What changed in this filing

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Item 1. Business

2024-11-15 compared with 2023-11-21 · 40 added, 60 removed, 155 unchanged (39% of the section changed)

This combined Form 10-K is being filed by Spectrum Brands Holdings, Inc.

(“SBH”) and SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”).

SB/RH is a wholly-owned subsidiary of SBH and represents substantially all of its assets, liabilities, revenues, expenses and operations.

SB/RH is the parent guarantor for certain debt of Spectrum Brands, Inc., a wholly-owned subsidiary of SB/RH ("SBI"), and represents all of SBI assets, liabilities, revenues, expenses, and operations.

Thus, all information contained in this report relates to, and is filed by, SBH.

Information that is specifically identified in this report as relating solely to SBH, such as its financial statements and its common stock, does not relate to and is not filed by SB/RH.

SB/RH makes no representation as to that information.

The terms “the Company,” “we,” and “our” as used in this report, refer to both SBH and its consolidated subsidiaries and SB/RH and its consolidated subsidiaries, unless otherwise indicated.

The terms “the Company,” “we," “our,” and "SBH" as used in this report, refer to Spectrum Brands Holdings, Inc.

and its consolidated subsidiaries, unless otherwise indicated.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge through our website at www.spectrumbrands.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC.

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and our general competitive position, especially as impacted by our competitors’ advertising and promotional activities and pricing strategies.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations , included in Item 7 to this Annual Report, for further discussion of the consolidated operating results and segment operating results.

See Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations , for further discussion of the consolidated operating results and segment operating results.

Global Pet Care (GPC)

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Companion Animal

Dog and cat chews, treats, wet and dry foods;

Dog and cat clean-up, behavioral training aides, health and grooming products;

Indoor bird and other small animal food and care products.

Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog and cat treats, and wet and dry pet food for dogs and cats.

Good’n’Fun®, DreamBone®, GOOD BOY®, SmartBones®, IAMS® (Europe only), EUKANUBA® (Europe only), Nature’s Miracle®, FURminator®, Dingo®, 8IN1® (8-in-1), Meowee!®, and Wild Harvest™.

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Live fish under our GloFish® brand are produced, marketed, and sold by an independent third-party breeder through a supply and licensing agreement with the Company.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represented approximately 33.4% of segment sales for the fiscal year ended September 30, 2023.

Primary competitors are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company all of which sell a comprehensive line of pet products that compete across our product categories.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, each of which exceed 10% of segment sales and represent approximately 33.8% of segment sales for the fiscal year ended September 30, 2024.

Primary competitors of our GPC segment are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company, each of which sells a comprehensive line of pet products that competes across our product categories.

The pet supplies (non-food) product category is highly fragmented with no competitor holding a substantial market share and consists of small companies with limited product lines, including private label products and suppliers.

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Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S.

and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® fish food with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.

We continually evaluate capacity at our manufacturing facilities and related utilization.

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We sell primarily in the U.S.

with some distribution in LATAM.Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Lowe’s, Home Depot, and Walmart, which represent approximately 63.1% segment sales for the year ended September 30, 2023.

Primary competitors include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C.

with some distribution in LATAM.

Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers exceeding 10% of net sales, including Lowe’s, Home Depot, and Walmart, each of which exceed 10% of segment sales and represent approximately 61.8% segment sales for the year ended September 30, 2024.

Primary competitors of our H&G segment include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C.

Johnson & Son, Inc.

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Fourth Quarter

H&G produces the majority of its products in one facility in St.

Louis, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, wipes and Rejuvenate® cleaning products.

H&G produces the majority of its products in one facility in Vinita Park, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, wipes and Rejuvenate® cleaning products.

The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals.

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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.

We have a trademark license agreement (the "License Agreement") with Stanley Black+Decker ("SBD") pursuant to which we license the Black + Decker® brand ("B&D") in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances:

We have a trademark license agreement (the “B+D License Agreement”) with the license holder, Stanley Black+Decker (“SBD”) which terminated the previous agreement and has an effective date of January 1, 2024, pursuant to which we license the Black + Decker® brand (“B+D”) in North America, South America (excluding Brazil), Central America, and the Caribbean (excluding Cuba) for primarily four core categories of home appliances:

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 that the minimum annual royalty will no longer be applied effective January 1, 2024 through the expiration of the License 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 continuing obligations or restrictions on the business activities of either party.

See Note 6 – Revenue Recognition included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on revenue concentration from B&D branded products.

The Emeril License is set to expire effective December 31, 2023, with options of up to two additional one-year renewal periods following the initial expiration.

Under the terms of the agreement, we are obligated 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.

The B+D License Agreement has an initial four-year term ending December 31, 2027, with two subsequent four-year renewal rights each based upon meeting certain sales metrics, potentially extending the total contract term to December 31, 2035.

The License Agreement may not renew if these targets are not satisfied.

Under the terms of the License Agreement, we agreed to pay SBD royalties based on a percentage of sales, with a minimum annual royalty payment of $11.7 million for the first year in the initial term, with decreases in subsequent years of the initial term down to $10.2 million in the fourth year, and is subject to adjustment with each renewal period.

The B+D License Agreement also requires us to comply with maximum annual returns rates for products and promotional spending commitments.

See Note 5 – Revenue Recognition included in the Notes to the Consolidated Financial Statements for further detail on revenue concentration from B+D branded products.

The Emeril Legasse® brand is subject to a trademark license agreement (the “Emeril License Agreement”) with the license holder, Martha Stewart Living Omnimedia, Inc., pursuant to which the HPC segment can license the Emeril Legasse® brand within the U.S., and its territories and possessions, Canada, Mexico, Australia, and the United Kingdom for certain designated products categories of home appliances, including small kitchen food preparation products, indoor and outdoor grills, grill accessories and cookbooks.

The agreement is set to expire effective December 31, 2024, with an option to renew through December 31, 2025, subject to meeting certain sales metrics.

Under the terms of the Emeril License Agreement, we are obligated to pay the license holder a percentage of net sales, with minimum annual royalty payments of $1.7 million, increasing to $1.8 million in the 2025 renewal period.

The Farberware® tradename brand is also subject to a trademark license agreement (the “Farberware License Agreement”) with the license holder, Farberware License Company, LLC, pursuant to which the HPC segment licenses the Farberware® brand on a worldwide basis for certain designated product categories of household appliances, including coffeemakers, juicers, toasters and toaster ovens.

The Farberware License Agreement is set to expire December 31, 2210.

The Company and HPC segment do not have a material concentration of branded products exceeding 10% of consolidated or segment revenue from either the Emeril Legasse® or Farberware® brands.

We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products;

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The terms of a 1986 agreement between Remington Products, LLC and Remington Arms provides for the shared rights to use the trademark on products which are not considered “principal products of interest” for either company.

We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.

We retain the Remington® trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.

HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores.

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Our sales generally are made through the use of individual purchase orders.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 37.1% of segment sales for the year ended September 30, 2023.

Primary competitors for home appliances include Newell Brands (Sunbeam, Mr.

A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, each of which exceed 10% of segment sales and represent approximately 41.5% of segment sales for the year ended September 30, 2024.

Primary competitors for the home appliances product category within our HPC segment include Newell Brands (Sunbeam, Mr.

Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.

(Hamilton Beach, Proctor Silex), Sensio, Inc.

SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers.

Primary competitors in personal care include Koninklijke Philips Electronics N.V.

(Bella), SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers.

Primary competitors for the personal care product category within our HPC segment include Koninklijke Philips Electronics N.V.

(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, Helen of Troy Limited, SharkNinja (Shark), and Dyson Limited (Dyson).

Sales from electric personal care product categories tend to increase during the December holiday season (the Company's fiscal first quarter), while small appliances sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company's fiscal fourth quarter) and in December for the holiday season.

Sales from electric personal care product categories tend to increase during the December holiday season (the Company’s fiscal first quarter), while small home appliance sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company’s fiscal fourth quarter) and in December for the holiday season.

Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2024, are as follows:

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We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.

Discontinued Operations

Hardware and Home Improvement ("HHI")

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 $2.8 billion included as a component of Income From Discontinued Operations, Net of Tax.

Refer to Note 3 - Divestitures to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining the HHI divestiture.

Human Resources

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As of September 30, 2024, we have approximately 3,100 full-time employees worldwide.

Approximately 25% of our total labor force is covered by collective bargaining agreements, of which approximately 25% is subject to arrangements under negotiations or expiring within 12 months.

Approximately 30% of our total labor force is covered by collective bargaining agreements, of which approximately 50% is subject to regular and ongoing negotiations as an ordinary course of business with our work councils.

We have one collective bargaining agreement applicable to our Australian operation that is scheduled or expected to expire within 12 months which is not substantive to our total employee count.

We believe that our overall relationship with our employees is good.

Employee Wellness

We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” promote innovation, trust, accountability and collaboration.

We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” all in the efforts to promote innovation, trust, accountability and collaboration.

The result is a work environment that encourages the well-being of our employees wholistically - mind and body.

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We continuously strive to maintain our strong safety performance as we continue to grow our business around the globe.

The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, and the leadership of our skilled EHS team.

The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, regular employee trainings on EHS topics, and the leadership of our skilled EHS team.

In the last several years, the team has added dedicated EHS professionals to individual sites to train employees and ensure compliance with applicable safety standards and regulations.

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We solicit and receive questions and feedback from our employees through this process.

Diversity, Equity and Inclusion

Spectrum Brands is committed to fostering a diverse, equitable, and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background.

Diversity and Inclusion

Spectrum Brands is committed to fostering a diverse and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background.

At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves.

To further that objective, we have:

• Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion (“DEI”) to help us create long-lasting change;

• Implemented a DEI program;

• Engaged the services of a third-party consultant with expertise in diversity and inclusion (“D&I”) to help us create long-lasting change;

• Implemented a D&I program;

• Created a U.S.

DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals, advise on ways to advance the DEI dialogue and drive meaningful cultural change at the Company ;

• Created affinity groups for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent DEI discussions among our employee populations;

D&I Advisory Counsel, made up of our employees of diverse backgrounds to help design and develop D&I-related priorities and goals, advise on ways to advance the D&I dialogue and drive meaningful cultural change at the Company ;

• Created inclusion networks for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent D&I discussions among our employee populations;

• Developed educational content and trainings to help leaders foster a more inclusive environment.

COVID-19 Response

In response to COVID-19, our Company took swift and effective action to protect the health and safety of our global employees.

The Company implemented a number of robust COVID-19 safety practices, including, by way of example:

• Temperature screenings and masks were required at all sites prior to admittance;

• Weekly audits using a list of safety requirements, including social distancing, personal protective equipment, sanitation, hygiene education, etc.;

• Guidelines and procedures for the deep cleaning of HVAC systems to prevent the spread of germs;

• Contact tracing practices with mandatory quarantine for individuals with confirmed close contact cases;

• Requirement that all non-essential employees to work from home;

• Suspension of travel restrictions for all unnecessary travel.

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-K

Item 1. Business