Spectrum Brands(SPB) - 2023 Q2 - Quarterly Report

Forward-Looking Statements The document contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially - The document contains forward-looking statements based on current expectations, subject to risks and uncertainties that could cause actual results to differ materially[9][10] - Key risk factors include the impact of the COVID-19 pandemic, economic conditions (inflation, recession fears), the Russia-Ukraine conflict, reliance on third-party partners, indebtedness, interest rate and foreign currency fluctuations, changes in consumer demand, competitive pressures, and the ability to complete the HHI divestiture[10][13] PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for SBH and SB/RH, covering financial position, income, cash flows, and detailed notes Spectrum Brands Holdings, Inc. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Financial Position (SBH) (in millions) | Item | April 2, 2023 | September 30, 2022 | | :-------------------------------- | :------------ | :----------------- | | Total current assets | $3,171.3 | $3,235.3 | | Total assets | $5,785.0 | $5,775.6 | | Total current liabilities | $1,176.6 | $1,188.1 | | Total liabilities | $4,595.9 | $4,506.5 | | Total equity | $1,189.1 | $1,269.1 | Condensed Consolidated Statements of Income (SBH) (in millions, except per share) | Item | Three Months Ended April 2, 2023 | Three Months Ended April 3, 2022 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $729.2 | $807.8 | | Gross profit | $214.5 | $255.6 | | Operating loss | $(77.0) | $(8.1) | | Net loss from continuing operations | $(75.0) | $(25.1) | | Income from discontinued operations, net of tax | $21.4 | $41.1 | | Net (loss) income | $(53.6) | $16.0 | | Basic earnings per share | $(1.31) | $0.39 | | Diluted earnings per share | $(1.31) | $0.39 | | Item | Six Months Ended April 2, 2023 | Six Months Ended April 3, 2022 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,442.5 | $1,565.0 | | Gross profit | $416.4 | $474.9 | | Operating loss | $(97.2) | $(32.0) | | Net loss from continuing operations | $(115.0) | $(55.3) | | Income from discontinued operations, net of tax | $40.9 | $79.9 | | Net (loss) income | $(74.1) | $24.6 | | Basic earnings per share | $(1.82) | $0.59 | | Diluted earnings per share | $(1.82) | $0.59 | Condensed Consolidated Statements of Cash Flows (SBH) (in millions) | Item | Six Months Ended April 2, 2023 | Six Months Ended April 3, 2022 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided (used) by operating activities | $177.6 | $(206.9) | | Net cash used by investing activities | $(33.8) | $(351.0) | | Net cash (used) provided by financing activities | $(69.6) | $566.7 | | Net change in cash, cash equivalents and restricted cash | $83.9 | $5.8 | | Cash, cash equivalents, and restricted cash, end of period | $327.8 | $195.8 | SB/RH Holdings, LLC Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Statements of Financial Position (SB/RH) (in millions) | Item | April 2, 2023 | September 30, 2022 | | :-------------------------------- | :------------ | :----------------- | | Total current assets | $3,260.0 | $3,321.4 | | Total assets | $5,814.9 | $5,861.1 | | Total current liabilities | $1,182.6 | $1,182.6 | | Total liabilities | $4,761.2 | $4,728.0 | | Total equity | $1,053.7 | $1,133.1 | Condensed Consolidated Statements of Income (SB/RH) (in millions) | Item | Three Months Ended April 2, 2023 | Three Months Ended April 3, 2022 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $729.2 | $807.8 | | Gross profit | $214.5 | $255.6 | | Operating loss | $(76.3) | $(7.3) | | Net loss from continuing operations | $(75.2) | $(24.6) | | Income from discontinued operations, net of tax | $21.9 | $41.1 | | Net (loss) income | $(53.3) | $16.5 | | Item | Six Months Ended April 2, 2023 | Six Months Ended April 3, 2022 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,442.5 | $1,565.0 | | Gross profit | $416.4 | $474.9 | | Operating loss | $(96.5) | $(30.8) | | Net loss from continuing operations | $(115.0) | $(54.7) | | Income from discontinued operations, net of tax | $41.4 | $79.9 | | Net (loss) income | $(73.6) | $25.2 | Condensed Consolidated Statements of Cash Flows (SB/RH) (in millions) | Item | Six Months Ended April 2, 2023 | Six Months Ended April 3, 2022 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided (used) by operating activities | $167.2 | $(239.3) | | Net cash used by investing activities | $(33.8) | $(351.0) | | Net cash (used) provided by financing activities | $(59.1) | $599.2 | | Net change in cash, cash equivalents and restricted cash | $84.0 | $5.9 | | Cash, cash equivalents, and restricted cash, end of period | $326.6 | $194.2 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements for both Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC, covering significant accounting policies, recent accounting standards, details on divestitures, restructuring charges, revenue recognition, debt, derivatives, and segment information NOTE 1– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The financial statements are unaudited and prepared in accordance with GAAP for interim financial information. The fiscal year ends September 30, with quarterly periods approximately thirteen weeks long - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions[46] - The fiscal year ends September 30, with quarterly periods approximately thirteen weeks long, except for the first and fourth quarters[47] - ASU 2020-04 (Reference Rate Reform) adoption had no material impact; ASU 2022-04 (Supplier Finance Programs) is currently being evaluated for its effect[48][49] NOTE 2 – DIVESTITURES The Company's Hardware and Home Improvement (HHI) segment is classified as held for sale and reported as discontinued operations. The sale to ASSA ABLOY AB for $4.3 billion is expected to close by June 30, 2023 - The HHI segment is classified as held for sale and its operations as discontinued, with a definitive agreement to sell to ASSA ABLOY AB for $4.3 billion[51] - The HHI transaction is expected to close by June 30, 2023, following a settlement with the DOJ where ASSA ABLOY agreed to divest Emtek and Smart Residential Business to Fortune Brands[56] Income from Discontinued Operations, Net of Tax (in millions) | Period | April 2, 2023 | April 3, 2022 | | :--------------------------------------- | :------------ | :------------ | | Three Months Ended | $21.4 | $41.1 | | Six Months Ended | $40.9 |