Spectrum Brands Holdings, Inc. [SPB] Filings

10-Q 1 spb-20240630.htm 10-Q spb-20240630

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 June 30, 2024

☐ 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 Identification No.

1-4219

Spectrum Brands Holdings, Inc.

74-1339132

(a Delaware corporation)

3001 Deming Way

Middleton, WI 53562

(608) 275-3340

www.spectrumbrands.com

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange On Which Registered

Common Stock, $0.01 par value

SPB

New York Stock Exchange

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter

Yes

☐

☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

As of August 5, 2024, there were 28,030,597 shares outstanding of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.

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Forward-Looking Statements

We have made or implied certain forward-looking statements in this document and may make additional oral forward-looking statements from time to time. All statements, other than statements of historical facts included or incorporated by reference in this document, including the statements under Management’s Discussion and Analysis of Financial Condition and Results of Operations, without limitation, statements or expectations regarding our business strategy, future operations, financial condition, estimated revenues, projected costs, inventory management, earnings power, projected synergies, prospects, plans and objectives of management, outcome of any litigation and information concerning expected actions of third parties are forward-looking statements. When used in this report, the words future, anticipate, pro forma, seek, intend, plan, envision, estimate, believe, belief, expect, project, forecast, outlook, earnings framework, goal, target, could, would, will, can, should, may and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Since these forward-looking statements are based upon our current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control and some of which may change rapidly, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation:

•the economic, social and political conditions or civil unrest, terrorist attacks, acts of war, natural disasters, other public health concerns or unrest in the United States ("U.S.") or the international markets impacting our business, customers, employees (including our ability to retain and attract key personnel), manufacturing facilities, suppliers, capital markets, financial condition and results of operations, all of which tend to aggravate the other risks and uncertainties we face;

•the impact of a number of local, regional and global uncertainties could negatively impact our business;

•the negative effect of the Russia-Ukraine war and the Israel-Hamas war and their impact on those regions and surrounding regions, including the Middle East and disruptions to international trade, supply chain and shipping routes and pricing, and on our operations and those operations of our customers, suppliers and other stakeholders;

•our increased reliance on third-party partners, suppliers and distributors to achieve our business objectives;

•the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring and optimization activities, including changes in inventory and distribution center changes which are complicated and involve coordination among a number of stakeholders, including our suppliers and transportation and logistics handlers;

•the impact of our indebtedness and financial leverage position on our business, financial condition and results of operations;

•the impact of restrictions in our debt instruments on our ability to operate our business, finance our capital needs or pursue or expand business strategies;

•any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;

•the effects of general economic conditions, including the impact of, and changes to tariffs and trade policies, inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or monetary or fiscal policies in the countries where we do business;

•the impact of fluctuations in transportation and shipment costs, fuel costs, commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;

•interest rate fluctuations;

•changes in foreign currency exchange rates that may impact our purchasing power, pricing and margin realization within international jurisdictions;

•the loss of, significant reduction in or dependence upon, sales to any significant retail customer(s), including their changes in retail inventory levels and management thereof;

•competitive promotional activity or spending by competitors, or price reductions by competitors;

•the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;

•changes in consumer spending preferences and demand for our products, particularly in light of economic stress;

•our ability to develop and successfully introduce new products, protect intellectual property and avoid infringing the intellectual property of third parties;

•our ability to successfully identify, implement, achieve and sustain productivity improvements, cost efficiencies (including at our manufacturing and distribution operations) and cost savings;

•the seasonal nature of sales of certain of our products;

•the impact weather conditions may have on the sales of certain of our products;

•the effects of climate change and unusual weather activity as well as our ability to respond to future natural disasters and pandemics and to meet our environmental, social and governance goals;

•the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);

•public perception regarding the safety of products that we manufacture and sell, including the potential for environmental liabilities, product liability claims, litigation and other claims related to products manufactured by us and third parties;

•the impact of existing, pending or threatened litigation, government regulation or other requirements or operating standards applicable to our business;

•the impact of cybersecurity breaches or our actual or perceived failure to protect company and personal data, including our failure to comply with new and increasingly complex global data privacy regulations;

•changes in accounting policies applicable to our business;

•our discretion to adopt, conduct, suspend or discontinue any share repurchase program or conduct any debt repayments, redemptions, repurchases or refinancing transactions (including our discretion to conduct purchases or repurchases, if any, in a variety of manners including open-market purchases, privately negotiated transactions, tender offers, redemptions, or otherwise);

•our ability to utilize net operating loss carry-forwards to offset tax liabilities;

•our ability to separate the Company's Home and Personal Care ("HPC") business and create an independent Global Appliances business on expected terms, and within the anticipated time period, or at all, and to realize the potential benefits of such business;

•our ability to create a pure play consumer products company composed of our Global Pet Care ("GPC") and Home & Garden ("H&G") business and to realize the expected benefits of such creation, and within the anticipated time period, or at all;

•our ability to successfully implement, and realize the benefits of, acquisitions or dispositions and the impact of any such transactions on our financial performance;

•the impact of actions taken by significant shareholders; and

•the unanticipated loss of key members of senior management and the transition of new members of our management teams to their new roles.

Some of the above-mentioned factors are described in further detail in the sections entitled Risk Factors in our annual and quarterly reports (including this report), as applicable. You should assume the information appearing in this report is accurate only as of the end of the period covered by this report, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the U.S. and the rules and regulations of the United States Securities and Exchange Commission (“SEC”), we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

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TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Statements of Financial Position as of June 30 , 2024 and September 30, 2023	2
	Condensed Consolidated Statements of Income for the three and nine month periods ended June 30, 2024 and Ju l y 2, 2023	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine month periods ended June 30 , 2024 and July 2, 2023	4
	Condensed Consolidated Statements of Shareholders’ Equity for the nine month periods ended June 30 , 2024 and July 2, 2023	5
	Condensed Consolidated Statements of Cash Flows for the nine month periods ended June 30 , 2024 and July 2, 2023	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 5.	Other Information	40
Item 6.	Exhibits	40
Signatures		41

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Financial Position

As of June 30, 2024 and September 30, 2023

(unaudited)


(in millions)	June 30, 2024		September 30, 2023
Assets
Cash and cash equivalents	$	157.7	$	753.9
Short term investments	149.1		1,103.3
Trade receivables, net	619.2		477.1
Other receivables	85.3		84.5
Inventories	439.9		462.8
Prepaid expenses and other current assets	41.8		44.3

Total current assets	1,493.0		2,925.9
Property, plant and equipment, net	266.5		275.1
Operating lease assets	105.4		110.8
Deferred charges and other	41.7		31.8
Goodwill	858.1		854.7
Intangible assets, net	990.6		1,060.1

Total assets	$	3,755.3	$	5,258.4
Liabilities and Shareholders' Equity
Current portion of long-term debt	$	9.1	$	8.6
Accounts payable	369.4		396.6
Accrued wages and salaries	61.0		46.1
Accrued interest	3.1		20.6
Income tax payable	41.3		114.5
Other current liabilities	170.2		178.4

Total current liabilities	654.1		764.8
Long-term debt, net of current portion	551.4		1,546.9
Long-term operating lease liabilities	92.2		95.6
Deferred income taxes	175.3		174.8
Other long-term liabilities	197.2		158.0

Total liabilities	1,670.2		2,740.1
Commitments and contingencies (Note 15)
Shareholders' equity
Common stock	0.5		0.5
Additional paid-in capital	1,983.1		1,920.8
Accumulated earnings	2,152.6		2,096.0
Accumulated other comprehensive loss, net of tax	(238.9)		(249.4)
Treasury stock	(1,812.7)		(1,250.3)
Total shareholders' equity	2,084.6		2,517.6
Non-controlling interest	0.5		0.7
Total equity	2,085.1		2,518.3
Total liabilities and equity	$	3,755.3	$	5,258.4

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Income

For the three and nine month periods ended June 30, 2024 and July 2, 2023

(unaudited)


	Three Month Periods Ended				Nine Month Periods Ended
(in millions, except per share)	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Net sales	$	779.4	$	735.5	$	2,190.2	$	2,178.1
Cost of goods sold	476.6		472.0		1,369.0		1,498.2
Gross profit	302.8		263.5		821.2		679.9
Selling, general & administrative	255.1		223.4		694.6		671.4


Impairment of goodwill	—		111.1		—		111.1
Impairment of intangible assets	—		53.7		43.0		120.7
Representation and warranty insurance proceeds	—		—		(65.0)		—
Gain from remeasurement of contingent consideration liability	—		—		—		(1.5)
Total operating expenses	255.1		388.2		672.6		901.7
Operating income (loss)	47.7		(124.7)		148.6		(221.8)
Interest expense	15.7		30.3		51.8		95.3
Interest income	(13.4)		(5.4)		(54.3)		(5.6)
Loss (gain) from early extinguishment of debt	2.2		8.6		(2.6)		8.6
Other non-operating expense, net	1.7		0.1		7.0		0.1
Income (loss) from continuing operations before income taxes	41.5		(158.3)		146.7		(320.2)
Income tax expense (benefit)	22.4		13.9		60.3		(33.0)
Net income (loss) from continuing operations	19.1		(172.2)		86.4		(287.2)
(Loss) income from discontinued operations, net of tax	(13.1)		2,031.8		9.6		2,072.7
Net income	6.0		1,859.6		96.0		1,785.5
Net (loss) income from continuing operations attributable to non-controlling interest	(0.1)		0.2		(0.2)		0.5
Income from discontinued operations attributable to non-controlling interest, net of tax	—		0.2		—		0.3
Net income attributable to controlling interest	$	6.1	$	1,859.2	$	96.2	$	1,784.7
Amounts attributable to controlling interest
Net income (loss) from continuing operations attributable to controlling interest	$	19.2	$	(172.4)	$	86.6	$	(287.7)
(Loss) income from discontinued operations attributable to controlling interest, net of tax	(13.1)		2,031.6		9.6		2,072.4
Net income attributable to controlling interest	$	6.1	$	1,859.2	$	96.2	$	1,784.7
Earnings Per Share
Basic earnings per share from continuing operations	$	0.66	$	(4.27)	$	2.79	$	(7.06)
Basic earnings per share from discontinued operations	(0.45)		50.34		0.31		50.87
Basic earnings per share	$	0.21	$	46.07	$	3.10	$	43.81
Diluted earnings per share from continuing operations	$	0.66	$	(4.27)	$	2.78	$	(7.06)
Diluted earnings per share from discontinued operations	(0.45)		50.34		0.31		50.87
Diluted earnings per share	$	0.21	$	46.07	$	3.09	$	43.81
Dividend per share	$	0.42	$	0.42	$	1.26	$	1.26
Weighted Average Shares Outstanding
Basic	28.9		40.4		31.0		40.7
Diluted	29.1		40.4		31.2		40.7

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Comprehensive Income

For the three and nine month periods ended June 30, 2024 and July 2, 2023

(unaudited)


	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Net income	$	6.0	$	1,859.6	$	96.0	$	1,785.5
Other comprehensive (loss) income
Foreign currency translation adjustment
Foreign currency translation (loss) gain	(7.7)		9.8		17.1		97.4
Unrealized (loss) income from net investment hedge	(3.5)		1.8		(13.2)		(44.6)
Foreign currency translation adjustment before tax	(11.2)		11.6		3.9		52.8
Deferred tax effect	0.8		(0.4)		3.6		12.1
Foreign currency translation adjustment, net	(10.4)		11.2		7.5		64.9
Unrealized gain (loss) on derivative instruments
Unrealized gain (loss) on derivative instruments before reclassification	1.6		(9.0)		(7.7)		(41.4)
Net reclassification for loss to income from continuing operations	2.4		3.6		12.3		6.0
Net reclassification for loss to income from discontinued operations	—		2.4		—		2.3
Unrealized gain (loss) on derivative instruments after reclassification	4.0		(3.0)		4.6		(33.1)
Deferred tax effect	(1.4)		0.8		(1.5)		8.6
Net unrealized gain (loss) on derivative instruments	2.6		(2.2)		3.1		(24.5)
Defined benefit pension gain (loss)
Defined benefit pension loss before reclassification	—		(1.2)		(0.9)		(3.3)
Net reclassification for loss to income from continuing operations	0.2		1.0		0.6		1.2
Net reclassification for gain to income from discontinued operations	—		(0.1)		—		(0.1)
Defined benefit pension gain (loss) after reclassification	0.2		(0.3)		(0.3)		(2.2)
Deferred tax effect	(0.1)		—		0.2		1.3
Net defined benefit pension gain (loss)	0.1		(0.3)		(0.1)		(0.9)
Deconsolidation of discontinued operations	—		26.1		—		26.1
Net change to derive comprehensive (loss) income for the period	(7.7)		34.8		10.5		65.6
Comprehensive (loss) income	(1.7)		1,894.4		106.5		1,851.1
Comprehensive income from continuing operations attributable to non-controlling interest	—		—		—		0.2
Comprehensive loss from discontinued operations attributable to non-controlling interest	—		(0.2)		—		—
Deconsolidation of discontinued operations attributable to non-controlling interest	—		0.7		—		0.7
Comprehensive (loss) income attributable to controlling interest	$	(1.7)	$	1,893.9	$	106.5	$	1,850.2

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholders' Equity

For the nine month period ended June 30, 2024

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Non- controlling Interest		Total Equity
(in millions)	Shares	Amount
Balances at September 30, 2023	35.3	$	0.5	$	1,920.8	$	2,096.0	$	(249.4)	$	(1,250.3)	$	2,517.6	$	0.7	$	2,518.3
Net income from continuing operations	—	—		—		17.4		—		—		17.4		0.1		17.5
Income from discontinued operations, net of tax	—	—		—		11.7		—		—		11.7		—		11.7
Other comprehensive income, net of tax	—	—		—		—		16.2		—		16.2		0.1		16.3
Accelerated share repurchase	(1.3)	—		83.2		—		—		(83.2)		—		—		—
Treasury stock repurchases	(3.3)	—		—		—		—		(243.0)		(243.0)		—		(243.0)
Excise tax on net share repurchases	—	—		—		—		—		(3.1)		(3.1)		—		(3.1)
Restricted stock issued and related tax withholdings	0.1	—		(14.3)		—		—		8.9		(5.4)		—		(5.4)
Share based compensation	—	—		3.9		—		—		—		3.9		—		3.9
Dividends declared	—	—		—		(14.5)		—		—		(14.5)		—		(14.5)

Balances as of December 31, 2023	30.8	0.5		1,993.6		2,110.6		(233.2)		(1,570.7)		2,300.8		0.9		2,301.7
Net income (loss) from continuing operations	—	—		—		50.1		—		—		50.1		(0.2)		49.9
Income from discontinued operations, net of tax	—	—		—		11.0		—		—		11.0		—		11.0

Other comprehensive income (loss), net of tax	—	—		—		—		2.0		—		2.0		(0.1)		1.9
Treasury stock repurchases	(1.2)	—		—		—		—		(97.6)		(97.6)		—		(97.6)
Excise tax on net share repurchases	—	—		—		—		—		(1.0)		(1.0)		—		(1.0)

Share based compensation	—	—		4.5		—		—		—		4.5		—		4.5
Dividends declared	—	—		—		(12.9)		—		—		(12.9)		—		(12.9)

Balances as of March 31, 2024	29.6	0.5		$	1,998.1	2,158.8		(231.2)		(1,669.3)		2,256.9		0.6		2,257.5
Net income (loss) from continuing operations	—	—		—		19.2		—		—		19.2		(0.1)		19.1
Loss from discontinued operations, net of tax	—	—		—		(13.1)		—		—		(13.1)		—		(13.1)

Other comprehensive loss, net of tax	—	—		—		—		(7.7)		—		(7.7)		—		(7.7)
Premium on capped call transactions, net of tax	—	—		(19.2)		—		—		—		(19.2)		—		(19.2)

Treasury stock repurchases	(1.6)	—		—		—		—		(142.2)		(142.2)		—		(142.2)
Excise tax on net share repurchases	—	—		—		—		—		(1.4)		(1.4)		—		(1.4)
Restricted stock issued and related tax withholdings	—	—		(0.3)		—		—		0.2		(0.1)		—		(0.1)
Share based compensation	—	—		4.5		—		—		—		4.5		—		4.5
Dividends declared	—	—		—		(12.3)		—		—		(12.3)		—		(12.3)

Balances at June 30, 2024	28.0	$	0.5	$	1,983.1	$	2,152.6	$	(238.9)	$	(1,812.7)	$	2,084.6	$	0.5	$	2,085.1

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC

Condensed Consolidated Statements of Shareholders' Equity

For the nine month period ended July 2, 2023

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity		Non- controlling Interest		Total Equity
(in millions)	Shares	Amount
Balances at September 30, 2022	40.8	$	0.5	$	2,032.5	$	362.1	$	(303.1)	$	(828.8)	$	1,263.2	$	5.9	$	1,269.1
Net (loss) income from continuing operations	—	—		—		(40.3)		—		—		(40.3)		0.3		(40.0)
Income from discontinued operations, net of tax	—	—		—		19.4		—		—		19.4		0.1		19.5
Other comprehensive income, net of tax	—	—		—		—		14.2		—		14.2		0.3		14.5


Restricted stock issued and related tax withholdings	0.2	—		(25.1)		—		—		14.6		(10.5)		—		(10.5)
Share based compensation	—	—		4.1		—		—		—		4.1		—		4.1
Dividends declared	—	—		—		(17.3)		—		—		(17.3)		—		(17.3)

Balances as of January 1, 2023	41.0	$	0.5	2,011.5		323.9		(288.9)		(814.2)		1,232.8		6.6		1,239.4
Net (loss) income from continuing operations	—	—		—		(75.1)		—		—		(75.1)		0.1		(75.0)
Income from discontinued operations, net of tax	—	—		—		21.4		—		—		21.4		—		21.4

Other comprehensive income, net of tax	—	—		—		—		16.0		—		16.0		0.2		16.2



Share based compensation	—	—		4.7		—		—		—		4.7		—		4.7
Dividends declared	—	—		—		(17.6)		—		—		(17.6)		—		(17.6)

Balances as of April 2, 2023	41.0	0.5		2,016.2		252.6		(272.9)		(814.2)		1,182.2		6.9		1,189.1
Net (loss) income from continuing operations	—	—		—		(172.4)		—		—		(172.4)		0.2		(172.2)
Income from discontinued operations, net of tax	—	—		—		2,031.6		—		—		2,031.6		0.2		2,031.8
Deconsolidation of discontinued operations	—	—		—		—		25.4		—		25.4		(5.9)		19.5
Other comprehensive income (loss), net of tax	—	—		—		—		8.9		—		8.9		(0.2)		8.7

Accelerated share repurchase	(5.3)	—		(100.0)		—		—		(400.0)		(500.0)		—		(500.0)
Excise tax on net share repurchases	—	—		—		—		—		(3.8)		(3.8)		—		(3.8)
Restricted stock issued and related tax withholdings	—	—		(1.6)		—		—		0.8		(0.8)		—		(0.8)
Share based compensation	—	—		5.1		—		—		—		5.1		—		5.1
Dividends declared	—	—		—		(17.5)		—		—		(17.5)		—		(17.5)
Balances at July 2, 2023	35.7	$	0.5	$	1,919.7	$	2,094.3	$	(238.6)	$	(1,217.2)	$	2,558.7	$	1.2	$	2,559.9

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

For the nine month periods ended June 30, 2024 and July 2, 2023

(unaudited)


	Nine Month Periods Ended
(in millions)	June 30, 2024		July 2, 2023
Cash flows from operating activities
Net income	$	96.0	$	1,785.5
Income from discontinued operations, net of tax	9.6		2,072.7
Net income (loss) from continuing operations	86.4		(287.2)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations:
Depreciation	42.9		36.2
Amortization	33.4		31.4
Share based compensation	12.9		12.5
Impairment of goodwill	—		111.1
Impairment of intangible assets	43.0		120.7
Impairment of property, plant and equipment and operating lease assets	5.6		8.1
Gain on sale of property, plant and equipment	—		(2.7)
(Gain) loss on early extinguishment of debt	(2.7)		8.6
Non-cash purchase accounting adjustments	1.1		1.4

Amortization of debt issuance costs and debt discount	3.0		5.9

Gain from remeasurement of contingent consideration liability	—		(1.5)
Deferred tax benefit	3.3		(120.7)
Net changes in operating assets and liabilities	(50.5)		148.7
Net cash provided by operating activities from continuing operations	178.4		72.5
Net cash (used) provided by operating activities from discontinued operations	(96.5)		31.8
Net cash provided by operating activities	81.9		104.3
Cash flows from investing activities
Purchases of property, plant and equipment	(31.0)		(44.3)
Proceeds from disposal of property, plant and equipment	—		3.0
Proceeds from sale of discontinued operations, net of cash	—		4,334.7
Purchases of short term investments	(849.3)		—
Proceeds from sale of short term investments	1,792.0		—
Purchase price settlement from sale of the HHI business	(26.9)		—

Other investing activity	0.2		(0.1)
Net cash provided by investing activities from continuing operations	885.0		4,293.3
Net cash used by investing activities from discontinued operations	—		(11.8)
Net cash provided by investing activities	885.0		4,281.5
Cash flows from financing activities
Payment of debt and debt premium	(1,346.7)		(1,141.1)
Proceeds from issuance of debt	350.0		—
Payment of debt issuance costs	(15.0)		(2.3)

Premium on capped call transactions	(25.2)		—
Treasury stock purchases	(482.7)		—
Accelerated share repurchase	—		(500.0)
Dividends paid to shareholders	(38.8)		(51.6)

Share based award tax withholding payments, net of proceeds upon vesting	(5.5)		(11.3)

Net cash used by financing activities from continuing operations	(1,563.9)		(1,706.3)
Net cash used by financing activities from discontinued operations	—		(0.8)
Net cash used by financing activities	(1,563.9)		(1,707.1)
Effect of exchange rate changes on cash and cash equivalents	0.8		7.8
Net change in cash, cash equivalents and restricted cash in continuing operations	(596.2)		2,686.5
Cash, cash equivalents, and restricted cash, beginning of period	753.9		243.7
Cash, cash equivalents, and restricted cash, end of period	$	157.7	$	2,930.2
Supplemental disclosure of cash flow information
Cash paid for interest associated with continued operations	$	66.7	$	89.2
Cash paid for interest associated with discontinued operations	—		45.3
Cash paid for taxes associated with continued operations	22.3		21.6
Cash paid for taxes associated with discontinued operations	59.1		24.0
Non cash investing activities
Acquisition of property, plant and equipment through finance leases	$	3.2	$	2.6
Non cash financing activities
Issuance of shares through stock compensation plan	$	14.0	$	13.9

See accompanying notes to the condensed consolidated financial statements

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SPECTRUM BRANDS HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 1– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Fiscal Period-End

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company and its majority owned subsidiaries in accordance with accounting principles for interim financial information generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations. It is management’s opinion, however, that all material adjustments have been made which are necessary for a fair financial statement presentation. For further information, refer to the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

The Company’s fiscal year ends on September 30 and the Company reports its results using fiscal quarters whereby each three month quarterly reporting period is approximately thirteen weeks in length and ends on a Sunday. The exceptions are the first quarter, which begins on October 1, and the fourth quarter, which ends on September 30. As a result, the fiscal period end date for the three and nine month periods included within this Quarterly Report for the Company are June 30, 2024 and July 2, 2023, respectively.

Newly Adopted Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations to enhance transparency about the use of supplier finance programs. Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a roll-forward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. The amendments in ASU 2022-04 are effective for all entities for fiscal years beginning after December 15, 2022, including interim periods within those financial years, except for the disclosure of roll-forward information, which is effective for fiscal years beginning after December 15, 2023. We adopted the ASU during the year ended September 30, 2023, except for the disclosure of roll-forward information, which was adopted during the first quarter of fiscal 2024. The following table summarizes the roll-forward of the supplier finance program for the nine month period ended June 30, 2024:



(in millions)	Amount
Outstanding payment obligations as of September 30, 2023	$	17.9
Invoices confirmed during the period	41.9
Confirmed invoices paid during the period	(52.7)
Outstanding payment obligations as of June 30, 2024	$	7.1

The outstanding payment obligations under the supplier finance program are included in Accounts Payable in the Company's Condensed Consolidated Statement of Financial Position.

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be applied retrospectively. This ASU will be effective for our Form 10-K for the year ending September 30, 2025 and our Form 10-Q for the first quarter of the year ending September 30, 2026. We are currently evaluating the impact this ASU may have on our consolidated financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. This ASU will be effective for our Form 10-K for the year ending September 30, 2026. We are currently evaluating the impact this ASU may have on our consolidated financial statement disclosures.

In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted final rules under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to disclose certain climate-related information in registration statements and annual reports. The final rules include requirements to disclose material climate-related risks, activities to mitigate or adapt to such risks, information about the board of directors' oversight of climate-related risks and management's role in managing material climate-related risks, and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition. In addition, the rules would require certain climate-related disclosure as it relates to severe weather events and other natural conditions and carbon offsets and renewable energy credits. Certain large registrants are also required to disclose Scope 1 and Scope 2 greenhouse gas ("GHG") emissions when material. While the SEC voluntarily stayed the rules due to pending judicial review, the rules in their current form would be effective for the Company beginning in our Form 10-K for the year ending September 30, 2026. The Company is currently assessing the impact that these rules may have on the Company's consolidated financial statements.

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SPECTRUM BRANDS HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, unaudited)

NOTE 2 – DIVESTITURES

The following table summarizes the components of Income from Discontinued Operations, Net of Tax in the Condensed Consolidated Statements of Income for the three and nine month periods ended June 30, 2024 and July 2, 2023:


	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Income from discontinued operations before income taxes – HHI	$	—	$	32.5	$	15.2	$	136.9
Gain on sale of discontinued operations before income taxes – HHI	—		2,824.9		—		2,824.9
(Loss) income from discontinued operations before income taxes – Other	(0.1)		(0.2)		10.2		(2.2)
Interest expense on corporate debt allocated to discontinued operations