Spectrum Brands Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with the Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q ("the Quarterly Report") and our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed with the SEC on November 15, 2024 (the "2024 Annual Report"). The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contributed these differences include those discussed within "Forward Looking Statements" included elsewhere in this Quarterly Report, and in Item 1A. Risk Factors and "Forward-Looking Statements" included within our 2024 Annual Report. Unless the context indicates otherwise, the term the "Company," "we," "us," or "our" are used to refer to Spectrum Brands Holdings, Inc. and its subsidiaries collectively. Non-GAAP Measurements Our consolidated and segment 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 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. We use organic net sales as one measure to monitor and evaluate our regional and segment performance. Organic growth is calculated by comparing organic net sales to net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination. We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior period. The following is a reconciliation of reported net sales to organic net sales for the three and nine month period ended June 29, 2025 compared to net sales for the three and nine month period ended June 30, 2024: Three Month Periods Ended (in millions, except %) June 29, 2025 Net Sales Effect of Changes in Currency Organic Net Sales Net Sales June 30, 2024 Variance GPC $ 255.2 $ (5.3) $ 249.9 $ 282.2 $ (32.3) (11.4) % H&G 189.2 0.1 189.3 211.0 (21.7) (10.3) % HPC 255.2 (1.6) 253.6 286.2 (32.6) (11.4) % Total $ 699.6 $ (6.8) $ 692.8 $ 779.4 (86.6) (11.1) % Nine Month Periods Ended (in millions, except %) June 29, 2025 Net Sales Effect of Changes in Currency Organic Net Sales Net Sales June 30, 2024 Variance GPC $ 784.4 $ (3.7) $ 780.7 $ 849.0 $ (68.3) (8.0) % H&G 433.6 0.1 433.7 443.7 (10.0) (2.3) % HPC 857.5 12.0 869.5 897.5 (28.0) (3.1) % Total $ 2,075.5 $ 8.4 $ 2,083.9 $ 2,190.2 (106.3) (4.9) % 26 Table of Contents Adjusted EBITDA and Adjusted EBITDA Margin. 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. 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 also excludes certain non-cash adjustments including share based compensation (see Note 11 - Share Based Compensation in the Notes to the Condensed 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 5- Property, Plant and Equipment and Note 6 - Goodwill and Intangible Assets in the Notes to the Condensed Consolidated Financial Statements for further detail, as applicable); gain or loss from the early extinguishment of debt through the repurchase or early redemption of debt (See Note 7 - Debt in the Notes to the Condensed Consolidated Financial Statements for further detail, as applicable); and purchase accounting adjustments recognized in income subsequent to 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, 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 From Continuing Operations to Adjusted EBITDA and Adjusted EBITDA margin for the three and nine month periods ended June 29, 2025 and June 30, 2024. Three Month Periods Ended Nine Month Periods Ended (in millions, except %) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net income from continuing operations $ 20.5 $ 19.1 $ 46.9 $ 86.4 Income tax expense 1.5 22.4 22.9 60.3 Interest expense 8.4 15.7 22.1 51.8 Depreciation 14.6 14.1 42.6 42.9 Amortization 10.5 11.1 31.5 33.4 Share based compensation 4.8 4.5 14.7 12.9 Non-cash impairment charges 7.8 5.1 23.5 48.6 Non-cash purchase accounting adjustments — 0.2 — 1.1 Loss (gain) from early extinguishment of debt — 2.2 — (2.6) Exit and disposal costs 4.2 0.1 8.2 1.0 HHI separation costs 1 0.3 0.9 1.4 3.0 HPC separation initiatives 1 (0.1) 5.4 0.9 8.5 Global ERP transformation 1 2.3 4.3 7.1 11.2 HPC product recall 2 — 0.6 — 6.6 Representation and warranty insurance proceeds 3 — — — (65.0) Litigation costs 4 1.2 0.8 2.8 2.2 Other 5 0.6 (0.2) 1.1 0.7 Adjusted EBITDA $ 76.6 $ 106.3 $ 225.7 $ 303.0 Net sales $ 699.6 $ 779.4 $ 2,075.5 $ 2,190.2 Net income from continuing operations margin 2.9 % 2.5 % 2.3 % 3.9 % Adjusted EBITDA margin 10.9 % 13.6 % 10.9 % 13.8 % ________________________________________ 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 14 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for further detail. 3 Gain from the receipt of insurance proceeds on representation and warranty policies during the prior year associated with the Tristar Business acquisition. See Note 14 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for further detail. 4 Litigation costs associated with the Tristar Business acquisition. See Note 14 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for further detail. 5 Other is attributable to other project costs associated with distribution center transitions and key executive severance and one-time compensatory costs. 27 Table of Contents Overview For additional discussion and overview of the business, please refer to Item 1. Business and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report. Recent Developments U.S. Tariffs and Global Macro-Economic Environment The changes to U.S. trade policy with the introduction of incremental U.S. tariffs on imported goods, especially on Chinese imports, are expected to have a significant impact to our operations, increasing costs for sourced products, materials and components, and thus raising cost of goods sold and pressuring profit margins. To mitigate this, the Company has adjusted prices to pass on some costs to customers and is actively managing its supply chain and engaging suppliers to support cost sharing or expand supply chain diversification, which can further impact our ability to supply customers timely during periods of such transitions. With the incremental tariffs on Chinese imports announced in early April 2025, we temporarily paused virtually all finished goods imports out of China. Following further amendments to the interim tariff rates, we subsequently reinstated our imports of finished goods during the three month period ended June 29, 2025 without substantial risk to margin realization, but we have recognized some impact on near-term fulfillment and distribution as part of our operating results, which are considered short-term and non-recurring. The changing tariff policies impact all segments to varying degrees, most significantly with the HPC segment as most all products supporting the U.S. business are imported from southeast Asia, with the majority coming from China. The HPC business has been actively pursuing sourcing alternatives and moving production to diversify its supply chain and more effectively manage risk. Over 60% of net sales in the HPC segment are driven through international markets and are not directly impacted by U.S. tariffs. With the temporary pause of Chinese imports, the U.S. business in the HPC segment was limited to its current and in-transit inventory in the near term, impacting operating results for the three month period ended June 29, 2025. As we have reinstated our supply chain to import product, the HPC business expects improvement in its fulfillment and distribution through the end of the fiscal year. The GPC business has certain aquatic equipment and chews & treats products that are sourced out of China, but has a higher degree of diversity within its product sourcing with major suppliers outside of China, which has allowed it to move production more swiftly to alternative supply. GPC finished goods imports from China were temporarily paused, but were reinstated within the period, and the impact from tariffs on sourced products have been predominantly mitigated through pricing adjustments. GPC also manufactures aquatics nutrition products at its facility in EMEA and imports such products into the U.S., which are also subject to the enacted tariffs. The Company has predominantly mitigated the impact primarily through pricing adjustments and cost management. The H&G segment is predominantly manufactured and sold within the U.S. but will also be impacted by tariffs, to a lesser degree, with certain affected material costs and a small portfolio of products, such as baits, traps and mops, that are internationally sourced and are being evaluated for alternative sourcing strategies. Due to the limited impact on the H&G segment and seasonal supply for its products, the impact from tariffs will not substantially impact near term operating results, with anticipated impacts mitigated through pricing adjustments and vendor cost management. We have intensified our focus on operational efficiencies by optimizing production processes, reducing waste, and leveraging technology to enhance productivity, aiming to offset cost increases and protect margins. With the most recent implemented tariff changes, there is an expected impact on operating results and we are closely monitoring impacts to our projections and forecasts. We have managed cash flow and secured our balance sheet to support the ongoing business through the evolving changes in U.S. trade policy and potential impacts to the global-macro economic environment. We are focused on supply chain diversification, operational efficiency, and strategic investments for sustaining growth and profitability amid trade uncertainties. 28 Table of Contents Strategic Transactions, Restructuring and Optimization Initiatives We periodically evaluate and enter 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 condensed consolidated financial statements. These changes and updates are inherently difficult and 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 potentially 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 three and nine month periods ended June 29, 2025 and June 30, 2024: Three month periods ended Nine Month Periods Ended (in millions) June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 HHI separation costs 1 $ 0.3 $ 0.9 $ 1.4 $ 3.0 HPC separation initiatives 2 (0.1) 5.4 0.9 8.5 Global ERP transformation 3 2.3 4.3 7.1 11.2 Other project costs 4 0.1 0.2 0.6 0.5 Total $ 2.6 $ 10.8 $ 10.0 $ 23.2 Reported as: Selling, general & administrative $ 2.6 $ 10.8 $ 10.0 $ 23.2 ________________________________________ 1 Costs attributable to the HHI divestiture consisting of subsequent costs to facilitate separation and transition of systems and processes subject to transition services agreements (“TSAs”). Costs were incurred through the transition period of up to 24 months following the close of the transaction as the Company exited TSAs in June 2025. 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 calendar year 2025. 4 Other project costs are attributable to 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 result 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 company and its segments. See Note 2 - Exit and Disposal Activities in the Notes to the Condensed Consolidated Financial Statements for further discussion. Refinancing Activity Financing activity during and between comparable periods may have a significant impact on the comparability of financial results on the condensed consolidated financial statements. • On 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, 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 three and nine month periods ended June 30, 2024. • During the year ended September 30, 2024, 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 in the nine month period ended June 30, 2024. 29 Table of Contents Consolidated Results of Operations The following is summarized consolidated results of operations for the three and nine month periods ended June 29, 2025 and June 30, 2024. (in millions, except %) Three Month Periods Ended Variance Nine Month Periods Ended Variance June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales $ 699.6 $ 779.4 $ (79.8) (10.2) % $ 2,075.5 $ 2,190.2 $ (114.7) (5.2) % Gross profit 264.1 302.8 (38.7) (12.8) % 775.3 821.2 (45.9) (5.6) % Selling, general & administrative 225.0 250.0 (25.0) (10.0) % 656.3 689.0 (32.7) (4.7) % Impairment of intangible assets — — — n/m 15.7 43.0 (27.3) (63.5) % Impairment of property, plant and equipment and operating leases 7.8 5.1 2.7 52.9 % 7.8 5.6 2.2 39.3 % Representation and warranty insurance proceeds — — — n/m — (65.0) 65.0 n/m Interest expense 8.4 15.7 (7.3) (46.5) % 22.1 51.8 (29.7) (57.3) % Interest income (0.6) (13.4) 12.8 n/m (3.6) (54.3) 50.7 n/m Loss (gain) from early extinguishment of debt — 2.2 (2.2) n/m — (2.6) 2.6 n/m Other non-operating expense, net 1.5 1.7 (0.2) (11.8) % 7.2 7.0 (0.2) 2.9 % Income tax expense 1.5 22.4 (20.9) (93.3) % 22.9 60.3 (37.4) (62.0) % Net income from continuing operations 20.5 19.1 1.4 7.3 % 46.9 86.4 (39.5) (45.7) % (Loss) income from discontinued operations, net of tax (0.8) (13.1) 12.3 n/m (2.2) 9.6 (11.8) n/m Net income 19.7 6.0 13.7 228.3 % 44.7 96.0 (51.3) (53.4) % n/m = not meaningful 30 Table of Contents Net Sales. The following is a summary of net sales by segment for the three and nine month periods ended June 29, 2025 and June 30, 2024, and the principal components of changes in net sales between the respective periods. (in millions, except %) Three Month Periods Ended Variance Nine Month Periods Ended Variance June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 GPC $ 255.2 $ 282.2 $ (27.0) (9.6) % $ 784.4 $ 849.0 $ (64.6) (7.6) % H&G 189.2 211.0 (21.8) (10.3) % 433.6 443.7 (10.1) (2.3) % HPC 255.2 286.2 (31.0) (10.8) % 857.5 897.5 (40.0) (4.5) % Net Sales $ 699.6 $ 779.4 (79.8) (10.2) % $ 2,075.5 $ 2,190.2 (114.7) (5.2) % Three Month Period Ended (in millions, except %) GPC H&G HPC Total Amount Percent Amount Percent Amount Percent Amount Percent Volume $ (32.0) (11.3) % $ (23.2) (11.0) % $ (36.1) (12.6) % $ (91.3) (11.7) % Price (0.3) (0.1) % 1.5 0.7 % 3.5 1.2 % 4.7 0.6 % Foreign Currency 5.3 1.9 % (0.1) — % 1.6 0.6 % 6.8 0.9 % Total $ (27.0) (9.6) % $ (21.8) (10.3) % $ (31.0) (10.8) % $ (79.8) (10.2) % Organic $ (32.3) (11.4) % $ (21.7) (10.3) % $ (32.6) (11.4) % $ (86.6) (11.1) % Nine Month Period Ended (in millions, except %) GPC H&G HPC Total Amount Percent Amount Percent Amount Percent Amount Percent Volume $ (64.3) (7.6) % $ (15.7) (3.5) % $ (31.7) (3.5) % $ (111.7) (5.1) % Price (4.0) (0.5) % 5.7 1.3 % 3.7 0.4 % 5.4 0.2 % Foreign Currency 3.7 0.4 % (0.1) — % (12.0) (1.3) % (8.4) (0.4) % Total $ (64.6) (7.6) % $ (10.1) (2.3) % $ (40.0) (4.5) % $ (114.7) (5.2) % Organic $ (68.3) (8.0) % $ (10.0) (2.3) % $ (28.0) (3.1) % $ (106.3) (4.9) % Refer to the Segment Financial Data section below for further discussion on net sales results. Gross Profit. The following is a summary of the gross profit and gross profit margin for the three and nine month periods ended June 29, 2025 and June 30, 2024, respectively, and the principal factors contributing to the change between the respective periods. Three Month Periods Ended Nine Month Periods Ended (in millions, except %) June 29, 2025 June 30, 2024 Variance June 29, 2025 June 30, 2024 Variance Gross profit $ 264.1 $ 302.8 $ (38.7) (12.8) % $ 775.3 $ 821.2 $ (45.9) (5.6) % Gross profit margin 37.8 % 38.9 % (110) bps 37.4 % 37.5 % (10) bps Three Month Period Ended Nine Month Period Ended (in millions, except margin) Gross Profit Margin Gross Profit Margin Price $ 5.8 50 bps $ 5.3 10 bps Mix (9.9) (130) bps (17.2) (70) bps Volume (31.3) 60 bps (40.7) 10 bps Cost changes (7.3) (100) bps (3.7) (20) bps Product recalls 1.2 10 bps 6.0 30 bps Foreign exchange rates 2.8 — bps 4.4 30 bps Total $ (38.7) (110) bps $ (45.9) (10) bps Gross profit for the three month period decreased due to lower volumes, with a margin decrease from an unfavorable mix and increased costs from inflation and tariffs, partially offset by pricing adjustments, cost improvements, operational efficiencies and favorable foreign currency. Gross profit for the nine month period decreased due to lower sales volumes, with a margin decrease from an unfavorable mix partially offset by positive pricing adjustments, favorable foreign currency and product recall activity in the prior period. 31 Table of Contents Selling, General & Administrative. The following summarizes the selling, general & administrative costs for the three and nine month periods ended June 29, 2025 and June 30, 2024, respectively, including amounts as a percentage of net sales for each respective period. Three Month Periods Ended (in millions, except %) June 29, 2025 % of Net Sales June 30, 2024 % of Net Sales Variance Sales, marketing & advertising $ 85.4 12.2 % $ 94.2 12.1 % $ (8.8) (9.3) % Distribution 60.4 8.6 % 71.8 9.2 % (11.4) (15.9) % General & administrative 67.0 9.6 % 66.2 8.5 % 0.8 1.2 % Research & development 5.5 0.8 % 6.8 0.9 % (1.3) (19.1) % Strategic transaction, restructuring and optimization 6.7 1.0 % 11.0 1.4 % (4.3) (39.1) % Total selling, general & administrative $ 225.0 32.2 % $ 250.0 32.1 % (25.0) (10.0) % Nine Month Periods Ended (in millions, except %) June 29, 2025 % of Net Sales June 30, 2024 % of Net Sales Variance Sales, marketing & advertising $ 244.0 11.8 % $ 242.1 11.1 % $ 1.9 0.8 % Distribution 182.2 8.8 % 199.4 9.1 % (17.2) (8.6) % General & administrative 194.8 9.4 % 204.7 9.3 % (9.9) (4.8) % Research & development 17.1 0.8 % 18.6 0.8 % (1.5) (8.1) % Strategic transaction, restructuring and optimization 18.2 0.9 % 24.2 1.1 % (6.0) (24.8) % Total selling, general & administrative $ 656.3 31.6 % $ 689.0 31.5 % (32.7) (4.7) % Selling, general & administrative expenses decreased for the three and nine month periods due to cost savings initiatives offset by higher costs on marketing and advertising initiatives. Sales, marketing and advertising costs decreased for the three month period due to the reduced or deferred spending towards marketing and advertising initiatives, while costs increased for the nine month period due to the Company's investment towards brand focused marketing and advertising initiatives in the first half of the fiscal year. Distribution costs decreased for the three and nine month periods due to lower volumes plus cost reduction and optimization in our distribution operations and supply chain. General & administrative costs decreased for the three and nine month periods due to lower overhead costs from cost improvement initiatives, partially offset by the expiration of transition service agreements associated with the HHI divestiture in June 2025. Research & development costs were consistent between periods for the three and nine month periods. Strategic transaction, restructuring and optimization costs, inclusive of exit & disposal costs, decreased for the three and nine month periods due to lower costs towards HPC separation initiatives and the expiration of transition service agreements associated with the HHI divestiture in June 2025, offset by higher exit and disposal costs within the three month period. See Note 2 - Exit and Disposal Activities in the Notes to the Condensed Consolidated Financial Statements for further discussion. Impairment of Intangible Assets . During the nine month period ended June 29, 2025, the Company recognized an impairment charge on its PowerXL® tradename in response to a previously identified triggering event. See Note 6 - Goodwill and Intangible Assets in the Notes to the Condensed Consolidated Financial Statements for further discussion. There was no impairment of intangible assets recognized during the three month period ended June 29, 2025. During the three and nine month periods ended June 30, 2024, the Company recognized an impairment on its Rejuvenate® tradename and a non-core strategic tradename in response to a triggering event. Impairment of Property, Plant and Equipment and Leases. During the three and nine month periods ended June 29, 2025, the Company recognized an impairment charge on its Middleton, WI office lease. See Note 5 - Property, Plant and Equipment in the Notes to the Condensed Consolidated Financial Statements for further discussion . During the three and nine month periods ended June 30, 2024, the Company recognized an impairment charge for the exit of a HPC distribution center in the prior year. Representation and Warranty Insurance Proceeds . During the nine month period ended June 30, 2024, the Company recognized a non-recurring gain of $65.0 million from its representation and warranty insurance policy associated with the Tristar Business acquisition. See Note 14 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for further discussion. There is no comparable activity during the three and nine month periods ended June 29, 2025. Interest Expense. Interest expense decreased during the three and nine month periods due to reduced debt borrowings following previously discussed refinancing activity in the prior year. Interest Income. Interest income decreased during the three and nine month periods due to lower balances in term deposits following the use of funds towards previously discussed refinancing activity in the prior year. Loss (Gain) From Early Extinguishment of Debt. During the three and nine month period ended June 30, 2024, the Company recognized a net loss (gain) from extinguishment of debt associated with previously discussed refinancing activity. There was no comparable activity during the three and nine month periods ended June 29, 2025. Other Non-Operating Expense, Net. Other non-operating expense is primarily due to changes in foreign currency compared to the prior year. Income Taxes. Our estimated annual effective tax rate was impacted by income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income, and certain nondeductible expenses. See Note 13 - Income Tax in the Notes to the Condensed Consolidated Financial Statements for further discussion on the effective tax rate for the three and nine month periods. Income From Discontinued Operations. Income from discontinued operations primarily reflect changes to indemnifications associated with divested businesses. Loss from discontinued operations during the nine month period ended June 30, 2024 were attributable to a tax related indemnification settlement and reduction in previously accrued transaction related costs associated previous divestitures. During the three and nine month periods ended June 29, 2025 there were no comparable substantive updates or changes. Noncontrolling Interest. The net income attributable to noncontrolling interest reflects the share of the net income of our subsidiaries, which are not wholly-owned, attributable to the accounting interest. Such amount varies in relation to such a subsidiary’s net income or loss for the period and the percentage interest not owned by the Company. 32 Table of Contents Segment Financial Data Global Pet Care (in millions, except %) Three Month Periods Ended Variance Nine Month Periods Ended Variance June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales $ 255.2 $ 282.2 $ (27.0) (9.6) % $ 784.4 $ 849.0 $ (64.6) (7.6) % Adjusted EBITDA 44.0 56.7 (12.7) (22.4) % 145.5 171.8 (26.3) (15.3) % Adjusted EBITDA margin 17.2 % 20.1 % (290) bps 18.5 % 20.2 % (170) bps Net sales for the three month period decreased with an organic net sales decrease of $32.3 million, or 11.4%, excluding a favorable foreign currency impact of $5.3 million, primarily due to lower North America ("NA") volumes from consumer demand softness in both companion animal and aquatics product categories, plus reduced distribution attributable to stop shipments during tariff driven pricing negotiations and supply constraints from pausing China sourced purchases, offset by distribution wins in the pet specialty channel. Volumes within Europe, Middle East and Africa ("EMEA") were negatively impacted by lower volume by lower consumer demand and distribution timing offset by continued expansion of Good Boy® volumes in continental Europe. Net sales for the nine month period decreased with an organic net sales decrease of $68.3 million, or 8.0%, excluding a favorable foreign currency impact of $3.7 million, primarily due to lower NA sales due to category softness, slower replenishment within the e-commerce channel, and reduced distribution attributable to tariff driven pricing negotiations and supply constraints, offset by an increase in EMEA volumes with the expansion of the Good Boy® brand and new product introduction in dog and cat food. Adjusted EBITDA for the three month period decreased with a margin decrease due to lower volume with inflationary costs and tariffs and an unfavorable mix, offset by pricing adjustments and productivity improvements reduced brand focused investments and favorable foreign currency. Adjusted EBITDA for the nine month period decreased with a margin decrease due to lower sales volume with inflationary costs and tariffs and an unfavorable mix, offset by pricing adjustments, operational productivity, cost improvements and favorable foreign currency. Home & Garden (in millions, except %) Three Month Periods Ended Variance Nine Month Periods Ended Variance June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales $ 189.2 $ 211.0 $ (21.8) (10.3) % $ 433.6 $ 443.7 $ (10.1) (2.3) % Adjusted EBITDA 38.6 43.3 (4.7) (10.9) % 74.6 71.8 2.8 3.9 % Adjusted EBITDA margin 20.4 % 20.5 % (10) bps 17.2 % 16.2 % 100 bps Net sales and organic net sales for the three month period decreased due to a delayed season driving slower retail sales, plus earlier seasonal retail inventory build-up reducing volumes from replenishment orders. Net sales and organic net sales for the nine month period decreased due to a delayed season driving slower retail sales and reduced volumes from replenishment orders. Adjusted EBITDA for the three month period decreased with a margin decrease due to lower volumes, inflation, incremental brand-focused investments, and an unfavorable mix offset by productivity improvements, favorable cost variances and lower trade spend. Adjusted EBITDA for the nine month period increased with a margin increase due to improved profitability on lower sales with favorable trade variances, cost improvements offset by higher investment in brand-building advertising and some inflationary cost pressures. Home and Personal Care (in millions, except %) Three Month Periods Ended Variance Nine Month Periods Ended Variance June 29, 2025 June 30, 2024 June 29, 2025 June 30, 2024 Net sales $ 255.2 $ 286.2 $ (31.0) (10.8) % $ 857.5 $ 897.5 $ (40.0) (4.5) % Adjusted EBITDA 7.0 11.8 (4.8) (40.7) % 41.0 56.3 (15.3) (27.2) % Adjusted EBITDA margin 2.7 % 4.1 % (140) bps 4.8 % 6.3 % (150) bps Net sales for the three month period decreased with an organic net sales decrease of $32.6 million, or 11.4%, excluding a favorable foreign currency impact of $1.6 million with lower EMEA volumes in both home appliance and personal care product categories with slower distribution through traditional retail, offset by increased e-commerce distribution with some reduced consumer demand and uncertainty. NA volumes also decreased in both categories with lower distribution attributable to stop shipments during tariff driven pricing negotiations and supply constraints from pausing China sourced purchases plus lower category demand, partially offset by pricing adjustments. LATAM volumes increased with category growth and new product launches. Net sales for the nine month period decreased with an organic net sales decrease of $28.0 million, or 3.1%, excluding an unfavorable foreign currency impact of $12.0 million, primarily due to lower NA volumes for both product categories with reduced distribution attributable to tariff driven pricing negotiations and supply constraints plus lower category demand, increase in EMEA sales with positive volume growth in e-commerce and favorable foreign currency offset by lower traditional retail distribution and lower consumer confidence, and growth in LATAM volume through new product listings and distribution wins offset by unfavorable foreign currency. Adjusted EBITDA for the three month period decreased with a margin decrease due to reduced volumes with inflation and tariffs and an unfavorable mix, partially offset by pricing adjustments, lower brand-focused investment in light of tariff supply issues and pricing negotiations, lower distribution costs and favorable foreign currency. Adjusted EBITDA for the nine month period decreased due to reduced sales volumes with inflationary costs and tariffs and an unfavorable mix, partially offset by pricing adjustments, cost savings initiatives, and favorable foreign currency. 33 Table of Contents Liquidity and Capital Resources The following is a summary of cash flow from continuing operations for the nine month periods ended June 29, 2025 and June 30, 2024, respectively. (in millions) June 29, 2025 June 30, 2024 Operating activities $ 33.1 $ 178.4 Investing activities (25.2) 885.0 Financing activities (245.0) (1,563.9) Cash Flows from Operating Activities Cash flows provided by operating activities from continuing operations decreased $145.3 million, due to lower sales offset with improved margins and lowered operating and interest costs, with lower working capital realization primarily due to temporary changes in inventory purchasing and related tariff volatility. Cash Flows from Investing Activities Cash flows used for investing activities increased $910.2 million from cash provided by investing activities in the prior year due to the decreased short term investment activity from the reduction of term deposits following previously discussed funding of refinancing activity in the prior year. Cash Flows from Financing Activities Cash flows used for financing activities decreased $1,318.9 million due to refinancing activity in the prior year and lower share repurchases activity. During the nine month periods ended June 29, 2025 and June 30, 2024, the Company made cash dividend payments of $36.9 million, or $0.47 per share, and $38.8 million, or $0.42 per share, respectively, which has decreased due to the lower outstanding shares following treasury share repurchase activity. Liquidity Outlook Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital. Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of June 29, 2025, the Company had a total cash and cash equivalents of $122.0 million and borrowing availability of $388.5 million under our credit facility with a total liquidity of $510.5 million. We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings. As of June 29, 2025, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Notes, due June 1, 2029 and the 3.875% Notes, due March 15, 2031. Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other strategic projects. Long-term financing needs depend largely on potential growth opportunities including acquisition activity, repayment or refinancing of our long-term obligations, and share repurchase activity, amongst others. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group. The Company has continued to repurchase shares of common stock as further detailed in Note 10 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements . 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. A portion of our cash balance is located outside the U.S. given our international operations. We manage our worldwide cash requirements centrally by reviewing available cash balances across our worldwide group and the cost effectiveness with which this cash can be accessed. We generally repatriate cash from non-U.S. subsidiaries, provided the cost of the repatriation is not considered material. The counterparties that hold our deposits consist of major financial institutions. The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality requires the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season. From time to time the Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. The Company has currently discontinued its receivable factoring activity but may factor receivables in the future which will be dependent on various factors. 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 payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution. There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation. The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as Accounts Payable on the Company's Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow. We do not believe the level of supplier based financing to be material. 34 Table of Contents Other than the changes to debt obligations previously noted, there have been no material changes to our debt obligations, lease obligations, employee benefit obligations, or other contractual obligations or commercial commitments previously disclosed. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Critical Accounting Policies and Estimates There have been no material changes to our critical accounting estimates as discussed in our 2024 Annual Report. New Accounting Pronouncements See Note 1 – Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted. 35 Table of Contents Guarantor Statements Spectrum Brands, Inc. (“SBI”) has issued the 3.375% Notes, due June 1, 2029, under the 2029 Indenture and the 3.875% Exchangeable Notes, due March 15, 2031, 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 within the Notes to the Consolidated Financial Statements within the 2024 Annual Report. 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, Spectrum Brands Holdings, Inc. as the parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors. Intercompany balances and transactions between SBI and the guarantors have been eliminated. Investments in non-guarantor subsidiaries and the earnings or losses from those non-guarantor subsidiaries have been excluded. Nine Month Period Ended Year Ended (in millions) June 29, 2025 September 30, 2024 Statements of Operations Data Third party net sales $ 1,237.5 $ 1,829.4 Intercompany net sales to non-guarantor subsidiaries 37.8 22.8 Net sales 1,275.3 1,852.2 Gross profit 464.4 662.3 Operating (loss) income (1.8) 22.2 Net loss from continuing operations (125.7) (23.6) Net loss (127.9) (6.1) Net loss attributable to controlling interest (127.9) (6.1) Statements of Financial Position Data Current Assets $ 922.2 $ 1,228.0 Noncurrent Assets 4,773.0 3,989.6 Current Liabilities 719.6 901.6 Noncurrent Liabilities 1,012.6 930.9 The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of June 29, 2025 and September 30, 2024 are as follows: (in millions) June 29, 2025 September 30, 2024 Statements of Financial Position Data Current receivables from non-guarantor subsidiaries $ 126.0 $ 124.3 Current note receivables from non-guarantor subsidiaries 22.8 227.1 Long-term note receivables from non-guarantor subsidiaries 19.7 30.7 Current payables to non-guarantor subsidiaries 72.2 58.6 Current debt with non-guarantor subsidiaries 326.6 435.3 Long-term debt with non-guarantor subsidiaries 20.9 20.2 36 Table of Contents