Current Liabilities 1,888.2 1,634.1 Noncurrent Liabilities 2,125.3 3,423.4 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 Current receivables from non-guarantor subsidiaries $ 28.5 $ 8.1 Long-term receivable from non-guarantor subsidiaries 106.4 74.6 Current payable to non-guarantor subsidiaries 273.3 311.2 Long-term debt with non-guarantor subsidiaries 10.3 2.0