What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-09 · 161 added, 282 removed, 415 unchanged (52% of the section changed)

5 unchanged sentences

Risk Factors and "Forward-Looking Statements" included within our 2023 Annual Report.

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.

Unless the context indicates otherwise, the term the "Company," "we," "us," or "our" are used to refer to Spectrum Brands Holdings, Inc.

and its subsidiaries collectively.

Non-GAAP Measurements

9 unchanged sentences

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

The following is a reconciliation of reported net sales to organic net sales for the three and six month period ended March 31, 2024 compared to net sales for the three and six month period ended April 2, 2023:

The following is a reconciliation of reported net sales to organic net sales for the three and nine month period ended June 30, 2024 compared to net sales for the three and nine month period ended July 2, 2023:

Three Month Periods Ended

(in millions, except %) March 31, 2024

(in millions, except %) June 30, 2024

Effect of Changes in Currency

April 2, 2023

$ 282.2 $ 1.2 $ 283.4 $ 272.3 $ 11.1 4.1 %

2 unchanged sentences

$ 779.4 $ 8.5 $ 787.9 $ 735.5 52.4 7.1 %

Six Month Periods Ended

Nine Month Periods Ended

(in millions, except %)

March 31, 2024

June 30, 2024

Effect of Changes in Currency

April 2, 2023

$ 849.0 $ (6.0) $ 843.0 $ 846.5 $ (3.5) (0.4) %

13 unchanged sentences

Refer to the Strategic transactions, restructuring and optimization initiatives discussion within the Overview section for further discussion on the projects and initiatives;

• 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 During the three and six month periods ended March 31, 2024 and April 2, 2023, the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent;

During the three and nine month periods ended June 30, 2024 and July 2, 2023, the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent;

• 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, when applicable.

During the three and six month period ended March 31, 2024, the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with an impairment charge on a right of use operating lease asset associated with an HPC facility that was exited prior to end of its term.

See Note 7 - Goodwill and Intangibles in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details.

During the three and six month period ended April 2, 2023, the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term;

• Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition.

During the three month period ended June 30, 2024, the Company recognized impairment charges on a right of use operating lease asset associated with a HPC facility that was exited prior to the end of its term.

See Note 6 - Property, Plant and Equipment in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion.

During the nine month period ended June 30, 2024, the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with impairment charges on right of use operating lease assets associated with HPC distribution facilities that were exited prior to end of its term.

See Note 7 - Goodwill and Intangibles and Note 6 - Property Plant and Equipment in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion.

During the three and nine periods ended July 2, 2023, the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term;

• Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition realized during the nine month period ended June 30, 2024 .

Refer to Note 15 - Commitment and Contingencies, in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

• Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent.

During the three and six month periods ended March 31, 2024, such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition.

During the three and nine month periods ended June 30, 2024 and July 2, 2023, such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition.

Refer to Note 15 - Commitment and Contingencies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

• Non-cash gain realized from the repurchase of debt obligations at a discount, net deferred financing costs, during the three and six month periods ended March 31, 2024.

See Note 8 - Debt in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;

• Gain or loss from the early extinguishment of debt realized through the repurchase or early redemption of outstanding debt obligations, net write-off of unamortized deferred debt issuance costs during the three and nine month periods ended June 30, 2024 and July 2, 2023.

See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

• Incremental costs associated with the recognition of product recall costs incurred by the HPC segment in collaboration with the CPSC, initiated at the end of the year ended September 30 2022 and during the year ended September 30, 2023, resulting in the accrual and recognition of incremental costs for the recall, product returns from customers, write-off of inventory on hand, and other costs such as notification, shipping and handling, rework and destruction of affected products, and consumer refunds, as needed.

Such costs are not recurring and directly attributable to the recall event, excluding all other costs associated with product warranty and returns.

During the three month period ended March 31, 2024, the Company was required by the CPSC to reissue a previously issued recall to provide a cash refund to customers, resulting in the recognition of incremental costs and reserves.

Note 17 - Commitments and Contingencies in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;

See Note 15 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;

• Unallocated shared costs reflect the costs associated with certain shared and center-led administrative functions such as information technology, human resources, finance and accounting, supply chain and commercial operations, supporting the HHI business during the period the Company owned and operated the business through the close of the HHI divestiture on June 20, 2023.

4 unchanged sentences

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

• Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the six month period ended April 2, 2023;

• For the three and six month periods ended April 2, 2023, the impact from the early settlement of foreign currency cash flow hedges during the year ended September 30, 2022, resulting in 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 excluded gains intended to mitigate costs during the year ending September 30, 2023;

• Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the nine month period ended July 2, 2023;

• For the three and nine month periods ended July 2, 2023, the impact from the early settlement of foreign currency cash flow hedges during the year ended September 30, 2022, resulting in 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 excluded gains intended to mitigate costs during the year ending September 30, 2023;

• Other adjustments are attributable to:

(1) key executive severance and other one-time compensatory costs;

and (2) non-recurring unusual insurable losses, including any the receipt of insurance proceeds or recovery realized.

and (2) non-recurring unusual insurable losses, including the receipt of related insurance proceeds.

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 (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the three month period ended March 31, 2024.

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the three month period ended June 30, 2024.

(in millions, except %) GPC H&G

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Global ERP transformation — — — 4.3 4.3

Other project costs — (0.1) (0.1) 0.3 0.1

Non-cash purchase accounting adjustments — — 0.5 — 0.5

Impairment of operating lease asset — — 0.5 — 0.5

Impairment of intangible assets — 39.0 — — 39.0

Representation and warranty insurance proceeds — — (65.0) — (65.0)

Legal and environmental — — 0.3 — 0.3

HPC product recall — — 6.7 — 6.7

Other 0.1 — — — 0.1

Adjusted EBITDA $ 62.3 $ 29.2 $ 17.8 $ 3.0 $ 112.3

Net sales $ 289.9 $ 160.7 $ 267.9 $ — $ 718.5

Net income (loss) from continuing operations margin 18.3 % (9.1) % 25.9 % — % 6.9 %

Adjusted EBITDA margin 21.5 % 18.2 % 6.6 % — % 15.6 %

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the three month period ended April 2, 2023.

(in millions, except %) GPC H&G

HPC Corporate Consolidated

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

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

Interest expense — — — 31.6 31.6

Depreciation 3.8 1.9 2.9 3.3 11.9

Amortization 5.5 2.9 2.1 — 10.5

EBITDA 39.5 (35.0) (32.7) (27.6) (55.8)

Share based compensation — — — 4.5 4.5

HHI divestiture and separation costs — — — 1.4 1.4

HPC separation initiatives — — — 1.1 1.1

Tristar integration — — 4.0 — 4.0

Fiscal 2023 and 2022 restructuring 2.1 — 2.4 0.1 4.6

Global ERP transformation — — — 3.3 3.3

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

1 unchanged sentence

Non-cash purchase accounting adjustments — — 0.2 — 0.2

Impairment of equipment and operating lease assets 2.7 — 1.5 — 4.2

Impairment of intangible assets — 48.0 19.0 — 67.0

Unallocated shared costs — — — 6.3 6.3

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

HPC product recall — — 1.6 — 1.6

Other 0.4 — — 0.2 0.6

Adjusted EBITDA $ 46.3 $ 15.1 $ (1.9) $ (8.5) $ 51.0

Net sales $ 296.7 $ 153.3 $ 279.2 $ — $ 729.2

Net income (loss) from continuing operations margin 10.2 % (26.0) % (13.5) % — % (10.3) %

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

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the six month period ended March 31, 2024.

(in millions, except %) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 96.6 $ (20.2) $ 85.2 $ (94.2) $ 67.4

Income tax expense — — — 37.9 37.9

Interest expense — — — 36.1 36.1

Depreciation 7.1 4.0 5.4 12.3 28.8

Amortization 11.2 5.7 5.3 — 22.2

EBITDA 114.9 (10.5) 95.9 (7.9) 192.4

Share based compensation — — — 8.4 8.4

HHI separation costs — — — 2.1 2.1

HPC separation initiatives — — — 3.1 3.1

Fiscal 2023 and 2022 restructuring 0.2 — 0.7 — 0.9

Global ERP transformation — — — 6.9 6.9

Other project costs (0.1) — — 0.2 0.1

Non-cash purchase accounting adjustments — — 0.9 — 0.9

Impairment of operating lease asset — — 5.1 — 5.1

Impairment of intangible assets — 39.0 4.0 — 43.0

Representation and warranty insurance proceeds — — (65.0) — (65.0)

Legal and environmental — — 0.8 — 0.8

Gain from debt repurchase — — — (4.7) (4.7)

HPC product recall — — 6.0 — 6.0

Other 0.1 — — 0.4 0.5

Adjusted EBITDA $ 115.1 $ 28.5 $ 44.5 $ 8.5 $ 196.6

Net sales $ 566.8 $ 232.7 $ 611.2 $ — $ 1,410.7

Net income (loss) from continuing operations margin 17.0 % (8.7) % 13.9 % — % 4.8 %

Adjusted EBITDA margin 20.3 % 12.2 % 7.3 % — % 13.9 %

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the six month period ended April 2, 2023.

(in millions, except %) GPC H&G HPC Corporate Consolidated

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

Income tax benefit — — — (46.9) (46.9)

Interest expense — — — 65.0 65.0

Depreciation 7.5 3.7 6.1 6.8 24.1

Amortization 11.0 5.7 4.2 — 20.9

EBITDA 71.8 (37.6) (31.5) (54.6) (51.9)

Share based compensation — — — 7.7 7.7

HHI divestiture and separation costs — — — 2.9 2.9

HPC separation initiatives — — — 3.5 3.5

Tristar integration — — 9.7 — 9.7

Fiscal 2023 and 2022 restructuring 2.1 0.2 2.4 0.4 5.1

Global ERP transformation — — — 4.9 4.9

Russia closing initiatives — — 2.8 — 2.8

Other project costs 3.6 2.1 1.6 4.6 11.9

Non-cash purchase accounting adjustments — — 0.9 — 0.9

Impairment of equipment and operating lease assets 2.7 — 1.8 — 4.5

Impairment of intangible assets — 48.0 19.0 — 67.0

Unallocated shared costs — — — 12.5 12.5

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

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

Loss from early extinguishment of debt — — — 2.2 2.2

HPC product recall — — 0.6 — 0.6

4 unchanged sentences

Adjusted EBITDA margin 20.1 % 20.5 % 4.1 % — % 13.6 %

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the three month period ended March 31, 2024.

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the three month period ended July 2, 2023.

(in millions, except %) GPC H&G

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Share based compensation — — — 4.8 4.8

HHI separation costs — — — 0.8 0.8

HPC separation initiatives — — — 2.8 2.8

Fiscal 2023 and 2022 restructuring 0.1 — 0.3 — 0.4

Global ERP transformation — — — 3.9 3.9

Other project costs — (0.1) (0.1) 0.3 0.1

Non-cash purchase accounting adjustments — — 0.5 — 0.5

Impairment of operating lease asset — — 0.5 — 0.5

Impairment of intangible assets — 39.0 — — 39.0

Representation and warranty insurance proceeds — — (65.0) — (65.0)

Legal and environmental — — 0.3 — 0.3

HPC product recall — — 6.7 — 6.7

Other 0.1 — — — 0.1

Adjusted EBITDA $ 62.3 $ 29.2 $ 17.8 $ 3.2 $ 112.5

Net sales $ 289.9 $ 160.7 $ 267.9 $ — $ 718.5

Net income (loss) from continuing operations margin 18.3 % (9.1) % 25.9 % — % 7.0 %

Adjusted EBITDA margin 21.5 % 18.2 % 6.6 % — % 15.7 %

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the three month period ended April 2, 2023.

(in millions, except %) GPC H&G

HPC Corporate Consolidated

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

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

Interest expense — — — 31.7 31.7

Depreciation 3.8 1.9 2.9 3.3 11.9

Amortization 5.5 2.9 2.1 — 10.5

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

Share based compensation — — — 4.0 4.0

HHI divestiture and separation costs — — — 4.0 4.0

7 unchanged sentences

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

1 unchanged sentence

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

Loss from early extinguishment of debt — — — 8.6 8.6

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

2 unchanged sentences

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

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the six month period ended March 31, 2024.

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the nine month period ended June 30, 2024.

(in millions, except %) GPC H&G HPC Corporate Consolidated

12 unchanged sentences

Non-cash purchase accounting adjustments — — 1.1 — 1.1

Impairment of operating lease assets — — 0.5 — 0.5

Impairment of operating lease asset — — 5.6 — 5.6

Impairment of intangible assets — 39.0 4.0 — 43.0

1 unchanged sentence

Legal and environmental — — 2.2 — 2.2

Gain from debt repurchase — — — (4.7) (4.7)

Gain from early extinguishment of debt — — — (2.6) (2.6)

HPC product recall — — 6.6 — 6.6

4 unchanged sentences

Adjusted EBITDA margin 20.2 % 16.2 % 6.3 % — % 13.8 %

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the six month period ended April 2, 2023.

The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the nine month period ended July 2, 2023.

(in millions, except %) GPC H&G HPC Corporate Consolidated

15 unchanged sentences

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

Unallocated shared costs — — — 18.1 18.1

Legal and environmental — (0.2) 1.7 — 1.5

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

1 unchanged sentence

HPC product recall — — 3.8 — 3.8

Loss from early extinguishment of debt — — — 8.6 8.6

Other 3.3 0.1 0.3 1.3 5.0

11 unchanged sentences

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 16 – 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 categories and brands:

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Personal Care:

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 8 – 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.

Strategic transactions, restructuring and optimization initiatives

12 unchanged sentences

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

• Tristar Integration - During the year ended September 30, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Lagasse®, and Copper Chef® brands.

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.

Substantially all costs have been incurred through September 30, 2023 and no further costs are anticipated in the subsequent periods.

• 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.

4 unchanged sentences

Substantially all costs associated with the initiatives have been recognized in prior periods and any subsequent amounts are attributable to changes in estimates, headcounts and timing of communication.

Substantially all costs have been incurred through September 30, 2023 and no further costs are anticipated in the subsequent periods.

• Russia Closing Initiative - During the year ended September 30, 2022, the Company initiated the close of its commercial operations in Russia, predominantly supporting the HPC segment.

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

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

Remaining costs primarily consist of administrative cost towards dissolution of the subsidiary.

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

The following is a summary of incremental costs for the three and six month periods ended March 31, 2024 and April 2, 2023.

Three Month Periods Ended Six Month Periods Ended

(in millions) March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

The following is a summary of incremental costs for the three and nine month periods ended June 30, 2024 and July 2, 2023.

Three Month Periods Ended Nine Month Periods Ended

(in millions) June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

HHI divestiture and separation costs $ 0.9 $ 4.0 $ 3.0 $ 6.9

12 unchanged sentences

• Following the close of the HHI divestiture on June 20, 2023, the Company repaid its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche, along with the remaining aggregate principal of its 5.750% Senior Notes due 2025 in full at the redemptions price and repurchased a portion of its remaining outstanding Senior Notes.

The Company repurchased outstanding bonds at a discount recognizing a gain of $4.7 million during the six month period ended March 31, 2024.

• During the three month period ended December 31, 2023, the Company entered into the Second Amended and Restated Credit Agreement (the "Credit Agreement"), refinancing the Company's previous credit agreement, extending maturity to October 19, 2028 and reduced capacity of the Revolver Facility to $500.0 million.

• On October 19, 2023 the Company entered into the Second Amended and Restated Credit Agreement (the "Credit Agreement"), refinancing the Company's previous credit agreement, extending maturity to October 19, 2028 and reduced capacity of the Revolver Facility to $500.0 million.

• On May 23, 2024, the Company completed its offering of $350.0 million principal amount of 3.375% Exchangeable Senior Notes due June 1, 2029 (the "Exchangeable Notes"), recognizing $11.9 million of fees and expenses which were capitalized as debt issuance costs and will be amortized over the term of the Exchangeable Notes.

• Concurrent with the issuance of the Exchangeable Notes, during the three month period ended June 30, 2024, the Company completed a tender offer of $1,160.5 million, including accrued and unpaid interest, on the aggregate outstanding principal balance of the 4.00% Senior Notes due 2026 (the “2026 Notes”), the 5.00% Senior Notes due 2029, the 5.50% Senior Notes due 2030, and the 3.875% Senior Notes due 2031 (the “2031 Notes”) (collectively, the “Tendered Notes”) and redeemed the remaining outstanding principal balance of the 2026 Notes, resulting in the reduction of the principal debt balance of $1,174.4 million and recognition of a loss on early extinguishment of $2.2 million during the three month period ended June 30, 2024, net of the write-off of unamortized debt issuance costs.

• During the nine month period ended June 30, 2024, the Company repurchased outstanding bonds at a discount recognizing a gain on extinguishment of $4.7 million, net write-off of unamortized debt issuance costs.

See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for additional detail regarding debt and financing activity.

1 unchanged sentence

The Company has experienced an inflationary environment on a global basis in the wake of the COVID-19 pandemic, geopolitical instability and supply chain constraints such as 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.

Together with labor shortages and higher demand for talent, the current economic environment has driven 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.

5 unchanged sentences

Consolidated Results of Operations

The following is summarized consolidated results of operations for SBH for the three and six month periods ended March 31, 2024 and April 2, 2023.

The following is summarized consolidated results of operations for the three and nine month periods ended June 30, 2024 and July 2, 2023.

(in millions, except %)

Three Month Periods Ended Variance

Six Month Periods Ended Variance

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Nine Month Periods Ended Variance

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Net sales $ 779.4 $ 735.5 $ 43.9 6.0 % $ 2,190.2 $ 2,178.1 $ 12.1 0.6 %

1 unchanged sentence

Selling, general & administrative 255.1 223.4 31.7 14.2 % 694.6 671.4 23.2 3.5 %

Impairment of intangible assets 39.0 67.0 (28.0) (41.8) % 43.0 67.0 (24.0) (35.8) %

Impairment of goodwill — 111.1 (111.1) n/m — 111.1 (111.1) n/m

Impairment of intangible assets — 53.7 (53.7) n/m 43.0 120.7 (77.7) (64.4) %

Representation and warranty insurance proceeds — — — n/m (65.0) — (65.0) n/m

1 unchanged sentence

Interest expense 15.7 30.3 (14.6) (48.2) % 51.8 95.3 (43.5) (45.6) %

Interest income (17.5) (0.2) (17.3) n/m (40.9) (0.4) (40.5) n/m

Gain from debt repurchase — — — n/m (4.7) — (4.7) n/m

Other non-operating expense, net 1.1 1.4 (0.3) (21.4) % 5.2 0.1 5.1 n/m

Income tax expense (benefit) 25.5 (34.8) 60.3 n/m 37.9 (46.9) 84.8 n/m

Interest income (13.4) (5.4) (8.0) 148.1 % (54.3) (5.6) (48.7) 869.6 %

Loss (gain) from early extinguishment of debt 2.2 8.6 (6.4) (74.4) % (2.6) 8.6 (11.2) n/m

Other non-operating expense, net 1.7 0.1 1.6 n/m 7.0 0.1 6.9 n/m

Income tax expense (benefit) 22.4 13.9 8.5 61.2 % 60.3 (33.0) 93.3 n/m

Net income (loss) from continuing operations 19.1 (172.2) 191.3 n/m 86.4 (287.2) 373.6 n/m

Income from discontinued operations, net of tax 11.0 21.4 (10.4) (48.6) % 22.7 40.9 (18.2) (44.5) %

Net income (loss) 60.9 (53.6) 114.5 n/m 90.1 (74.1) 164.2 n/m

(Loss) income from discontinued operations, net of tax (13.1) 2,031.8 (2,044.9) n/m 9.6 2,072.7 (2,063.1) (99.5) %

Net income 6.0 1,859.6 (1,853.6) (99.7) % 96.0 1,785.5 (1,689.5) (94.6) %

n/m = not meaningful

The following is a summary of net sales by segment for the three and six month periods ended March 31, 2024 and April 2, 2023, 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 June 30, 2024 and July 2, 2023, 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

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Nine Month Periods Ended Variance

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

$ 282.2 $ 272.3 $ 9.9 3.6 % $ 849.0 $ 846.5 $ 2.5 0.3 %

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(in millions)

Three Month Periods Ended Six Month Periods Ended

Net Sales for the period ended April 2, 2023

Three Month Periods Ended Nine Month Periods Ended

Net Sales for the period ended July 2, 2023

$ 735.5 $ 2,178.1

Decrease in GPC

Increase (decrease) in GPC

Increase in H&G

Decrease in HPC (10.3) (38.1)

Increase (decrease) in HPC 17.0 (21.1)

Foreign currency impact, net

Net Sales for the period ended March 31, 2024

Net Sales for the period ended June 30, 2024

$ 779.4 $ 2,190.2

Three Month Period Ended March 31, 2024 Volume Price Foreign Currency Total Organic

Three Month Period Ended June 30, 2024 Volume Price Foreign Currency Total Organic

GPC 4.0 % 0.1 % (0.5) % 3.6 % 4.1 %

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Total 7.3 % (0.2) % (1.1) % 6.0 % 7.1 %

Six Month Period Ended March 31, 2024 Volume Price Foreign Currency Total Organic

Nine Month Period Ended June 30, 2024 Volume Price Foreign Currency Total Organic

GPC 0.1 % (0.5) % 0.7 % 0.3 % (0.4) %

4 unchanged sentences

Gross Profit.

The following is a summary of the gross profit and gross profit margin for the three and six month periods ended March 31, 2024 and April 2, 2023, respectively, and the principal factors contributing to the change for the three and six month periods.

Three Month Periods Ended Six Month Periods Ended

(in millions, except %) March 31, 2024 April 2, 2023 Variance March 31, 2024 April 2, 2023 Variance

The following is a summary of the gross profit and gross profit margin for the three and nine month periods ended June 30, 2024 and July 2, 2023, respectively, and the principal factors contributing to the change for the three and nine month periods.

Three Month Periods Ended Nine Month Periods Ended

(in millions, except %) June 30, 2024 July 2, 2023 Variance June 30, 2024 July 2, 2023 Variance

Gross Profit $ 302.8 $ 263.5 $ 39.3 14.9 % $ 821.2 $ 679.9 $ 141.3 20.8 %

Gross Profit Margin 38.9 % 35.8 % 310 bps 37.5 % 31.2 % 630 bps

Three Month Period Ended Six Month Period Ended

Three Month Period Ended Nine Month Periods Ended

(in millions, except margin) Gross Profit Margin Gross Profit Margin

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Change in gross profit and gross profit margin $ 39.3 310 bps $ 141.3 630 bps

Gross profit and margin increases are predominantly due to the cost improvements initiatives and the higher inflated inventoried costs that were realized during the prior periods with favorable mix.

Despite reduced volumes, gross profit benefited from the improved mix realized by previous SKU rationalization initiatives and reduction in excess inventory sales.

The impact from product recalls is due to the reissued product safety recall with the CPSC recognized during the three period ended March 31, 2024, further discussed in Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Gross profit and margin increases during the three and nine month periods are predominantly due to the lower cost inventory in the current periods with higher inflated inventoried costs that were realized during the prior periods and improved volume further contributing gross profit and margins.

Price and mix did not substantively impact gross profit within the three and nine month periods, with some benefit realized within the nine month period from SKU rationalization initiatives earlier in the prior year and overall reduction in excess inventory sales.

The impact from product recalls is due to a reissued product safety recall with the CPSC recognized during the nine period ended June 30, 2024, further discussed in Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Gross profit was also further benefited by the reduced costs towards restructuring and optimization initiatives.

Selling, general and administrative.

The following summarizes the selling, general & administrative costs for the three and six month periods ended March 31, 2024 and April 2, 2023, respectively, including amounts as a percentage of net sales for each respective period.

Three Month Periods Ended (in millions, except %) March 31, 2024 % of Net Sales April 2, 2023 % of Net Sales Variance

The following summarizes the selling, general & administrative costs for the three and nine month periods ended June 30, 2024 and July 2, 2023, respectively, including amounts as a percentage of net sales for each respective period.

Three Month Periods Ended (in millions, except %) June 30, 2024 % of Net Sales July 2, 2023 % of Net Sales Variance

Sales, marketing & advertising $ 94.2 12.1 % $ 66.2 9.0 % $ 28.0 42.3 %

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Total selling, general & administrative $ 255.1 32.7 % $ 223.4 30.4 % 31.7 14.2 %

Six Month Periods Ended (in millions, except %) March 31, 2024 % of Net Sales April 2, 2023 % of Net Sales Variance

Nine Month Periods Ended (in millions, except %) June 30, 2024 % of Net Sales July 2, 2023 % of Net Sales Variance

Sales, marketing & advertising $ 242.1 11.1 % $ 195.7 9.0 % $ 46.4 23.7 %

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Total selling, general & administrative $ 694.6 31.7 % $ 671.4 30.8 % 23.2 3.5 %

Increase in sales, marketing and advertising costs for the three and six month periods are due to the investment towards brand marketing and advertising initiatives across segments plus increased incentive compensation costs from higher than expected results.

Distribution costs for the three and six month periods decreased due to the improved optimization and fulfillment at our distribution centers and lower outbound freight costs.

General & administrative costs for the three and six month periods increased due to higher incentive compensation costs, partially offset by lowered overhead costs from restructuring initiatives in the prior year, plus decrease in bank fees related to reduced factoring on trade receivables.

Increased research & development costs for the three and six month periods ended March 31, 2024 are from an additional investment in new product development and innovation across segments.

Reduced strategic transaction, restructuring and optimization is primarily due to reduced restructuring initiative spending, completion of Tristar Business integration and other non-recurring HPC transformation initiatives in the prior year.

Impairment of Intangible Assets.

Impairment of intangible assets during the three and six month period ended March 31, 2024 was attributable to a triggering event during the three month period ended March 31, 2024 resulting in an impairment of indefinite lived tradenames.

The increase in sales, marketing and advertising costs for both the three and nine month periods are due to the Company's investment towards brand marketing and advertising initiatives across all segments plus increased incentive compensation costs from higher than expected operating performance results.

Distribution costs for the three month period were consistent to the prior year, but decreased relative to sales due to improved optimization and fulfillment at our distribution centers.

Distribution costs for the nine month period decreased due to the improved optimization and fulfillment and decreased outbound freight costs compared to the prior nine month period.

General & administrative costs for the three and nine month periods increased due to increased incentive compensation costs, partially offset by lowered overhead costs from prior year restructuring initiatives and decrease in bank fees related to reduced factoring on trade receivables.

Increased research & development costs for the three and nine month periods are from the additional investment in new product development and innovation across all segments.

Strategic transaction, restructuring and optimization costs for the three month period is consistent to the prior year with the close of the HHI divestiture in June 2023 compared to HPC separation initiatives in the current period.

Strategic transaction, restructuring and optimization costs decreased due to reduced restructuring initiative spending with the completion of Tristar Business integration and other non-recurring HPC transformation initiatives that were not recurring in the current period.

Impairment of Goodwill and Intangible Assets.

Impairment of goodwill and intangible assets during the three month period ended July 2, 2023 was attributable to the impairment of the HPC reporting unit goodwill and the impairment of indefinite lived intangible assets associated with the Rejuvenate®, PowerXL® and George Foreman® tradenames without comparative impairment charges recognized in the three month period ended June 30, 2024.

Impairment of intangible assets during the nine month period ended June 30, 2024 was attributable to triggering events earlier in the year resulting in impairment charges for the Rejuvenate® tradename and a non-core strategic tradename with impairment charges from the HPC reporting unit goodwill and the indefinite lived intangible assets for the Rejuvenate®, PowerXL® and George Foreman® tradenames realized in the prior year during the nine month period July 2, 2023.

See Note 7 - Goodwill and Intangible Assets in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Impairment of intangible assets during the three and six month period ended April 2, 2023 were attributable to the identification of a triggering event resulting in an impairment of the Rejuvenate® and PowerXL® indefinite lived tradenames in the prior period.

Representation and Warranty Insurance Proceeds.

During the three and six month periods ended March 31, 2024, the Company recognized a gain of $65.0 million from its representation and warranty insurance policy associated with the Tristar Business acquisition.

During the nine month period ended June 30, 2024, the Company recognized a gain of $65.0 million from its representation and warranty insurance policy associated with the Tristar Business acquisition.

See Note 15 - Commitments and Contingencies in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.

Interest Expense.

Interest expense decreased due to reduced debt borrowings following the close of the HHI divestiture in the prior year with a decrease in the average borrowing rates during the respective periods.

Interest expense decreased during the three and nine month periods due to reduced debt borrowings following the close of the HHI divestiture in the prior year, plus the issuance of the Exchangeable Notes and tender offer and bond redemption during the three month period ended June 30, 2024, further reducing the outstanding principal balance and average borrowing rates during the three and nine month periods.

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

Interest Income.

Interest income increased due to interest on term deposits entered into using cash proceeds from the closing of the HHI divestiture in the prior year.

Gain from debt repurchase.

During the three and six month periods ended March 31, 2024, the Company recognized income from the discount realized on the repurchase of debt with no direct comparable in the prior periods.

Interest income increased due to interest on term deposits entered into using cash proceeds from the closing of the HHI divestiture in the prior year, with reduced term deposits following the previously discussed tender offer and bond redemption during the three month period ended June 30, 2024 .

Loss (Gain) from early extinguishment of debt.

During the three month period ended June 30, 2024, the Company recognized a net loss on the extinguishment of debt associated with the tender offer and bond redemption, whereas during the nine the period ended June 30, 2024 the Company recognized a gain from discounts realized on the repurchase of debt earlier in the year, partially offset by the loss on extinguishment associated with the tender offer and bond redemption.

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

Loss on early extinguishment of debt in the prior periods were attributable to the pay down of an outstanding term loan following the close of the HHI divestiture in June 2023.

Other Non-Operating Expense (Income), Net.

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Income or loss attributable to discontinued operations in the prior period primarily reflect the income from the discontinued operations of the HHI segment as the divestiture was completed in the prior year on June 20, 2023.

Income attributable to discontinued operations in the current period primarily reflect changes to indemnifications associated with the divested businesses.

Income attributable to discontinued operations in the current period primarily reflect changes to indemnifications associated with the divested businesses and related tax provision adjustments.

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

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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.

The following is summarized consolidated results of operations for SB/RH for the three and six month periods ended March 31, 2024 and April 2, 2023:

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

Six Month Periods Ended Variance

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Net sales $ 718.5 $ 729.2 $ (10.7) (1.5) % $ 1,410.7 $ 1,442.5 $ (31.8) (2.2) %

Gross profit 273.4 214.5 58.9 27.5 % 518.4 416.4 102.0 24.5 %

Selling, general and administrative 222.9 223.8 (0.9) (0.4) % 438.4 447.4 (9.0) (2.0) %

Impairment of intangible assets 39.0 67.0 (28.0) (41.8) % 43.0 67.0 (24.0) (35.8) %

Representation and warranty insurance proceeds (65.0) — (65.0) n/m (65.0) — (65.0) n/m

Gain from remeasurement of contingent consideration liability — — — n/m — (1.5) 1.5 n/m

Interest expense 16.9 31.7 (14.8) (46.7) % 36.1 65.1 (29.0) (44.5) %

Interest income (17.5) (0.2) (17.3) n/m (40.9) (0.4) (40.5) n/m

Gain from debt repurchase — — — n/m (4.7) — (4.7) n/m

Other non-operating expense, net 1.1 1.4 (0.3) (21.4) % 5.2 0.1 5.1 n/m

Income tax expense (benefit) 25.6 (34.0) 59.6 n/m 37.8 (46.3) 84.1 n/m

Net income (loss) from continuing operations 50.4 (75.2) 125.6 n/m 68.5 (115.0) 183.5 n/m

Income from discontinued operations, net of tax 11.0 21.9 (10.9) (49.8) % 22.7 41.4 (18.7) (45.2) %

Net income (loss) 61.4 (53.3) 114.7 n/m 91.2 (73.6) 164.8 n/m

n/m = not meaningful

The changes in SB/RH for the three and six month periods ended March 31, 2024 are primarily attributable to the changes in SBH previously discussed.

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

Segment Financial Data

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Three Month Periods Ended Variance

Six Month Periods Ended Variance

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Nine Month Periods Ended Variance

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

$ 282.2 $ 272.3 $ 9.9 3.6 % $ 849.0 $ 846.5 $ 2.5 0.3 %

5 unchanged sentences

20.1 % 19.7 % 40 bps 20.2 % 16.2 % 400 bps

Net sales decreased primarily from decreased volumes driven by lower demand in the aquatics product category, primarily from aquatics hard goods such as aquatic systems with lesser volume of new entrants into the category, whereas aquatic nutrition and consumables is showing signs of stabilizing.

Volumes were also adversely impacted by the decision to exit non-strategic categories and lower margin SKUs in the prior year, positively impacting mix and profitability for the three and six month periods ended March 31, 2024.

Lower foot traffic and sales within the pet specialty channel, primarily in NA, further contributed to the volume reduction offset by overall distribution growth in e-commerce channels globally.

Organic net sales for the three month period ended March 31, 2024 decreased $9.0 million, or 3.0%, excluding a favorable foreign currency impact of $2.2 million.

Organic net sales for the six month period decreased $14.7 million, or 2.6%, excluding a favorable foreign currency impact of $7.2 million.

Segment net income, adjusted EBITDA and margins increased due to improvement in gross profit margins from lower cost inventory compared to prior year, favorable product and channel mix, plus reduced operating cost overhead due to savings from prior year initiatives and improved distribution costs from improved fulfillment and optimization, partially offset by increased investment in marketing and advertising.

Net sales increased for the three month period from higher volumes through incremental distribution in e-commerce and the food and drug channels with some softness in mass retail.

Volume growth was predominantly focused on consumables for both companion animal, including chews and treats and dog and cat food, and aquatics nutrition and consumables, partially offset by decreases in hard goods, such aquatic kits and environments.

Volumes for the nine month period were adversely impacted by the decision to exit non-strategic categories and lower margin SKUs in the prior year, positively impacting mix and profitability for the nine month period.

Organic net sales for the three month period ended June 30, 2024 increased $11.1 million, or 4.1%, excluding an unfavorable foreign currency impact of $1.2 million.

Organic net sales for the nine month period decreased $3.5 million, or 0.4%, excluding a favorable foreign currency impact of $6.0 million.

Segment net income and adjusted EBITDA for the three month period increased due to higher volume with improved margins from lower cost inventory compared to the prior period, and favorable mix, partially offset by increased investment in marketing and advertising and unfavorable foreign currency.

Segment net income, adjusted EBITDA and margins for the nine month period increased due to lower cost inventory, positive product and channel mix, operating cost improvements due to savings from prior year initiatives, partially offset by increased investment in marketing and advertising and unfavorable foreign currency.

Home & Garden

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Three Month Periods Ended Variance

Six Month Periods Ended Variance

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

$ 160.7 $ 153.3 $ 7.4 4.8 % $ 232.7 $ 224.6 $ 8.1 3.6 %

Segment net loss

Nine Month Periods Ended Variance

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

$ 211.0 $ 186.6 $ 24.4 13.1 % $ 443.7 $ 411.3 $ 32.4 7.9 %

Segment net loss margin

Segment net income (loss)

38.4 26.2 12.2 46.6 % 18.3 (20.8) 39.1 n/m

Segment net income (loss) margin

18.2 % 14.0 % 420 bps 4.1 % (5.1) % 920 bps

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20.5 % 20.7 % (20) bps 16.2 % 12.5 % 370 bps

Net sales increased due to higher volume primarily in the Controls product category with increased spring seasonal sales and distribution with key retailers during the three month period ended March 31, 2024, with favorable weather trends driving increase in retail traffic and accelerating seasonal inventory into stores by retailers compared to the prior year.

Late warmer fall weather extended the selling season in the prior year and further contributed to higher sales during the six month period.

The higher volume from Controls was partially offset by reduced volume in other product categories for Household Controls and Repellents as we expect retailers to be cautious in building inventory for the season and more in line with seasonal volume and expected traffic in stores for those respective product categories later in the summer and fall seasons.

Volume in our cleaning products also declined with lower demand on restorative products and lost distribution within the product line.

Segment net loss, adjusted EBITDA, and margins improved due to higher sales volume, improved gross profit margins from reduced material and input costs and manufacturing efficiencies carrying into the fiscal year, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation.

Net sales increased during the three and nine month periods due to higher volume predominantly in the Controls product category and our indoor insect control products, with increased spring seasonal sales compared to the prior year.

Favorable weather trends, with improved temperatures and precipitation levels during the three month period, drove increased retail traffic and accelerated replenishment distribution with larger home center and mass retail partners from allocated off-shelf and promotional space for these product categories.

Volumes also increased in the Repellent product category with retailers with improved correlation between POS and retail orders compared to prior year distribution.

Volume increases were partially offset by the decline in our Cleaning category during the three and nine month periods with soft consumer demand for certain product lines in this category and retail distribution losses.

Late warmer fall weather extended the selling season in the prior year and further contributed to higher sales during the nine month period.

Segment net loss, adjusted EBITDA the three and nine month period improved due to higher sales volume, with improved gross profit margins from reduced material and input costs and manufacturing efficiencies carrying into the fiscal year, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation.

Segment net income for the nine month period ended June 30, 2024 was further impacted by a $39.0 million impairment charge on the Rejuvenate® indefinite lived intangible asset earlier in the year.

Segment net loss for the three and nine month periods ended July 2, 2023 were further impacted by impairment charges of $8.0 million and $56.0 million, respectively, on the Rejuvenate® indefinite lived intangible asset.

Home and Personal Care

(in millions, except %) Three Month Periods Ended

Six Month Periods Ended Variance

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Nine Month Periods Ended Variance

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

$ 286.2 $ 276.6 $ 9.6 3.5 % $ 897.5 $ 920.3 $ (22.8) (2.5) %

Segment net income (loss) 69.3 (37.7) 107.0 n/m 85.2 (41.8) 127.0 n/m

Segment net income (loss) margin 25.9 % (13.5) % 3,940 bps 13.9 % (6.5) % 2,040 bps

Segment net (loss) income

(0.5) (156.5) 156.0 n/m 84.7 (198.2) 282.9 n/m

Segment net (loss) income margin

(0.2) % (56.6) % 5,640 bps 9.4 % (21.5) % 3,090 bps

Adjusted EBITDA

$ 17.8 $ (1.9) $ 19.7 n/m $ 44.5 $ 11.3 $ 33.2 293.8 %

$ 11.8 $ 11.4 $ 0.4 3.5 % $ 56.3 $ 22.7 $ 33.6 148.0 %

Adjusted EBITDA margin

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n/m = not meaningful

Net sales decreased due to lower volumes in small kitchen appliances from reduced placements in NA from the prior year, with overall category decline and exit of lower performance and reduced margin SKUs in the prior year, partially offset by increases in LATAM.

Volume decline from small kitchen appliances were partially mitigated through volume growth in personal care on a global basis and overall higher volume distribution through e-commerce channels, plus opportunistic sales when a competitor filed for bankruptcy further benefiting the six month period.

Pricing improvements were primarily attributable to positive pricing in inflationary markets, reduced excess inventory sales and fewer low-margin promotions, further benefiting product mix and overall profitability.

Organic net sales for the three month period decreased $10.3 million, or 3.7%, excluding a unfavorable foreign currency impact of $1.0 million.

Organic net sales for the six month period decreased $38.1 million, or 5.9%.

excluding favorable foreign currency impact of $5.7 million.

Segment net income, Adjusted EBITDA and margins increased due to improved gross profit margins due to lower cost inventory compared to the prior year, cost improvement initiatives, and improved profitability through SKU rationalization and reduced excess inventory sales, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation.

Segment net income was further benefited by the recognition of proceeds from representation and warranty insurance policies of $65.0 million, intangible impairment charges in the prior year, and lower costs on restructuring and integration initiatives.

Net sales increased for the three month period was due to increased volume in personal care and home and kitchen product categories with increase in distribution in through continued growth in e-commerce and new product listings in NA with mass retail customers.

Net sales for the nine month decreased from lower volumes in kitchen appliances during the first half of the fiscal year from reduced placements in NA from the prior year, influenced by category decline and exit of lower performance and reduced margin SKUs in the prior year, partially offset by volume growth in personal care on a global basis and overall higher volume distribution through e-commerce channels, plus opportunistic sales when a competitor filed for bankruptcy further benefiting the nine month period.

Organic net sales for the three month period increased $17.0 million, or 6.1%, excluding a unfavorable foreign currency impact of $7.4 million.

Organic net sales for the nine month period decreased $21.1 million, or 2.3%.

excluding unfavorable foreign currency impact of $1.7 million.

Segment net loss and margin decreased with an increase in Adjusted EBITDA and margin for the three month period from improved gross profit margin realization due to lower cost inventory compared to the prior year, cost improvement initiatives, partially offset by additional investments in marketing and advertising, unfavorable mix and pricing.

Segment net income, Adjusted EBITDA, and margins increased for the nine month period increased due to lower cost investment, cost improvement initiatives, and improved profitability through SKU rationalization and reduced excess inventory sales, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation.

Segment net income (loss) for the the three and nine month periods ended June 30, 2024 were further benefited by lower restructuring and integration costs, impairment charges in the prior year for the reporting unit goodwill of $111.1 million, along with impairment of intangible assets of $45.0 million and $64.7 million, for the respective periods, and recognition of proceeds from representation and warranty insurance policies of $65.0 million during the nine month period ended June 30, 2024,

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 March 31, 2024 and April 2, 2023, respectively.

Six Month Periods Ended (in millions)

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

The following is a summary of cash flow from continuing operations for the nine month periods ended June 30, 2024 and July 2, 2023, respectively.

Nine Month Periods Ended (in millions)

June 30, 2024 July 2, 2023

Operating activities

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Cash Flows from Operating Activities

Cash flows provided by SBH's continuing operations decreased $67.9 million, primarily due to lower cash flow generated by working capital due to reduced receivables factoring, higher cash paid towards taxes offset by lower cash interest and the receipt of $50.0 million in representation and warranty insurance proceeds.

Cash flows provided by continuing operations increased $105.9 million, due to improved cash flow generated by working capital with improved sales and gross profit realization, lower cost inventory, lower cost for strategic transaction, restructuring and optimization initiatives, lower cash interest and the receipt of $65.0 million in representation and warranty insurance proceeds.

See Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion on the representation and warranty proceeds.

Cash flows provided by SB/RH continuing operations decreased $73.8 million primarily due to the items previously discussed above.

Cash Flows from Investing Activities

Cash flows provided by investing activities for SBH continuing operations increased $570.0 million, primarily from the investment activity of short-term investments offset by the recognition of a $26.9 million payment for the final purchase price settlement on the HHI divestiture, which closed in the prior year on June 20, 2023, in accordance with the Purchase Agreement.

Cash flows provided by investing activities for continuing operations decreased $3,408.3 million, primarily from the recognition of $4,334.7 million in proceeds from the completion of the HHI divestiture in the prior period on June 20, 2023, partially offset by the investment activity of short-term investments used to fund the tender offer and bond redemption in the current period, with the recognition of a $26.9 million payment in the current period for the final purchase price settlement on the HHI divestiture, in accordance with the Purchase Agreement.

See Note 2 - Divestitures within Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly report for further discussion on the HHI divestiture.

Cash flows provided by investing activities of SB/RH is due to the items previously discussed.

Cash Flows from Financing Activities

Cash flows used by financing activities for continuing operations increased $484.9 million primarily due to the pay down of debt and treasury share repurchases.

Cash flows used by financing activities for continuing operations decreased $142.4 million due to the issuance of $350.0 million Exchangeable Notes offset by the premium paid towards the associated capped call transactions, higher level of payment on outstanding debt from the tender call and bond redemption, market repurchase of bonds and the continued high level of treasury share repurchasing.

Refer to Note 8 – Debt and Note 11 - Shareholders' Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information.

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

During the six month periods ended March 31, 2024 and April 2, 2023, SBH made cash dividend payments of $26.8 million, or $0.42 per share, and $34.4 million, or $0.42 per share, respectively, which decreased due to the lower outstanding shares.

Cash flows used by financing activity of SB/RH increased $479.0 million and is highly dependent upon the financing cash flow activities of SBH.

During the nine month periods ended June 30, 2024 and July 2, 2023, the Company made cash dividend payments of $38.8 million, or $0.42 per share, and $51.6 million, or $0.42 per share, respectively, which decreased due to the lower outstanding shares attributable to the treasure share repurchase activity in the current period.

Liquidity Outlook

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Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans.

As of March 31, 2024, the Company had borrowing availability of $490.3 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.

As of June 30, 2024, the Company had borrowing availability of $490.4 million, net of outstanding letters of credit, under our credit facility.

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 strategic projects.

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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.

During the three and six month period ended March 31, 2024, the Company completed additional repurchases of Senior Notes available for sale on the open market, at a discount.

The Company had a high level of cash reserves due to the cash proceeds from the HHI divestiture.

The Company has temporarily invested a portion of its cash in short-term investments until such expenditures are considered required or necessary to the Company in executing its strategic plans and initiatives, including any further debt reduction and share buybacks.

The Company has substantially decreased its outstanding debt with the early extinguishment of debt following the receipt of proceeds from the completion of the HHI divestiture in June 2023 through various redemptions and repurchase transactions.

See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

The Company may continue to make repayments on its debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of our outstanding Senior Notes, any of which will be dependent on various factors, including market conditions.

The Company may make additional repayments on its remaining outstanding debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of our outstanding Senior Notes, any of which will be dependent on various factors, including market conditions.

Any such repurchases may be affected through a variety of means, including privately negotiated transactions, market transactions, tender offers, redemptions or as otherwise required or permitted by the instruments covering the Company's outstanding indebtedness.

The Company has also continued to repurchase common shares through open market purchases during the three and six month period ended March 31, 2024.

The Company has also continued to repurchase common shares during the three and nine period ended June 30, 2024.

See Note 11 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail.

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.

During the three month period ended December 31, 2023, we entered into a $200.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through November 15, 2024, until the cap is reached or until the plan is terminated.

As of March 31, 2024, there has been $108.7 million repurchased pursuant to the 10b5-1 repurchase plan.

As of March 31, 2024, the Company had a high level of cash reserves, as compared to the prior year, due to the cash proceeds from the HHI divestiture.

If the Company does not use the proceeds from the HHI divestiture to repay debt or reinvest in the business within certain time periods by the terms of the Company's outstanding indebtedness, the Company may be required to make an asset sale offer to the holders of its Senior Notes pursuant to the terms of the Company's outstanding indebtedness.

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 March 31, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 4.00% Notes, due October 1, 2026;

the 5.00% Notes, due October 1, 2029;

the 5.50% Notes due July 15, 2030;

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

At June 30, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Notes, and the 3.875% Notes, due March 15, 2031.

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 has temporarily suspended most of its receivable factoring activity and intends to terminate the remainder when contractually possible during the 2024 fiscal year.

The Company has temporarily suspended its receivable factoring activity.

Additionally, the Company facilitates a voluntary supply chain financing program to provide 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.

See Note 1 - Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for additional details.

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.

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

Guarantor Statements – SB/RH

SBI has issued 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.

Guarantor Statements

SBI has issued the 3.375% Notes under the 2029 Indenture and the 3.875% Exchangeable Notes under the 2031 Indentures (collectively, the “Notes”).

The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Spectrum Brands Holdings, Inc., as parent guarantor, 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.

See Note 8 - Debt within the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 12 - Debt within the Notes to the Consolidated Financial Statements included elsewhere in our Annual Report within the Form 10-K for the year ended September 30, 2023.

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.

The “Obligor” consists of the financial statements of SBI as the debt issuer, Spectrum Brands Holdings, Inc.

as the 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.

Six Month Period Ended Year Ended

(in millions) March 31, 2024 September 30, 2023

Nine Month Period Ended Year Ended

(in millions) June 30, 2024 September 30, 2023

Statements of Operations Data

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Noncurrent Liabilities 945.8 1,862.9

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of March 31, 2024 and September 30, 2023 are as follows:

(in millions) March 31, 2024 September 30, 2023

The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of June 30, 2024 and September 30, 2023 are as follows:

(in millions) June 30, 2024 September 30, 2023

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