FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 1, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to______ Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Commission File No. Name of Registrant, State of Incorporation, Address of Principal Offices, and Telephone No. IRS Employer Identific ...

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines forward-looking statements, subject to risks and uncertainties that may cause actual results to differ materially - Forward-looking statements are identified by words such as 'future,' 'anticipate,' 'expect,' 'project,' and 'will,' and are based on current expectations and projections[11](index=11&type=chunk) - Actual results may differ materially due to numerous risks and uncertainties, many beyond the company's control, including the COVID-19 pandemic, economic conditions, reliance on third parties, indebtedness, and international business risks[12](index=12&type=chunk)[13](index=13&type=chunk)[16](index=16&type=chunk) - Key factors that could cause material differences include the COVID-19 pandemic's impact, global economic uncertainties, the Russia-Ukraine conflict, increased reliance on third-party partners, and the impact of indebtedness[13](index=13&type=chunk) - Other significant risks include fluctuations in transportation costs, commodity prices, interest rates, foreign currency exchange rates, dependence on major retail customers, competitive pressures, and the ability to introduce new products[13](index=13&type=chunk) - The company's ability to consummate the HHI divestiture and integrate the Tristar Business acquisition are also noted as important factors[13](index=13&type=chunk)[16](index=16&type=chunk) [PART I](index=6&type=section&id=PART%20I) [ITEM 1. BUSINESS](index=6&type=section&id=ITEM%201.%20BUSINESS) Spectrum Brands operates as a diversified global consumer products company across HPC, GPC, and H&G segments - Spectrum Brands Holdings, Inc. (SBH) and SB/RH Holdings, LLC (SB/RH) are a diversified global branded consumer products and home essentials company[17](index=17&type=chunk)[19](index=19&type=chunk) - The business is managed in three vertically integrated, product-focused segments: Home and Personal Care (HPC), Global Pet Care (GPC), and Home and Garden (H&G)[19](index=19&type=chunk) - Products are distributed globally across North America (NA), Europe, Middle East & Africa (EMEA), Latin America (LATAM), and Asia-Pacific (APAC) regions through various channels[19](index=19&type=chunk) - Operating performance is influenced by general economic conditions, foreign exchange fluctuations, consumer trends, raw material pricing, energy costs, and competitive activities[20](index=20&type=chunk) [General Overview](index=6&type=section&id=General%20Overview) Spectrum Brands operates as a diversified global consumer products company across HPC, GPC, and H&G segments - The company's business is structured into three product-focused segments: Home and Personal Care (HPC), Global Pet Care (GPC), and Home and Garden (H&G)[19](index=19&type=chunk) - Segments are supported by center-led shared services including finance, IT, legal, HR, supply chain, and commercial operations[19](index=19&type=chunk) - Key factors influencing operating performance include general economic conditions, foreign exchange rates, consumer trends, product mix, raw material prices, and competitive positioning[20](index=20&type=chunk) [Home and Personal Care (HPC)](index=7&type=section&id=Home%20and%20Personal%20Care%20(HPC)) HPC offers small kitchen appliances and personal care products, with seasonal sales concentrated among key retailers - HPC products include small kitchen appliances (e.g., toaster ovens, coffeemakers) and personal care items (e.g., hair dryers, electric shavers)[23](index=23&type=chunk) - Key brands include Black & Decker®, Russell Hobbs®, George Foreman®, PowerXL®, Emeril Legasse®, Copper Chef®, and Remington®[23](index=23&type=chunk) - The company licenses the Black & Decker® brand in North America, Latin America, and the Caribbean until June 30, 2025, with minimum annual royalty payments[24](index=24&type=chunk) - The Tristar Business acquisition (PowerXL®, Emeril Legasse®, Copper Chef® brands) in February 2022 expanded HPC's product portfolio and direct-to-consumer capabilities[26](index=26&type=chunk)[27](index=27&type=chunk) - Sales are highly concentrated, with Walmart and Amazon representing approximately **35% of segment sales** for the year ended September 30, 2022[27](index=27&type=chunk) - Sales of personal care products increase during the December holiday season (fiscal Q1), while small appliance sales increase from July to December (fiscal Q4 and Q1)[29](index=29&type=chunk) HPC Sales by Quarter (as % of annual net sales) | Quarter | 2022 | 2021 | | :--- | :--- | :--- | | First Quarter | 32 % | 30 % | | Second Quarter | 24 % | 24 % | | Third Quarter | 22 % | 22 % | | Fourth Quarter | 22 % | 24 % | [Global Pet Care (GPC)](index=8&type=section&id=Global%20Pet%20Care%20(GPC)) GPC offers companion animal and aquatics products, with consistent sales through major retailers - GPC products include companion animal care (rawhide chews, clean-up, grooming, food) and aquatics (aquarium kits, filtration, fish food)[33](index=33&type=chunk) - Notable brands are 8IN1®, Dingo®, Nature's Miracle®, FURminator®, Tetra®, Marineland®, and GloFish®[33](index=33&type=chunk) - Sales are primarily to large retailers, pet superstores, and online retailers, with Walmart and Amazon accounting for approximately **34% of segment sales** in fiscal 2022[34](index=34&type=chunk) - Sales for GPC remain fairly consistent throughout the year with little seasonal variation[36](index=36&type=chunk) GPC Sales by Quarter (as % of annual net sales) | Quarter | 2022 | 2021 | | :--- | :--- | :--- | | First Quarter | 26 % | 24 % | | Second Quarter | 25 % | 26 % | | Third Quarter | 25 % | 23 % | | Fourth Quarter | 24 % | 27 % | - Manufacturing occurs at third-party suppliers in APAC and Mexico for rawhide and hard goods, and in the U.S. and Germany for aquatics and other companion animal products[37](index=37&type=chunk)[38](index=38&type=chunk) [Home and Garden (H&G)](index=9&type=section&id=Home%20and%20Garden%20(H%26G)) H&G provides pest control and cleaning products, with highly seasonal sales concentrated among major retailers - H&G products include household pest control, outdoor insect/weed control, animal repellents, and household surface cleaning/restoration products[41](index=41&type=chunk) - Key brands include Hot Shot®, Black Flag®, Spectracide®, Garden Safe®, Cutter®, Repel®, and Rejuvenate®[41](index=41&type=chunk) - The acquisition of For Life Products, LLC (Rejuvenate® brand) in May 2021 expanded the H&G segment's product categories[41](index=41&type=chunk) - Sales are primarily in the U.S. and highly concentrated, with Lowe's, Home Depot, and Walmart representing approximately **66% of segment sales** in fiscal 2022[41](index=41&type=chunk) - Sales typically peak during the first six months of the calendar year (fiscal Q2 and Q3) and are lowest in the last three months (fiscal Q1)[43](index=43&type=chunk) H&G Sales by Quarter (as % of annual net sales) | Quarter | 2022 | 2021 | | :--- | :--- | :--- | | First Quarter | 12 % | 14 % | | Second Quarter | 33 % | 29 % | | Third Quarter | 35 % | 35 % | | Fourth Quarter | 20 % | 22 % | - The majority of H&G products are produced in St. Louis, Missouri, with some products from third-party manufacturers[44](index=44&type=chunk) [Discontinued Operations](index=10&type=section&id=Discontinued%20Operations) The HHI segment was classified as held for sale, with operations reported separately as discontinued - The Hardware and Home Improvement (HHI) segment was classified as held for sale on September 8, 2021, following an agreement to sell it to ASSA ABLOY AB for **$4.3 billion**[46](index=46&type=chunk) - HHI products include residential locksets, door hardware, kitchen/bath faucets, and builders' hardware under brands such as Kwikset®, Weiser®, Baldwin®, and Pfister®[46](index=46&type=chunk) - The assets and liabilities of HHI are classified as held for sale, and its operations are reported as discontinued operations for all periods presented[46](index=46&type=chunk) [Human Resources](index=10&type=section&id=Human%20Resources) Spectrum Brands employs 11,000 globally, fostering a culture of trust, accountability, and DEI - As of September 30, 2022, Spectrum Brands had approximately **11,000 full-time employees** globally, with **3,300** in continuing operations[48](index=48&type=chunk) - Approximately **17% of the total workforce** and **21% of the continuing operations workforce** are covered by collective bargaining agreements[48](index=48&type=chunk) - The company's culture is built on values of trust, accountability, and collaboration, promoting employee well-being, safety, and talent development[47](index=47&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) - Initiatives include dedicated EHS professionals, regular safety meetings, performance and development plans, and company-wide town halls for feedback[50](index=50&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - In response to COVID-19, the company implemented safety practices such as temperature screenings, masks, social distancing, deep cleaning, contact tracing, remote work for non-essential employees, and travel restrictions[54](index=54&type=chunk) - The company is committed to Diversity, Equity, and Inclusion (DEI), having implemented a DEI program, created a U.S. DEI Advisory Council, and developed educational content and trainings[55](index=55&type=chunk) [ITEM 1A. RISK FACTORS](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines material risks to business, financial condition, and operating results, spanning operations, debt, and compliance - The COVID-19 pandemic poses a significant threat to health and economic well-being, impacting demand, supply chains, third-party obligations, and financial markets[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Reliance on third-party partners, suppliers, and distributors introduces risks of non-performance, financial loss, and disruptions due to external factors like government shutdowns or natural disasters[59](index=59&type=chunk) - Uncertain global economic conditions, including inflation, recession fears, and tighter credit markets, may reduce demand for products and cause financial hardship for business partners[60](index=60&type=chunk) - The company operates in highly competitive markets, facing risks from larger competitors, private label brands, price reductions, new product introductions, and shifts in consumer preferences and distribution channels[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Dependence on a small number of key retail customers (mass merchandisers) for a significant percentage of sales creates risks related to pricing demands, inventory management, and potential loss of accounts[66](index=66&type=chunk)[67](index=67&type=chunk) - Seasonal sales for certain products (e.g., home and garden) can lead to fluctuating working capital requirements and vulnerability to adverse weather conditions[70](index=70&type=chunk)[71](index=71&type=chunk) - Increases in raw material prices (e.g., petroleum-based plastics, corrugated materials), transportation costs, and fuel surcharges can adversely impact profit margins if not passed on to customers[72](index=72&type=chunk)[73](index=73&type=chunk) - Dependence on a few suppliers without long-term contracts makes the company vulnerable to supply disruptions, quality issues, and political/economic instability in supplier locations[75](index=75&type=chunk) - Manufacturing concentration in specific facilities (St. Louis, MO; Blacksburg, VA; Bridgeton, MO; Noblesville, IN; Melle, Germany) exposes the company to hazards like chemical spills, explosions, and natural disasters[76](index=76&type=chunk) - Risks from third-party manufactured products include non-compliance with regulations, contaminated/defective products, and supplier financial difficulties[77](index=77&type=chunk)[78](index=78&type=chunk) - Global uncertainties, including the Russia-Ukraine conflict, can disrupt manufacturing, supply, and sales, leading to increased costs and potential impairments[80](index=80&type=chunk)[81](index=81&type=chunk) - Substantial indebtedness limits financial and operating flexibility, increases vulnerability to adverse economic conditions, and restricts strategic actions like acquisitions or dividends[102](index=102&type=chunk)[105](index=105&type=chunk) - Restrictive covenants in debt agreements can limit the company's ability to incur additional debt, make distributions, sell assets, or pursue business strategies[104](index=104&type=chunk) - International operations expose the company to currency fluctuations, changes in economic conditions, labor unrest, political instability, and compliance with foreign laws and trade policies[106](index=106&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Inadequate protection of intellectual property rights, infringement claims by third parties, and reliance on licensed trademarks could harm the business and competitive position[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk) - Cybersecurity breaches, failures of IT systems, and inadequate protection of personal data could lead to reputational harm, financial losses, litigation, and regulatory actions[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - The company faces risks from class action lawsuits, product liability claims, product recalls, and environmental liabilities, which could result in significant costs and reputational damage[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - Compliance with public health, consumer protection, and other regulations (e.g., EPA, FDA, CPSC, TSCA, EU Directives) could increase costs and expose the company to penalties or product removal[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Impairment of goodwill, indefinite-lived intangible assets, or other long-term assets could result in significant charges to earnings, particularly for the HPC reporting unit and Rejuvenate® tradename[152](index=152&type=chunk)[153](index=153&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk) - The proposed sale of the HHI division to ASSA ABLOY is subject to regulatory approval and a DOJ complaint, creating uncertainty regarding its consummation and potential adverse conditions[98](index=98&type=chunk)[99](index=99&type=chunk) - The integration of the Tristar Business into the HPC segment may be more difficult or costly than expected, potentially hindering the realization of anticipated benefits and synergies[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Strategic initiatives, including acquisitions and divestitures, may not be successful, divert management's attention, and create customer uncertainty[88](index=88&type=chunk)[89](index=89&type=chunk) - The market price of the company's common stock is likely to be highly volatile due to various factors, including operating results, acquisitions, and economic conditions[159](index=159&type=chunk) [Risks Related to our Business Operations](index=11&type=section&id=Risks%20Related%20to%20our%20Business%20Operations) This section details risks from COVID-19, third-party reliance, economic instability, supply chain, and competition - The COVID-19 pandemic poses risks including reduced demand, supply chain disruptions, failure of third parties, political/economic changes, and cybersecurity threats[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Reliance on third-party suppliers, distributors, and service providers introduces risks of non-performance, delays, and confidentiality breaches[59](index=59&type=chunk) - Uncertain global economic conditions (inflation, recession, credit markets) can negatively impact product demand and the financial health of business partners[60](index=60&type=chunk) - Disruptions in the global supply chain, including labor shortages, manufacturing site impairments, and raw material procurement issues, can adversely affect business results[61](index=61&type=chunk) - Highly competitive markets, including private label brands, can lead to loss of market share, sales, or pressure to reduce prices[62](index=62&type=chunk)[63](index=63&type=chunk) - Changes in consumer shopping trends and distribution channels, particularly the growth of e-commerce and closure of brick-and-mortar stores, could harm the business[64](index=64&type=chunk)[65](index=65&type=chunk) - Consolidation of retailers and dependence on a few key customers (e.g., Walmart, Amazon) for a significant percentage of sales can lead to demands for lower pricing or other unfavorable terms[66](index=66&type=chunk)[67](index=67&type=chunk) - Retailers' tighter inventory control (just-in-time) may require the company to carry additional inventory, increasing warehousing costs or obsolescence risk[68](index=68&type=chunk) - Seasonality of sales for certain products (e.g., home and garden) causes fluctuations in operating results and working capital requirements, and adverse weather can impact sales[70](index=70&type=chunk)[71](index=71&type=chunk) - Significant increases in raw material prices (petroleum-based plastics, corrugated materials) or supply disruptions can adversely affect profitability[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Dependence on a few suppliers without long-term contracts makes the company vulnerable to supply disruptions, quality issues, and political/economic instability in supplier locations[75](index=75&type=chunk) - Manufacturing facilities are subject to various hazards (chemical materials, explosions, natural disasters, power loss) that could disrupt production and incur significant costs[76](index=76&type=chunk) - Risks related to third-party manufactured products include non-compliance with regulations, contaminated/defective products, and supplier financial difficulties[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - Local, regional, and global uncertainties (e.g., Russia-Ukraine conflict, trade policies, supply chain constraints) can negatively impact manufacturing, supply, sales, and financial performance[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Inability to negotiate satisfactory collective bargaining agreements could lead to labor disruptions and increased labor expenses[84](index=84&type=chunk) - Changes in pension asset returns, discount rates, and other factors could affect results of operations, equity, and future pension contributions[85](index=85&type=chunk) - Changes to fiscal and tax policies, such as the Tax Cuts and Jobs Act, could adversely affect results of operations and cash flows, and the company may not fully utilize its U.S. tax attributes (NOLs, credits)[86](index=86&type=chunk)[87](index=87&type=chunk) - Strategic initiatives (acquisitions, divestitures) may not be successful, divert management's attention, and create customer uncertainty[88](index=88&type=chunk)[89](index=89&type=chunk) - Integration of the Tristar Business may be difficult, time-consuming, or costly, potentially hindering the realization of anticipated benefits and synergies[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Significant costs are incurred for strategic transactions, including employee redeployment, system integration, and facility reorganization, which may not be offset by anticipated efficiencies[93](index=93&type=chunk) - Business acquisitions carry risks of not realizing anticipated benefits, integration difficulties, and assuming unexpected liabilities[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - Inability to retain key personnel or recruit qualified replacements could materially affect the business and incur substantial costs[97](index=97&type=chunk) - The proposed sale of the HHI division to ASSA ABLOY is subject to regulatory approval and a DOJ complaint, creating uncertainty regarding its consummation and potential adverse conditions[98](index=98&type=chunk)[99](index=99&type=chunk) - Increased focus on sustainability issues (climate change, plastic waste) by stakeholders may lead to new regulations, increased costs, and reputational damage[100](index=100&type=chunk)[101](index=101&type=chunk) [Risks Related to our Indebtedness and Financing Activities](index=18&type=section&id=Risks%20Related%20to%20our%20Indebtedness%20and%20Financing%20Activities) Substantial indebtedness limits financial flexibility, increases vulnerability, and restricts strategic actions - Substantial indebtedness requires a large portion of cash flow for principal and interest payments, reducing funds for working capital, capital expenditures, and other business activities[102](index=102&type=chunk) - Variable interest rate debt exposes the company to higher debt service requirements if market interest rates increase[103](index=103&type=chunk) - Restrictive covenants in debt agreements limit asset dispositions, mergers, acquisitions, dividends, stock repurchases, and the ability to incur additional indebtedness or liens[104](index=104&type=chunk) - Failure to comply with financial covenants could lead to acceleration of debt repayment and potential inability to obtain adequate refinancing[104](index=104&type=chunk) - Future financing activities, including additional indebtedness or equity issuances, could result in default, acceleration of obligations, inability to obtain further financing, and limitations on dividend payments[106](index=106&type=chunk) [Risks Related to our International Operations](index=19&type=section&id=Risks%20Related%20to%20our%20International%20Operations) International operations face risks from currency fluctuations, economic conditions, political instability, and trade - International operations are subject to risks such as currency fluctuations (Euro, British Pound, Canadian Dollar, etc.), changes in economic conditions, labor unrest, and political instability[106](index=106&type=chunk) - Significant changes in the U.S. dollar's value against foreign currencies affect sales, purchasing power, pricing, and operating margins[108](index=108&type=chunk)[110](index=110&type=chunk) - Compliance with foreign laws and regulations, such as EU Directives (RUHSEEE, WEEE) for electronic products, can incur additional costs or lead to penalties[112](index=112&type=chunk)[113](index=113&type=chunk) - Changes in foreign trade agreements (e.g., USMCA) and the imposition of tariffs by the U.S. and other governments can impact supply chains, sourcing, and operating costs[114](index=114&type=chunk)[115](index=115&type=chunk) - The United Kingdom's exit from the European Union creates uncertainty regarding tariffs, shipping delays, and alignment of laws, potentially increasing costs and affecting consumer confidence[116](index=116&type=chunk) - Importing goods and materials from foreign countries carries risks related to political/financial instability, trade restrictions, labor conditions, and compliance with U.S. and foreign laws[117](index=117&type=chunk)[118](index=118&type=chunk) [Risks Related to Data Privacy and Intellectual Property](index=21&type=section&id=Risks%20Related%20to%20Data%20Privacy%20and%20Intellectual%20Property) Risks include protecting intellectual property, licensed trademarks, cybersecurity breaches, and data privacy compliance - Inability to adequately establish and protect intellectual property rights (patents, trademarks, trade secrets) could harm the business, requiring costly litigation or leading to competitors using similar technologies[119](index=119&type=chunk)[120](index=120&type=chunk) - Reliance on licensed trademarks from third parties means termination or non-renewal of agreements could adversely affect business, financial condition, and results of operations[121](index=121&type=chunk) - Failure to protect the confidentiality of proprietary information and know-how could enable competitors to copy or use trade secrets, impairing competitive position[122](index=122&type=chunk) - Claims by third parties of intellectual property infringement could be time-consuming, expensive, cause product delays, or require licensing agreements[123](index=123&type=chunk) - Cybersecurity breaches or failures of IT systems could lead to loss of confidential data, misappropriation of personal information, business disruption, and reputational harm[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[129](index=129&type=chunk) - Non-compliance with evolving global data privacy regulations (e.g., GDPR, CCPA, CPRA) could result in enforcement actions, significant penalties, negative publicity, and increased operating costs[127](index=127&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [Risks Related to Litigation and Regulatory Compliance](index=22&type=section&id=Risks%20Related%20to%20Litigation%20and%20Regulatory%20Compliance) Litigation, regulatory compliance, and asset impairment pose significant financial and reputational risks - Class action and derivative lawsuits, as well as government investigations, can result in significant costs, divert management attention, and adversely affect business[131](index=131&type=chunk)[132](index=132&type=chunk) - Product liability claims and product recalls (e.g., due to contamination, defects) could negatively impact profitability, sales, and brand reputation, with insurance potentially insufficient to cover all liabilities[133](index=133&type=chunk) - Environmental liabilities, including remediation costs for historic activities and compliance with increasingly stringent laws (e.g., EU Directives, climate change regulations), could incur material capital and other costs[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Compliance with public health, consumer protection, and other regulations (e.g., EPA, FDA, CPSC, TSCA) for products and facilities can increase costs, require product registration, or lead to recalls and fines[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Public perceptions of product unsafety, whether justified or not, can impair reputation and adversely affect business[151](index=151&type=chunk) - Impairment of goodwill, indefinite-lived intangible assets, or other long-term assets (e.g., HPC reporting unit goodwill, Rejuvenate® tradename) could require significant charges to earnings due to changes in economic conditions or business circumstances[152](index=152&type=chunk)[153](index=153&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk) - The successful execution of operational efficiency and multi-year restructuring initiatives is crucial for long-term growth, but risks include delays, workforce issues, redundant costs, and failure to meet operational targets[154](index=154&type=chunk) [Risks Related to Investment in our Common Stock](index=25&type=section&id=Risks%20Related%20to%20Investment%20in%20our%20Common%20Stock) Investment in common stock carries risks from anti-takeover provisions, limited liquidity, volatility, and dilution - Restated Bylaws designate the Delaware Court of Chancery as the exclusive forum for most disputes, potentially limiting stockholders' ability to choose a favorable judicial forum[155](index=155&type=chunk) - Certain provisions in the charter, bylaws, and DGCL have anti-takeover effects, potentially delaying or preventing tender offers or takeover attempts[157](index=157&type=chunk) - The company's common stock has less liquidity than many other exchange-listed stocks, making it potentially difficult for stockholders to sell large numbers of shares without impacting the price[158](index=158&type=chunk) - The market price of common stock is highly volatile, influenced by factors such as customer/supplier loss, key personnel changes, business acquisitions, operating results, and economic conditions[159](index=159&type=chunk) - Additional issuances of common stock under equity incentive plans or for financing purposes could result in dilution to existing stockholders' book value, market price, and proportionate ownership/voting power[160](index=160&type=chunk)[161](index=161&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=27&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company has no unresolved staff comments to report [ITEM 2. PROPERTIES](index=27&type=section&id=ITEM%202.%20PROPERTIES) Principal owned and leased facilities are suitable and adequate for current and foreseeable operating needs Principal Owned or Leased Facilities (as of September 30, 2022) | Location | Function / Use | Owned / Leased | | :--- | :--- | :--- | | **U.S. Locations** | | | | Alpharetta, Georgia | Commercial Operations | Leased | | Blacksburg, Virginia | GPC - Manufacturing | Owned | | Bridgeton, Missouri | GPC - Manufacturing | Leased | | Middleton, Wisconsin | Corporate Headquarters | Leased | | Noblesville, Indiana | GPC - Manufacturing | Owned | | St. Louis, Missouri | H&G - Manufacturing | Leased | | **Non-U.S. Locations** | | | | Manchester, UK | HPC - UK Operations | Owned | | Melle, Germany | GPC - Manufacturing | Owned | | Nottingham, UK | GPC - UK Operations | Owned | | Shenzhen, China | APAC Shared Operations & Distribution | Leased | - The company believes its existing facilities are suitable and adequate for present and foreseeable operating needs, with productive capacity substantially utilized or planned for utilization[165](index=165&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Legal proceedings with potential adverse effects are disclosed in the notes to the consolidated financial statements - Legal proceedings with potential adverse effects are disclosed in Note 20 - Commitments and Contingencies[166](index=166&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company [PART II](index=29&type=section&id=PART%20II) [ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=29&type=section&id=ITEM%205.%20MARKET%20FOR%20THE%20REGISTRANTS%27%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) SBH common stock trades on NYSE, with 40.8 million shares outstanding, and a $1 billion repurchase program - Spectrum Brands Holdings, Inc. (SBH) common stock trades on the New York Stock Exchange (NYSE) under the symbol 'SPB'[167](index=167&type=chunk) - As of November 18, 2022, there were **40,787,456 shares** of SBH Common Stock outstanding and approximately **1,193 holders of record**[5](index=5&type=chunk)[168](index=168&type=chunk) - SB/RH Holdings, LLC is a wholly-owned subsidiary of SBH with no public trading market for its equity securities[169](index=169&type=chunk) - SB/RH paid dividends of **$194.7 million** and **$192.3 million** to SBH in fiscal 2022 and 2021, respectively, subject to debt covenant limitations[169](index=169&type=chunk) Equity Plans Authorized and Available Shares (in millions) | Plan | Authorized | Available | | :--- | :--- | :--- | | Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan | 7.1 | 0.2 | | Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan | 1.2 | 1.2 | - The Board approved a new **$1 billion share repurchase program** on May 4, 2021, effective for 36 months, allowing repurchases in the open market or privately negotiated transactions[171](index=171&type=chunk) Common Stock Repurchases (Fourth Quarter FY2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that may Yet Be Purchased | | :--- | :--- | :--- | :--- | | As of July 4, 2022 | 2,239,367 | $95.72 | $785,647,294 | | As of September 30, 2022 | 2,239,367 | $95.72 | $785,647,294 | - The company repurchased **$134.0 million** of treasury stock at an average cost of **$97.34 per share** in fiscal 2022[229](index=229&type=chunk) - No unregistered securities were sold[172](index=172&type=chunk) [Equity Plans](index=29&type=section&id=Equity%20Plans) The company uses 2011 and 2020 Omnibus Equity Awards Plans for incentive compensation - Equity awards are issued under the Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan and the 2020 Omnibus Equity Plan[170](index=170&type=chunk) Equity Plans Authorized and Available Shares (in millions) | Plan | Authorized | Available | | :--- | :--- | :--- | | Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan | 7.1 | 0.2 | | Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan | 1.2 | 1.2 | [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=29&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) The Board approved a $1 billion share repurchase program, with $134.0 million repurchased in fiscal 2022 - A new **$1 billion share repurchase program** was approved on May 4, 2021, effective for 36 months[171](index=171&type=chunk) - Shares can be repurchased in the open market or through privately negotiated transactions[171](index=171&type=chunk) Common Stock Repurchases (Fourth Quarter FY2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that may Yet Be Purchased | | :--- | :--- | :--- | :--- | | As of July 4, 2022 | 2,239,367 | $95.72 | $785,647,294 | | As of September 30, 2022 | 2,239,367 | $95.72 | $785,647,294 | - In fiscal 2022, the company repurchased **$134.0 million** of treasury stock at an average cost of **$97.34 per share**[229](index=229&type=chunk) - The Inflation Reduction Act of 2022 imposes a **1% excise tax** on stock repurchases made after December 31, 2022[231](index=231&type=chunk) [Recent Sales of Unregistered Securities](index=29&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) There were no recent sales of unregistered securities [Stock Performance Graph](index=30&type=section&id=Stock%20Performance%20Graph) The stock performance graph compares SBH common stock return to a market index and peer group - The graph compares SBH's common stock performance to the Russell 1000 Financial Index and a peer group (Allegion PLC, Central Garden and Pet Company, Church & Dwight Co., Inc., Edgewell Personal Care Company, Energizer Holdings, Inc., Fortune Brands Home & Security, Inc., Hamilton Beach Brands Holding Company, Helen of Troy Limited, Newell Brands, Inc., Nu Skin Enterprises, Inc., Stanley Black & Decker, Inc., The Clorox Company, and The Scotts Miracle-Gro Company)[174](index=174&type=chunk) - The comparison assumes a **$100 investment** on September 30, 2017, with reinvestment of all dividends, through September 30, 2022[175](index=175&type=chunk) [ITEM 6. RESERVED.](index=30&type=section&id=ITEM%206.%20RESERVED.) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section discusses financial condition, results of operations, and liquidity, covering strategic transactions and performance - The company's financial performance is influenced by strategic transactions, restructuring initiatives, and macroeconomic factors such as the Russia-Ukraine conflict, COVID-19, inflation, and supply chain constraints[180](index=180&type=chunk)[185](index=185&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[194](index=194&type=chunk) - Net sales for SBH increased by **$134.4 million (4.5%)** to **$3,132.5 million** in fiscal 2022, driven by acquisitions but partially offset by foreign currency impact and organic declines in HPC and H&G[210](index=210&type=chunk)[211](index=211&type=chunk) - Gross profit decreased by **$44.2 million (4.3%)** to **$990.4 million**, with gross profit margin declining by **290 basis points** to **31.6%** in fiscal 2022, primarily due to inflation, freight costs, and lower volumes[210](index=210&type=chunk)[211](index=211&type=chunk) - Operating expenses increased by **$29.7 million (3.2%)** to **$967.2 million** in fiscal 2022, mainly due to higher selling expenses (distribution, transportation, labor inflation) partially offset by reduced general and administrative costs and a gain from contingent consideration remeasurement[210](index=210&type=chunk)[212](index=212&type=chunk) - Net loss from continuing operations for SBH was **$77.0 million** in fiscal 2022, compared to net income of **$15.3 million** in fiscal 2021[210](index=210&type=chunk) - Adjusted EBITDA for SBH decreased by **$108.7 million (27.7%)** to **$283.1 million** in fiscal 2022, with Adjusted EBITDA margin falling to **9.0%** from **13.1%** in fiscal 2021[202](index=202&type=chunk)[204](index=204&type=chunk) - Cash flows from operating activities for SBH continuing operations decreased by **$320.7 million** to a net use of **$231.5 million** in fiscal 2022, driven by lower operating results and increased cash towards inflationary costs and inventory[226](index=226&type=chunk)[227](index=227&type=chunk) - The company had borrowing availability of **$342.4 million** under its credit facility as of September 30, 2022, and expects cash flows from operations to be sufficient for short-term needs[230](index=230&type=chunk) [Business Overview](index=31&type=section&id=Business%20Overview) This section describes Spectrum Brands' business and recent developments for understanding financial results and trends - The section provides a general description of the company's business and recent developments for the years ended September 30, 2022 and 2021[179](index=179&type=chunk) - It emphasizes factors important for understanding results of operations, financial condition, and anticipated future trends[179](index=179&type=chunk) [Acquisitions, Divestitures and Other Business Development Initiatives](index=31&type=section&id=Acquisitions%2C%20Divestitures%20and%20Other%20Business%20Development%20Initiatives) Spectrum Brands engaged in strategic acquisitions and divestitures, including Tristar, Rejuvenate, and Armitage - The company acquired Tristar Business (PowerXL®, Emeril, Copper Chef® brands) on February 18, 2022, integrating it into the HPC segment. Transaction and integration costs were **$24.3 million** in fiscal 2022[181](index=181&type=chunk)[184](index=184&type=chunk) - The Rejuvenate acquisition (household cleaning products) was completed on May 28, 2021, integrated into the H&G segment. Integration costs were **$6.8 million** in fiscal 2022 and **$10.8 million** in fiscal 2021[181](index=181&type=chunk)[184](index=184&type=chunk) - The Armitage acquisition (pet treats and toys) was completed on October 26, 2020, integrated into the GPC segment. Integration costs were **$1.4 million** in fiscal 2022 and **$10.9 million** in fiscal 2021[181](index=181&type=chunk)[184](index=184&type=chunk) - The HHI divestiture to ASSA ABLOY is pending, with the DOJ filing a complaint to enjoin the transaction. HHI is classified as held for sale. Divestiture costs were **$6.3 million** in fiscal 2022 and **$9.6 million** in fiscal 2021[181](index=181&type=chunk)[184](index=184&type=chunk) - Initiatives for HPC separation incurred **$19.1 million** in fiscal 2022 and **$14.2 million** in fiscal 2021[181](index=181&type=chunk)[184](index=184&type=chunk) Strategic Transaction and Business Development Costs (in millions) | (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | Tristar Business acquisition and integration | $24.3 | $0.1 | | Rejuvenate acquisition and integration | $6.8 | $10.8 | | Armitage acquisition and integration | $1.4 | $10.9 | | Omega integration | $4.6 | $1.3 | | HHI divestiture | $6.3 | $9.6 | | HPC separation initiatives | $19.1 | $14.2 | | Coevorden operations separation | $8.8 | $11.6 | | Other project costs | $1.0 | $5.4 | | **Total** | **$72.3** | **$63.9** | [Restructuring and Optimization Initiatives](index=32&type=section&id=Restructuring%20and%20Optimization%20Initiatives) Spectrum Brands implemented restructuring and optimization initiatives to improve efficiency and reduce costs - Fiscal 2022 restructuring initiatives, including headcount reductions, incurred **$9.8 million** in costs[185](index=185&type=chunk)[188](index=188&type=chunk) - A multi-year Global ERP Transformation project to upgrade to SAP S/4 HANA incurred **$13.1 million** in fiscal 2022 and **$4.3 million** in fiscal 2021[188](index=188&type=chunk) - GPC Distribution Transition in the U.S. to optimize supply chain operations incurred **$35.8 million** in fiscal 2022 and **$15.2 million** in fiscal 2021[188](index=188&type=chunk) - The Global Productivity Improvement Program incurred **$5.1 million** in fiscal 2022 and **$21.2 million** in fiscal 2021, focusing on cost savings and operational optimization[188](index=188&type=chunk) - The company initiated the closing of its HPC commercial operations in Russia, incurring **$1.9 million** in fiscal 2022 for impairment and exit costs[188](index=188&type=chunk) Restructuring and Optimization Project Costs (in millions) | (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | Fiscal 2022 restructuring | $9.8 | $— | | Global ERP transformation | $13.1 | $4.3 | | GPC distribution center transition | $35.8 | $15.2 | | Global productivity improvement program | $5.1 | $21.2 | | HPC brand portfolio transitions | $1.3 | $— | | Russia closing initiative | $1.9 | $— | | Other project costs | $11.1 | $2.0 | | **Total** | **$78.1** | **$42.7** | [Refinancing Activity](index=34&type=section&id=Refinancing%20Activity) In fiscal 2022, the company amended its Credit Agreement and issued notes to support acquisitions and manage debt - In fiscal 2022, the Credit Agreement was amended to provide an incremental **$500 million** capacity on the Revolver Facility, used for the Tristar Business acquisition and working capital[195](index=195&type=chunk) - In fiscal 2021, the company issued **$500.0 million** of 3.875% Notes and a **$400.0 million** Term Loan Facility[195](index=195&type=chunk) - The company redeemed **$250.0 million** of 6.125% Notes and **$550.0 million** of 5.75% Notes in fiscal 2021, incurring a call premium of **$23.4 million** and a non-cash write-off of **$7.9 million** in debt issuance costs[195](index=195&type=chunk) [Russia-Ukraine Conflict](index=34&type=section&id=Russia-Ukraine%20Conflict) The Russia-Ukraine conflict led to discontinuing imports and closing HPC operations in Russia - The company has discontinued importing goods and initiated the closing of its HPC operations within Russia due to the Russia-Ukraine conflict[191](index=191&type=chunk) - Material assets in Russia are not significant, primarily consisting of working capital associated with in-country distribution[191](index=191&type=chunk) - Risks associated with collectability and realizable value for working capital in the region have been adjusted[191](index=191&type=chunk) [COVID-19](index=34&type=section&id=COVID-19) The COVID-19 pandemic has not materially impacted liquidity or caused impairments, despite economic disruptions - The COVID-19 pandemic has not had a materially negative impact on the company's liquidity position or resulted in material impairments[193](index=193&type=chunk) - The pandemic has caused economic and social disruptions, leading to uncertainties in demand, manufacturing, supply arrangements, and political/economic environments[192](index=192&type=chunk) - The company expects a significant continuing inflationary environment with higher manufacturing, employment, and logistics costs, and ongoing supply chain disruptions[192](index=192&type=chunk) [Inflation and Supply Chain Constraints](index=34&type=section&id=Inflation%20and%20Supply%20Chain%20Constraints) The company faces challenges from product availability, labor shortages, inflation, and supply chain disruptions - The business faces challenges with product availability due to increased labor shortages and supply chain disruptions[194](index=194&type=chunk) - An inflationary environment is driving higher wages, manufacturing, employment, and logistics costs, negatively impacting gross margin rates[194](index=194&type=chunk) - Further supply chain disruptions stem from unanticipated shutdowns in the supply base and limitations in transportation, increasing freight costs[194](index=194&type=chunk) [Non-GAAP Measurements](index=35&type=section&id=Non-GAAP%20Measurements) The company uses non-GAAP metrics, Organic Net Sales and Adjusted EBITDA, for supplemental performance information - Organic Net Sales excludes the effect of changes in foreign currency exchange rates and/or impact from acquisitions to reflect regional and segment performance[197](index=197&type=chunk) Reconciliation of Net Sales to Organic Net Sales (SBH & SB/RH, FY2022 vs. FY2021) | (in millions, except %) | Net Sales (2022) | Effect of Changes in Currency | Net Sales Excluding Effect of Changes in Currency | Effect of Acquisitions | Organic Net Sales (2022) | Net Sales (2021) | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | HPC | $1,370.1 | $59.0 | $1,429.1 | $(189.7) | $1,239.4 | $1,260.1 | $(20.7) | (1.6 %) | | GPC | $1,175.3 | $35.9 | $1,211.2 | $(8.8) | $1,202.4 | $1,129.9 | $72.5 | 6.4 % | | H&G | $587.1 | $— | $587.1 | $(26.6) | $560.5 | $608.1 | $(47.6) | (7.8 %) | | **Total** | **$3,132.5** | **$94.9** | **$3,227.4** | **$(225.1)** | **$3,002.3** | **$2,998.1** | **$4.2** | **0.1 %** | - Adjusted EBITDA is a non-GAAP metric used by management to reflect ongoing operating performance, excluding non-cash expenses and non-recurring items, and for debt covenant compliance[199](index=199&type=chunk) - Adjusted EBITDA further excludes stock-based compensation, strategic transaction costs, restructuring costs, unallocated shared costs from discontinued operations, non-cash purchase accounting adjustments, and other specific non-recurring gains/losses[200](index=200&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (SBH, FY2022) | (in millions) | HPC | GPC | H&G | Corporate | Consolidated | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) from continuing operations | $25.4 | $75.2 | $57.2 | $(234.8) | $(77.0) | | EBITDA | $54.1 | $112.6 | $75.8 | $(134.1) | $108.4 | | Adjusted EBITDA | $69.6 | $168.6 | $86.2 | $(41.3) | $283.1 | | Net Sales | $1,370.1 | $1,175.3 | $587.1 | $— | $3,132.5 | | Adjusted EBITDA Margin | 5.1 % | 14.3 % | 14.7 % | — | 9.0 % | Reconciliation of Net Income (Loss) to Adjusted EBITDA (SBH, FY2021) | (in millions) | HPC | GPC | H&G | Corporate | Consolidated | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) from continuing operations | $46.1 | $127.7 | $83.7 | $(242.2) | $15.3 | | EBITDA | $90.1 | $166.9 | $102.9 | $(137.5) | $222.4 | | Adjusted EBITDA | $102.6 | $212.1 | $124.0 | $(46.9) | $391.8 | | Net Sales | $1,260.1 | $1,129.9 | $608.1 | $— | $2,998.1 | | Adjusted EBITDA Margin | 8.1 % | 18.8 % | 20.4 % | — | 13.1 % | Reconciliation of Net Income (Loss) to Adjusted EBITDA (SB/RH, FY2022) | (in millions) | HPC | GPC | H&G | Corporate | Consolidated | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) from continuing operations | $25.4 | $75.2 | $57.2 | $(232.8) | $(75.0) | | EBITDA | $54.1 | $112.6 | $75.8 | $(131.3) | $111.2 | | Adjusted EBITDA | $69.6 | $168.6 | $86.2 | $(39.9) | $284.5 | | Net Sales | $1,370.1 | $1,175.3 | $587.1 | $— | $3,132.5 | | Adjusted EBITDA Margin | 5.1 % | 14.3 % | 14.7 % | — | 9.1 % | Reconciliation of Net Income (Loss) to Adjusted EBITDA (SB/RH, FY2021) | (in millions) | HPC | GPC | H&G | Corporate | Consolidated | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (loss) from continuing operations | $46.1 | $127.7 | $83.7 | $(240.2) | $17.3 | | EBITDA | $90.1 | $166.9 | $102.9 | $(133.8) | $226.1 | | Adjusted EBITDA | $102.6 | $212.1 | $124.0 | $(44.9) | $393.8 | | Net Sales | $1,260.1 | $1,129.9 | $608.1 | $— | $2,998.1 | | Adjusted EBITDA Margin | 8.1 % | 18.8 % | 20.4 % | — | 13.1 % | [Consolidated Results of Operations](index=41&type=section&id=Consolidated%20Results%20of%20Operations) SBH reported a **$77.0 million net loss** from continuing operations in fiscal 2022, driven by decreased gross profit and increased expenses SBH Summarized Consolidated Results of Operations (in millions, except %) | (in millions, except %) | 2022 | 2021 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $3,132.5 | $2,998.1 | $134.4 | 4.5 % | | Gross profit | $990.4 | $1,034.6 | $(44.2) | (4.3 %) | | Gross profit margin | 31.6 % | 34.5 % | (290) bps | | | Operating expenses | $967.2 | $937.5 | $29.7 | 3.2 % | | Interest expense | $99.4 | $116.5 | $(17.1) | (14.7 %) | | Other non-operating expense (income), net | $14.1 | $(8.3) | $22.4 | n/m | | Income tax benefit | $(13.3) | $(26.4) | $13.1 | (49.6 %) | | Net (loss) income from continuing operations | $(77.0) | $15.3 | $(92.3) | n/m | | Income from discontinued operations, net of tax | $149.7 | $174.3 | $(24.6) | (14.1 %) | | Net income | $72.7 | $189.6 | $(116.9) | (61.7 %) | SBH Net Sales by Segment (in millions, except %) | (in millions, except %) | 2022 | 2021 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | HPC | $1,370.1 | $1,260.1 | $110.0 | 8.7 % | | GPC | $1,175.3 | $1,129.9 | $45.4 | 4.0 % | | H&G | $587.1 | $608.1 | $(21.0) | (3.5 %) | | **Net Sales** | **$3,132.5** | **$2,998.1** | **$134.4** | **4.5 %** | - Gross profit and margin decreased due to accelerated freight and input cost inflation outpacing pricing actions, increased supply chain costs, and lower volumes[211](index=211&type=chunk) - Operating expenses increased due to higher selling expenses (**$79.1 million**) from distribution and transportation costs, warehousing, and labor inflation, partially offset by a **$17.8 million reduction** in general and administrative costs and a **$28.5 million gain** from contingent consideration liability remeasurement[212](index=212&type=chunk) - Interest expense decreased due to one-time refinancing charges in the prior year, but was offset by higher outstanding borrowings and increased variable borrowing rates[213](index=213&type=chunk) - Other non-operating expense, net, increased due to unfavorable foreign currency exchange rates and the absence of prior year gains from Energizer common stock sales[214](index=214&type=chunk) - Income from discontinued operations (HHI business) decreased due to lower sales volume, increasing inflationary costs, and higher freight spend, partially offset by lower depreciation and amortization[216](index=216&type=chunk) [Segment Financial Data](index=42&type=section&id=Segment%20Financial%20Data) HPC, GPC, and H&G segments experienced varied net sales and decreased margins due to acquisitions, demand, and inflation HPC Segment Financial Data (in millions, except %) | (in millions, except %) | 2022 | 2021 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,370.1 | $1,260.1 | $110.0 | 8.7 % | | Operating income | $30.2 | $46.4 | $(16.2) | (34.9) % | | Operating income margin | 2.2 % | 3.7 % | (150) bps | | | Adjusted EBITDA | $69.6 | $102.6 | $(33.0) | (32.2 %) | | Adjusted EBITDA margin | 5.1 % | 8.1 % | (300) bps | | - HPC net sales increased due to Tristar Business acquisition (**$189.7 million**), but organic net sales decreased by **1.6% ($20.7 million)** due to lower category demand, reduced replenishment orders, and unfavorable foreign currency impact (**$59.0 million**)[218](index=218&type=chunk) - HPC operating income and Adjusted EBITDA decreased due to accelerated freight and input cost inflation, increased distribution/inventory management costs, negative foreign currency impact, and Tristar acquisition/integration costs, partially offset by a **$28.5 million gain** from contingent consideration remeasurement[219](index=219&type=chunk) GPC Segment Financial Data (in millions, except %) | (in millions, except %) | 2022 | 2021 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,175.3 | $1,129.9 | $45.4 | 4.0 % | | Operating income | $78.3 | $129.9 | $(51.6) | (39.7 %) | | Operating income margin | 6.7 % | 11.5 % | (480) bps | | | Adjusted EBITDA | $168.6 | $212.1 | $(43.5) | (20.5 %) | | Adjusted EBITDA margin | 14.3 % | 18.8 % | (450) bps | | - GPC net sales increased due to higher demand in dog chews/treats and aquatic consumables, positive pricing adjustments, and improved fulfillment, despite unfavorable foreign exchange impact (**$35.9 million**) and supplier shutdowns. Organic net sales increased by **6.4% ($72.5 million)**[221](index=221&type=chunk) - GPC operating income and Adjusted EBITDA decreased due to higher freight and input cost inflation, increased distribution/inventory management costs, operating inefficiencies from distribution transitions, labor turnover, unfavorable product mix, and negative foreign currency impact[222](index=222&type=chunk) H&G Segment Financial Data (in millions, except %) | (in millions, except %) | 2022 | 2021 | Variance | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $587.1 | $608.1 | $(21.0) | (3.5 %) | | Operating income | $57.3 | $83.7 | $(26.4) | (31.5 %) | | Operating income margin | 9.8 % | 13.8 % | (400) bps | | | Adjusted EBITDA | $86.2 | $124.0 | $(37.8) | (30.5 %) | | Adjusted EBITDA margin | 14.7 % | 20.4 % | (570) bps | | - H&G net sales decreased primarily due to unfavorable weather conditions, reduced POS and foot traffic, and increased retail inventory levels, despite positive pricing adjustments and Rejuvenate acquisition sales (**$26.6 million**). Organic net sales decreased by **7.8% ($47.6 million)**[223](index=223&type=chunk) - H&G operating income and Adjusted EBITDA decreased due to lower volumes, higher freight and input cost inflation outpacing pricing actions, and unfavorable product mix[224](index=224&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operating cash flow and credit access, despite decreased operating cash flow in fiscal 2022 Summary of Net Cash Flows from Continuing Operations (in millions) | (in millions) | SBH 2022 | SBH 2021 | SB/RH 2022 | SB/RH 2021 | | :--- | :--- | :--- | :--- | :--- | | Operating activities | $(231.5) | $89.2 | $(263.5) | $81.7 | | Investing activities | $(335.9) | $(400.7) | $(335.9) | $(400.7) | | Financing activities | $490.7 | $(206.9) | $523.1 | $(197.1) | - Cash flows from operating activities for SBH continuing operations decreased by **$320.7 million** in fiscal 2022, primarily due to lower operating results and increased cash used for inflationary costs, labor, freight, and higher inventory levels[227](index=227&type=chunk) - Cash flows used in investing activities for SBH continuing operations decreased by **$64.8 million** in fiscal 2022, mainly due to lower cash used for acquisitions (Tristar Business vs. Armitage/Rejuvenate in prior year), offset by the absence of proceeds from Energizer common stock sales and increased capital expenditures for ERP systems[228](index=228&type=chunk) - Cash flows provided by financing activities for SBH continuing operations increased by **$697.6 million** in fiscal 2022, driven by increased borrowings on the Revolver Facility (**$740.0 million**) to support the Tristar Business acquisition and working capital, partially offset by increased stock repurchase activity (**$134.0 million**) and higher share-based award withholding payments[229](index=229&type=chunk) - As of September 30, 2022, the company had borrowing availability of **$342.4 million** under its credit facility[230](index=230&type=chunk) - Post-fiscal year, on November 17, 2022, an amendment to the Credit Agreement temporarily increased the maximum consolidated total net leverage ratio to **7.0 to 1.0**, before returning to **6.0 to 1.0** by September 29, 2023, or 10 business days after the HHI divestiture closing[232](index=232&type=chunk) - Annual interest payments are anticipated to be **$175.2 million**, including variable rate debt and fixed-rate notes[237](index=237&type=chunk) - The company has lease obligations for manufacturing facilities, distribution centers, and equipment, with ROU assets and liabilities recognized on the balance sheet[238](index=238&type=chunk) - Employee benefit plan obligations include defined benefit pension plans and defined contribution plans, with future contributions to defined benefit plans not expected to be material[239](index=239&type=chunk) - Other commitments include a mandatory repatriation tax liability of **$16.9 million** payable over the next 4 years, with **$2.2 million** due in the next 12 months (offset by credits)[240](index=240&type=chunk) - The company utilizes factoring agreements and supply chain financing programs to manage working capital, treating factored receivables as sales without recourse[235](index=235&type=chunk) [Guarantor Statements - SB/RH](index=46&type=section&id=Guarantor%20Statements%20-%20SB%2FRH) SB/RH and its subsidiaries guarantee SBI's senior unsecured notes, with summarized financial data provided - SB/RH and SBI's domestic subsidiaries unconditionally guarantee SBI's senior unsecured notes[244](index=244&type=chunk) Obligor Summarized Statement of Operations Data (in millions, FY2022) | (in millions) | 2022 | | :--- | :--- | | Third-party net sales | $1,955.8 | | Intercompany net sales to non-guarantor subsidiaries | $14.4 | | Total net sales | $1,970.2 | | Gross profit | $551.2 | | Operating loss | $(190.4) | | Net loss from continuing operations | $(263.2) | | Net loss | $(174.7) | | Net loss attributable to controlling interest | $(174.7) | Obligor Summarized Statement of Financial Position Data (in millions, as of Sep 30, 2022) | (in millions) | 2022 | | :--- | :--- | | Current Assets | $2,634.4 | | Noncurrent Assets | $2,169.9 | | Current Liabilities | $1,634.1 | | Noncurrent Liabilities | $3,423.4 | [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on critical accounting policies and estimates for goodwill, intangible assets, and income taxes - Critical accounting policies and estimates involve significant judgment and assumptions, particularly for goodwill, intangible assets, other long-lived assets, and income taxes[248](index=248&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually or more frequently if triggering events occur, using qualitative or quantitative assessments (discounted cash flow methodology for fair value)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk) - Potential impairment risk is identified for the HPC reporting unit goodwill (**$108.1 million**) and the Rejuvenate® tradename (**$119.1 million**) as of September 30, 2022, due to macroeconomic headwinds, inflationary costs, and integration risks[252](index=252&type=chunk) - Income tax accounting requires significant judgment in determining worldwide provision, deferred tax assets/liabilities, and valuation allowances, with changes in estimates potentially impacting future results[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=48&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Market risks from interest rates, foreign currency, and commodity prices are mitigated by derivatives - The company has market risk exposure from changes in interest rates, foreign currency exchange rates, tariffs, and commodity prices, mitigated by derivative financial instruments[261](index=261&type=chunk) - As of September 30, 2022, **$1,134.0 million (35.5% of total debt)** was subject to variable interest rates. A **1% increase** in market rates would increase interest expense by **$11.5 million**[262](index=262&type=chunk) - Approximately **39% of net sales** in fiscal 2022 were denominated in foreign currencies, exposing the company to foreign exchange risk[108](index=108&type=chunk) - Foreign exchange exposure is managed through offsetting positions, forward foreign exchange contracts, and swaps[263](index=263&type=chunk) - As of September 30, 2022, the company had **$425.6 million equivalent** of debt denominated in foreign currencies, primarily Euro-denominated 4.00% Notes, designated as a net investment hedge[264](index=264&type=chunk) - A **10% unfavorable change** in underlying exchange rates would result in a potential loss of **$73.6 million** in fair value of outstanding foreign exchange derivative instruments, with a net gain of **$38.9 million** after including the effect of underlying exposures[265](index=265&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=49&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to Item 15 for consolidated financial statements and supplementary data for SBH and SB/RH - Financial statements and supplementary data are included in Item 15 of this Annual Report on Form 10-K[266](index=266&type=chunk) - The report is a combined report of SBH and SB/RH, with notes to consolidated financial statements including specific information for SB/RH where required[266](index=266&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=49&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure [ITEM 9A. CONTROLS AND PROCEDURES](index=49&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) SBH and SB/RH concluded disclosure controls and internal control over financial reporting were effective - SBH's management concluded that its disclosure controls and procedures were effective as of September 30, 2022, providing reasonable assurance for timely and accurate reporting[268](index=268&type=chunk) - SBH's management also concluded that its internal control over financial reporting was effective as of September 30, 2022, based on the COSO 2013 Framework[272](index=272&type=chunk) - The Tristar Business acquisition, completed on February 18, 2022, was excluded from the assessment of the effectiveness of internal control over financial reporting for SBH, representing **$381.9 million** in total assets and **$189.7 million** in total net sales[273](index=273&type=chunk) - SB/RH's management similarly concluded that its disclosure controls and procedures and internal control over financial reporting were effective as of September 30, 2022[275](index=275&type=chunk)[279](index=279&type=chunk) - The Tristar Business acquisition was also excluded from SB/RH's internal control over financial reporting assessment[280](index=280&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal fourth quarter for either regis

Spectrum Brands Fiscal 2022 Fourth Quarter and Full Year Earnings Call November 18, 2022 2 Agenda • Introduction – Faisal Qadir VP, Strategic Finance & Enterprise Reporting • CEO Overview and Outlook – David Maura Chairman and Chief Executive Officer • Financial & Business Review – Jeremy Smeltser Chief Financial Officer • Q&A – David Maura and Jeremy Smeltser Forward-looking Statements 3 We have made or implied certain forward-looking statements in this document. All statements, other than statements of hi ...

Spectrum Brands Holdings, Inc. (NYSE:SPB) Q4 2022 Earnings Conference Call November 18, 2022 9:00 AM ET Company Participants Faisal Qadir - VP, Strategic Finance & Enterprise Reporting David Maura - Executive Chairman & CEO Jeremy Smeltser - EVP & CFO Conference Call Participants Bob Labick - CJS Securities Christopher Carey - Wells Fargo Securities Ian Zaffino - Oppenheimer Peter Grom - UBS Operator Good day, and welcome to the Q4 and Full-Year 2022 Spectrum Brands Holdings’ Earnings Conference Call. I wou ...

Spectrum Brands Holdings, Inc. (NYSE:SPB) Q3 2022 Earnings Conference Call August 12, 2022 9:00 AM ET Company Participants Randal Lewis - EVP & COO Faisal Qadir - VP, Strategic Finance and Enterprise Reporting David Maura - Executive Chairman & CEO Jeremy Smeltser - EVP & CFO Conference Call Participants Olivia Cheang - Raymond James & Associates Ian Zaffino - Oppenheimer Peter Grom - UBS Christopher Carey - Wells Fargo Securities William Reuter - Bank of America Merrill Lynch Robert Labick - CJS Securities ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2022 | Spectrum Brands Holdings, Inc. | Yes | ☒ | No | ☐ | | --- | --- | --- | --- | --- | | SB/RH Holdings, LLC | Yes | ☒ | No | ☐ | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting compan ...

Spectrum Brands Fiscal 2022 Second Quarter Earnings Call May 6, 2022 | --- | --- | --- | |--------|------------------------------|-----------------------------------------| | | | | | | | | | | • | | | | Introduction | Jeremy Smeltser Chief Financial Officer | | | • CEO Overview and Outlook | David Maura | | | | Chairman and Chief Executive Officer | | | • Financial Review | Jeremy Smeltser | | Agenda | | Chief Financial Officer | | | • Business Review | Randy Lewis | | | | Chief Operating Officer | | | • CE ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to______ | Commission File No. | Name of Registrant, State of Incorporation, Address of Principal Offices, and Telephone No. | IRS Employer Ident ...

Spectrum Brands Holdings, Inc. (NYSE:SPB) Q2 2022 Earnings Conference Call May 6, 2022 9:00 AM ET Company Participants David Maura - Chairman and CEO Jeremy Smeltser - CFO Randy Lewis - COO Conference Call Participants Bob Larrick - CJS Securities Steve Powers - Deutsche Bank Peter Grom - UBS Chris Carey - Wells Fargo Nick Zaffino - Oppenheimer Carla Casella - JPMorgan Operator Good day, and thank you for standing by. Welcome to the Q2 2022 Spectrum Brands Holdings, Inc. Earnings Conference Call. At this ti ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 2, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to______ Commission File No. Name of Registrant, State of Incorporation, Address of Principal Offices, and Telephone No. IRS Employer Identific ...