Spectrum Brands(SPB) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This part provides the company's unaudited condensed consolidated financial statements and related disclosures Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Spectrum Brands Holdings, Inc., including the Statements of Financial Position, Income, Comprehensive Income, Shareholders' Equity, and Cash Flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items Condensed Consolidated Statements of Financial Position This section details the company's assets, liabilities, and shareholders' equity at specific dates | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $122.0 | $368.9 | | Total current assets | $1,338.9 | $1,578.6 | | Total assets | $3,542.3 | $3,842.3 | | Liabilities and Shareholders' Equity | | | | Total current liabilities | $553.1 | $687.1 | | Long-term debt, net of current portion | $655.9 | $551.4 | | Total liabilities | $1,648.5 | $1,700.6 | | Total shareholders' equity | $1,893.8 | $2,140.9 | | Total liabilities and equity | $3,542.3 | $3,842.3 | - Total assets decreased by $300 million from $3,842.3 million as of September 30, 2024, to $3,542.3 million as of June 29, 2025. Cash and cash equivalents saw a significant reduction from $368.9 million to $122.0 million[13] - Total shareholders' equity decreased by $247.1 million, from $2,140.9 million to $1,893.8 million, primarily due to treasury stock repurchases[13] Condensed Consolidated Statements of Income This section presents the company's revenues, expenses, and net income over specific periods | (in millions, except per share) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $699.6 | $779.4 | $2,075.5 | $2,190.2 | | Gross profit | $264.1 | $302.8 | $775.3 | $821.2 | | Operating income | $31.3 | $47.7 | $95.5 | $148.6 | | Net income from continuing operations | $20.5 | $19.1 | $46.9 | $86.4 | | Net income | $19.7 | $6.0 | $44.7 | $96.0 | | Basic earnings per share | $0.80 | $0.21 | $1.68 | $3.10 | | Diluted earnings per share | $0.80 | $0.21 | $1.68 | $3.09 | | Dividend per share | $0.47 | $0.42 | $1.41 | $1.26 | - Net sales decreased by 10.2% for the three-month period and 5.2% for the nine-month period year-over-year[16] - Net income increased significantly for the three-month period (from $6.0M to $19.7M) but decreased for the nine-month period (from $96.0M to $44.7M)[16] Condensed Consolidated Statements of Comprehensive Income This section outlines net income and other comprehensive income components, reflecting total non-owner changes in equity | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $19.7 | $6.0 | $44.7 | $96.0 | | Foreign currency translation gain (loss), net | $61.7 | $(10.4) | $29.6 | $7.5 | | Net unrealized (loss) gain on derivative instruments | $(9.1) | $2.6 | $(3.5) | $3.1 | | Net defined benefit pension (loss) gain | $(1.0) | $0.1 | $0.4 | $(0.1) | | Comprehensive income (loss) | $71.3 | $(1.7) | $71.2 | $106.5 | - Comprehensive income for the three-month period ended June 29, 2025, was $71.3 million, a significant increase from a loss of $1.7 million in the prior year, primarily driven by a foreign currency translation gain[19] Condensed Consolidated Statements of Shareholders' Equity This section tracks changes in the company's equity, including share repurchases and comprehensive income - Shareholders' equity decreased from $2,141.7 million at September 30, 2024, to $1,893.8 million at June 29, 2025, primarily due to treasury stock repurchases totaling $287.2 million for the nine-month period[21][74] - Accumulated other comprehensive loss, net of tax, improved from $(204.0) million to $(177.7) million over the nine-month period, mainly due to foreign currency translation gains[13][21] Condensed Consolidated Statements of Cash Flows This section reports cash inflows and outflows from operating, investing, and financing activities | (in millions) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32.5 | $81.9 | | Net cash (used) provided by investing activities | $(25.2) | $885.0 | | Net cash used by financing activities | $(245.0) | $(1,563.9) | | Net change in cash, cash equivalents and restricted cash | $(245.0) | $(596.2) | - Net cash provided by operating activities decreased by $49.4 million, from $81.9 million to $32.5 million, year-over-year[27] - Cash flows from investing activities shifted from a significant inflow of $885.0 million in the prior year to an outflow of $25.2 million, primarily due to reduced short-term investment activity[27][149] - Cash used in financing activities decreased by $1,318.9 million, from $1,563.9 million to $245.0 million, mainly due to lower refinancing activity and reduced share repurchases compared to the prior year[27][150] Notes to the Condensed Consolidated Financial Statements This section provides information on notes to the condensed consolidated financial statements NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES This note outlines the principles of consolidation, fiscal period-end, and recently issued accounting standards. The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information. Several new FASB ASUs (2023-07, 2023-09, 2024-03, 2025-05) are discussed, with their effective dates ranging from fiscal years beginning after December 2023 to December 2025, and the Company is evaluating their potential impact - The Company's fiscal year ends on September 30, with quarterly periods approximately thirteen weeks long, ending on a Sunday. The current reporting period ends June 29, 2025[30] - New accounting standards (ASU 2023-07, 2023-09, 2024-03, 2025-05) related to segment reporting, income tax disclosures, disaggregation of income statement expenses, and credit losses for receivables are being evaluated for their impact on the consolidated financial statements, with effective dates in future fiscal years[31][32][33][34] NOTE 2 – EXIT AND DISPOSAL ACTIVITIES Spectrum Brands initiated restructuring activities within its HPC and GPC segments, as well as shared operations, leading to headcount reductions and termination charges. Total cumulative exit and disposal costs for the nine months ended June 29, 2025, were $8.2 million, with an additional $3 million forecasted - Total cumulative exit and disposal costs for the nine months ended June 29, 2025, were $8.2 million, with $3 million additional costs forecasted[36] | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Exit and disposal costs | $4.2 | $0.1 | $8.2 | $1.0 | | Reported as: Selling, general & administrative expense | $4.2 | $0.1 | $8.2 | $1.0 | - The HPC segment incurred the largest portion of restructuring charges, with $5.3 million for the nine-month period ended June 29, 2025[38] NOTE 3 – REVENUE RECOGNITION AND RECEIVABLES This note details the Company's revenue disaggregation by segment, geographic region, and revenue type, primarily product sales. It also highlights significant customer concentration, with two large retail customers accounting for 36.5% of net sales for the nine-month period ended June 29, 2025, and 47.9% of trade receivables | (in millions) | Nine Month Period Ended June 29, 2025 | Nine Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $2,075.5 | $2,190.2 | | GPC | $784.4 | $849.0 | | H&G | $433.6 | $443.7 | | HPC | $857.5 | $897.5 | | Revenue type (June 29, 2025) | | | | Product Sales | $2,059.3 | | | Licensing | $13.1 | | | Service and other | $3.1 | | - Significant customers (exceeding 10% of net sales) accounted for 36.5% of net sales for the nine-month period ended June 29, 2025, and 47.9% of net trade receivables as of June 29, 2025[43][44] | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Liability for product returns | $10.4 | $14.4 | | Allowance for doubtful accounts | $6.0 | $8.1 | NOTE 4 – INVENTORIES This note provides details on the composition and changes in inventory balances | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Raw materials | $51.6 | $46.8 | | Work-in-process | $6.6 | $5.6 | | Finished goods | $449.3 | $409.7 | | Inventories | $507.5 | $462.1 | - Finished goods increased by $39.6 million, from $409.7 million to $449.3 million, contributing to the overall inventory increase[47] NOTE 5 – PROPERTY, PLANT AND EQUIPMENT This note presents net property, plant and equipment and related impairment charges | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Property, plant and equipment, net | $250.3 | $266.6 | - An impairment charge of $7.8 million was recognized on a finance lease for office space in Middleton, WI, for the three and nine-month periods ended June 29, 2025[49] | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Depreciation expense | $14.6 | $14.1 | $42.6 | $42.9 | | Amortization expense (cloud computing) | $2.2 | $0.6 | $5.2 | $1.9 | NOTE 6 - GOODWILL AND INTANGIBLE ASSETS This note details goodwill and intangible asset balances, including impairment charges | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Goodwill | $868.9 | $864.9 | | Intangible assets, net | $952.0 | $990.4 | - An impairment charge of $15.7 million was recognized on the PowerXL® tradename in the HPC segment during the nine-month period ended June 29, 2025, due to declining sales expectations[52] | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Amortization expense | $10.5 | $11.1 | $31.5 | $33.4 | NOTE 7 – DEBT This note outlines the company's debt structure, borrowings, and exchangeable notes | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total debt | $681.1 | $577.7 | | Long-term debt, net of current portion | $655.9 | $551.4 | - The Company had $103.0 million outstanding under its $500 million Revolver Facility as of June 29, 2025, with $388.5 million borrowing availability[58] - The exchange rate for the 3.375% Exchangeable Notes due June 1, 2029, was adjusted to 8.2229 shares per $1,000 principal amount (approx. $121.61 per share) following an increase in the quarterly dividend rate[59] NOTE 8 - DERIVATIVES This note describes the company's use of derivative financial instruments for risk management - Derivative financial instruments are used to manage foreign currency risk, not for speculative or trading purposes[61] | (in millions) | June 29, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Derivative Assets | $1.3 | $1.8 | | Total Derivative Liabilities | $17.6 | $15.3 | - A net loss of $11.0 million (net of tax) from cash flow hedges is estimated to be reclassified from Accumulated Other Comprehensive Income (AOCI) into earnings over the next 12 months[68] NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS This note explains the fair value measurements for the company's financial instruments | (in millions) | Fair Value (June 29, 2025) | Carrying Amount (June 29, 2025) | | :--- | :--- | :--- | | Derivative Assets | $1.3 | $1.3 | | Derivative Liabilities | $17.6 | $17.6 | | Debt | $624.3 | $666.6 | - Fair value measurements for debt and derivative instruments are primarily based on Level 2 inputs, using quoted or observed market prices[70] NOTE 10 – SHAREHOLDERS' EQUITY This note details changes in shareholders' equity, including share repurchase programs | (in millions except per share data) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | Total Shares Repurchased | 3.7 | 7.4 | | Average Price Paid Per Share | $78.30 | $76.66 | | Total Amount | $287.2 | $565.9 | - The Company terminated two Rule 10b5-1 repurchase plans totaling $200 million and initiated a new $50 million plan in June 2025, with $6.0 million repurchased as of June 29, 2025[74][75][76] NOTE 11 - SHARE BASED COMPENSATION This note presents share-based compensation expense and equity award grants | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Share based compensation expense | $4.8 | $4.5 | $14.7 | $12.9 | | (in millions, except per share data) | Units | Fair Value at Grant Date | | :--- | :--- | :--- | | Total time-based grants | 0.12 | $10.0 | | Performance-based grants | 0.16 | $14.7 | | Total grants | 0.28 | $24.7 | NOTE 12 - ACCUMULATED OTHER COMPREHENSIVE INCOME This note explains the components and changes in accumulated other comprehensive income | (in millions) | Balance at September 30, 2024 | Balance at June 29, 2025 | | :--- | :--- | :--- | | Foreign Currency Translation | $(164.1) | $(134.7) | | Derivative Instruments | $(2.2) | $(5.7) | | Defined Benefit Pension | $(37.7) | $(37.3) | | Total AOCI | $(204.0) | $(177.7) | - Foreign currency translation contributed a gain of $61.7 million (net of tax) for the three-month period and $61.4 million (attributable to controlling interest) for the nine-month period ended June 29, 2025[80] NOTE 13 - INCOME TAXES This note details the effective tax rate and factors influencing income tax expense | | Three Month Periods Ended | Nine Month Periods Ended | | :--- | :--- | :--- | | | June 29, 2025 | June 30, 2024 | June 29, 2025 | June 30, 2024 | | Effective tax rate | 6.8 % | 54.0 % | 32.8 % | 41.1 % | - The lower effective tax rate for the three-month period was influenced by $7.2 million in tax benefits from state law changes and $2.2 million in interest related to uncertain tax positions[85] - The Company is assessing the impact of Pillar Two legislation (global minimum corporate income tax of 15%) and the One Big Beautiful Bill Act, but does not anticipate a significant impact on its effective tax rate from Pillar Two for Fiscal 2025[86][87] NOTE 14 - COMMITMENTS AND CONTINGENCIES This note outlines various litigation, environmental, and product liability matters - Environmental remediation liability stands at $4.5 million as of June 29, 2025[91] - Product liability is estimated at $2.0 million as of June 29, 2025[91] - Costs for product safety recalls in the HPC segment were $5.5 million, with $7.9 million expected to be recovered from third-party indemnification provisions[92] - The Company received $65.0 million in insurance proceeds during the nine-month period ended June 30, 2024, related to the Tristar Business acquisition litigation[93] NOTE 15 - SEGMENT INFORMATION Spectrum Brands operates in three segments: Global Pet Care (GPC), Home & Garden (H&G), and Home & Personal Care (HPC). All segments experienced a decrease in net sales for both the three and nine-month periods ended June 29, 2025, compared to the prior year. Total segment Adjusted EBITDA also decreased, reflecting lower sales volumes, inflationary costs, and tariffs, partially offset by pricing adjustments and productivity improvements | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | | | | | | GPC | $255.2 | $282.2 | $784.4 | $849.0 | | H&G | $189.2 | $211.0 | $433.6 | $443.7 | | HPC | $255.2 | $286.2 | $857.5 | $897.5 | | Total Net sales | $699.6 | $779.4 | $2,075.5 | $2,190.2 | | Adjusted EBITDA | | | | | | GPC | $44.0 | $56.7 | $145.5 | $171.8 | | H&G | $38.6 | $43.3 | $74.6 | $71.8 | | HPC | $7.0 | $11.8 | $41.0 | $56.3 | | Total segment adjusted EBITDA | $89.6 | $111.8 | $261.1 | $299.9 | - GPC net sales decreased by 9.6% (three-month) and 7.6% (nine-month), with Adjusted EBITDA decreasing by 22.4% and 15.3% respectively, due to lower NA volumes, consumer demand softness, and tariff-driven supply constraints[101][143] - H&G net sales decreased by 10.3% (three-month) and 2.3% (nine-month) due to a delayed season and reduced replenishment orders. Adjusted EBITDA for H&G increased by 3.9% for the nine-month period due to improved profitability on lower sales[101][144] - HPC net sales decreased by 10.8% (three-month) and 4.5% (nine-month), with Adjusted EBITDA decreasing by 40.7% and 27.2% respectively, impacted by lower EMEA and NA volumes, tariff-driven supply issues, and reduced consumer demand[101][145] NOTE 16 - EARNINGS PER SHARE This note provides basic and diluted earnings per share calculations and related factors | (in millions, except per share amounts) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic earnings per share from continuing operations | $0.83 | $0.66 | $1.77 | $2.79 | | Basic earnings per share | $0.80 | $0.21 | $1.68 | $3.10 | | Diluted earnings per share from continuing operations | $0.83 | $0.66 | $1.76 | $2.78 | | Diluted earnings per share | $0.80 | $0.21 | $1.68 | $3.09 | - The Exchangeable Notes were anti-dilutive for both periods as the average market price of the Company's common shares was less than the initial conversion price[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance, liquidity, and operational results for the three and nine months ended June 29, 2025. It includes discussions on non-GAAP measures, recent developments like U.S. tariffs and strategic initiatives, consolidated results of operations, segment performance, and liquidity and capital resources Introduction This section provides context for the financial discussion and highlights forward-looking statements - The discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes in this 10-Q and the 2024 Annual Report on Form 10-K[107] - The section contains forward-looking statements subject to risks and uncertainties, as detailed in the 'Forward-Looking Statements' section[107] Non-GAAP Measurements This section defines and reconciles non-GAAP financial measures used by management - The Company uses non-GAAP metrics such as organic net sales, adjusted EBITDA, and adjusted EBITDA margin to provide supplemental information on operational strength and performance[109][112] - Organic net sales exclude the effects of foreign currency exchange rate changes and acquisitions, providing insight into regional and operating segment performance[110] | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $699.6 | $779.4 | $2,075.5 | $2,190.2 | | Organic Net Sales | $692.8 | $779.4 | $2,083.9 | $2,190.2 | | Organic Net Sales Variance | $(86.6) (-11.1%) | - | $(106.3) (-4.9%) | - | | Adjusted EBITDA | $76.6 | $106.3 | $225.7 | $303.0 | | Adjusted EBITDA margin | 10.9 % | 13.6 % | 10.9 % | 13.8 % | Overview This section provides a general overview of the company's business and financial context Recent Developments This section highlights significant recent events impacting the company's operations and financial condition U.S. Tariffs and Global Macro-Economic Environment New U.S. tariffs on Chinese imports have increased costs and pressured profit margins, particularly for the HPC segment. The Company temporarily paused Chinese imports but reinstated them, mitigating impact through pricing adjustments, supply chain diversification, and operational efficiencies. The HPC segment is actively moving production, while GPC and H&G have diversified sourcing or limited exposure - Incremental U.S. tariffs on Chinese imports have increased costs, especially for the HPC segment, which sources most U.S. products from Southeast Asia, primarily China[118][119] - The Company temporarily paused finished goods imports from China but reinstated them, expecting improved fulfillment and distribution by year-end[118][119] - Mitigation efforts include pricing adjustments, supply chain diversification (HPC moving production), and operational efficiencies to offset cost increases[118][119][122] Strategic Transactions, Restructuring and Optimization Initiatives The Company incurred $10.0 million in costs for strategic transactions and optimization initiatives for the nine-month period ended June 29, 2025, down from $23.2 million in the prior year. These costs include HHI separation, HPC separation initiatives, and Global ERP transformation, aimed at improving efficiencies and reducing costs | (in millions) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | HHI separation costs | $1.4 | $3.0 | | HPC separation initiatives | $0.9 | $8.5 | | Global ERP transformation | $7.1 | $11.2 | | Other project costs | $0.6 | $0.5 | | Total | $10.0 | $23.2 | - Costs for HPC separation initiatives decreased from $8.5 million to $0.9 million, and HHI separation costs decreased from $3.0 million to $1.4 million, reflecting progress in these strategic efforts[123] Exit and Disposal Activity Exit and disposal costs, primarily severance and contract termination, are recognized due to reorganizations or cost-saving initiatives. These costs are considered incremental and not reflective of ongoing operating costs, impacting financial comparability - Exit and disposal costs are primarily severance and contract termination costs from reorganizations or cost savings initiatives[124] - These costs are considered incremental and non-recurring, affecting the comparability of financial results[124] Refinancing Activity In May 2024, the Company issued $350.0 million in 3.375% Exchangeable Senior Notes due 2029 and concurrently completed a tender offer and redeemed outstanding principal debt, reducing the principal debt balance by $1,174.4 million. This resulted in a $2.2 million loss on early extinguishment in the prior year, partially offset by a $4.7 million gain from open market bond repurchases - Issued $350.0 million of 3.375% Exchangeable Senior Notes due June 1, 2029, in May 2024[126] - Completed a tender offer and redeemed outstanding debt, reducing principal debt by $1,174.4 million, resulting in a $2.2 million loss on early extinguishment in the prior year[126] - Recognized a $4.7 million gain on extinguishment from repurchasing outstanding bonds in the open market during the nine-month period ended June 30, 2024[126] Consolidated Results of Operations This section discusses the company's overall financial performance, including sales, profit, and expenses Net Sales Consolidated net sales decreased by 10.2% to $699.6 million for the three-month period and by 5.2% to $2,075.5 million for the nine-month period ended June 29, 2025. The decline was primarily driven by lower volumes across all segments, partially offset by positive pricing adjustments and favorable foreign currency impacts in some periods | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $699.6 | $779.4 | $2,075.5 | $2,190.2 | | Variance | $(79.8) (-10.2%) | - | $(114.7) (-5.2%) | - | | (in millions, except %) | Three Month Period Ended (Volume) | Three Month Period Ended (Price) | Three Month Period Ended (Foreign Currency) | | :--- | :--- | :--- | :--- | | GPC | $(32.0) (-11.3%) | $(0.3) (-0.1%) | $5.3 (1.9%) | | H&G | $(23.2) (-11.0%) | $1.5 (0.7%) | $(0.1) (0.0%) | | HPC | $(36.1) (-12.6%) | $3.5 (1.2%) | $1.6 (0.6%) | | Total | $(91.3) (-11.7%) | $4.7 (0.6%) | $6.8 (0.9%) | - Organic net sales decreased by 11.1% for the three-month period and 4.9% for the nine-month period, indicating broad-based volume declines[111] Gross Profit Gross profit decreased by 12.8% to $264.1 million for the three-month period and by 5.6% to $775.3 million for the nine-month period. Gross profit margin decreased by 110 basis points to 37.8% for the three-month period, primarily due to lower volumes, unfavorable mix, and increased costs from inflation and tariffs, partially offset by pricing and operational efficiencies | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross profit | $264.1 | $302.8 | $775.3 | $821.2 | | Gross profit margin | 37.8 % | 38.9 % | 37.4 % | 37.5 % | | Variance (3-month) | $(38.7) (-12.8%) | - | - | - | | Variance (9-month) | - | - | $(45.9) (-5.6%) | - | - For the three-month period, gross profit margin decreased by 110 basis points due to lower volumes, unfavorable mix (-130 bps), and increased costs (-100 bps), partially offset by pricing (+50 bps)[132] Selling, General & Administrative Selling, general & administrative (SG&A) expenses decreased by 10.0% to $225.0 million for the three-month period and by 4.7% to $656.3 million for the nine-month period. This reduction was driven by lower distribution costs due to reduced volumes and optimization efforts, and decreased strategic transaction and restructuring costs, partially offset by increased brand-focused marketing in the nine-month period | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total selling, general & administrative | $225.0 | $250.0 | $656.3 | $689.0 | | % of Net Sales (3-month) | 32.2 % | 32.1 % | - | - | | % of Net Sales (9-month) | - | - | 31.6 % | 31.5 % | - Distribution costs decreased by 15.9% for the three-month period and 8.6% for the nine-month period due to lower volumes and optimization[134] - Strategic transaction, restructuring and optimization costs decreased by 39.1% for the three-month period and 24.8% for the nine-month period[134] Impairment of Intangible Assets The Company recognized a $15.7 million impairment charge on its PowerXL® tradename during the nine-month period ended June 29, 2025, due to declining sales expectations. No impairment was recognized in the three-month period - A $15.7 million impairment charge was recognized on the PowerXL® tradename in the nine-month period ended June 29, 2025[135] Impairment of Property, Plant and Equipment and Leases An impairment charge of $7.8 million was recognized on the Middleton, WI office lease for both the three and nine-month periods ended June 29, 2025, following the Company's exit from transition service agreements - An impairment charge of $7.8 million was recognized on the Middleton, WI office lease for the three and nine-month periods ended June 29, 2025[136] 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 representation and warranty insurance policies related to the Tristar Business acquisition. No comparable activity occurred in the current periods - A non-recurring gain of $65.0 million from insurance proceeds related to the Tristar Business acquisition was recognized in the nine-month period ended June 30, 2024[137] Interest Expense Interest expense decreased significantly during both the three and nine-month periods due to reduced debt borrowings following refinancing activities in the prior year | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest expense | $8.4 | $15.7 | $22.1 | $51.8 | | Variance (3-month) | $(7.3) (-46.5%) | - | - | - | | Variance (9-month) | - | - | $(29.7) (-57.3%) | - | Interest Income Interest income decreased during both the three and nine-month periods due to lower balances in term deposits, as funds were used for refinancing activities in the prior year | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest income | $(0.6) | $(13.4) | $(3.6) | $(54.3) | | Variance (3-month) | $12.8 | - | - | - | | Variance (9-month) | - | - | $50.7 | - | Loss (Gain) From Early Extinguishment of Debt The Company recognized a net loss (gain) from early extinguishment of debt in the three and nine-month periods ended June 30, 2024, due to refinancing activities. No comparable activity occurred in the current periods ended June 29, 2025 | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Loss (gain) from early extinguishment of debt | $0.0 | $2.2 | $0.0 | $(2.6) | Other Non-Operating Expense, Net Other non-operating expense, net, remained relatively consistent, primarily reflecting changes in foreign currency compared to the prior year | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Other non-operating expense, net | $1.5 | $1.7 | $7.2 | $7.0 | Income Taxes Income tax expense decreased significantly for the three-month period due to a lower effective tax rate (6.8% vs. 54.0%), influenced by state law changes and accrued interest on uncertain tax positions. For the nine-month period, income tax expense also decreased, with an effective tax rate of 32.8% | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $1.5 | $22.4 | $22.9 | $60.3 | | Variance (3-month) | $(20.9) (-93.3%) | - | - | - | | Variance (9-month) | - | - | $(37.4) (-62.0%) | - | - The effective tax rate for the three months ended June 29, 2025, was 6.8%, compared to 54.0% in the prior year, primarily due to state law changes and interest on uncertain tax positions[85][140] Income From Discontinued Operations Income from discontinued operations primarily reflects changes to indemnifications related to divested businesses. The prior year's nine-month period included a tax-related indemnification settlement and reduction in accrued transaction costs, which were not present in the current period | (in millions) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | (Loss) income from discontinued operations, net of tax | $(0.8) | $(13.1) | $(2.2) | $9.6 | - The prior year's nine-month income from discontinued operations included a $9.6 million gain from a tax-related indemnification settlement and reduced transaction costs[141] Noncontrolling Interest Net income attributable to noncontrolling interest represents the share of net income or loss from subsidiaries not wholly-owned by the Company, varying with the subsidiary's performance and the percentage of noncontrolling interest - Noncontrolling interest reflects the share of net income or loss from partially owned subsidiaries[142] Segment Financial Data This section presents detailed financial performance for each of the company's operating segments Global Pet Care (GPC) GPC net sales decreased by 9.6% for the three-month period and 7.6% for the nine-month period, primarily due to lower North America volumes from consumer demand softness, reduced distribution from tariff-driven pricing negotiations, and supply constraints. Adjusted EBITDA decreased by 22.4% and 15.3% respectively, impacted by lower volumes, inflationary costs, and an unfavorable mix | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $255.2 | $282.2 | $784.4 | $849.0 | | Adjusted EBITDA | $44.0 | $56.7 | $145.5 | $171.8 | | Adjusted EBITDA margin | 17.2 % | 20.1 % | 18.5 % | 20.2 % | - Organic net sales for GPC decreased by 11.4% for the three-month period and 8.0% for the nine-month period[143] - North America volumes were negatively impacted by consumer demand softness and supply constraints from pausing China-sourced purchases due to tariffs[143] Home & Garden (H&G) H&G net sales decreased by 10.3% for the three-month period and 2.3% for the nine-month period, primarily due to a delayed season and reduced replenishment orders. Adjusted EBITDA decreased by 10.9% for the three-month period but increased by 3.9% for the nine-month period, with margin improvement driven by favorable trade variances and cost improvements | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $189.2 | $211.0 | $433.6 | $443.7 | | Adjusted EBITDA | $38.6 | $43.3 | $74.6 | $71.8 | | Adjusted EBITDA margin | 20.4 % | 20.5 % | 17.2 % | 16.2 % | - Net sales and organic net sales for H&G decreased due to a delayed season and slower retail sales, leading to reduced replenishment orders[144] - Nine-month Adjusted EBITDA margin increased by 100 basis points due to improved profitability on lower sales, favorable trade variances, and cost improvements[144] Home and Personal Care (HPC) HPC net sales decreased by 10.8% for the three-month period and 4.5% for the nine-month period, driven by lower volumes in EMEA and North America due to slower distribution, reduced consumer demand, and tariff-driven supply constraints. Adjusted EBITDA decreased by 40.7% and 27.2% respectively, impacted by reduced sales volumes, inflation, tariffs, and an unfavorable mix | (in millions, except %) | Three Month Periods Ended June 29, 2025 | Three Month Periods Ended June 30, 2024 | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $255.2 | $286.2 | $857.5 | $897.5 | | Adjusted EBITDA | $7.0 | $11.8 | $41.0 | $56.3 | | Adjusted EBITDA margin | 2.7 % | 4.1 % | 4.8 % | 6.3 % | - Organic net sales for HPC decreased by 11.4% for the three-month period and 3.1% for the nine-month period[145] - North America volumes were impacted by lower distribution due to tariff-driven pricing negotiations and supply constraints from pausing China-sourced purchases[145] Liquidity and Capital Resources This section analyzes the company's cash position, debt, and ability to meet its financial obligations Cash Flows from Operating Activities Cash flows provided by operating activities from continuing operations decreased by $145.3 million to $33.1 million for the nine-month period, primarily due to lower sales and temporary changes in inventory purchasing related to tariff volatility, despite improved margins and lower operating/interest costs | (in millions) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | Operating activities | $33.1 | $178.4 | - The decrease in operating cash flow was driven by lower sales and temporary changes in inventory purchasing due to tariff volatility[148] Cash Flows from Investing Activities Cash flows used for investing activities increased by $910.2 million, shifting from a cash inflow of $885.0 million in the prior year to an outflow of $25.2 million. This change was primarily due to decreased short-term investment activity following the use of funds for refinancing | (in millions) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | Investing activities | $(25.2) | $885.0 | - The significant change was driven by decreased short-term investment activity, as funds were used for prior year refinancing[149] Cash Flows from Financing Activities Cash flows used for financing activities decreased by $1,318.9 million to $245.0 million, primarily due to reduced refinancing activity and lower share repurchases compared to the prior year. Dividend payments also decreased due to fewer outstanding shares | (in millions) | Nine Month Periods Ended June 29, 2025 | Nine Month Periods Ended June 30, 2024 | | :--- | :--- | :--- | | Financing activities | $(245.0) | $(1,563.9) | | Dividends paid to shareholders | $(36.9) | $(38.8) | | Treasury stock purchases | $(287.2) | $(482.7) | - The decrease in cash used was primarily due to lower refinancing activity and reduced share repurchases compared to the prior year[150] Liquidity Outlook The Company expects sufficient cash flows from operations and available credit to meet operating and capital expenditure requirements for at least the next 12 months. As of June 29, 2025, total liquidity was $510.5 million, comprising $122.0 million in cash and $388.5 million in borrowing availability. The Company was in compliance with all debt covenants - Total liquidity as of June 29, 2025, was $510.5 million, consisting of $122.0 million in cash and $388.5 million in borrowing availability under its credit facility[151] - The Company expects cash flows from operations to be sufficient for operating and capital expenditure requirements for at least the next 12 months[151] - As of June 29, 2025, the Company was in compliance with all covenants under its Credit Agreement and indentures[152] Critical Accounting Policies and Estimates This section confirms no material changes to critical accounting estimates - There have been no material changes to the Company's critical accounting estimates as discussed in its 2024 Annual Report[159] New Accounting Pronouncements This section refers to disclosures regarding new accounting standards - Information about newly adopted and recent accounting pronouncements not yet adopted is provided in Note 1 – Basis of Presentation and Significant Accounting Policies[160] Guarantor Statements This section provides summarized financial information for the Obligor (Spectrum Brands, Inc. as issuer, Spectrum Brands Holdings, Inc. as parent guarantor, and domestic subsidiaries as subsidiary guarantors). For the nine months ended June 29, 2025, the Obligor reported $1,275.3 million in net sales and a net loss of $127.9 million - The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Spectrum Brands Holdings, Inc. and SBI's domestic subsidiaries[161] | (in millions) | Nine Month Period Ended June 29, 2025 | Year Ended September 30, 2024 | | :--- | :--- | :--- | | Third party net sales | $1,237.5 | $1,829.4 | | Net sales | $1,275.3 | $1,852.2 | | Operating (loss) income | $(1.8) | $22.2 | | Net loss from continuing operations | $(125.7) | $(23.6) | | Net loss | $(127.9) | $(6.1) | | 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 | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in the Company's market risk occurred during the nine-month period ended June 29, 2025. Further details on market risk factors are available in Note 7 (Debt) and Note 8 (Derivatives) of this report, and in the Company's 2024 Annual Report - No material change in the Company's market risk occurred during the nine-month period ended June 29, 2025[165] Item 4. Controls and Procedures Management concluded that the Company's disclosure controls and procedures were effective as of June 29, 2025. The Company implemented a new global ERP system in its GPC and H&G businesses in North America, which involved modifying existing controls and implementing new ones to enhance internal controls over financial reporting. No other material changes to internal control over financial reporting occurred during the three-month period - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 29, 2025[166] - A new global ERP system (SAP S/4 HANA) was implemented in the GPC and H&G businesses in North America, leading to modifications and new internal controls to enhance financial reporting[167] - No other material changes in internal control over financial reporting occurred during the three-month period ended June 29, 2025[168] PART II. OTHER INFORMATION This part includes legal proceedings, risk factors, equity sales, and other relevant disclosures Item 1. Legal Proceedings The Company is involved in various litigation matters arising in the ordinary course of business. Based on current information, management does not believe any pending matters will have a material adverse effect on its operations, financial condition, liquidity, or cash flows. Further details are in Note 14 – Commitments and Contingencies - The Company is a defendant in various litigation matters arising in the ordinary course of business[170] - Management does not believe any pending legal proceedings will have a material adverse effect on the Company's financial results[170] Item 1A. Risk Factors The Company faces risks associated with international suppliers and supply chains, particularly concerning unfavorable regulatory, political, economic, tax, tariff, export, and import controls. Recent U.S. trade policy changes, including increased tariffs on Chinese imports, have required price increases or resulted in lower gross margins. Mitigation efforts, such as alternative sourcing, may not always be successful, and further geopolitical deterioration could materially impact the business - The Company faces risks from international suppliers and supply chains, including those related to tariffs and trade policies imposed by the U.S. and other governments[172] - Increased tariffs on Chinese imports have led to higher prices for customers or lower gross margins[172] - Attempts to mitigate supply chain disruptions and cost pressures through alternative sourcing or price increases may not always be successful[172] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not issue or sell any unregistered equity securities during the three-month period ended June 29, 2025. It continued its common stock repurchase program, buying back 0.9 million shares for $54.4 million during the quarter, as part of a $500 million authorization - No unregistered sales of equity securities occurred during the three-month period ended June 29, 2025[173] | | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | March 31, 2025 to April 27, 2025 | 280,661 | $61.03 | 280,661 | | April 28, 2025 to May 25, 2025 | 344,294 | $59.87 | 344,294 | | May 26, 2025 to June 29, 2025 | 282,081 | $58.76 | 282,081 | | Total (3-month) | 907,036 | $59.88 | 907,036 | - As of June 29, 2025, approximately $115.6 million remained available under the $500 million common stock repurchase program authorized in May 2024[174] Item 5. Other Information During the three-month period ended June 29, 2025, no officers or directors adopted, modified, or terminated any Rule 10b5-1(c) trading arrangements or non-Rule 10b5-1 trading arrangements - No officers or directors adopted, modified, or terminated Rule 10b5-1(c) trading arrangements during the three-month period ended June 29, 2025[175] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and XBRL-related documents (Exhibits 101.INS to 101.PRE, and 104) - The exhibit index includes certifications from the Chief Executive Officer and Chief Financial Officer as required by the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[180] - XBRL-related information is furnished, not filed, in accordance with Regulation S-T[180]