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Item 7. Management’s Discussion and Analysis

2024-11-15 compared with 2023-11-21 · 249 added, 455 removed, 237 unchanged (75% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report.

The following is a combined report of SBH and SB/RH, and the following discussion includes SBH and certain matters related to SB/RH as signified below.

Unless the context indicates otherwise, the terms the “Company,” “we,” “our” or “us” are used to refer to SBH and its subsidiaries and SB/RH and its subsidiaries, collectively.

Business Overview

The following section provides a general description of our business as well as recent developments for the years ended September 30, 2023 and 2022, which we believe are important to understanding our results of operations, financial condition, and understanding anticipated future trends.

Refer to Item 1 - Business and Note 1 – Description of Business in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for an overview of our business.

For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.

Acquisitions, Divestitures and Other Business Development Initiatives

The Company periodically evaluates strategic transactions that may result in the acquisition of a business or assets that qualify as a business combination, or a divestiture of a business or assets that may be recognized as either a component of continuing operations or discontinued operations, depending on the significance to the consolidated group.

Acquisitions may impact the comparability of the consolidated or segment financial information, with the inclusion of the operating results for the acquired business in periods subsequent to acquisition date, the inclusion of acquired assets, both tangible and intangible (including goodwill), and the related amortization, depreciation or other non-cash purchase accounting adjustments of acquired assets.

Divestitures may impact the comparability of the consolidated or segment financial information with the recognition of an impairment loss when held for sale, gain or loss on disposition, or change in classification to discontinued operations for a qualifying transactions.

Moreover, the comparability of consolidated or segment financial information may be impacted by incremental costs to facilitate and effect such transactions and initiatives to integrate acquired business or separate divested operations and assets with the consolidated group.

The following strategic transactions have been considered as having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information.

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

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

The operating results of the HHI divestiture are included as Income From Discontinued Operations, Net of Tax for all periods presented through the date of the divestiture, including the gain on sale.

See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.

The Company has incurred incremental costs attributable to the divestiture, consisting of legal and professional fees to effect the realization of the Purchase Agreement, preparation for separation of systems and processes supporting the divested business and enabling functions under a transition services agreement ("TSA").

Transaction costs directly attributable to the close of the transaction including certain compensatory costs contingent upon the successful completion of the sale are included as a component of the gain on sale of discontinued operations.

Incremental costs are expected to be incurred following consummation of the transaction to support TSA processes and mitigation following the close of the sale are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction.

• HPC Separation - The Company has initiated projects to facilitate a strategic separation of the Company's ownership in the HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or other strategic transaction, and the retained GPC and H&G businesses of the consolidated group.

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

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

• Tristar Business Acquisition - During the year ended September 30, 2022, on February 18, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril, and Copper Chef® brands.

The net assets and operating results of the Tristar Business are included in the Consolidated Financial Statements and reported within the HPC reporting segment as of and for the years ended September 30, 2023 and 2022, effective as of the transaction date.

See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further detail.

In addition to the transaction costs of $13.5 million to effect the close of the transaction, recognized during the year ended September 30, 2022, the Company has 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 facilitate in the consolidation of financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.

Costs attributable to the integration of the Tristar Business were initiated with the close of the transaction and were substantial complete and recognized as of September 30, 2023.

• Rejuvenate Acquisition - During the year ended September 30, 2021, on May 28, 2021, the Company acquired 100% of the membership interests in For Life Products, LLC ("FLP"), a manufacturer of household cleaning, maintenance, and restoration products sold under the Rejuvenate® brand.

The net assets and operating results of FLP are included in the Consolidated Financial Statements and reported within the H&G reporting segment as of and for the years ended September 30, 2023 and 2022.

The Company has incurred incremental costs to combine and integrate the acquired business with the H&G segment, primarily towards the integration of systems and processes, transfer of inventory and integration to an existing H&G distribution center, retention costs for personnel supporting transition and integration efforts.

Costs attributable to the integration of the Rejuvenate business were completed as of September 30, 2022.

• Armitage Acquisition - During the year ended September 30, 2021, on October 26, 2020, the Company completed the acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys business in Nottingham, UK including a portfolio of brands that include the dog treats brand, Good Boy®, cat treats brand, Meowee!®, and Wildbird® bird feed products, among others, that are predominantly sold within the UK.

The net assets and results of operations of Armitage are included in the Consolidated Financial Statements and reported within the GPC reporting segment as of and for the years ended September 30, 2023 and 2022.

The Company has incurred incremental costs to combine and integrate the acquired business with the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and integration to existing GPC supply chain and distribution centers within the EMEA region, plus retention costs for personnel supporting the transition and integration efforts.

Costs attributable to the integration of the Armitage business were completed as of September 30, 2022.

• Coevorden Operations - During the year ended September 30, 2020, on March 29, 2020, the Company completed the sale of its dog and cat food ("DCF") production facility and distribution center in Coevorden, Netherlands with United Petfood Producers NV ("UPP").

Following the separation of the Coevorden Operations, the Company incurred incremental costs attributable to a tolling charge for the continued production of DCF products through a three-year manufacturing agreement with the buyer entered into concurrently with the sale, rent charges associated with the transferred warehouse operated by the Company during an 18-month transition period, plus costs to facilitate the transfer of the warehouse operations to the buyer and the movement of inventory and distribution center operations.

Incremental costs attributable to the tolling arrangement were completed in March 2023.

• Omega Acquisition - During the year ended September 30, 2020, on March 10, 2020, the Company acquired Omega Sea, LLC ("Omega"), a manufacturer and marketer of premium fish foods and consumable goods for the home and commercial aquarium markets, primarily consisting of the Omega brand.

The net assets and results of operations of Omega are included in the Consolidated Financial Statements and reported within GPC segment as of and for the years ended September 30, 2023 and 2022.

The Company incurred incremental costs to combine and integrate the acquired business within the GPC segment, primarily towards the integration of systems and processes, transfer of inventory and production to an existing GPC facility, including related exit and disposal costs of the assumed leased facility, related start-up costs and operational inefficiencies attributable to the transferred production, plus retention costs for personnel supporting the transition and integration after the transaction date.

Costs attributable to the integration of the Omega business were completed in the prior year.

The following is a summary of costs attributable to strategic transactions and business development costs for the respective projects during the years ended September 30, 2023 and 2022.

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

(in millions) 2023 2022

Tristar Business acquisition and integration $ 11.5 $ 24.3

HHI divestiture and separation 8.4 6.3

HPC separation initiatives 4.2 19.1

Coevorden operations separation 2.7 8.8

Rejuvenate acquisition and integration — 6.8

Armitage acquisition and integration — 1.4

Omega integration — 4.6

Other project costs 0.7 1.0

Total $ 27.5 $ 72.3

Net sales $ — $ 0.7

Cost of goods sold 2.7 9.4

General & administrative expense 24.8 57.9

Other non-operating expense, net — 4.3

Restructuring and Optimization Initiatives

We continually seek and develop operating strategies to improve our operational efficiency, match our capacity and product costs to market demand and better utilize our manufacturing and distribution resources in order to reduce costs, increase revenues, and maintain or increase our current profit margins.

We have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the consolidated financial statements.

These changes and updates are inherently difficult and are made even more difficult by current global economic conditions.

Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors such as COVID-19, or inflation and increased interest rates, many of which are beyond our control.

The following initiatives have been considered as having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information.

• Fiscal 2023 Restructuring - During the year ended September 30, 2023, the Company entered into an initiative in response to the continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of further of headcount reductions.

Substantially all costs associated with the initiative had been recognized any accrued as of September 30, 2023.

See Note 5 - Restructuring Charges in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail on related exit or disposal costs attributable to this initiative.

• Fiscal 2022 Restructuring - During the year ended September 30, 2022, the Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction.

Substantially all costs associated with the initiative had been recognized and accrued in the prior year with amounts during the year ended September 30, 2023 due to changes in estimates, headcounts and timing of communication.

See Note 5 - Restructuring Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on related exit or disposal costs attributable to this initiative.

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

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

The initiative is subject to exit and disposal costs for severance benefits of personnel associated with the operations, see Note 5 - Restructuring Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail.

Substantially all costs associated with the initiative has been recognized and accrued as of September 30, 2023.

• Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis.

This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as either capital expenditures or deferred costs in accordance with applicable accounting policies, with certain costs recognized as operating expense associated with project development and project management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software configuration and implementation costs.

The Company has substantially completed the build phase and initiated a pilot deployment during the year ended September 30, 2023 with subsequent deployments and updates planned during the following year.

Costs are anticipated to be incurred with various deployments expected through September 30, 2025.

• HPC Brand Portfolio Transitions - During the year ended September 30, 2021, in response to the acquisition of the Tristar Business and the PowerXL® brand, the HPC segment initiated a project to assess and evaluate the current utilization of tradenames and brands across its portfolio of home and kitchen appliance products.

The project included incremental costs to facilitate transitions of branded product offerings on global basis, including investment with our supply base and retail partners to manage inventory and transition new branded products to market.

Costs attributable to the initiative were completed during the year ended September 30, 2023.

• GPC Distribution Transition - During the year ended September 30, 2021, the GPC segment entered into an initiative to update its supply chain and distribution operations within the U.S.

to address capacity needs, optimize and improve fill rates attributable to recent growth in the business and consumer demand, and improve overall operational effectiveness and throughput.

The initiative includes the transition of its third party logistics (3PL) service provider at its existing distribution center, incorporating new facilities into the distribution footprint by expanding warehouse capacity and securing additional space to support long-term distribution and fulfillment, plus updating engagement and processes with suppliers and its transportation and logistics handlers.

Incremental costs include one-time transition, implementation and start-up cost with the new 3PL service provider, including the integration of provider systems and technology, incentive-based compensation to maintain performance during transition, duplicative and redundant costs, and incremental costs for various disruptions in the operations during the transition period including supplemental transportation and storage costs, incremental detention and demurrage costs.

Additionally, the Company experienced an increase in customer fines and penalties during the transition period (recognized as a reduction in net sales).

Costs attributable to the initiative were completed during the year ended September 30, 2022.

• Global Productivity Improvement Program - During the year ended September 30, 2019, the Company initiated a company-wide, multi-year program, consisting of various restructuring related initiatives to redirect resources and spending to drive growth, identify cost savings and pricing opportunities through standardization and optimization, develop organizational and operating optimization, and reduce overall operational complexity across the Company.

With the Company’s divestitures of GBL and GAC during the year ended September 30, 2019, the project focus includes the transition of the Company’s continuing operations in a post-divestiture environment and exiting of TSAs, which were fully exited in January 2022.

The initiative includes review of global processes and organization design and structures, headcount reductions and transfers, and rightsizing the Company’s shared operations and commercial business strategy and exit of certain internal production to third-party suppliers, among others, resulting in the recognition of severance benefits and other exit and disposal costs to facilitate such activity.

Costs attributable to the initiative were completed during the year ended September 30, 2022.

The following is a summary of impacts to operating results attributable to restructuring initiatives and other optimization projects incurred for the respective projects during the years ended September 30, 2023 and 2022.

In addition to the projects and initiatives discussed above, the Company regularly incurs costs and engages in less significant restructuring and optimization initiatives that individually are not substantial and occur over a shorter time period (generally less than 12 months).

(in millions) 2023 2022

Fiscal 2023 restructuring $ 7.4 $ —

Fiscal 2022 restructuring 0.4 9.8

Global ERP transformation 11.4 13.1

Russia closing initiative 3.2 1.9

HPC brand portfolio transitions 2.5 1.3

GPC distribution center transition — 35.8

Global productivity improvement program — 5.1

Other project costs 10.5 11.1

Total $ 35.4 $ 78.1

Net sales $ — $ 5.0

Cost of goods sold 1.0 1.0

Selling expense — 31.3

General & administrative expense 34.4 40.8

Refinancing Activity

The following recent financing activity has a significant impact on the comparability of financial results on the consolidated financial statements.

• During the year ended September 30, 2023, following the close of the HHI divestiture, 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 $450.0 million aggregate principal amount of 5.750% Senior Notes due 2025 in full at the redemption price.

The Company recognized $10.8 million as interest expense for the year ended September 30, 2023 from the write-down of deferred financing costs and original issuance discount.

• During the year ended September 30, 2023, the Company repurchased of $61.4 million of its outstanding bonds resulting in the early extinguishment of the debt and the recognition of a gain from debt repurchases of $7.9 million for the year ended September 30, 2023

• Additionally, during the year ended September 30, 2023, and prior to the closing of the HHI divestiture, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.

Following the close of the HHI divestiture, the maximum consolidated total net leverage ratio was reverted to 6.0 to 1.0.

The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense for the year ended September 30, 2023.

• During the year ended September 30, 2022, the Company entered into the third amendment to the Amended and Restated Credit Agreement (the "Credit Agreement") that provided incremental capacity on the Revolver Facility of $500 million that was used to support the acquisition of the Tristar Business and the continuing operations and working capital requirements of the Company.

Borrowings under the incremental capacity are subject to a borrowing rate which is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25 basis points 270 days after the effective date of the third amendment and an additional 25 basis points on each 90 day anniversary of such date.

Outstanding borrowings under the incremental capacity were paid down and the Incremental Revolving Credit Facility Tranche was terminated following the close of the HHI divestiture.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail regarding debt and refinancing activity.

Tristar Business Acquisition

Following the purchase of the Tristar Business in February 2022, the Company and its HPC segment have been detrimentally impacted by aspects of the acquired business’ operations and products, which have negatively impacted subsequent operating performance and partner relationships of the acquired brands and segment.

Since the acquisition, the acquired business realized, among other things, significant distribution challenges, increased levels of retail inventory, reduced sales, increased promotional spending and deductions, higher level of returns, and overall increased amount of costs.

Additionally, the segment has subsequently realized unusual losses attributable to the recognition of product recalls for products associated with the brands, increased risks over the realizability of receivables and inventory, and recognized an impairment on assets including the acquired goodwill and tradename intangible assets.

Most recently the Company disposed of certain inventory and products associated with the acquired brands after assessing, among other things, performance and quality standards.

As of September 30, 2023, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company.

The Company is pursuing avenues to remediate and recover such damages and losses realized since the acquisition.

Russia-Ukraine Conflict

The impacts of the Russia-Ukraine conflict and the sanctions imposed in response to the conflict may have an impact on the Company's consolidated operations and cash flow attributable to operations and distribution within the region.

The Company does not maintain a significant level of operations within Ukraine and initiated the closing of its in-country commercial operations within Russia to reduce the relative risk and exposure within the region.

Inflation and Supply Chain Constraint s

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

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

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

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

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

Unless the context indicates otherwise, the terms the “Company,” “we,” “our” or “us” are used to refer to SBH and its subsidiaries, collectively.

Non-GAAP Measurements

Our consolidated and segment results contain non-GAAP metrics such as organic net sales and Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization).

Our consolidated results contain non-GAAP metrics such as organic net sales, Adjusted EBITDA and Adjusted EBITDA margin.

While we believe organic net sales and Adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results.

Organic Net Sales.

We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (where applicable).

We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (where applicable).

We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and acquisitions.

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

The following is a reconciliation of net sales to organic net sales of SBH and SB/RH for the year ended September 30, 2023 compared to net sales for the year ended September 30, 2022:

September 30, 2023 Net Sales September 30, 2022 Variance

(in millions, except %) Net Sales

Effect of Changes in Currency

Net Sales Excluding Effect of Changes in Currency

Effect of Acquisitions

The following is a reconciliation of net sales to organic net sales of for the year ended September 30, 2024, compared to net sales for the year ended September 30, 2023:

2024 Net Sales 2023 Variance

(in millions, except %) Net Sales Effect of Changes in Currency Organic

GPC $ 1,151.5 $ (7.7) $ 1,143.8 $ 1,139.0 $ 4.8 0.4 %

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Adjusted EBITDA and adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metric used by management, which we believe provide useful information to investors because they reflect the ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods.

They also facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies.

Adjusted EBITDA and adjusted EBITDA margin are non-GAAP metrics used by management, which we believe are useful to investors to measure the operational strength and performance of our business.

These metrics provide investors additional information about our operating profitability for certain non-cash items, non-routine items we do not expect to continue at the same level in the future, as well as other items not core to our continuing operations.

By providing these measures, together with a reconciliation of the most directly comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives, as securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management and our board of directors for internal purposes in evaluating our business performance, making budgeting decisions, and comparing our performance against other peer companies using similar measures.

They facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies.

Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

See Note 11 - Debt in the Notes to the Consolidated Financial Statements for additional detail.

EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income.

Adjusted EBITDA further excludes:

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

See Note 18 - Share Based Compensation in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further details;

• Incremental amounts attributable to strategic transactions and business development initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business.

These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards business development activities, incremental costs attributable to such transactions and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

• Incremental amounts realized towards restructuring and optimization projects including, but not limited to, costs towards the development and implementation of strategies to optimize operations and improve efficiency, reduce costs, increase revenues, increase or maintain our current profit margins, including recognition of one-time exit or disposal costs.

These amounts are excluded from our ongoing performance metrics as they are reflective of incremental investment by the Company towards significant initiatives controlled by management, incremental costs directly attributable to such initiatives, indirect impact or disruption to operating performance during implementation, and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;

• Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions the Company's business units excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations.

Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or restructuring initiatives, TSAs, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations following the completed sale of the discontinued operations.

See Note 3 – Divestitures in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details;

• Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others;

• Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets;

See Note 10 - Property, Plant and Equipment, Note 11 - Goodwill and intangible Assets and Note 13 - Leases in Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details;

• Non-cash gain from the remeasurement of the contingent consideration liability associated with the Tristar Business acquisition, recognized during the years ended September 30, 2023 and 2022.

See Note 4 - Acquisitions in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details;

• Non-cash gain realized from the repurchase of debt obligations at a discount, net deferred financing costs, during the year ended September 30, 2023.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further details;

• Incremental reserves for non-recurring litigation or environmental remediation activity including the proposed settlement of outstanding litigation at our H&G and HPC segments attributable to significant and unusual nonrecurring matters with no previous history or precedent recognized during the years ended September 30, 2023 and 2022.

See Note 20 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail;

• Impact from the early settlement of foreign currency cash flow hedges in the prior year, resulting in subsequent assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in the recognition of excluded gains during the year ended September 30, 2022 intended to mitigate costs through the year ending September 30, 2023;

• Incremental costs recognized by the HPC segment during the year ended September 30, 2023 for the approved disposal of select product SKUs and models associated with the acquired brands from the Tristar Business acquisition after assessing, among other things, performance and quality standards, and the business risks associated with the continued support and distribution of such products.

HPC management has suspended further sale of the selected products as part of a shift in its strategy for distribution and development within its brand portfolio and avoid deterioration and further reduction in the value of the acquired brands and supported products;

• Incremental costs recognized by the HPC segment attributable to the realization of product recalls initiated by the Company with costs realized during the years ended September 30, 2023 and 2022.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details;

• Other adjustments primarily attributable to (1) costs associated with Salus as they are not considered a component of the continuing commercial products company;

(2) key executive severance related costs;

(3) asset write-off for exit of certain GPC brands within China during year ended September 30, 2022, and (4) write-off of cost based investment previously held by the GPC segment during the year ended September 30, 2022.

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 and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Adjusted EBITDA also excludes certain non-cash adjustments including share based compensation (see Note 18 - Share Based Compensation in the Notes to the Consolidated Financial Statements for further detail);

impairment charges on property, plant and equipment, right of use lease assets, and goodwill and other intangible assets (See Note 9 - Property, Plant and Equipment, Note 12 - Leases, and Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements for further detail, respectively);

gain or loss from the early extinguishment of debt through the repurchase or early redemption of debt (See Note 11 - Debt in the Notes to the Consolidated Financial Statements for further detail);

and purchase accounting adjustments recognized in income subsequent an acquisition attributable to the step-up in value on assets acquired, including, but not limited to, inventory or lease assets.

Additionally, the Company will further recognize adjustments from adjusted EBITDA for other costs, gains and losses that are considered significant, non-recurring, or otherwise not supporting the continuing operations and revenue generating activity of the segment or Company, including but not limited to, exit and disposal activities (See Note 4 - Exit and Disposal Activities in the Notes to the Consolidated Financial Statements for further detail), or incremental costs associated with strategic transactions, restructuring and optimization initiatives such as the acquisition or divestiture of a business, related integration or separation costs, or the development and implementation of strategies to optimize or restructure the Company and its operations.

Adjusted EBITDA margin is adjusted EBITDA as a percentage of reported net sales.

The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for the years ended September 30, 2024 and 2023:

(in millions, except %) 2024 2023

Net income (loss) from continuing operations $ 99.3 $ (233.7)

Income tax benefit — — — (56.5) (56.5)

Income tax expense (benefit) 64.3 (56.5)

Interest expense 58.5 116.1

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Amortization 44.5 42.3

EBITDA 171.4 13.8 (195.4) (61.8) (72.0)

Share based compensation 17.5 17.2

Tristar Business integration — — 11.5 — 11.5

HHI divestiture — — — 8.4 8.4

HPC separation initiatives — — — 4.2 4.2

Coevorden operations divestiture 2.7 — — — 2.7

Fiscal 2023 restructuring initiatives 3.0 — 4.4 — 7.4

Fiscal 2022 restructuring initiatives (0.3) 0.2 — 0.5 0.4

Global ERP transformation — — — 11.4 11.4

Russia closing initiatives — — 3.2 — 3.2

HPC brand portfolio transitions — — 2.5 — 2.5

Other project costs 1.3 2.5 2.3 5.1 11.2

Impairment of equipment and operating lease assets 9.0 0.1 1.7 — 10.8

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 56.0 64.7 — 120.7

Unallocated shared costs — — — 18.0 18.0

Non-cash impairment charges 50.3 242.6

Non-cash purchase accounting adjustments 1.2 1.9

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

Gain from debt repurchase — — — (7.9) (7.9)

Legal and environmental — (0.2) 3.2 — 3.0

Early settlement of foreign currency cash flow hedges — — 4.9 — 4.9

HPC product disposal — — 20.6 — 20.6

HPC product recall — — 7.7 — 7.7

Salus and other adjustments 3.5 0.1 0.3 1.7 5.6

Adjusted EBITDA $ 190.6 $ 72.5 $ 43.1 $ (3.2) $ 303.0

$ 1,139.0 $ 536.5 $ 1,243.3 $ — $ 2,918.8

Adjusted EBITDA Margin 16.7 % 13.5 % 3.5 % — 10.4 %

The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2022.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 75.2 $ 57.2 $ 25.4 $ (234.8) $ (77.0)

Income tax benefit — — — (13.3) (13.3)

Interest expense — — — 99.4 99.4

Depreciation 14.8 7.2 12.4 14.6 49.0

Amortization 22.6 11.4 16.3 — 50.3

EBITDA 112.6 75.8 54.1 (134.1) 108.4

Share based compensation — — — 10.2 10.2

Tristar Business acquisition and integration — — 24.3 — 24.3

Rejuvenate integration — 6.8 — — 6.8

Armitage integration 1.4 — — — 1.4

Omega production integration 4.6 — — — 4.6

HHI divestiture — — — 6.3 6.3

(Gain) loss from early extinguishment of debt (2.6) 3.0

Exit and disposal costs 1.0 9.3

HHI separation costs 1

HPC separation initiatives 1

Coevorden operations divestiture 8.8 — — — 8.8

Fiscal 2022 restructuring initiatives 3.6 0.7 4.9 0.6 9.8

Global ERP transformation 1

GPC distribution center transition 35.8 — — — 35.8

Global productivity improvement program 0.8 — 2.4 1.9 5.1

Russia closing initiatives — — 1.9 — 1.9

HPC brand portfolio transitions — — 1.3 — 1.3

Other project costs 0.1 — 0.5 11.5 12.1

Legal and environmental — 1.5 — — 1.5

Gain from remeasurement of contingent consideration liability — — (28.5) — (28.5)

Unallocated shared costs — — — 27.6 27.6

Early settlement of foreign currency cash flow hedges — — (5.1) — (5.1)

HPC product recall — — 5.5 — 5.5

Non-cash purchase accounting adjustments — — 8.3 — 8.3

Salus and other adjustments 0.9 1.4 — 2.5 4.8

Adjusted EBITDA $ 168.6 $ 86.2 $ 69.6 $ (41.3) $ 283.1

$ 1,175.3 $ 587.1 $ 1,370.1 $ — $ 3,132.5

Adjusted EBITDA Margin 14.3 % 14.7 % 5.1 % 9.0 %

The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SB/RH and its segments for the year ended September 30, 2023.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 134.0 $ (5.0) $ (215.8) $ (139.5) $ (226.3)

Income tax benefit — — — (55.1) (55.1)

Interest expense — — — 120.5 120.5

Depreciation 15.2 7.3 11.8 14.6 48.9

Amortization 22.2 11.5 8.6 — 42.3

EBITDA 171.4 13.8 (195.4) (59.5) (69.7)

Share based compensation — — — 15.7 15.7

Tristar Business integration 1

HHI divestiture — — — 8.4 8.4

HPC separation initiatives — — — 4.2 4.2

Coevorden operations divestiture 2.7 — — — 2.7

Fiscal 2023 restructuring initiatives 3.0 — 4.4 — 7.4

Fiscal 2022 restructuring initiatives (0.3) 0.2 — 0.5 0.4

Global ERP transformation — — — 11.4 11.4

Russia closing initiatives — — 3.2 — 3.2

HPC brand portfolio transitions — — 2.5 — 2.5

Other project costs 1.3 2.5 2.3 5.1 11.2

Impairment of equipment and operating lease assets 9.0 0.1 1.7 — 10.8

Impairment of goodwill — — 111.1 — 111.1

Impairment of intangible assets — 56.0 64.7 — 120.7

Unallocated shared costs — — — 18.0 18.0

Non-cash purchase accounting adjustments — — 1.9 — 1.9

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

Gain from debt repurchase — — — (7.9) (7.9)

Legal and environmental — (0.2) 3.2 — 3.0

Early settlement of foreign currency cash flow hedges — — 4.9 — 4.9

HPC product disposal — — 20.6 — 20.6

HPC product recall 2

Other adjustments 3.5 0.1 0.3 1.5 5.4

Gain from remeasurement of contingent consideration 3

Representation and warranty insurance proceeds 4

Litigation costs 5

HPC inventory disposal 6

Adjusted EBITDA $ 371.8 $ 275.1

Net sales $ 2,963.9 $ 2,918.8

Net income (loss) from continuing operations margin 3.4 % (8.0) %

Adjusted EBITDA margin 12.5 % 9.4 %

The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SB/RH and its segments for the year ended September 30, 2022.

(in millions) GPC H&G HPC Corporate Consolidated

Net income (loss) from continuing operations $ 75.2 $ 57.2 $ 25.4 $ (232.8) $ (75.0)

Income tax benefit — — — (12.9) (12.9)

Interest expense — — — 99.8 99.8

Depreciation 14.8 7.2 12.4 14.6 49.0

Amortization 22.6 11.4 16.3 — 50.3

EBITDA 112.6 75.8 54.1 (131.3) 111.2

Share based compensation — — — 9.1 9.1

Tristar Business acquisition and integration — — 24.3 — 24.3

Rejuvenate integration — 6.8 — — 6.8

Armitage integration 1.4 — — — 1.4

Omega production integration 4.6 — — — 4.6

HHI divestiture — — — 6.3 6.3

________________________________________

1 Incremental costs associated with strategic transactions, restructuring and optimization initiatives, including, but not limited to, the acquisition or divestiture of a business, related integration or separation costs, or the development and implementation of strategies to optimize or restructure operations.

Refer to Strategic Transactions, Restructuring and Optimization Initiatives discussion within the Business Overview section for further detail.

2 Incremental net costs from product recalls in the HPC segment.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further detail.

3 Non-cash gain from the remeasurement of a contingent consideration liability associated with the Tristar Business acquisition.

4 Gain from the receipt of insurance proceeds on representation and warranty policies associated with the Tristar Business acquisition.

See Note 20 Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further detail .

5 Litigation costs primarily associated with the Tristar Business acquisition.

See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further detail.

6 Non-cash write-off from disposal of HPC inventory.

See Note 8 - Inventory in the Notes to the Consolidated Financial Statements , for further detail.

7 Other is attributable to (1) other strategic transaction, restructuring and optimization initiatives;

(2) other foreign currency loss from the liquidation and deconsolidation of the Company’s Russia operating entity during the year ended September 30, 2024;

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

(4) non-recurring insurable losses, net insurance proceeds (5) impact from the early settlement of foreign currency cash flow hedges during September 30, 2023, as previously reported, and (6) tolling agreement costs during September 30, 2023 following the divestiture of the Coevorden operating facility, as previously reported.

Business Overview

The following section provides a general description of our business as well as recent developments for the years ended September 30, 2024 and 2023, which we believe are important to understanding our results of operations, our financial condition, and anticipated future trends.

Refer to Item 1 - Business and Note 1 - Description of Business in the Notes to the Consolidated Financial Statements for an overview of our business.

For a discussion of our fiscal 2022 results, please refer to Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on November 21, 2023.

Strategic transactions, restructuring and optimization initiatives

The Company periodically evaluates and enters into strategic transactions that may result in the acquisition or divestiture of a business which impacts the comparability of the financial results of the consolidated group and or segments.

Additionally, we develop and enter into restructuring and optimization initiatives to improve efficiencies and utilization to reduce costs, increase revenues and improve margins, which may have a significant impact on the comparability of financial results on the consolidated financial statements.

These changes and updates are inherently difficult and are made even more difficult by current global economic conditions.

Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors, or inflation and increased interest rates, many of which are beyond our control.

Moreover, the comparability of financial information may be impacted by incremental amounts attributable to such strategic transactions, restructuring and optimization initiatives.

The following is a summary of costs attributable to strategic transactions and business development costs that are considered as having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information, for the respective projects during the years ended September 30, 2024 and 2023:

(in millions) 2024 2023

HHI divestiture and separation costs 1

HPC separation initiatives 2

Coevorden operations divestiture 8.8 — — — 8.8

Fiscal 2022 restructuring initiatives 3.6 0.7 4.9 0.6 9.8

Global ERP transformation 3

GPC distribution center transition 35.8 — — — 35.8

Global productivity improvement program 0.8 — 2.4 1.9 5.1

Other project costs 0.1 — 0.5 11.5 12.1

Unallocated shared costs — — — 27.6 27.6

Gain from remeasurement of contingent consideration liability — — (28.5) — (28.5)

Russia closing initiatives — — 1.9 — 1.9

Early settlement of foreign currency cash flow hedges — — (5.1) — (5.1)

HPC brand portfolio transitions — — 1.3 — 1.3

Non-cash purchase accounting adjustments — — 8.3 — 8.3

Legal and environmental — 1.5 — — 1.5

HPC product recall — — 5.5 — 5.5

Other adjustments 0.9 1.4 — 2.2 4.5

Adjusted EBITDA $ 168.6 $ 86.2 $ 69.6 $ (39.9) $ 284.5

Net sales $ 1,175.3 $ 587.1 $ 1,370.1 $ — $ 3,132.5

Adjusted EBITDA Margin 14.3 % 14.7 % 5.1 % — 9.1 %

Tristar integration 4

Total $ 32.7 $ 38.6

Selling, general & administrative expense 32.7 38.6

________________________________________

1 Costs attributable to the HHI divestiture effective June 2023 consisting of legal and professional fees to effect the close of the transaction and subsequent costs to facilitate separation and transition of systems and processes subject to transition services agreements (“TSAs”).

Costs are expected to be incurred through the transition period of up to 24 months following the close of the transaction as the Company exits various TSAs.

See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements for further discussion.

2 Costs attributable to efforts to facilitate a strategic separation of the HPC segment either through a spin, merger or sale, consisting of legal and professional fees to facilitate transaction opportunities and diligence, consult on tax and compliance implications, legal entity restructurings, system and process segregation, carve-out financials and the confidential filing of a Form 10 registration statement in July 2024.

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

3 Costs attributable to a multi-year transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis, including project management and professional services for planning, design, and business process review that do not qualify as software configuration and implementation costs recognized as capital expenditures or deferred costs under applicable accounting principles.

Costs are anticipated to be incurred through various deployments through September 30, 2025.

4 Costs attributable to the integration of the Tristar Business with the HPC segment, acquired in February 2022, consisting of the integration of systems and processes, and the merger of commercial operations, supply chain and other shared enabling functions.

5 Other costs primarily consist of professional fees for business transformation initiatives, strategy development and distribution center transitions.

Exit and Disposal Activity

The Company periodically recognizes exit and disposal costs primarily consisting of severance and contract termination costs that may be attributable to a reorganization or restructuring of the Company, cost savings initiatives, or in consideration of a recent strategic transaction.

Such actions results in the recognition of costs to the Company that are considered incremental and not reflective of the continuing operating costs of the business and may impact the comparability of the consolidated business and its segments.

Refer to the Note 4 - Exit and Disposal Activities in the Notes to the Consolidated Financial Statements for further detail.

Refinancing Activity

The following recent financing activity has a significant impact on the comparability of financial results on the consolidated financial statements.

• 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 $11.8 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 year ended September 30, 2024, the Company completed a tender offer 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 years ended September 30, 2024 and 2023, the Company repurchased outstanding bonds in the open market at a discount resulting in the recognition of a gain on extinguishment of $4.7 million and $7.9 million, respectively.

• During the year ended September 30, 2023, following the close of the HHI divestiture in June 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 $450.0 million aggregate principal amount of 5.750% Senior Notes due 2025 in full at the redemption price.

The Company recognized $10.8 million as a loss from the early extinguishment of debt.

Following the close of the HHI divestiture, the maximum consolidated total net leverage ratio was reverted to 6.0 to 1.0.

The Company incurred $2.3 million in connection with the fourth amendment, which has been recognized as interest expense.

See Note 11 - Debt in the Notes to the Consolidated Financial Statements for additional detail regarding debt and refinancing activity.

Tristar Business Acquisition

Following the purchase of the Tristar Business in February 2022, the Company and its HPC segment had been detrimentally impacted by aspects of the acquired business’ operations and products, which negatively impacted subsequent operating performance and partner relationships of the acquired brands and segment.

Additionally, the segment has subsequently realized losses attributable to the recognition of product recalls for products associated with the brands, increased risks over the realizability of receivables and inventory, and recognized an impairment on assets including the acquired goodwill and tradename intangible assets.

The Company disposed of certain inventory and products associated with the acquired brands, further discussed in Note 8 - Inventory in the Notes to the Consolidated Financial Statements .

As of September 30, 2024, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company.

The Company is pursuing avenues to remediate and recover such damages and losses realized since the acquisition.

During the year ended September 30, 2024, the Company recognized a gain of $65.0 million attributable to insurance proceeds received from its representation and warranty insurance policies associated with the Tristar Business acquisition, further discussed in Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements .

Inflation, Supply Chain and Macroeconomic Environment.

The Company 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 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.

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

We can provide no assurance that such mitigation would be available in the future.

While we have seen more stability in the recent economic environment and have not experienced significant disruption in our recent operating results, the risks of future negative impacts due to transportation, logistical or supply constraints remain present, and the Company could continue to experience corresponding incremental costs and margin pressures.

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

The Company does not maintain a significant level of operations within the territories directly affected by the Russia-Ukraine war and the Israel-Hamas war, including the Middle East, and we closed our commercial operations within Russia, but economic sanctions and hostilities attributable to such conflicts may negatively impact ours and our customers' financial viability and supply chains, which may negatively impact us, supply chain demands, or the demands or economic viability of our customers in other parts of the world.

Consolidated Results of Operations

1 unchanged sentence

The following is summarized consolidated results of operations for SBH for the years ended September 30, 2023 and 2022, respectively:

The following is summarized consolidated results of operations for the years ended September 30, 2024 and 2023, respectively:

(in millions, except %)

2 unchanged sentences

Gross profit 1,109.3 924.3 185.0 20.0 %

Gross profit margin 31.7 % 31.6 % 10 bps

Operating expenses $ 1,129.9 $ 967.2 $ 162.7 16.8 %

Selling, general & administrative

958.5 899.6 58.9 6.5 %

Impairment of goodwill

— 111.1 (111.1) n/m

Impairment of intangible assets

45.2 120.7 (75.5) (62.6) %

Representation and warranty insurance proceeds

(65.0) — (65.0) n/m

Gain from remeasurement of contingent consideration liability

— (1.5) 1.5 n/m

Interest expense 58.5 116.1 (57.6) (49.6 %)

Interest income

(38.3) (0.6) (37.7) n/m

Gain on debt repurchase

(57.5) (38.3) (19.2) 50.1 %

(Gain) loss from early extinguishment of debt

(2.6) 3.0 (5.6) n/m

1 unchanged sentence

8.6 3.8 4.8 126.3 %

Income tax benefit (56.5) (13.3) (43.2) 324.8 %

Net loss from continuing operations

(233.7) (77.0) (156.7) 203.5 %

Income from discontinued operations, net of tax 2,035.6 149.7 1,885.9 n/m

Net income 1,801.9 72.7 1,729.2 n/m

Income tax expense (benefit)

64.3 (56.5) 120.8 n/m

Net income (loss) from continuing operations

99.3 (233.7) 333.0 n/m

Income from discontinued operations, net of tax 25.5 2,035.6 (2,010.1) (98.7 %)

Net income 124.8 1,801.9 (1,677.1) (93.1 %)

n/m = not meaningful

8 unchanged sentences

Net Sales for the year ended September 30, 2023

Increase due to acquisition

Decrease in GPC

Decrease in H&G (50.6)

Increase in GPC

Increase in H&G

Decrease in HPC (3.4)

1 unchanged sentence

Net Sales for the year ended September 30, 2024

Year Ended September 30, 2024 Volume Price Foreign Currency Total Organic

GPC 0.9 % (0.5) % 0.7 % 1.1 % 0.4 %

H&G 7.0 % 0.8 % — % 7.8 % 7.8 %

HPC — % (0.3) % (0.5) % (0.8) % (0.3) %

Total 1.7 % (0.2) % — % 1.5 % 1.5 %

Refer to the Segment Financial Data section below for further discussion on net sales.

Gross Profit.

Gross profit decreased primarily due to lower sales volume with unfavorable mix earlier in the year from the realization of higher inventoried costs accumulated in the prior year offset by positive pricing and improved supply chain costs offsetting the impact to gross profit margin.

Operating Expenses.

Operating expenses increased due to the recognition of an impairment of goodwill with the HPC segment of $111.1 million and impairment of intangible assets of $120.7 million, offset by lower sales volume reducing selling costs, operating cost savings and restructuring initiatives, plus a prior year gain from remeasurement of a gain contingency of $28.5 million associated with the Tristar Business acquisition.

See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

Selling expense decreased $52.9 million from a reduction in distribution and transportation costs with improved operating effectiveness plus initiatives to reduce operating spend, with partial offset from an impairment of equipment and operating lease assets.

See Note 10 - Property, Plant and Equipment in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

General and administrative expenses decreased $39.0 million from operating spend initiatives and lower project cost towards strategic transactions and restructuring initiatives.

The following is a summary of the gross profit and gross profit margin for the years ended September 30, 2024 and 2023, respectively, and the principal factors contributing to the change between periods.

(in millions, except %) 2024 2023 Variance

Gross Profit $ 1,109.3 $ 924.3 $ 185.0 20.0 %

Gross Profit Margin 37.4 % 31.7 % 570 bps

(in millions, except margin) Gross Profit Margin

Price $ (4.3) (10) bps

Mix 2.4 10 bps

Volume 26.6 80 bps

Cost changes 158.8 490 bps

Other 2.0 — bps

Foreign exchange rates (0.5) — bps

Change in gross profit and gross profit margin $ 185.0 570 bps

Gross profit and gross profit margin increased predominantly due to lower cost inventory compared to higher inventoried costs realized in the prior period and improved volume.

Price and mix did not substantively impact gross profit, with some benefit realized from SKU rationalization initiatives in the prior year and reduction in excess inventory sales.

Other includes impact from product recalls and restructuring and optimization initiative costs.

Selling, General & Administrative.

The following summarizes the selling, general & administrative costs for the years ended September 30, 2024 and 2023, respectively, including amounts as a percentage of net sales for each respective period.

Year Ended (in millions, except %) 2024 % of Net Sales 2023 % of Net Sales Variance

Sales, marketing & advertising $ 346.6 11.7 % $ 272.1 9.3 % $ 74.5 27.4 %

Distribution 266.9 9.0 % 272.6 9.3 % (5.7) (2.1) %

General & administrative 283.2 9.6 % 275.7 9.4 % 7.5 2.7 %

Research & development 28.1 0.9 % 22.5 0.8 % 5.6 24.9 %

Strategic transaction, restructuring & optimization 33.7 1.1 % 56.7 1.9 % (23.0) (40.6) %

Total selling, general & administrative $ 958.5 32.3 % $ 899.6 30.8 % 58.9 6.5 %

Sales, marketing & advertising increased due to the Company’s investment towards marketing spend and brand advertising initiatives across all segments, plus increased incentive compensation costs from higher than anticipated operating performance results.

Distribution costs decreased due to improved optimization and fulfillment with customers, with lower freight costs compared to the prior year and overall reduction relative to the increase in sales in the current year.

General and administrative costs increased due to higher incentive compensation costs from higher than anticipated operating performance results, partially offset by lowered overhead costs from prior year savings initiatives and decrease in bank fees related to suspended factoring on trade receivables.

Research and development increased with investment towards product development but remains consistent with overall sales.

Strategic transaction, restructuring and optimization costs decreased due to reduced exit and disposal costs, close of the HHI divestiture and completion of Tristar Business integration in the prior year and other non-recurring transformation initiatives, partially offset by incremental investment towards execution of an HPC separation.

Impairment of Goodwill and Intangible Assets.

The Company recognized impairment charges of $45.2 million associated with the Rejuvenate® and OmegaSea® tradenames and a non-core strategic tradename during the year ended September 30, 2024, compared to impairment charges on HPC goodwill of $111.1 million and intangible assets of $120.7 million associated with the Rejuvenate®, PowerXL®, and George Foreman® tradenames, in the prior year.

See Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements.

Representation and Warranty Insurance Proceeds.

During the year ended September 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 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements .

Interest Expense.

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

See Note 12 – Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

Interest expense decreased due to reduced borrowings following the close of the HHI divestiture in June 2023, plus the issuance of the Exchangeable Notes and tender offer and bond redemption during the year ended September 30, 2024, as discussed in the refinancing activity above, further reducing outstanding principal balance and average borrowing rates.

See Note 11 – Debt in the Notes to the Consolidated Financial Statements .

Interest Income.

Interest income increased due to interest realized on the cash proceeds received from the closing of the HHI divestiture.

See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

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

Gain on Debt Repurchase The Company recognized income from the discount realized on the repurchase of the Company's debt during the year ended September 30, 2023.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

Interest income increased due to interest on term deposits entered into using cash proceeds from the closing of the HHI divestiture in June 2023, with reduced term deposits following the previously discussed tender offer and bond redemption during the year ended September 30, 2024.

(Gain) Loss From Early Extinguishment of Debt.

The Company recognized income from discounts realized on the repurchase of debt and losses attributable to the paydown of debt during the years ended September 30, 2024 and 2023 following the close of the HHI divestiture in June 2023, as discussed in the refinancing activity above.

See Note 11 - Debt in the Notes to the Consolidated Financial Statements .

Other Non-Operating Expense, Net.

Other non-operating expense, net decreased primarily due to less volatility of foreign currency.

Other non-operating expense, net increased primarily due to the changes in foreign currency transaction gains and losses, including the realization of translation loss from the liquidation and de-consolidation of the Company’s Russia operating entity during the year ended September 30, 2024.

Income Taxes.

5 unchanged sentences

federal statutory rate.

The tax expense for the year ended September 30, 2022 was significantly impacted by a valuation allowance increase and share based compensation.

See Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.

See Note 16– Income Taxes in the Notes to the Consolidated Financial Statements .

Income From Discontinued Operations.

Income or loss attributable to discontinued operations primarily reflect the income from the discontinued operations of the HHI segment and the resulting gain on sale from the completion of the HHI Divestiture during the year ended September 30, 2023.

Income from discontinued operations attributable to the HHI business increased due to the resulting gain on sale from the HHI divestiture offset by lower operating income from the HHI segment prior to disposition due to lower volumes offset by pricing increases and unfavorable mix from higher inventoried costs accumulated in the prior year.

See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail.

The following is summarized consolidated results of operations for SB/RH for the years ended September 30, 2023 and 2022:

(in millions, except %)

2023 2022 Variance

Net sales $ 2,918.8 $ 3,132.5 $ (213.7) (6.8) %

Gross profit 924.3 990.4 (66.1) (6.9) %

Gross profit margin 31.7 % 31.6 % 10 bps

Operating expenses $ 1,127.6 $ 964.5 $ 163.1 16.9 %

Interest expense 120.5 99.8 20.7 20.7 %

Interest income

(38.3) (0.6) (37.7) n/m

Gain on debt repurchase

(7.9) — (7.9) n/m

Other non-operating expense, net

3.8 14.6 (10.8) (74.0) %

Income tax benefit (55.1) (12.9) (42.2) 327.1 %

Net loss from continuing operations

(226.3) (75.0) (151.3) 201.7 %

Income from discontinued operations, net of tax 2,035.6 149.7 1,885.9 n/m

Net income 1,809.3 74.7 1,734.6 n/m

n/m = not meaningful

For the years ended September 30, 2023 and 2022, the change in net sales, gross profit and gross profit margin, operating expenses, interest expense, interest income, gain on debt repurchase, and other non-operating expenses are primarily attributable to changes in SBH previously discussed.

Income from discontinued operations is attributable to SBH previously discussed.

The effective tax rate was 19.6% for the year ended September 30, 2023 compared to 14.6% for the year ended September 30, 2022.

The change in tax rate is primarily attributable to the changes in SBH previously discussed.

Income from the prior year primarily reflects the income from the HHI segment prior to the completion of its divestiture in June 2023 and the realized gain on sale.

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

See Note 3 - Divestitures in the Notes to the Consolidated Financial Statements .

Segment Financial Data

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Net sales $ 1,151.5 $ 1,139.0 $ 12.5 1.1 %

Operating income 134.4 78.3 56.1 71.6 %

Operating income margin

11.8 % 6.7 % 510 bps

Adjusted EBITDA 216.1 190.6 25.5 13.4 %

Adjusted EBITDA margin 18.8 % 16.7 % 210 bps

Net sales decreased due to reduction in aquatics sales, higher retail inventory levels earlier in the year leading to lower replenishment sales and unfavorable foreign exchange rates offset by pricing adjustments.

Organic net sales decreased $22.2 million, or 1.9% excluding unfavorable foreign exchange impact of $14.1 million.

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

Operating income was further impacted by the impairment of equipment and operating leases realized during the year.

See Note 10 - Property, Plant and Equipment and Note 13 - Leases in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.

Net sales increased 1.1 % with an increase in organic net sales of 0.4% excluding favorable foreign exchange impact of $7.7 million.

The increase is primarily attributable to higher volume through incremental distribution in e-commerce and food and drug channels, partially offset by softness in mass retail.

Volume growth was predominantly focused on consumables in both product categories, such as chews and treats, dog and cat food, and aquatic nutrition;

partially offset by decreases in hard goods primarily in our aquatics categories such as aquarium kits and equipment, and prior year volumes from the exit of non-strategic categories and lower margin SKUs, positively impacting mix and profitability.

Adjusted EBITDA and adjusted EBITDA margin increased due to higher volume, improved gross profit margins from reduced material and input costs carrying into the fiscal year, plus reduced operating cost overhead from prior year cost savings initiatives, positive product and channel mix, partially offset by additional investments in marketing and advertising and product innovation.

Home & Garden (H&G)

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$ 578.6 $ 536.5 $ 42.1 7.8 %

Operating (loss) income

(5.0) 57.3 (62.3) n/m

Operating (loss) income margin

(0.9 %) 9.8 % (1,070) bps

Adjusted EBITDA

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Adjusted EBITDA margin 15.7 % 13.5 % 220 bps

n/m = not meaningful

Net sales decreased due to adverse weather conditions leading to lower POS and replenishment orders which also drove retailers to be conservative with inventory planning and further reduce retail inventory levels, further impacted by a strong early season inventory build in the prior year and slow spring cleaning season impacting cleaning products category contributed by the POS decline.

Operating (loss) income, adjusted EBITDA and margins decreased due to lower volumes, the realization of high inventoried costs accumulated in the prior year, partially mitigated by fixed cost restructuring and operational cost reductions, with an impairment of intangible assets of $56.0 million further impacting operating loss and margin.

See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.

Net sales increased 7.8 % due to higher volume across all product categories with favorable weather trends, improved temperatures and precipitation levels driving increased retail traffic and distribution with larger home center and mass retail partners, with a high concentration in Spectracide® and our controls products.

Repellent products benefited from an extended season and storms activity driving volume increase later in the season compared to the prior year.

Adjusted EBITDA and adjusted EBITDA margin increased due to higher sales volumes, improved gross profit margins from reduced material and input costs and manufacturing efficiencies carrying into the fiscal year, plus reduced operating cost overhead from prior year cost savings initiatives, and favorable product mix partially offset by additional investments in marketing and advertising and product innovations.

Adjusted EBITDA excludes an impairment charge of $39.0 million on the Rejuvenate® tradename intangible asset during the year ended September 30, 2024, and an impairment charge of $56.0 million on the Rejuvenate® tradename intangible asset during the year ended September 30, 2023, further discussed in Note 10 -Goodwill and Intangibles in the Notes to the Consolidated Financial Statements .

Home & Personal Care (HPC)

(in millions, except %)

2023 2022 Variance

(in millions, except %) 2024 2023 Variance

Net sales $ 1,233.8 $ 1,243.3 $ (9.5) (0.8 %)

Operating (loss) income

(214.7) 30.2 (244.9) n/m

Operating (loss) income margin

(17.3 %) 2.2 % (1,950) bps

Adjusted EBITDA 75.3 43.1 32.2 74.7 %

Adjusted EBITDA margin 6.1 % 3.5 % 260 bps

n/m = not meaningful

Net sales decreased due to decrease in product category POS with kitchen appliances, predominantly in NA, from lower consumer demand, further impacted by the high competitive landscape and closing of our Russia commercial operations with increased promotional spending and reduced placements, most significantly due to products associated with the Tristar Business acquisition which were challenged by high retail inventory levels and slower direct to consumer sales.

Organic net sales decreased $179.8 million or 13.1%, excluding acquisition sales of $89.9 million, with significant unfavorable foreign currency impact of $36.9 million.

Operating (loss) income, adjusted EBITDA and margins decreased due to lower volumes, significant inventory write-offs, sale of higher cost inventory accumulated in the prior year, higher level of inventory excess and obsolescence, and unfavorable foreign currency, offset by cost savings initiatives and reduction of operating spend during the year.

Operating (loss) income was further impacted by the impairment of goodwill of $111.1 million, impairment of intangible assets of $64.7 million and management election to dispose of select products associated with the Tristar Business acquisition.

See Note 9 - Inventory and Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.

Net sales decreased 0.8 % with a decrease in organic net sales of 0.3% excluding unfavorable foreign currency of $6.1 million.

Decrease is attributable to lower volumes from our kitchen appliances product category during the first half of the year from reduced mass retail listings in NA carrying over from the prior year, mitigated by new listings in second half of the year, volume growth in personal care and overall higher volume distribution through e-commerce channels.

Adjusted EBITDA and adjusted EBITDA margin increased due to improved profitability with lower product cost, SKU rationalization and reduced excess inventory sales, plus reduced overhead due to operating cost reduction initiatives in the prior year, partially offset by additional investments in marketing and advertising and product innovation.

Adjusted EBITDA excludes the recognition of proceeds from representation warranty insurance policies of $65.0 million during the year ended September 30, 2024, further discussed in Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, and impairment charges for reporting unit goodwill of $111.1 million and $64.7 million on indefinite lived intangible assets during the year ended September 30, 2023, further discussed in Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements .

Liquidity and Capital Resources

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(in millions)

2023 2022 2023 2022

Operating activities

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Cash flows from operating activities

Cash flows provided by operating activities for SBH continuing operations increased $239.5 million due to the a reduction in cash used for working capital, primarily with the reduced purchasing and overall inventory reduction compared to higher supply chain costs in the prior year, plus lower strategic transactions and restructuring initiative spending.

Cash flows used by operating activities for SB/RH continuing operations increased $27.9 million primarily due to the SBH items previously discussed with incremental cash outflow under the tax sharing agreement with SBH and utilization of NOLs held by the parent company.

Cash flows provided by operating activities for continuing operations increased $261.8 million due to the reduction in cash used for working capital, primarily from improved sales and collections, reduced purchasing costs and overall inventory reduction compared to higher supply chain costs in the prior year, lower strategic transactions and restructuring initiative spending, and improved payment terms on payables, partially offset by the reduction in cash provided by receivables due to the suspension of receivables factoring.

Cash flows from investing activities

Cash flows provided by investing activities for SBH continuing operations increased $3,527.8 million due to net cash proceeds from the HHI divestiture of $4,334.7 million, cash used in the prior year for the acquisition of the Tristar Business of $272.1 million and reduced capital expenditures.

Cash flows provided by investing activities for SB/RH continuing operations increased $3,527.8 million due to the SBH items previously discussed.

Cash flows provided by investing activities for continuing operations decreased $2,170.7 million primarily due to the net cash proceeds from the HHI divestiture in the prior year and the investment of net proceeds in short-term investments into the current year.

Cash flows from financing activities

Cash flows used by financing activities for SBH continuing operations increased $2,754.0 million due to the pay down of debt, debt repurchases and treasury share repurchases following the HHI divestiture.

During the year ended September 30, 2023, the Company paid down borrowings on its outstanding Revolver Facility and Term Loan, redeemed its 5.75% Senior Notes due 2025, and engaged in open market repurchases of a portion of outstanding Senior Notes, resulting in total cash used towards the repayment of debt of $1,646.8 million.

Refer to Note 12 - Debt in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

During the year ended September 30, 2023, the Company used $500.0 million for the repurchase of common stock under an accelerated share repurchase agreement, along with incremental open market share repurchases of $34.7 million.

See Note 17 - Shareholder's Equity in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

Cash flows used by financing activities for continuing operations decreased $685.1 million due to the pay down of debt, debt repurchases and treasury share repurchases in the current and prior year following the HHI divestiture, and the net issuance of the Exchangeable Notes in the current year.

During the year ended September 30, 2024, the Company paid down outstanding Senior Notes through a tender offer, plus engaged in open market repurchases of a portion of outstanding Senior Notes, resulting in total cash used towards the repayment of debt of $1,349.3 million.

Concurrent with the tender offer, we issued $350.0 million of Exchangeable Notes and paid premium on associated capped calls of $25.2 million.

Refer to Note 11 - Debt in the Notes to Consolidated Financial Statements for additional information.

During the year ended September 30, 2024, the Company used $482.7 million for the repurchase of common stock.

See Note 17 - Shareholders' Equity in the Notes to Consolidated Financial Statements for additional information.

Cash dividend payments decreased due to lower shares outstanding with a consistent quarterly dividend rate of $0.42 per share.

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

Cash dividend payments decreased due to lower shares outstanding with a consistent quarterly dividend rate of $0.42 per shares.

Cash flows from financing activities for SB/RH continuing operations for the year ended September 30, 2023 are highly dependent upon the financing cash flow activity of SBH.

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 September 30, 2023, the Company had borrowing availability of $586.9 million, net of outstanding letters of credit of $13.1 million, under our credit facility.

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

Subsequent to September 30, 2023, the Company entered into an amendment to the Credit Agreement, resulting in a reduction of the Revolver Facility capacity to $500.0 million.

Refer to Note 12 - Debt in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail.

Following the amendment to the Credit Agreement, the borrowing availability of the Revolver Facility would have been reduced to $486.9 million, net of outstanding letters of credit of $13.1 million.

As of September 30, 2024, the Company has total cash and cash equivalents of $368.9 million and borrowing availability under the credit facility of $490.8 million, net of outstanding letters of credit of $9.2 million, under our credit facility with a total liquidity of $859.7 million.

Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other related projects.

2 unchanged sentences

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 year ended September 30, 2023, the Company completed the HHI divestiture resulting in a significant net cash inflow of $4,334.7 million.

The Company used a portion of the proceeds to repay the outstanding balance on the Term Loan of $392.0 million and the Revolver Facility of $715.0 million, as well as to redeem its 5.75% Notes due 2025, of which $450.0 million in aggregate principal amount was outstanding.

Additionally, the Company initiated a process of repurchasing Senior Notes available for sale on the open market, at a discount, which are ultimately retired upon receipt resulting in the repurchase of $61.4 million in aggregate principal amount of Senior Notes and the recognition of a gain of $7.9 million, including realized discounts and write-off of related deferred issuance costs.

See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail.

Following the close of the HHI divestiture in June 2023, the Company received a substantial amount of proceeds which the Company used to paydown debt and repurchase treasury shares as well as invest in term deposits, funds operations and support working capital needs During the year ended September 30, 2024, the Company substantially refinanced and reduced its debt obligations through the completion of a tender offer on existing bonds, issuance of the Exchangeable Notes and the repurchase of debt in the open market.

See Note 11 - Debt in the Notes to the Consolidated Financial Statements 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 its outstanding Senior Notes, any of which will be dependent on various factors, including market conditions.

Any such repurchases may be effected 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 also used $500.0 million of cash on hand following the HHI divestitures to repurchase shares of common stock through an accelerated share repurchase agreement.

See Note 17 – Shareholders’ Equity in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail.

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

The Company also repurchased $34.7 million of additional shares through open market purchases during the year ended September 30, 2023.

The Company also continued to repurchase shares of common stock during the year ended September 30, 2024.

See Note 17 - Shareholders' Equity in the Notes to the Consolidated Financial Statements 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.

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

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

Additionally, if the Company does not use the proceeds from the HHI divestiture to repay debt or reinvest in the business within certain time periods as required 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 outstanding Senior Notes pursuant to the terms of the Company's outstanding indebtedness.

As of September 30, 2023, the Company has a net outstanding obligation to ASSA of $23.3 million, which is primarily for the estimated purchase price settlement, cash flow settlement for subsequent commingled operations and net TSA charges including amounts subject to repayment by the Company.

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

2 unchanged sentences

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

At September 30, 2023, 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 September 30, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Exchangeable Notes due June 1, 2029, 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.

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

4 unchanged sentences

The counterparties that hold our deposits consist of major financial institutions.

At September 30, 2023, we believe there is approximately $40-50 million of foreign cash available for repatriation.

The majority of our business is not considered seasonal with a year-round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.

4 unchanged sentences

Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements.

Following the closing of the HHI divestiture and receipt of related proceeds, the Company has temporarily suspended most of its receivable factoring activity and intends to terminate the remainder when contractually possible in Fiscal 2024.

See Note 7 - Receivables in the Notes to the Consolidated Financial Statements for additional detail.

The Company has temporarily suspended its receivable factoring activity.

Additionally, the Company facilitates a voluntary supply chain financing program to provide certain of its suppliers with the opportunity to sell receivables due from the Company (the Company’s trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution.

See Note 14 - Supplier Financing Programs in the Notes to the Consolidated Financial Statements for additional detail.

There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation.

The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Company's Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.

The Company’s responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.

Debt obligations

Our debt obligations, excluding finance leases, have varying maturity dates with no material outstanding principal payments due within the following 12 months.

Refer to Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.

In addition to the outstanding principal on our debt, we anticipate annual interest payments of $70.8 million in the aggregate and includes interest under our:

(i) 4.00% Notes of $18.0 million;

(ii) 5.00% Notes of $14.9 million;

(iii) 5.50% Notes of $15.9 million;

(iv) 3.875% Notes of $17.6 million;

(v) interest of approximately $3.4 million attributable to finance leases;

and (vi) interest cost of $1.0 million attributable to unused fee associated with the Revolver Facility.

Refer to Note 11 - Debt in the Notes to the Consolidated Financial Statements for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.

In addition to the outstanding principal on our debt, we anticipate annual interest payments of approximately $22.1 million including unused fees associated with the Revolver Facility with interest of approximately $4.3 million attributable to finance leases.

Interest on the notes is payable semi-annually in arrears and interest on borrowings under the Revolver Facility, if any, would be payable on various interest payment dates as provided in the Credit Agreement.

1 unchanged sentence

The Company enters into leases primarily pertaining to real estate for manufacturing facilities, distribution centers, office space, warehouses, and various equipment including automobiles, machinery, computers, and office equipment, amongst others.

Lease obligations with a term in excess of 12 months are recognized on the Company's Consolidated Statement of Financial Position.

See Note 13 - Leases of the Notes to the Consolidated Financial Statement included elsewhere in the Annual Report for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position, as well as additional disclosure on lease commitments that have not yet commenced and therefore not yet reflected as a obligation on the Consolidated Statements of Financial Position..

Lease obligations with a term in excess of 12 months are recognized on the Consolidated Statement of Financial Position.

See Note 12 - Leases of the Notes to the Consolidated Financial Statement for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position, as well as additional disclosure on lease commitments that have not yet commenced and therefore not yet reflected as an obligation on the Consolidated Statements of Financial Position.

Employee benefit plan obligations

The Company and its subsidiaries are sponsors to various defined benefit pension plans covering some of its employees that provide post-employment benefits of stated amounts for each year of service, including a number of other non-U.S.

pension arrangements, including various retirement and termination benefit plans, some of which are covered by local law or coordinated with government-sponsored plans.

The Company's recognizes an actuarial determined unfunded projected benefit obligation recognized as Other Long-Term Liabilities on the Company's Consolidated Statement of Financial Position, net fair value of dedicated plan assets.

See Note 15 - Employee Benefit Plans in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail included projected payments towards the future obligation for the following 5 years and thereafter.

The Company’s recognizes an actuarial determined unfunded projected benefit obligation, net fair value of dedicated plan assets.

See Note 15 - Employee Benefit Plans in the Notes to the Consolidated Financial Statements for further detail including the projected payments on the outstanding obligation for the following 5 years and thereafter.

The Company anticipates that benefit obligations will be predominantly paid through dedicated plan assets.

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Other commitments and obligations include an outstanding mandatory repatriation tax liability of $11.1 million that is payable over the next 2 years, with $5.2 million due and payable in the next 12 months.

See Note 16 - Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

Our Consolidated Statements of Financial Position also includes reserves for uncertain tax positions;

2 unchanged sentences

It is reasonably possible that during the next 12 months, some portion of our unrecognized tax benefits could be recognized.

See Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional discussion on uncertain tax positions.

See Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements for additional discussion.

The Company has recognized other payables associated with indemnifications following divestitures, including tax indemnifications, that we cannot reasonably predict the ultimate outcome of our obligation;

however, it is reasonably possible that during the next 12 months, some portion of our indemnification payable could be recognized.

As of September 30, 2023, there are $8.6 million of indemnification liabilities recognized as Other Current Liabilities and $19.3 million recognized as Other Long-Term Liabilities on the Consolidated Statement of Financial Position.

See Note 3 – Divestitures in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.

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.

See Note 3 – Divestitures in the Notes to the Consolidated Financial Statements for further discussion.

The Company has other obligations associated with various contingent matters includes environmental remediation obligations, product liabilities and warranties, and product recalls.

See Note 20 - Commitments and Contingencies in the N otes to the Consolidated Financial Statements for further discussion .

The Company is a defendant in various litigation matters generally arising out of the ordinary course of business.

Based on information currently available, the Company does not believe that any additional matters or proceedings presently pending will have a material adverse effect on its results of operations, financial condition, liquidity or cash flows.

Guarantor Statements

SBI has issued the 3.375% Exchangeable Notes under the 2029 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 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 11 - Debt for further detail.

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, SBH as a parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors.

Intercompany balances and transactions between SBI and the guarantors have been eliminated.

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Gross profit 662.3

Operating loss (322.5)

Net income from continuing operations 0.1

Net income 2,006.3

Net income attributable to controlling interest 2,006.3

Operating income 22.2

Net loss from continuing operations (23.6)

Net loss (6.1)

Net loss attributable to controlling interest (6.1)

Statement of Financial Position Data

16 unchanged sentences

The application of these accounting policies requires judgment and use of assumptions as to future events and outcomes that are uncertain and, as a result, actual results could differ from these estimates.

Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for all relevant accounting policies.

Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements for all relevant accounting policies.

Goodwill, Intangible Assets and Other Long-Lived Assets

1 unchanged sentence

Intangible and tangible assets with determinable useful lives are amortized or depreciated on a straight-line basis over estimated useful lives.

Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for more information about useful lives.

Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements for more information about useful lives.

On an annual basis, during the fourth quarter of the fiscal year, or more frequently if triggering events occur, the Company tests for impairment of goodwill by either performing a qualitative assessment or quantitative test for some or all reporting units.

Our reporting units are consistent with our operating segments.

See Note 21 - Segment Information in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion of operating and reporting segments.

See Note 21 - Segment Information in the Notes to the Consolidated Financial Statements for further discussion of operating and reporting segments.

The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

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The estimated fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between willing parties on an arms-length basis.

In estimating the fair value of the reporting unit, we use a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.

In estimating the fair value of the reporting unit, we use both an income approach and a market approach.

The income approach is a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.

The market approach is a guideline public company method that assesses value of our reporting unit based upon market multiples derived from financial results of selected comparable companies.

We test the aggregate estimated fair value of our reporting units by comparison to our total market capitalization, including both equity and debt capital.

If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded for the difference between the fair value of the reporting unit goodwill and its carrying value.

During the year ended September 30, 2023, the Company recognized a full impairment of the HPC reporting unit goodwill.

There were no impairments recognized on the Company's GPC and H&G reporting units.

See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion.

In addition to goodwill, the Company has indefinite-lived intangible assets that consist of acquired tradenames.

During the year ended September 30, 2024, the Company had no impairments of goodwill for any of its reporting units.

See Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements for further discussion.

The Company also has indefinite-lived intangible assets that consist of acquired tradenames.

On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.

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If the fair value is less than its carrying value, an impairment loss is recorded for the excess.

During the year ended September 30, 2023, we recognized impairments of the Rejuvenate®, PowerXL®, George Foreman® tradenames.

There were no further impairments on the remaining tradenames held as indefinite-lived intangible assets.

See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion.

With the recognition of impairments of goodwill and indefinite lived intangible assets during the year ended September 30, 2023, there is potential risk of impairment associated with the Rejuvenate® and PowerXL® tradenames, with a cumulative carrying cost of $84.0 million as of September 30, 2023.

There is no remaining goodwill with the HPC reporting unit following the impairment recognized.

During the year ended September 30, 2024, we recognized an impairment charge for the Rejuvenate® tradename and a non-core tradename in response to triggering events identified earlier in the fiscal year, plus an impairment charge for the OmegaSea® tradename as part of our annual impairment analysis in the fourth quarter.

See Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements for further discussion.

There is potential risk of impairment primarily associated with the Rejuvenate® and PowerXL® tradenames, with a cumulative carrying cost of $45.0 million as of September 30, 2024, attributable to recent impairment charges on the respective tradenames and recent operating performance results for the respective brands.

We do not anticipate that these assets will be subject to further impairment based upon our projections and forecasts used in evaluating the current market value but cannot guarantee that no future impairment will be realized.

The risk of future impairment for the Rejuvenate® and PowerXL® tradenames are based upon the results realized during the year ended September 30, 2023, and dependency upon the timing and realization of milestones, as well as the integration of the brands and synergies associated with the acquired businesses.

The risk of future impairment for the Rejuvenate® and PowerXL® tradenames are based upon the results realized during the year ended September 30, 2024, recent impairments on the respective tradenames and dependency upon the timing and realization of projected revenues and growth strategies.

The Company also reviews other definite-lived intangible assets, tangible fixed assets and operating lease assets for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.

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If impairment is determined to exist, any related impairment loss is calculated based on fair value.

For the year ended September 30, 2023, the Company did recognize impairments associated with certain tangible fixed assets and operating leases.

See Note 10 - Property, Plant and Equipment and Note 13 - Leases in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion.

For the year ended September 30, 2024, the Company recognized an impairment on a right of use operating lease asset associated with the HPC distribution facilities that were exited prior to end of its term.

See Note 12 - Leases in the Notes to the Consolidated Financial Statements for further discussion.

A considerable amount of judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and assets subject to impairment testing.

While the Company has not recognized an impairment for its goodwill, intangible assets or other long-lived assets, the assessment requires the consideration of a significant level of judgement and subjectivity, including the use of prospective financial information, which may be impacted by changes in the economic environment, future strategic business decisions, political, legal or regulatory conditions, competitive or market risk factors not readily identifiable or present, or other changes that may negatively impact prospective revenue generation or cash flow.

Such changes may not be determinable, but could adversely impact the fair value of the its reporting unit goodwill, intangible assets or other long-lived assets and increase the risk of impairment, particularly associated with those assets recently acquired through a business without generating excess value since the initial acquisition.

The assessment for the impairment of goodwill, intangible assets and other long-lived assets requires the consideration of a significant level of judgement and subjectivity, including the use of prospective financial information, which may be impacted by changes in the economic environment, future strategic business decisions, political, legal or regulatory conditions, competitive or market risk factors not readily identifiable or present, or other changes that may negatively impact prospective revenue generation or cash flow.

Such changes may not be determinable but could adversely impact the fair value of its reporting unit goodwill, intangible assets or other long-lived assets and increase the risk of impairment, particularly associated with those assets recently acquired through a business without generating excess value since the initial acquisition.

The Company believes its judgments and assumptions are reasonable, but different assumptions could change the estimated fair value, increasing the risk of impairment and potentially additional impairment charges could be required.

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What changed 10-K

Item 7. Management’s Discussion and Analysis