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What changed in Spectrum Brands Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Spectrum Brands Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+418 added−431 removedSource: 10-K (2024-11-15) vs 10-K (2023-11-21)

Top changes in Spectrum Brands Holdings, Inc.'s 2024 10-K

418 paragraphs added · 431 removed · 270 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

34 edited+13 added−13 removed29 unchanged
Biggest changeSales from electric personal care product categories tend to increase during the December holiday season (the Company's fiscal first quarter), while small appliances sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company's fiscal fourth quarter) and in December for the holiday season. 8 Table of Contents Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 27 % Second Quarter 23 % Third Quarter 23 % Fourth Quarter 27 % Substantially all of our home appliances and personal care products are manufactured by third-party suppliers that are primarily located in the APAC region, the prices of which may be susceptible to changes in transportation costs, government regulations and tariffs, and changes in currency exchange rates.
Biggest changeOur sales by quarter as a percentage of annual net sales during the year ended September 30, 2024, are as follows: 2024 First Quarter 28 % Second Quarter 22 % Third Quarter 23 % Fourth Quarter 27 % Substantially all of our home appliances and personal care products are manufactured by third-party suppliers that are primarily located in the APAC region, the prices of which may be susceptible to changes in transportation costs, government regulations and tariffs, and changes in currency exchange rates.
Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S. and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® fish food with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in Melle, Germany.
Aquatics and certain other companion animal products are produced in various manufacturing plants located in the U.S. and Germany, including the production of glass aquariums in in our Noblesville, Indiana facility, shampoos and aquarium salt in our Blacksburg, Virginia facility, OmegaSea® fish food with bird and other small animal products manufactured in our Bridgeton, Missouri facility, and aquatics nutrition and care products manufactured in our Melle, Germany facility.
The following is an overview of the consolidated business showing net sales by segment and geographic region sold (based upon destination) as a percentage of consolidated net sales for the year ended September 30, 2023.
The following is an overview of the consolidated business showing net sales by segment and geographic region sold (based upon destination) as a percentage of consolidated net sales for the year ended September 30, 2024.
We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 6 Table of Contents Home and Garden (H&G) The following is an overview of H&G net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
We plan to continue to use our brand names, customer relationships and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 7 Table of Contents Home and Garden (H&G) The following is an overview of H&G net sales by product category and geographic region sold by destination for the year ended September 30, 2024.
We plan to continue to use our brand names, customer relationships, and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 7 Table of Contents Home and Personal Care (HPC) The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
We plan to continue to use our brand names, customer relationships, and research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. 8 Table of Contents Home and Personal Care (HPC) The following is an overview of net sales by product category and geographic region sold by destination for the year ended September 30, 2024.
We believe on-the-job experience is an outstanding way to learn, and performance and development plans ensure that managers and employees have conversations about career aspirations, mobility, developmental goals and interests. 9 Table of Contents Employee Communication and Feedback In an ongoing effort to understand our employees needs, and deliver on our values of trust, accountability and collaboration, we listen.
We believe on-the-job experience is an outstanding way to learn, and performance and development plans ensure that managers and employees have conversations about career aspirations, mobility, developmental goals and interests. Employee Communication and Feedback In an ongoing effort to understand our employees' needs, and deliver on our values of trust, accountability and collaboration, we listen.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 24 % Second Quarter 26 % Third Quarter 24 % Fourth Quarter 26 % Chews products are produced at third-party suppliers in the APAC region and Mexico.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2024' are as follows: 2024 First Quarter 24 % Second Quarter 25 % Third Quarter 25 % Fourth Quarter 26 % Chews products are produced at third-party suppliers in the APAC region and Mexico.
DEI Advisory Counsel made up of our employees of diverse backgrounds to help design and develop DEI-related priorities and goals, advise on ways to advance the DEI dialogue and drive meaningful cultural change at the Company ; • Created affinity groups for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent DEI discussions among our employee populations; and • Developed educational content and trainings to help leaders foster a more inclusive environment.
D&I Advisory Counsel, made up of our employees of diverse backgrounds to help design and develop D&I-related priorities and goals, advise on ways to advance the D&I dialogue and drive meaningful cultural change at the Company ; • Created inclusion networks for our diverse employees and developing trainings, communications and programs to further facilitate and encourage open and transparent D&I discussions among our employee populations; and • Developed educational content and trainings to help leaders foster a more inclusive environment.
Primary competitors include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C. Johnson & Son, Inc. (Raid, OFF!), Central Garden & Pet (AMDRO, Sevin), SBM Company (BioAdvanced), Henkel AG & Co. KgaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer, Zevo).
Primary competitors of our H&G segment include The Scotts Miracle-Gro Company (Ortho, Roundup, Tomcat), S.C. Johnson & Son, Inc. (Raid, OFF!), Central Garden & Pet (AMDRO, Sevin), SBM Company (BioAdvanced), Henkel AG & Co. KgaA (Combat), Bona AB (Bona), and Procter & Gamble (Swiffer, Zevo).
Cleaning Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes, and markers. Rejuvenate® We sell primarily to large retailers, home improvement centers, mass merchants, dollar stores, hardware stores, lawn and garden distributors, food and drug retailers, and e-commerce.
Cleaning Household surface cleaning, maintenance, and restoration products, including bottled liquids, mops, wipes, and markers. Rejuvenate® We sell primarily to large retailers, home improvement centers, mass merchants, dollar stores, hardware stores, lawn and garden distributors, food and drug retailers, and e-commerce. We sell primarily in the U.S. with some distribution in LATAM.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations , included in Item 7 to this Annual Report, for further discussion of the consolidated operating results and segment operating results. 5 Table of Contents Global Pet Care (GPC) The following is an overview of GPC net sales by product category and geographic region sold by destination for the year ended September 30, 2023.
See Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations , for further discussion of the consolidated operating results and segment operating results. 6 Table of Contents Global Pet Care (GPC) The following is an overview of GPC net sales by product category and geographic region sold by destination for the year ended September 30, 2024.
Employee Wellness We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” promote innovation, trust, accountability and collaboration. The result is a work environment that encourages the well being of our employees wholistically - mind and body. Employee Health and Safety We are committed to the Environmental Health and Safety (EHS) safety of our employees.
Employee Wellness We encourage our employees to “Speak Up,” “Be Accountable,” “Take Action,” and “Grow Talent,” all in the efforts to promote innovation, trust, accountability and collaboration. The result is a work environment that encourages the well-being of our employees wholistically - mind and body.
Product Category Products Brands Companion Animal Dog and cat chews, treats, wet and dry foods; Dog and cat clean-up, behavioral training aides, health and grooming products; Indoor bird and other small animal food and care products. Good'n'Fun®, DreamBone®, GOOD BOY®, SmartBones®, IAMS® (Europe only), EUKANUBA® (Europe only), Nature's Miracle®, FURminator®, Dingo®, 8IN1® (8-in-1), Meowee!®, and Wild Harvest™.
Product Category Products Brands Companion Animal Rawhide chews, dog and cat clean-up, training, health and grooming products, small animal food and care products, rawhide-free dog and cat treats, and wet and dry pet food for dogs and cats. Good’n’Fun®, DreamBone®, GOOD BOY®, SmartBones®, IAMS® (Europe only), EUKANUBA® (Europe only), Nature’s Miracle®, FURminator®, Dingo®, 8IN1® (8-in-1), Meowee!®, and Wild Harvest™.
Primary competitors are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company all of which sell a comprehensive line of pet products that compete across our product categories.
Primary competitors of our GPC segment are Mars Corporation, Nestle Purina, and the Central Garden & Pet Company, each of which sells a comprehensive line of pet products that competes across our product categories.
We regularly host company-wide and business unit town halls to offer employees an opportunity to ask questions about Company activities and policies that impact them. We solicit and receive questions and feedback from our employees through this process.
We regularly host company-wide and business unit town halls to offer employees an opportunity to ask questions about Company activities and policies that impact them.
We strive to live our core values of trust, accountability and collaboration every day by serving our customers, consumers, and communities. Our workplace culture is centered around practices that support our communities and promote sustainable practices and a diverse, equitable, and inclusive workforce. As of September 30, 2023, we have approximately 3,100 full-time employees worldwide.
Our workplace culture is centered around practices that support our communities and promote sustainable practices and a diverse, equitable, and inclusive workforce. As of September 30, 2024, we have approximately 3,100 full-time employees worldwide.
HPC products are also sold direct-to-consumer through direct response television, brand websites, and other online marketplaces. International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders.
International distribution varies by region and is often executed on a country-by-country basis. Our sales generally are made through the use of individual purchase orders.
The terms “the Company,” “we,” and “our” as used in this report, refer to both SBH and its consolidated subsidiaries and SB/RH and its consolidated subsidiaries, unless otherwise indicated.
ITEM 1. BUSINESS The terms “the Company,” “we," “our,” and "SBH" as used in this report, refer to Spectrum Brands Holdings, Inc. and its consolidated subsidiaries, unless otherwise indicated.
We sell primarily in the U.S. with some distribution in LATAM.Our sales generally are made through the use of individual purchase orders. A significant percentage of our sales are attributable to a limited group of retailer customers, including Lowe’s, Home Depot, and Walmart, which represent approximately 63.1% segment sales for the year ended September 30, 2023.
Our sales generally are made through the use of individual purchase orders. A significant percentage of our sales are attributable to a limited group of retailer customers exceeding 10% of net sales, including Lowe’s, Home Depot, and Walmart, each of which exceed 10% of segment sales and represent approximately 61.8% segment sales for the year ended September 30, 2024.
Remington® We have a trademark license agreement (the "License Agreement") with Stanley Black+Decker ("SBD") pursuant to which we license the Black + Decker® brand ("B&D") in North America, Latin America (excluding Brazil) and the Caribbean for four core categories of household appliances: beverage products, food preparation products, garment care products and cooking products.
Remington® We have a trademark license agreement (the “B+D License Agreement”) with the license holder, Stanley Black+Decker (“SBD”) which terminated the previous agreement and has an effective date of January 1, 2024, pursuant to which we license the Black + Decker® brand (“B+D”) in North America, South America (excluding Brazil), Central America, and the Caribbean (excluding Cuba) for primarily four core categories of home appliances: beverage products, food preparation products, garment care products and cooking products.
We continuously strive to maintain our strong safety performance as we continue to grow our business around the globe. The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, and the leadership of our skilled EHS team.
The keys to our EHS success are a workforce that is engaged, a management team who supports and invests in employee safety, regular employee trainings on EHS topics, and the leadership of our skilled EHS team.
(Hamilton Beach, Proctor Silex), Sensio, Inc. (Bella); SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers. Primary competitors in personal care include Koninklijke Philips Electronics N.V.
Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co. (Hamilton Beach, Proctor Silex), Sensio, Inc. (Bella), SEB S.A.(T-fal, Krups, Rowenta), Whirlpool Corporation (Kitchen Aid), Conair Corporation (Cuisinart, Waring), Versuni (Philips), Donlim (Morphy Richards), Gourmia, and private label brands for major retailers.
The prices of these raw materials are susceptible to fluctuations due to supply and demand trends, energy costs, transportation costs, inflation, government regulations, and tariffs. We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity. Our research and development strategy is focused on new product development and performance enhancements of our existing products.
The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals. The prices of these raw materials are susceptible to fluctuations due to supply and demand trends, energy costs, transportation costs, inflation, government regulations, and tariffs. We continuously monitor and evaluate our supplier network for quality, cost, and manufacturing capacity.
To further that objective we have: • Engaged the services of a third-party consultant with expertise in diversity, equity and inclusion (“DEI”) to help us create long-lasting change; • Implemented a DEI program; • Created a U.S.
At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves. To further that objective, we have: • Engaged the services of a third-party consultant with expertise in diversity and inclusion (“D&I”) to help us create long-lasting change; • Implemented a D&I program; • Created a U.S.
A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represent approximately 37.1% of segment sales for the year ended September 30, 2023. Primary competitors for home appliances include Newell Brands (Sunbeam, Mr. Coffee, Crockpot, Oster), De’Longhi America (DeLonghi, Kenwood, Braun), SharkNinja (Shark, Ninja), Hamilton Beach Holding Co.
A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, each of which exceed 10% of segment sales and represent approximately 41.5% of segment sales for the year ended September 30, 2024. Primary competitors for the home appliances product category within our HPC segment include Newell Brands (Sunbeam, Mr.
We retain the trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels. HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores.
HPC products are sold primarily to large retailers, online retailers, wholesalers, distributors, warehouse clubs, food and drug chains and specialty trade or retail outlets such as consumer electronics stores, department stores, discounters and other specialty stores. HPC products are also sold direct-to-consumer through direct response television, brand websites, and other online marketplaces.
(“Remington Arms”) owns the rights to use the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools. The terms of a 1986 agreement between Remington Products, LLC and Remington Arms provides for the shared rights to use the trademark on products which are not considered “principal products of interest” for either company.
The terms of a 1986 agreement between Remington Products, LLC and Remington Arms provides for the shared rights to use the trademark on products which are not considered “principal products of interest” for either company. We retain the Remington® trademark for nearly all products which we believe can benefit from the use of the brand name in our distribution channels.
Diversity, Equity and Inclusion Spectrum Brands is committed to fostering a diverse, equitable, and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background. At Spectrum Brands, we strive to make our employees feel valued and respected and given the opportunity to thrive as their authentic selves.
We solicit and receive questions and feedback from our employees through this process. 10 Table of Contents Diversity and Inclusion Spectrum Brands is committed to fostering a diverse and inclusive workplace for employees of every race, color, gender identity, sexual orientation, age, physical or mental ability and background.
Refer to Note 3 - Divestitures to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion pertaining the HHI divestiture. Human Resources Employee Profile At Spectrum Brands, we are led by our values of trust, accountability, and collaboration to serve others through this common mission: We Make Living Better at Home.
Human Resources Employee Profile At Spectrum Brands, we are led by our values of trust, accountability, and collaboration to serve others through this common mission: We Make Living Better at Home. We strive to live our core values of trust, accountability and collaboration every day by serving our customers, consumers, and communities.
Under the terms of the agreement, we are obligated to pay the license holder a percentage of sales, with minimum annual royalty payments of $1.6 million, increasing to $1.8 million in subsequent renewal periods. We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products; and Remington Arms Company, Inc.
Under the terms of the Emeril License Agreement, we are obligated to pay the license holder a percentage of net sales, with minimum annual royalty payments of $1.7 million, increasing to $1.8 million in the 2025 renewal period.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2023 are as follows: 2023 First Quarter 12 % Second Quarter 29 % Third Quarter 35 % Fourth Quarter 24 % H&G produces the majority of its products in one facility in St.
Our sales by quarter as a percentage of annual net sales during the year ended September 30, 2024, are as follows: 2024 First Quarter 12 % Second Quarter 28 % Third Quarter 37 % Fourth Quarter 23 % H&G produces the majority of its products in one facility in Vinita Park, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, wipes and Rejuvenate® cleaning products.
Live fish under our GloFish® brand are produced, marketed, and sold by an independent third-party breeder through a supply and licensing agreement with the Company. A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, which represented approximately 33.4% of segment sales for the fiscal year ended September 30, 2023.
A significant percentage of our sales are attributable to a limited group of retailer customers, including Walmart and Amazon, each of which exceed 10% of segment sales and represent approximately 33.8% of segment sales for the fiscal year ended September 30, 2024.
Approximately 25% of our total labor force is covered by collective bargaining agreements, of which approximately 25% is subject to arrangements under negotiations or expiring within 12 months. We believe that our overall relationship with our employees is good.
We have one collective bargaining agreement applicable to our Australian operation that is scheduled or expected to expire within 12 months which is not substantive to our total employee count. We believe that our overall relationship with our employees is good.
See Note 6 – Revenue Recognition included in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail on revenue concentration from B&D branded products. The Emeril License is set to expire effective December 31, 2023, with options of up to two additional one-year renewal periods following the initial expiration.
The B+D License Agreement also requires us to comply with maximum annual returns rates for products and promotional spending commitments. See Note 5 – Revenue Recognition included in the Notes to the Consolidated Financial Statements for further detail on revenue concentration from B+D branded products.
Removed
ITEM 1. BUSINESS This combined Form 10-K is being filed by Spectrum Brands Holdings, Inc. (“SBH”) and SB/RH Holdings, LLC (“SB/RH”) (collectively, the “Company”). SB/RH is a wholly-owned subsidiary of SBH and represents substantially all of its assets, liabilities, revenues, expenses and operations.
Added
Live fish under our GloFish® brand are produced, marketed, and sold by an independent third-party breeder through a supply and licensing agreement with the Company.
Removed
SB/RH is the parent guarantor for certain debt of Spectrum Brands, Inc., a wholly-owned subsidiary of SB/RH ("SBI"), and represents all of SBI assets, liabilities, revenues, expenses, and operations. Thus, all information contained in this report relates to, and is filed by, SBH.
Added
Our research and development strategy is focused on new product development and performance enhancements of our existing products.
Removed
Information that is specifically identified in this report as relating solely to SBH, such as its financial statements and its common stock, does not relate to and is not filed by SB/RH. SB/RH makes no representation as to that information.
Added
The B+D License Agreement has an initial four-year term ending December 31, 2027, with two subsequent four-year renewal rights each based upon meeting certain sales metrics, potentially extending the total contract term to December 31, 2035. The License Agreement may not renew if these targets are not satisfied.
Removed
Louis, Missouri, with production primarily consisting of liquids and aerosols, and the remaining portion of products being produced by various third-party manufacturers, consisting of granulates, candles, baits & traps, wipes and Rejuvenate® cleaning products. The main raw materials purchased are plastic bottles, steel aerosol cans, corrugate, active ingredients, and bulk chemicals.
Added
Under the terms of the License Agreement, we agreed to pay SBD royalties based on a percentage of sales, with a minimum annual royalty payment of $11.7 million for the first year in the initial term, with decreases in subsequent years of the initial term down to $10.2 million in the fourth year, and is subject to adjustment with each renewal period.
Removed
The License Agreement has a term ending June 30, 2025, including a sell-off period from April 1, 2025 to June 30, 2025 whereby the Company can continue to sell and distribute but no longer produce products subject to the License Agreement.
Added
The Emeril Legasse® brand is subject to a trademark license agreement (the “Emeril License Agreement”) with the license holder, Martha Stewart Living Omnimedia, Inc., pursuant to which the HPC segment can license the Emeril Legasse® brand within the U.S., and its territories and possessions, Canada, Mexico, Australia, and the United Kingdom for certain designated products categories of home appliances, including small kitchen food preparation products, indoor and outdoor grills, grill accessories and cookbooks.
Removed
Under the terms of the License Agreement, we agree to pay SBD royalties based on a percentage of sales, with minimum annual royalty payments of $15.0 million, with the exception that the minimum annual royalty will no longer be applied effective January 1, 2024 through the expiration of the License Agreement.
Added
The agreement is set to expire effective December 31, 2024, with an option to renew through December 31, 2025, subject to meeting certain sales metrics.
Removed
The License Agreement also requires us to comply with maximum annual return rates for products. Subsequent to the completion of the License Agreement, there are no continuing obligations or restrictions on the business activities of either party.
Added
The Farberware® tradename brand is also subject to a trademark license agreement (the “Farberware License Agreement”) with the license holder, Farberware License Company, LLC, pursuant to which the HPC segment licenses the Farberware® brand on a worldwide basis for certain designated product categories of household appliances, including coffeemakers, juicers, toasters and toaster ovens.
Removed
(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, Helen of Troy Limited, SharkNinja (Shark), and Dyson Limited (Dyson).
Added
The Farberware License Agreement is set to expire December 31, 2210. The Company and HPC segment do not have a material concentration of branded products exceeding 10% of consolidated or segment revenue from either the Emeril Legasse® or Farberware® brands.
Removed
Discontinued Operations Hardware and Home Improvement ("HHI") On September 8, 2021, the Company entered into a definitive Asset and Stock Purchase Agreement (the "Purchase Agreement") with ASSA ABLOY AB ("ASSA") to sell its HHI segment for cash proceeds of $4.3 billion, subject to customary purchase price adjustments.
Added
We own the right to use the Remington® trademark for electric shavers, shaver accessories, grooming products and personal care products; and Remington Arms Company, Inc. (“Remington Arms”) owns the rights to use the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools.
Removed
HHI consists of residential locksets and door hardware, including knobs, levers, deadbolts, handle sets, and electronic and connected locks under the Kwikset®, Weiser®, Baldwin®, Tell Manufacturing®, and EZSET® brands; kitchen and bath faucets and accessories under the Pfister® brand; and builders' hardware consisting of hinges, metal shapes, security hardware, rack and sliding door hardware, and gate hardware under the National Hardware® and FANAL® brands.
Added
Primary competitors for the personal care product category within our HPC segment include Koninklijke Philips Electronics N.V.
Removed
On June 20, 2023, the Company completed its divestiture of its HHI segment resulting in the recognition of a gain on sale of $2.8 billion included as a component of Income From Discontinued Operations, Net of Tax.
Added
(Norelco), The Procter & Gamble Company (Braun), Conair Corporation, Wahl Clipper Corporation, Helen of Troy Limited, SharkNinja (Shark), and Dyson Limited (Dyson). 9 Table of Contents Sales from electric personal care product categories tend to increase during the December holiday season (the Company’s fiscal first quarter), while small home appliance sales typically increase from July through December primarily due to the increased demand by customers in the late summer for “back-to-school” sales (the Company’s fiscal fourth quarter) and in December for the holiday season.
Removed
COVID-19 Response In response to COVID-19, our Company took swift and effective action to protect the health and safety of our global employees.
Added
Approximately 30% of our total labor force is covered by collective bargaining agreements, of which approximately 50% is subject to regular and ongoing negotiations as an ordinary course of business with our work councils.
Removed
The Company implemented a number of robust COVID-19 safety practices, including, by way of example: • Temperature screenings and masks were required at all sites prior to admittance; • Weekly audits using a list of safety requirements, including social distancing, personal protective equipment, sanitation, hygiene education, etc.; • Guidelines and procedures for the deep cleaning of HVAC systems to prevent the spread of germs; • Contact tracing practices with mandatory quarantine for individuals with confirmed close contact cases; • Requirement that all non-essential employees to work from home; and • Suspension of travel restrictions for all unnecessary travel.
Added
Employee Health and Safety We are committed to the Environmental Health and Safety (“EHS”) safety of our employees. We continuously strive to maintain our strong safety performance as we continue to grow our business around the globe.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

123 edited+79 added−37 removed214 unchanged
Biggest changeAlthough we have implemented policies and procedures designed to facilitate compliance with laws and regulations relating to doing business in foreign markets and importing merchandise from abroad, there can be no assurance that suppliers and other third parties with whom we do business will not violate such laws and regulations or our policies, which could subject us to liability and could adversely affect our results of operations. 19 Table of Contents We are subject to the various risks of importing merchandise from abroad and purchasing product made in foreign countries, such as: • potential disruptions in manufacturing, logistics and supply; • changes in duties, tariffs, quotas and voluntary export restrictions on imported goods; • strikes and other events affecting delivery; • product compliance with laws and regulations of the destination country; • product liability claims from customers or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliance or alleged to be harmful; • concerns about human rights, working conditions and other labor rights and conditions and environmental impact in foreign countries where goods are produced and materials or components are sourced, and changing labor, environmental and other laws in these countries; • local business practice and political issues that may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; • compliance with laws and regulations concerning ethical business practices, such as the U.S.
Biggest changeWe are subject to the various risks of importing merchandise from abroad and purchasing product made in foreign countries, such as: • potential disruptions in manufacturing, logistics and supply; • changes in duties, tariffs, quotas and voluntary export restrictions on imported goods; • strikes and other events affecting delivery; • product compliance with laws and regulations of the destination country; • product liability claims from customers or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliance or alleged to be harmful; • concerns about human rights, working conditions and other labor rights and conditions and environmental impact in foreign countries where goods are produced and materials or components are sourced, and changing labor, environmental and other laws in these countries; • local business practice and political issues that may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; 22 Table of Contents • compliance with laws and regulations concerning ethical business practices, such as the U.S.
Our international operations are subject to risks including, among others: • currency fluctuations, including, without limitation, fluctuations in the foreign exchange rate of the Euro, British Pound, Canadian Dollar, Australian Dollar, Japanese Yen, Chinese Renminbi, and the Mexican Peso; • changes in the economic conditions or consumer preferences or demand for our products in these markets; • the risk that because our brand names may not be locally recognized, we must spend significant amounts of time and money to build brand recognition without certainty that we will be successful; • labor unrest; • political and economic instability, as a result of war, terrorist attacks, pandemics, natural disasters or otherwise; • lack of developed infrastructure; • longer payment cycles and greater difficulty in collecting accounts; • restrictions on transfers of funds; • import and export duties and quotas, as well as general transportation costs; • changes in domestic and international customs and tariffs; • compliance with laws and regulations concerning ethical business practices, such as U.S.
Our international operations are subject to risks including, among others: • currency fluctuations, including, without limitation, fluctuations in the foreign exchange rate of the Euro, British Pound, Canadian Dollar, Australian Dollar, Japanese Yen, Chinese Renminbi, and the Mexican Peso, among others; • changes in the economic conditions or consumer preferences or demand for our products in these markets; • the risk that because our brand names may not be locally recognized, we must spend significant amounts of time and money to build brand recognition without certainty that we will be successful; • labor unrest; • political and economic instability, as a result of war, terrorist attacks, pandemics, natural disasters or otherwise; • lack of developed infrastructure; • longer payment cycles and greater difficulty in collecting accounts; • restrictions on transfers of funds; • import and export duties and quotas, as well as general transportation costs; • changes in domestic and international customs and tariffs; • compliance with laws and regulations concerning ethical business practices, such as U.S.
In the ordinary course of our business, the Company may be named as a defendant in lawsuits involving product liability claims. In any such proceedings, plaintiffs may seek to recover large and sometimes unspecified amounts of damages, and the matters may remain unresolved for several years.
In the ordinary course of our business, the Company may be named as a defendant in lawsuits involving product liability claims. In any such product liability proceedings, plaintiffs may seek to recover large and sometimes unspecified amounts of damages, and the matters may remain unresolved for several years.
These include laws and regulations that govern: • discharges to the air, water and land; • the handling and disposal of solid and hazardous substances and wastes; and • remediation of contamination associated with release of hazardous substances at our facilities and at off-site disposal locations. Risk of environmental liability is inherent in our business.
These include laws and regulations that govern: • discharges to the air, water and land; and • the handling and disposal of solid and hazardous substances and wastes; and • the remediation of contamination associated with release of hazardous substances at our facilities and at off-site disposal locations. Risk of environmental liability is inherent in our business.
In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act includes provisions regarding certain minerals and metals, known as conflict minerals, mined from the Democratic Republic of Congo and adjoining countries. These provisions require companies to undertake due diligence procedures and report on the use of conflict minerals in its products, including products manufactured by third parties.
The Dodd-Frank Wall Street Reform and Consumer Protection Act includes provisions regarding certain minerals and metals, known as conflict minerals, mined from the Democratic Republic of Congo and adjoining countries. These provisions require companies to undertake due diligence procedures and report on the use of conflict minerals in its products, including products manufactured by third parties.
To the extent the Chinese Renminbi (“RMB”) or other currencies depreciate or appreciate with respect to the U.S. dollar ("USD"), we may experience fluctuations in our results of operations. The RMB is not pegged to the USD at a constant exchange rate and instead fluctuates versus a basket of currencies.
To the extent the Chinese Renminbi (“RMB”) or other currencies depreciate or appreciate with respect to the U.S. dollar (“USD”), we may experience fluctuations in our results of operations. The RMB is not pegged to the USD at a constant exchange rate and instead fluctuates versus a basket of currencies.
Since the acquisition, the Tristar Business realized, among other things, significant distribution challenges, increased levels of retail inventory, reduced sales, increased promotional spending and deductions, higher level of returns, and overall increased amount of costs.
Since the acquisition, the acquired Tristar Business realized, among other things, significant distribution challenges, increased levels of retail inventory, reduced sales, increased promotional spending and deductions, higher level of returns, and overall increased amount of costs.
Our indebtedness has had, and could continue to have, adverse consequences for our business, and may: • require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict our ability to make strategic acquisitions, dispositions or to exploit business opportunities; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
Our indebtedness has had, and could continue to have, adverse consequences for our business, and may: • require us to dedicate a large portion of our cash flow to pay principal and interest on our indebtedness, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict our ability to make strategic acquisitions, dispositions or to exploit business opportunities; 19 Table of Contents • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.
To the extent we have not identified such environmental liabilities or to the extent the indemnifications obtained from our counterparties are insufficient to cover such environmental liabilities, these environmental liabilities could have a material adverse effect on our business. 22 Table of Contents We are also subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are responsible as a result of our relationship with such other parties.
To the extent we have not identified such environmental liabilities or to the extent the indemnifications obtained from our counterparties are insufficient to cover such environmental liabilities, these environmental liabilities could have a material adverse effect on our business. 25 Table of Contents We are also subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are responsible as a result of our relationship with such other parties.
Department of the Treasury's Office of Foreign Assets Control ("OFAC") and export controls; • changes in foreign labor laws and regulations affecting our ability to hire and retain employees; • inadequate protection of intellectual property in foreign countries; • unexpected changes in regulatory environments; • actions taken by governmental authorities to contain the spread of COVID-19 and mitigate its public health effects; • difficulty in complying with foreign law; and • adverse tax consequences.
Department of the Treasury's Office of Foreign Assets Control (“OFAC”) and export controls; • changes in foreign labor laws and regulations affecting our ability to hire and retain employees; • inadequate protection of intellectual property in foreign countries; • unexpected changes in regulatory environments; • actions taken by governmental authorities to contain the spread of COVID-19 and mitigate its public health effects; • difficulty in complying with foreign law; and • adverse tax consequences.
Events and changes in circumstances that may indicate that there may be an impairment and which may indicate that interim impairment testing is necessary include, but are not limited to: strategic decisions to exit a business or dispose of an asset made in response to changes in economic, political and competitive conditions; the impact of the economic environment on the customer base and on broad market conditions that drive valuation considerations by market participants; our internal expectations with regard to future revenue growth and the assumptions we make when performing impairment reviews; a significant decrease in the market price of our assets; a significant adverse change in the extent or manner in which our assets are used; a significant adverse change in legal factors or the business climate that could affect our assets; an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset; and significant changes in the cash flows associated with an asset.
Events and changes in circumstances that may indicate that there may be an impairment include, but are not limited to: strategic decisions to exit a business or dispose of an asset made in response to changes in economic, political and competitive conditions; the impact of the economic environment on the customer base and on broad market conditions that drive valuation considerations by market participants; our internal expectations with regard to future revenue growth and the assumptions we make when performing impairment reviews; a significant decrease in the market price of our assets; a significant adverse change in the extent or manner in which our assets are used; a significant adverse change in legal factors or the business climate that could affect our assets; an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset; and significant changes in the cash flows associated with an asset.
Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not for many part of this report. Public perceptions that some of the products we produce and market are not safe could adversely affect us.
Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not for many parts of this report. Public perceptions that some of the products we produce and market are not safe could adversely affect us.
We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.
We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or stockholder support.
As a result of consolidation of retailers that has occurred during the past several years, particularly in the United States and the European Union ("EU"), and consumer trends toward national mass merchandisers, a significant percentage of our sales are attributable to a limited group of customers.
As a result of consolidation of retailers that has occurred during the past several years, particularly in the United States and the European Union (“EU”), and consumer trends toward national mass merchandisers, a significant percentage of our sales are attributable to a limited group of customers.
Environmental law requirements and the enforcement thereof, change frequently, have tended to become more stringent over time and could require us to incur significant expenses. 23 Table of Contents Most federal, state and local authorities require certification by Underwriters Laboratory, Inc.
Environmental law requirements and the enforcement thereof, change frequently, have tended to become more stringent over time and could require us to incur significant expenses. 26 Table of Contents Most federal, state and local authorities require certification by Underwriters Laboratory, Inc.
If analysis indicates that an individual asset’s carrying value does exceed its fair value, the next step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value. The analysis required by GAAP entail significant amounts of judgment and subjectivity.
If analysis indicates that an individual asset’s carrying value does exceed its fair value, the next step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value. The analysis required by GAAP entails significant amounts of judgment and subjectivity.
Additionally, while we expect to benefit from leveraging distribution channels and brand names among the combined Company, we cannot assure you that we will achieve such benefits. We may not realize the anticipated benefits of, and synergies from, our business acquisitions and may become responsible for certain liabilities and integration costs as a result.
Additionally, while we expect to benefit from leveraging distribution channels and brand names among the combined Company, we cannot assure you that we will achieve such benefits. 16 Table of Contents We may not realize the anticipated benefits of, and synergies from, our business acquisitions and may become responsible for certain liabilities and integration costs as a result.
The costs and operational consequences of responding to breaches and implementing remediation measures could be significant. Disruption or failures of our information technology systems could have a material adverse effect on our business. Our IT systems are susceptible to security breaches, operational data loss, general disruptions in functionality, and may not be compatible with new technology.
The costs and operational consequences of responding to breaches and implementing remediation measures could be significant. Disruption or failures of our information technology systems could have a material adverse effect on our business. The IT systems used by the Company are susceptible to security breaches, operational data loss, general disruptions in functionality, and may not be compatible with new technology.
Sales of certain of our products are seasonal and may cause our operating results and working capital requirements to fluctuate. On a consolidated basis, our financial results are approximately equally weighted across our quarters, however, sales of certain product categories tend to be seasonal. Further discussion over the seasonality of our sales is included under Item 1 - Business above.
Sales of certain of our products are seasonal and may cause our operating results and working capital requirements to fluctuate. On a consolidated basis, our financial results are approximately equally weighted across our quarters, however, sales of certain product categories tend to be seasonal. Further discussion over the seasonality of our sales is included in Item 1 - Business .
The disclosure of our trade secrets would impair our competitive position, thereby weakening demand for our products or services and harming our ability to maintain or increase our customer base. 20 Table of Contents Claims by third parties that we are infringing their intellectual property and other litigation could adversely affect our business.
The disclosure of our trade secrets would impair our competitive position, thereby weakening demand for our products or services and harming our ability to maintain or increase our customer base. Claims by third parties that we are infringing their intellectual property and other litigation could adversely affect our business.
Our results of operations may be positively or negatively affected by the amount of income or expense we record for our defined benefit pension plans. Accounting Principles Generally Accepted in the United States (“GAAP”) requires that we calculate income or expense for the plans using actuarial valuations.
Our results of operations may be positively or negatively affected by the amount of income or expense we record for the defined benefit pension plans for which we are responsible. Accounting Principles Generally Accepted in the United States (“GAAP”) requires that we calculate income or expense for the plans using actuarial valuations.
We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time. Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control.
We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time and expect to set further such aspirations and goals to ESG matters. Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control.
Any significant reduction in purchases, failure to obtain anticipated orders or delays or cancellations of orders by any of these major retail customers, changes to retail inventory management strategies and initiatives, or significant pressure to reduce prices and support promotions and discounts from any of these major retail customers, could have a material adverse effect on our business, financial condition and results of operations.
Any significant reduction in purchases, failure to obtain anticipated orders or delays or cancellations of orders by any of these major retail customers, changes to retail inventory management strategies and initiatives, competition from private label products or significant pressure to reduce prices and support promotions and discounts from any of these major retail customers, could have a material adverse effect on our business, financial condition and results of operations.
A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support.
A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose stockholder support.
Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market. 18 Table of Contents Additionally, many products in our international operations are sourced through USD denominated transactions and sold within their respective markets using local currencies.
Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market. Additionally, many products in our international operations are sourced through USD denominated transactions and sold within their respective markets using local currencies.
In certain instances, we may have continuing obligations pursuant to certain of these transactions, including obligations to indemnify other parties to agreements, and may be subject to risks resulting from these transactions. We may incur material capital and other costs due to environmental liabilities.
In certain instances, we may have continuing obligations pursuant to certain of these transactions, including obligations to indemnify other parties to agreements, and may be subject to risks resulting from these transactions. We may incur material capital and other costs due to changing environmental laws and regulations and other environmental liabilities.
If our goodwill, indefinite-lived intangible assets or other long-term assets become impaired, we will be required to record additional impairment charges, which may be significant. A significant portion of our long-term assets consist of goodwill, other indefinite-lived intangible assets and finite-lived intangible assets recorded as a result of past acquisitions as well as through fresh start reporting.
If our indefinite-lived intangible assets or other long-term assets become impaired, we will be required to record additional impairment charges, which may be significant. A significant portion of our long-term assets have historically consisted of goodwill, other indefinite-lived intangible assets and finite-lived intangible assets recorded as a result of past acquisitions as well as through fresh start reporting.
We have initiated the closure of our HPC operations within Russia and in the future, we may have to further reduce or cease doing business within the certain surrounding regions, which could have a negative impact on our ability to collect outstanding accounts receivables, or impose additional costs, further negatively impacting our business performance.
We have closed our HPC operations within Russia and in the future, we may have to further reduce or cease doing business within the certain surrounding regions, which could have a negative impact on our ability to collect outstanding accounts receivables, or impose additional costs, further negatively impacting our business performance.
These obligations could result in: • default and foreclosure on our assets if our operating revenues after an investment or acquisition are insufficient to repay our financial obligations; • acceleration of our obligations to repay the financial obligations even if we make all required payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; • our immediate payments of all amounts owed, if any, if such financial obligations are payable on demand; • our inability to obtain additional financing if such financial obligations contain covenants restricting our ability to obtain such financing while the financial obligations remain outstanding; • our inability to pay dividends on our capital stock; • using a substantial portion of our cash flow to pay principal and interest or dividends on our financial obligations, which will reduce the funds available for dividends on our Common Stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; • limitations on our flexibility in planning for and reacting to changes in our business and in the industries in which we operate; • an event of default that triggers a cross default with respect to other financial obligations, including our indebtedness; • increased vulnerability to adverse changes in general economic, industry, financial, competitive, legislative, regulatory and other conditions and adverse changes in government regulation; and • limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors.
These obligations could result in: • default and foreclosure on our assets if our operating revenues after an investment or acquisition are insufficient to repay our financial obligations; • acceleration of our obligations to repay the financial obligations even if we make all required payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; • our immediate payments of all amounts owed, if any, if such financial obligations are payable on demand; • our inability to obtain additional financing if such financial obligations contain covenants restricting our ability to obtain such financing while the financial obligations remain outstanding; • our inability to pay dividends on our capital stock; • using a substantial portion of our cash flow to pay principal and interest or dividends on our financial obligations, which will reduce the funds available for dividends on our Common Stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; • limitations on our flexibility in planning for and reacting to changes in our business and in the industries in which we operate; • an event of default that triggers a cross default with respect to other financial obligations, including our indebtedness; • increased vulnerability to adverse changes in general economic, industry, financial, competitive, legislative, regulatory and other conditions and adverse changes in government regulation; and • limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors. 20 Table of Contents Risks Related to our International Operations We are subject to significant international business risks that could hurt our business and cause our results of operations to fluctuate.
An adverse change in any of the following could have a material adverse effect on our business, financial condition and results of operations: • our ability to identify and develop relationships with qualified suppliers; • the terms and conditions upon which we purchase products from our suppliers, including applicable exchange rates, transport and other costs, our suppliers’ willingness to extend credit to us to finance our inventory purchases and other factors beyond our control; • the financial condition of our suppliers; • political and economic instability in the countries in which our suppliers are located, as a result of war, terrorist attacks, pandemics, natural disasters or otherwise; • our ability to import outsourced products; • our suppliers’ noncompliance with applicable laws, trade restrictions and tariffs; or • our suppliers’ ability to manufacture and deliver outsourced products according to our standards of quality on a timely and efficient basis.
If any of the following were to occur, we could experience loss and liability, which could have a material adverse effect on our business, financial condition and results of operations: • our ability to identify and develop relationships with qualified suppliers; • the terms and conditions upon which we purchase products from our suppliers, including applicable exchange rates, transport and other costs, our suppliers’ willingness to extend credit to us to finance our inventory purchases and other factors beyond our control; • the financial condition of our suppliers and their ability to deliver products on a timely and efficient basis; • political and economic instability in the countries in which our suppliers are located, as a result of war, terrorist attacks, pandemics, natural disasters or otherwise; • our ability to import outsourced products; • our suppliers’ noncompliance with applicable laws, trade restrictions and tariffs; or • our suppliers’ ability to manufacture and deliver outsourced products according to our standards of quality on a timely and efficient basis.
In addition, the economic sanctions and hostilities in Russia and Ukraine and the Israel-Hamas war may negatively impact our and our customers’ financial viability, which may negatively impact us or the demands or economic viability of our customers in other parts of the world.
In addition, the economic sanctions and hostilities in Russia and Ukraine and the Israel-Hamas war (including other parts of the Middle East) may negatively impact our and our customers’ financial viability, which may negatively impact us or the demands or economic viability of our customers in other parts of the world.
However, because the techniques used in these attacks change frequently and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures.
However, because the techniques used in these attacks change frequently and may be difficult to detect for periods of time, we and our service providers may face difficulties in anticipating and implementing adequate preventative measures.
Any breach of our or our service providers' network, or other vendor systems, may result in the loss of confidential business and financial data, misappropriation of our consumers', users' or employees' personal information or a disruption of our business.
Any breach of our or our service providers’ network, or other vendor systems, may result in the loss of confidential business and financial data, misappropriation of our consumers,’ users’ or employees’ personal information or a disruption of our business.
We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, including our purchase of the Tristar Business, in addition to costs related directly to completing such transactions. We would expect similar costs to be incurred with any future acquisition or divestiture.
We expect to incur one-time costs in connection with integrating our operations, products and personnel and those of the businesses we acquire or divest, in addition to costs related directly to completing such transactions. We would expect similar costs to be incurred with any future acquisition or divestiture.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on product liability. Agreements, transactions and litigation involving or resulting from the activities of our predecessor and its former subsidiaries may subject us to future claims or litigation that could materially adversely impact our capital resources.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further discussion on product liability. Agreements, transactions and litigation involving or resulting from the activities of our predecessor and its former subsidiaries may subject us to future claims or litigation that could materially adversely impact our capital resources.
Factors that may influence the price of the common stock include, without limitation, the following: • loss of any of our key customers or suppliers, including our B&D licensing agreement with SBD; • additions or departures of key personnel; • sales of common stock; • our ability to execute our business plan; • announcements and consummations of business acquisitions; • operating results that fall below expectations; • amount and terms of borrowings with debtors and net leverage provisions; • additional issuances of common stock; • low volume of sales due to concentrated ownership of common stock; • intellectual property disputes; • industry developments; • economic and other external factors; and • period-to-period fluctuations in our financial results.
Many factors, including some we may be unable to control, may influence the price of the common stock including, without limitation, the following: • loss of any of our key customers or suppliers, including our B+D licensing agreement with SBD; • additions or departures of key personnel; • sales of common stock; • our ability to execute our business plan; • announcements and consummations of business acquisitions and divestitures; • operating results that fall below expectations; • amount and terms of borrowings with debtors and net leverage provisions; • additional issuances of common stock; • low volume of sales due to concentrated ownership of common stock; • intellectual property disputes; • industry developments; • economic and other external factors; and • period-to-period fluctuations in our financial results.
As of September 30, 2023, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company, however there may be additional risks posed to the Company from the acquisition of the Tristar Business and its integration with the Company and the HPC segment.
As of September 30, 2024, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company, however there may be additional risks posed to the Company from the acquisition of the Tristar Business and its integration with the Company.
It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment. See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion on estimated liabilities arising from such environmental matters.
It is difficult to quantify with certainty the potential financial impact of actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment. See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further discussion on estimated liabilities arising from such environmental matters.
Our ability to compete in these consumer product markets may be adversely affected by a number of factors, including, but not limited to, the following: • We compete against many well-established companies that may have substantially greater financial and other resources, including personnel and research and development, and greater overall market share than us. • In some key product lines, our competitors may have lower production costs and higher profit margins than us, which may enable them to compete more aggressively in offering retail discounts, rebates and other promotional incentives. • Technological advancements, product improvements or effective advertising campaigns by competitors may weaken consumer demand for our products. • Consumer purchasing behavior may shift to distribution channels, including to online retailers, where we and our customers do not have a strong presence. • Consumer preferences may change to lower margin products or products other than those we market. • We may not be successful in the introduction, marketing and manufacture of any new products or product innovations or be able to develop and introduce, in a timely manner, innovations to our existing products that satisfy customer needs or achieve market acceptance.
Our ability to compete in these consumer product markets may be adversely affected by a number of factors, including, but not limited to, the following: • We compete against many well-established companies that may have substantially greater financial and other resources, including personnel and research and development, and greater overall market share than us. • In some key product lines, our competitors may have lower production costs and higher profit margins than us, which may enable them to compete more aggressively in offering retail discounts, rebates and other promotional incentives. • Technological advancements, product improvements or effective advertising campaigns by competitors may weaken consumer demand for our products. • Consumer purchasing behavior may shift to distribution channels, including to online retailers, where we and our customers do not have a strong presence. • Consumer preferences may change to lower or higher margin products or products other than those we market. • We may not be successful in the introduction, marketing and manufacture of any new products or product innovations or be able to develop and introduce, in a timely manner, innovations to our existing products that satisfy customer needs or achieve market acceptance. 12 Table of Contents In addition, in certain of our product lines, we compete with our retail customers, who use their own private label brands, and with distributors and foreign manufacturers of unbranded products.
If we are unable to successfully manage the transition of our business to new brands, our reputation among our customers could be adversely affected, and our revenue and profitability could decline. Refer to Item 1 - Business included elsewhere in this Annual Report for further discussions on licensed tradenames and related contractual terms.
If we are unable to successfully manage the transition of our business to new brands, our reputation among our customers could be adversely affected, and our revenue and profitability could decline. Refer to Item 1 - Business for further discussions on licensed tradenames and related contractual terms.
Additionally, successful integration and separation of operations, products and personnel may place a significant burden on our management and other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition process, could harm our business, financial condition, and operating results.
Additionally, any acquisition or disposition (including the successful integration and separation of operations, products and personnel) may place a significant burden on our management and other internal resources. The diversion of management’s attention, and any difficulties encountered in such a process, could harm our business, financial condition, and operating results.
See “Management’s Discussion & Analysis –Business Overview—Tristar Business Acquisition.” Significant costs have been incurred and are expected to be incurred in connection with the consummation of recent and future strategic initiatives including the integration or separation of acquired or divested businesses within the Company.
See the Tristar Business Acquisition discussion within the Business Overview section in Item 7 - Management’s Discussion & Analysis . Significant costs have been incurred and are expected to be incurred in connection with the consummation of recent and future strategic initiatives including the integration or separation of acquired or divested businesses within the Company.
Our success is dependent on our ability to manage our retailer relationships, including offering mutually acceptable trade terms. Concentration of sales are further discussed in Item 1 - Business above and Note 6 - Revenue Recognition in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report.
Our success is dependent on our ability to manage our retailer relationships, including offering mutually acceptable trade terms. Concentration of sales are further discussed in Item 1 - Business above and Note 5 - Revenue Recognition in the Notes to the Consolidated Financial Statements .
Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic, or future pandemics, that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position. The duration of any such impacts cannot be predicted.
In the event of a future pandemic, any of the foregoing factors, or the resulting cascading effects of any pandemic, or future pandemics that are not currently foreseeable, could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity position. The duration of any such impacts cannot be predicted.
These economic uncertainties and potential disruptions include a slow-down in the general economy; reduced market growth rates; increased inflation rates and cost of goods; increased fuel and employee costs; higher interest rates; tighter credit markets; changes in government policies, including the imposition of tariffs or import costs; the deterioration of economic relations between countries or regions; actions taken by governmental authorities to contain the spread of COVID-19 and mitigate its public health effects; and the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, all of which can negatively impact our ability to manufacture, supply or sell our products and otherwise conduct our day-to-day operations.
These economic uncertainties and potential disruptions include a slow-down in the general economy; reduced market growth rates; increased inflation rates and cost of goods; increased fuel and employee costs; higher interest rates; tighter credit markets; changes in government policies, including the imposition of tariffs or import costs; the deterioration of economic relations between countries or regions; and the escalation or continuation of armed conflict, hostilities or economic sanctions between countries or regions, all of which can negatively impact our ability to manufacture, supply or sell our products and otherwise conduct our day-to-day operations.
See Note 11 – Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further detail. The successful execution of our operational efficiency and multi-year restructuring initiatives are important to the long-term growth of our business.
See Note 10 – Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements for further detail. The successful execution of our operational efficiency and multi-year restructuring initiatives are important to the long-term growth of our business.
We rely extensively on information technology (IT) systems, networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our business.
We rely extensively on information technology (IT) systems, networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our business. 23 Table of Contents In addition, our use of social media presents other possible vulnerabilities.
For example, the European Union adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018, and California passed the California Consumer Privacy Act (the "CCPA"), which became effective on January 1, 2020, and is being amended by the California Privacy Rights Act ("CPRA"), which became effective on January 1, 2023.
For example, the EU adopted the General Data Protection Regulation (the “GDPR”), which became effective on May 25, 2018, and California passed the California Consumer Privacy Act (the “CCPA”), which became effective on January 1, 2020, and is being amended by the California Privacy Rights Act (“CPRA”), which became effective on January 1, 2023.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that Company products caused illness or injury could adversely affect the Company’s reputation with existing and potential customers and its corporate and brand image.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that Company products caused illness, injury or property damage could adversely affect the Company’s reputation with existing and potential customers and its corporate and brand image and trigger certain rights of owners of the brands the Company licenses.
Furthermore, we primarily sell branded products and a move by one or more of our large customers to sell significant quantities of private label products, which we do not produce on their behalf and which directly compete with our products, could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, we primarily sell branded products and a move by one or more of our large customers to sell significant quantities of private label products, which could be at the exclusion of our products and/or which directly compete with our products, could have a material adverse effect on our business, financial condition and results of operations.
Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations. Our dependence on a few suppliers for certain of our products makes us vulnerable to a disruption in the supply of our products.
Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations. Our dependence on a few suppliers for certain of our products makes us vulnerable to a disruption in the supply of our products. We generally do not have long-term contracts with our suppliers.
Louis, MO, facility and our aquatics products and certain companion animal products are manufactured in Blacksburg, VA, Bridgeton, MO, Noblesville IN and Melle, Germany. We are dependent upon the continued safe operation of these facilities.
Our home and garden products are mainly manufactured from our Vinita Park, MO, facility and our aquatics products and certain companion animal products are manufactured in Blacksburg, VA, Bridgeton, MO, Noblesville IN and Melle, Germany. We are dependent upon the continued safe operation of these facilities.
We continue to assess potential threats and make investments seeking to address and prevent these threats, including monitoring of networks and systems and upgrading skills, employee training and security policies for the Company and its third-party providers.
Through our third party service providers, we continue to assess potential threats and seek to address and prevent these threats, including monitoring of networks and systems and upgrading skills, employee training and security policies for the Company and its third-party providers.
Refer to Note 5 - Restructuring Charges in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail over restructuring related activity. 24 Table of Contents Risks Related to Investment in our Common Stock Our Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Refer to Note 4 - Exit and Disposal Activities in the Notes to the Consolidated Financial Statements for additional detail over restructuring related activity. 27 Table of Contents Risks Related to our Common Stock Our Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Any failure to attract and retain key personnel could have a material adverse effect on our business. If any of our key personnel or those of our acquired businesses were to join a competitor or form a competing company, existing and potential customers or suppliers could choose to form business relationships with that competitor instead of us.
If any of our key personnel or those of our acquired businesses were to join a competitor or form a competing company, existing and potential customers or suppliers could choose to form business relationships with that competitor instead of us.
This increased focus on environmental issues and sustainability may result in new or increased regulations and customer, consumer and investor demands that could cause us to incur additional costs or to make changes to our operations to comply with any such regulations and address demands.
This increased focus on environmental issues and sustainability has resulted in and may result in further adoption of a number of customer, consumer, investor and industry demands, that could cause us to incur additional costs or to make changes to our operations to comply with any such regulations and address demands.
Our international operations may expose us to risks related to compliance with the laws and regulations of foreign countries. See the risk factor Our international operations may expose us to risks related to compliance with the laws and regulations of foreign countries included elsewhere in this Annual Report.
Our international operations may expose us to risks related to compliance with the laws and regulations of foreign countries. See the risk factor Our international operations may expose us to risks related to compliance with the laws and regulations of foreign countries .
RUHSEEE requires us to eliminate specified hazardous materials from products we sell in EU member states. WEEE requires us to collect and treat, dispose of or recycle certain products we manufacture or import into the EU at our own expense. The costs associated with maintaining compliance or failing to comply with the EU Directives may harm our business.
WEEE requires us to collect and treat, dispose of or recycle certain products we manufacture or import into the EU at our own expense. The costs associated with maintaining compliance or failing to comply with the EU Directives may harm our business.
These agreements may be on terms that are less favorable than those under our current collective bargaining agreements. Increased exposure to collective bargaining agreements, whether on terms more or less favorable than our existing collective bargaining agreements, could adversely affect the operation of our business, including through increased labor expenses.
Increased exposure to collective bargaining agreements, whether on terms more or less favorable than our existing collective bargaining agreements, could adversely affect the operation of our business, including through increased labor expenses.
Regardless of their subject matter or merits, class action lawsuits and other government investigations may result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations. 21 Table of Contents We are subject to a number of claims and litigation and may be subject to future claims and litigation, any of which may adversely affect our business.
Regardless of their subject matter or merits, class action lawsuits and other government investigations may result in significant cost to us, which may not be covered by insurance, may divert the attention of management or may otherwise have an adverse effect on our business, financial condition and results of operations.
The loss of one or more of our suppliers, a material reduction in their supply of products or provision of services to us or extended disruptions or interruptions in their operations could have a material adverse effect on our business, financial condition and results of operations. 12 Table of Contents Our home and garden products are mainly manufactured from our St.
The loss of one or more of our suppliers, a material reduction in their supply of products or provision of services to us or extended disruptions or interruptions in their operations could have a material adverse effect on our business, financial condition and results of operations.
As a distributor of consumer products in the U.S., certain of our products are also subject to the Consumer Product Safety Act, which empowers the U.S. Consumer Product Safety Commission (the “Consumer Commission”) to exclude from the market products that are found to be unsafe or hazardous.
As a global distributor of consumer products, certain of our products are subject to the Consumer Product Safety Act, which empowers the U.S. Consumer Product Safety Commission (the “Consumer Commission”) to exclude from the market products that are found to be unsafe or hazardous, and other similar laws in states and other countries in which we sell our products.
We may be unable to achieve the goals and aspirations set forth in our sustainability report, particularly with respect to the reduction of greenhouse gas (GHG) emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.
We may be unable to achieve our goals and aspirations related to the reduction of greenhouse gas emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.
While we currently expect to negotiate continuations to the terms of these agreements, there can be no assurances that we will be able to obtain terms that are satisfactory to us or otherwise to reach agreement at all with the applicable parties. In addition, in the course of our business, we may also become subject to additional collective bargaining agreements.
While we currently expect to negotiate continuations to the terms of collective bargaining agreements, there can be no assurances that we will be able to obtain terms that are satisfactory to us or otherwise to reach agreement at all with the applicable parties.
We are also seeing more traditional brick-and-mortar retailers closing physical stores, and filing for bankruptcy, which could negatively impact our distribution strategies and/or sales if such retailers decide to significantly reduce their inventory levels for our products or to designate more floor space to our competitors.
We are also seeing more traditional brick-and-mortar retailers consolidating, closing physical stores, and filing for bankruptcy, which could further concentrate the negotiating power of our remaining brick-and-mortar customers and negatively impact our distribution strategies and/or sales if such retailers decide to pursue aggressive price reduction strategies, significantly reduce their inventory levels for our products or to designate more floor space to our competitors.
Among other things, the FDA enforces statutory prohibitions against misbranded and adulterated products, establishes ingredients and manufacturing procedures for certain products, establishes standards of identity for certain products, determines the safety of products and establishes labeling standards and requirements.
Certain of our products and packaging materials are subject to regulations administered by the FDA. Among other things, the FDA enforces statutory prohibitions against misbranded and adulterated products, establishes ingredients and manufacturing procedures for certain products, establishes standards of identity for certain products, determines the safety of products and establishes labeling standards and requirements.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion over material claims and litigation. The Company may be subject to product liability claims and product recalls, which could negatively impact its profitability.
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further discussion over material claims and litigation. 24 Table of Contents The Company has been, and may in the future be, subject to product liability claims and product recalls, which could negatively impact its profitability.
Public perception that any such third-party trademarks, brand names and logos used by us are not safe, whether justified or not, could have a material adverse effect on our business, financial condition and results of operations.
Public perception that any such third-party trademarks, brand names and logos used by us are not safe, whether justified or not, could have a material adverse effect on our business, financial condition and results of operations. We have in our past recorded substantial impairment charges relating to indefinite-lived intangible assets.
In particular, changing consumer preferences may result in increased customer and consumer concerns and demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and their environmental impact on sustainability, a growing demand for natural or organic products and ingredients, or increased consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products.
In particular, changing consumer preferences have resulted in and may result in future customer and consumer concerns and demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and their environmental impact on sustainability, a growing focus on the components, raw materials and production processes used to create our products and ingredients, or increased consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products.
We face a number of local, regional, and global uncertainties and potential disruptions which could adversely impact our businesses, our financial performance or liquidity, and our ability to carry out our go-forward plans and strategies.
We face a number of local, regional, and global uncertainties and potential disruptions, including relating to political and economic instability in a number of regions, some of which have been historically volatile, which could adversely impact our businesses, our financial performance or liquidity, and our ability to carry out our go-forward plans and strategies.
We may not be able to fully utilize our U.S. tax attributes. The Company has accumulated a substantial amount of U.S. federal and state net operating loss (“NOLs”) carryforwards, and federal and state tax credits that will expire if unused.
The Company has accumulated a substantial amount of U.S. federal and state net operating loss (“NOLs”) carryforwards, and federal and state tax credits that will expire if unused.
We may issue additional equity, incur long-term or short-term indebtedness, spend cash or use a combination of these for all or part of the consideration paid in future acquisitions or expansion of our operations.
We may issue additional equity, incur long-term or short-term indebtedness, spend cash or use a combination of these for all or part of the consideration paid in future acquisitions or expansion of our operations, which may not be available to us on terms we find advantageous or acceptable, if at all.
Under many of our supply arrangements, the price we pay for raw materials fluctuates along with certain changes in underlying commodities costs. Price increases for our raw materials have placed pressure on our costs and could continue to do so, and we may not be able to effectively hedge or pass along any such increases to our customers or consumers.
Price increases for our raw materials have placed pressure on our costs and could continue to do so, and we may not be able to effectively hedge or pass along any such increases to our customers or consumers.
Adverse weather conditions during the first six months of the calendar year (the Company’s second and third fiscal quarters), when demand for home and garden control products typically peaks, could have a material adverse effect on our home and garden business and our financial results during such period.
Adverse weather conditions during the first six months of the calendar year (the Company’s second and third fiscal quarters), when demand for home and garden control products typically peaks, could have a material adverse effect on our home and garden business and our financial results during such period. 13 Table of Contents Our products utilize certain key raw materials; any significant increase in the price of, or change in supply and demand for, these raw materials could have a material and adverse effect on our business, financial condition and profits.
Risks Related to our Indebtedness and Financing Activities Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our indebtedness. We have, and we expect to continue to have, substantial indebtedness.
Our substantial indebtedness may limit our financial and operating flexibility, and we may incur additional debt, which could increase the risks associated with our indebtedness. We have, and we expect to continue to have, substantial indebtedness. See Note 11 - Debt in the Notes to the Consolidated Financial Statements for additional detail .
As a result of the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closure of our distribution centers, and corporate facilities, as have our wholesale customers, licensing partners, suppliers and vendors, and despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.
Despite our efforts to manage and remedy the impact of COVID-19 on our financial condition and results of operations, the ultimate impact also depended on factors beyond our knowledge or control at the time, including the duration and severity of the COVID-19 pandemic, potential future waves of COVID-19 cases in the locations where we operate, and actions taken by governmental authorities to contain its spread and mitigate its public health effects.
If our obligations under the senior secured facilities are accelerated, we cannot assure you that our assets would be sufficient to repay in full such indebtedness. 17 Table of Contents Future financing activities may adversely affect our leverage and financial condition.
If our obligations under the senior secured facilities are accelerated, we cannot assure you that our assets would be sufficient to repay in full such indebtedness. Future financing activities may adversely affect our leverage and financial condition. Subject to the limitations set forth in our debt agreements, we may incur additional indebtedness and issue dividend-bearing redeemable equity interests.
We are seeing the emergence of strong e-commerce channels generating more online competition and declining in-store traffic in brick-and-mortar retailers. Consumer shopping preferences have shifted and may continue to shift in the future to distribution channels other than traditional retail that may have more limited experience, presence and developed, such as e-commerce channels.
Consumer shopping preferences have shifted and may continue to shift in the future to distribution channels other than traditional retail that may have more limited experience, presence and developed, such as e-commerce channels.
For instance, the conflict between Russia and Ukraine has led us to terminate, reduce or significantly change our business activities in these regions and certain surrounding regions.
For instance, the conflict between Russia and Ukraine has led us to terminate, reduce or significantly change our business activities in these regions and certain surrounding regions. We have also experienced increased shipping costs and shipping delays from the dangerous disruptions to shipping in the Red Sea.
We could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could fail in fully and accurately reporting our progress on such initiatives and goals. In addition, we could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters.
We could also be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocations Ballymount, Ireland HPC - Commercial Operations Leased Barcelona, Spain HPC - Commercial Operations Leased Bogota, Colombia Shared - Commercial Operations Leased Borgholzhausen, Germany GPC - Distribution Leased Bucharest, Romania HPC - Commercial Operations Leased Buenos Aires, Argentina HPC - Commercial Operations Leased Coevorden, Netherlands GPC - Distribution Leased El Dorado, Panama HPC - Commercial Operations Leased Guatemala, Guatemala HPC - Commercial Operations Leased Istanbul, Turkey HPC - Commercial Operations Leased Manchester, UK Shared - UK Operations Owned Melle, Germany GPC - Manufacturing Owned Mentone, Australia HPC - Operations & Distribution Leased Mexico City, Mexico Shared - Commercial Operations Leased Milan, Italy Shared - Commercial Operations Leased Nuremberg, Germany HPC - Distribution Leased Penrose, New Zealand HPC - Commercial Operations Leased San Jose, Costa Rica HPC - Commercial Operations Leased San Salvador, El Salvador HPC - Commercial Operations Leased Santa Domingo, Dominican Republic HPC - Commercial Operations Leased Shanghai, China HPC - Commercial Operations Leased Shenzhen, China APAC Shared Operations & Distribution Leased Singapore, Singapore Shared Commercial Operations Leased Sofia, Bulgaria HPC - Commercial Operations Leased Stockholm, Sweden HPC - Commercial Operations Leased Sulzbach, Germany EMEA Shared Operations Leased Tegucigalpa, Honduras HPC - Commercial Operations Leased Utrecht, Netherlands HPC - Commercial Operations Leased Vantaa, Finland HPC - Commercial Operations Leased Warsaw, Poland Shared - Commercial Operations Leased Wombourne, UK HPC - Distribution Leased Xiamen, China Shared - Commercial Operations Leased Yokohama, Japan GPC Commercial Operations Leased We also contract with third parties to operate distribution centers, sales and other administrative offices throughout the world in support of our business.
Biggest changeLocations (continued) Melle, Germany GPC - Manufacturing, Distribution & Commercial Operations Owned Mentone, Australia HPC - Commercial Operations & Distribution Leased Mexico City, Mexico HPC & GPC Shared - Commercial Operations Leased Milan, Italy HPC & GPC Shared - Commercial Operations Leased Ningbo City, China HPC - Commercial Operations Leased Nottingham, UK GPC - Commercial Operations & Distribution Leased Nuremberg, Germany HPC - Distribution Leased Otopeni, Romania HPC – Commercial Operations Leased Panama City, Panama HPC – Commercial Operations Leased Penrose, New Zealand HPC - Commercial Operations Leased Pingshan, China HPC – Distribution Leased Puteaux, France GPC – Commercial Operations Leased San Jose, Costa Rica HPC - Commercial Operations Leased San Salvador, El Salvador HPC - Commercial Operations Leased Santa Domingo, Dominican Republic HPC - Commercial Operations Leased Schwabach, Germany HPC – Distribution Leased Shenzhen, China APAC Shared Operations & Distribution Leased Singapore, Singapore HPC & GPC Shared - Commercial Operations Leased Sofia, Bulgaria HPC - Commercial Operations & Distribution Leased Stockholm, Sweden HPC - Commercial Operations Leased Sulzbach, Germany EMEA - Shared Operations Leased Tegucigalpa, Honduras HPC - Commercial Operations Leased Tarlungeni, Romania HPC – Commercial Operations & Distribution Leased Upton, UK GPC – Distribution Leased Utrecht, Netherlands HPC - Commercial Operations Leased Vantaa, Finland HPC - Commercial Operations Leased Vicente Lopez, Argentina HPC - Commercial Operations Leased Vienna, Austria GPC - Commercial Operations Leased Warsaw, Poland Shared - Commercial Operations Leased Woking, UK GPC - Commercial Operations Leased Wombourne, UK HPC - Commercial Operations & Distribution Leased Xiamen, China HPC & GPC Shared - Commercial Operations Leased Yokkaichi, Japan GPC – Distribution Leased Yokohama, Japan GPC - Commercial Operations Leased Zagreb, Croatia HPC – Commercial Operations Leased We believe that our existing facilities are suitable and adequate for our present purposes and that the productive capacity in such facilities is substantially being utilized or we have plans to utilize it.
ITEM 2. PROPERTIES The following lists our principal owned or leased administrative, manufacturing, packaging, and distribution facilities at September 30, 2023 Location Function / Use Owned / Leased U.S.
ITEM 2. PROPERTIES The following lists our principal owned or leased administrative, manufacturing, packaging, and distribution facilities at September 30, 2024: Location Function / Use Owned / Leased U.S.
Locations Bentonville, Arkansas Shared Commercial Operations Leased Blacksburg, Virginia GPC - Research & Development Leased Blacksburg, Virginia GPC - Manufacturing Owned Bridgeton, Missouri GPC - Manufacturing Leased Earth City, Missouri GPC Headquarters, H&G Headquarters and NA Shared Operations Leased Edwardsville, Illinois GPC - Distribution Leased Edwardsville, Illinois H&G - Distribution Leased Fairfield, New Jersey HPC - Commercial Operations Leased Meriden, Connecticut HPC - Distribution Leased Middleton, Wisconsin Corporate Headquarters, HPC Headquarters and NA Shared Operations Leased Miramar, Florida HPC -Commercial Operations Leased Mooresville, North Carolina H&G - Commercial Operations Leased Moorpark, California GPC - Commercial Operations Leased New Britain, Connecticut HPC - Distribution Leased Noblesville, Indiana GPC - Manufacturing Owned Redlands, California HPC - Distribution Leased Reno, Nevada HPC - Distribution Leased Riverview, Florida GPC - Research & Development Owned St.
Locations Bentonville, Arkansas HPC, GPC, & H&G Shared - Commercial Operations Leased Blacksburg, Virginia GPC - Research & Development Leased Blacksburg, Virginia GPC - Manufacturing Owned Bridgeton, Missouri GPC - Manufacturing Leased Dothan, Alabama H&G - Distribution Leased Earth City, Missouri GPC Headquarters, H&G Headquarters and NA Shared Operations Leased Edwardsville, Illinois GPC - Distribution Leased Edwardsville, Illinois H&G - Distribution Leased Fairfield, New Jersey HPC - Commercial Operations Leased Las Palmas, Puerto Rico HPC - Distribution Leased Middleton, Wisconsin Corporate Headquarters, HPC Headquarters and NA Shared Operations Leased Miramar, Florida HPC - Commercial Operations and LATAM Shared Operations Leased Moorpark, California GPC - Commercial Operations Leased New Britain, Connecticut HPC - Distribution Leased Noblesville, Indiana GPC - Manufacturing Owned Redlands, California HPC - Distribution Leased Riverview, Florida GPC - Research & Development Owned Vinita Park, Missouri H&G - Manufacturing Leased Non-U.S.
Removed
Louis, Missouri H&G - Manufacturing Leased 26 Table of Contents Location Function / Use Owned / Leased Non-U.S.
Added
Locations Alcobendas, Spain HPC - Commercial Operations Leased Auckland, New Zealand HPC – Distribution Leased Ballerup, Denmark HPC - Commercial Operations Leased Ballymount, Ireland HPC - Commercial Operations Leased Barcelona, Spain HPC - Commercial Operations Leased Bogota, Colombia HPC & GPC Shared - Commercial Operations and LATAM Shared Operations Leased Borgholzhausen, Germany GPC - Distribution Leased Bucharest, Romania HPC - Commercial Operations Leased Budapest, Hungary HPC - Commercial Operations Leased Cali, Colombia HPC - Distribution Leased Catalca, Türkiye HPC - Distribution Leased Ceska Liska, Czech Republic HPC - Commercial Operations Leased Coevorden, Netherlands GPC - Distribution Leased Cuautitlan, Mexico GPC – Distribution, H&G Distribution Leased El Dorado, Panama HPC & GPC Shared - Commercial Operations Leased Escobar, Argentina HPC – Distribution Leased Etobicoke, Canada HPC – Distribution Leased Guatemala, Guatemala HPC - Commercial Operations Leased Istanbul, Türkiye HPC - Commercial Operations Leased Lisboa, Portugal HPC - Commercial Operations Leased Ljublijana, Slovenia HPC - Commercial Operations Leased Llica de Vall, Spain HPC – Distribution Leased Manchester, UK HPC & GPC Shared - UK Operations Owned Mechelen, Belgium HPC - Commercial Operations Leased 30 Table of Contents Location Function / Use Owned / Leased Non-U.S.
Removed
We believe that our existing facilities are suitable and adequate for our present purposes and that the productive capacity in such facilities is substantially being utilized or we have plans to utilize it.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We have disclosed all matters of legal proceedings believed to have an adverse effect on our results of operations, financial condition, liquidity or cash flows in the notes to our consolidated financial statements.
Biggest changeITEM 3. LEGAL PROCEEDINGS We have disclosed all matters of legal proceedings believed to have an adverse effect on our results of operations, financial condition, liquidity or cash flows in the notes to our consolidated financial statements. See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements for additional detail. ITEM 4.
Removed
See Note 20 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail. ITEM 4. MINE SAFETY DISCLOSURES Not applicable 27 Table of Contents PART II
Added
MINE SAFETY DISCLOSURES Not applicable 31 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities None. 28 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock to the cumulative total return of the Russell 1000 Financial Index, the S&P 500 Household Products Index, and the Spectrum Peer Group selected in good faith, which is composed of the following companies ( alphabetical order ): 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.
Biggest changeRecent Sales of Unregistered Securities None. 32 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our Common Stock to the cumulative total return of the Russell 1000 Financial Index, the S&P 500 Household Products Index.
The share repurchase program permits shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).
The 2024 Repurchase Program permits shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).
Equity Plans Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans: • Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan as approved and amended by the Spectrum Legacy stockholders. • Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan, as approved and amended by the Spectrum stockholders.
Equity Plans Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans: • Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan as approved and amended by the stockholders. • Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan, as approved and amended by stockholders.
The stockholder return shown on the graph below is not necessarily indicative of future performance and will not make or endorse any predictions as to future stockholder returns. ITEM 6. RESERVED. 29 Table of Contents
The stockholder return shown on the graph below is not necessarily indicative of future performance and will not make or endorse any predictions as to future stockholder returns. ITEM 6. RESERVED. 33 Table of Contents
The comparison below assumes that $100 was invested in the common stock of SBH from September 30, 2018 until September 30, 2023. The comparison is based upon the closing price of the common stock, as applicable, and assumes the reinvestment of all dividends, if any.
The comparison below assumes that $100 was invested in the common stock of SBH from September 30, 2019 until September 30, 2024. The comparison is based upon the closing price of the common stock, as applicable, and assumes the reinvestment of all dividends, if any.
The following is a summary of the authorized and available shares per the respective plans: (number of shares, in millions) Authorized Available Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan 7.1 0.2 Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan 2.6 2.1 Refer to Note 18 – Share Based Compensation in Notes to our Consolidated Financial Statement included elsewhere in this Annual Report, for additional information.
The following is a summary of the authorized and available shares per the respective plans: (number of shares, in millions) Authorized Available Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan 7.1 0.4 Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan 2.6 1.8 Refer to Note 18 – Share Based Compensation in the Notes to our Consolidated Financial Statement for additional information.
Pursuant to the agreement, the Company paid $500.0 million at inception and took delivery of 5.3 million shares which represented 80% of the total shares the Company expected to receive based on the market price at the time of the initial stock transaction.
Pursuant to the ASR Agreement, the Company paid $500.0 million to the financial institution at inception of the agreement and took delivery of 5.3 million shares, which represented 80% of the total shares the Company expected to receive based on the market price at the time of the initial delivery.
ITEM 5. MARKET FOR THE REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SBH’s common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB”. As of November 15, 2023, there were approximately 1,123 holders of record based upon data provided by the transfer agent for the SBH’s common stock.
ITEM 5. MARKET FOR THE REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES SBH’s common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SPB.” As of November 8, 2024 there were approximately 1,059 holders of record based upon data provided by the transfer agent for the SBH’s common stock.
The following summarizes the activity of common stock repurchases under the program in the fourth quarter of the year ended September 30, 2023: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Plan Approximate Dollar Value of Shares that may Yet Be Purchased July 3, 2023 to July 30, 2023 — $ — — $ 500,000,000 July 31, 2023 to August 27, 2023 34,107 82.81 34,107 497,175,050 August 28, 2023 to September 30, 2023 391,287 81.50 391,287 465,286,924 As of September 30, 2023 5,768,702 5,768,702 $ 465,286,924 The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements, and may use funds received from its divestitures to support the common stock repurchase program.
The following summarizes the activity of common stock repurchases under the program in the fourth quarter of the year ended September 30, 2024: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Plan Approximate Dollar Value of Shares that may Yet Be Purchased July 1, 2024 to July 28, 2024 — $ — — $ 402,696,794 July 29, 2024 to August 25, 2024 — — — 402,696,794 August 26, 2024 to September 30, 2024 — — — 402,696,794 As of September 30, 2024 — $ — — $ 402,696,794 The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements, and may use funds received from its divestitures to support the common stock repurchase program.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On June 17, 2023, the Board of Directors approved a share repurchase program authorizing the purchase of up to $1 billion of common stock (the "Maximum Amount").
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On June 17, 2023, the Board of Directors approved a share repurchase program authorizing the purchase of up to $1 billion of common stock (the "2023 Repurchase Program"), which was in effect from June 17, 2023 until May 20, 2024 when it was suspended and replaced by the 2024 Repurchase Program (as described below).
During the year ended September 30, 2023, the Company entered into an accelerated share repurchase agreement (the "ASR Agreement") to repurchase an aggregate of $500.0 million of the Company's common stock under the Company's new share repurchase program.
During the year ended September 30, 2023 and as part of the 2023 Repurchase Program, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution to repurchase an aggregate of $500 million of the Company’s common stock.
Upon settlement of the ASR agreement, the final number of shares to be delivered will be determined with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount. The final settlement of the transaction under the agreement is expected to occur no later than December 20, 2023.
Upon settlement of the ASR Agreement effective November 16, 2023, the financial institution delivered additional shares of 1.3 million, based on the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount.
The share repurchase program will be in effect from June 17, 2023 until the earlier of the Maximum Amount being repurchased thereunder or the suspension, termination or replacement of the program by the Company's Board of Directors.
On May 20, 2024, the Company announced a new $500 million common stock repurchase program authorized by its Board of Directors (the "2024 Repurchase Program"), replacing the Company’s 2023 Repurchase Program, which is effective from May 20, 2024 until the earlier of the maximum amount being repurchased or the suspension, termination or replacement of the program by the Company’s Board of Directors.
This number does not include the stockholders for whom shares are held in a “nominee” or “street” name. SB/RH is a wholly-owned subsidiary of SBH and accordingly, there is no established public trading market for its equity securities. As of November 15, 2023, there is only one record holder of its equity securities.
This number does not include the stockholders for whom shares are held in a “nominee” or “street” name.
Removed
During the years ended September 30, 2023 and 2022, SB/RH paid dividends of $305.1 million and $194.7 million, respectively, to its parent company, SBH. Certain restrictive covenants within the Company’s debt facilities impose limitations on payment of dividends by SB/RH’s subsidiaries to SBH.
Added
The 2023 Repurchase Program permitted shares to be repurchased in open market or through privately negotiated transactions, including by direct purchases or purchases pursuant to derivative instruments or other transactions (including pursuant to accelerated share repurchase agreements, the writing and settlement of put options and the purchase and exercise of call options).
Added
The number of shares to be repurchased, and the timing of any repurchases, was dependent on factors such as the share price, economic and market conditions, and corporate and regulatory requirements.
Added
During the year ended September 30, 2024, and as part of the 2023 Repurchase Program, the Company had entered into a $200 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through November 15, 2024, until the cap was reached or until the plan was terminated.
Added
On May 20, 2024, such 10b5-1 repurchase plan was terminated with a total of 1.9 million shares repurchased for $156.0 million.
Added
As part of the approved 2024 Repurchase Program, the Company purchased $50.0 million aggregate principal amount of Common Stock concurrent with the pricing of the offering of the Exchangeable Notes in May 2024 in privately negotiated transactions effected through one of the initial purchasers and/or its affiliates. The 2024 Repurchase Program may be suspended or discontinued at any time.
Added
See Note 17 - Shareholders' Equity in the Notes to the Consolidated Financial Statements for further detail .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+45 added−104 removed47 unchanged
Biggest change(in millions) GPC H&G HPC Corporate Consolidated Net income (loss) from continuing operations $ 134.0 $ (5.0) $ (215.8) $ (146.9) $ (233.7) Income tax benefit — — — (56.5) (56.5) Interest expense — — — 127.0 127.0 Depreciation 15.2 7.3 11.8 14.6 48.9 Amortization 22.2 11.5 8.6 — 42.3 EBITDA 171.4 13.8 (195.4) (61.8) (72.0) Share based compensation — — — 17.2 17.2 Tristar Business integration — — 11.5 — 11.5 HHI divestiture — — — 8.4 8.4 HPC separation initiatives — — — 4.2 4.2 Coevorden operations divestiture 2.7 — — — 2.7 Fiscal 2023 restructuring initiatives 3.0 — 4.4 — 7.4 Fiscal 2022 restructuring initiatives (0.3) 0.2 — 0.5 0.4 Global ERP transformation — — — 11.4 11.4 Russia closing initiatives — — 3.2 — 3.2 HPC brand portfolio transitions — — 2.5 — 2.5 Other project costs 1.3 2.5 2.3 5.1 11.2 Impairment of equipment and operating lease assets 9.0 0.1 1.7 — 10.8 Impairment of goodwill — — 111.1 — 111.1 Impairment of intangible assets — 56.0 64.7 — 120.7 Unallocated shared costs — — — 18.0 18.0 Non-cash purchase accounting adjustments — — 1.9 — 1.9 Gain from remeasurement of contingent consideration liability — — (1.5) — (1.5) Gain from debt repurchase — — — (7.9) (7.9) Legal and environmental — (0.2) 3.2 — 3.0 Early settlement of foreign currency cash flow hedges — — 4.9 — 4.9 HPC product disposal — — 20.6 — 20.6 HPC product recall — — 7.7 — 7.7 Salus and other adjustments 3.5 0.1 0.3 1.7 5.6 Adjusted EBITDA $ 190.6 $ 72.5 $ 43.1 $ (3.2) $ 303.0 Net sales $ 1,139.0 $ 536.5 $ 1,243.3 $ — $ 2,918.8 Adjusted EBITDA Margin 16.7 % 13.5 % 3.5 % — 10.4 % 36 Table of Contents The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for SBH and its segments for the year ended September 30, 2022.
Biggest changeAdjusted EBITDA margin is adjusted EBITDA as a percentage of reported net sales. 34 Table of Contents The following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDA and Adjusted EBITDA margin for the years ended September 30, 2024 and 2023: (in millions, except %) 2024 2023 Net income (loss) from continuing operations $ 99.3 $ (233.7) Income tax expense (benefit) 64.3 (56.5) Interest expense 58.5 116.1 Depreciation 57.3 48.9 Amortization 44.5 42.3 Share based compensation 17.5 17.2 Non-cash impairment charges 50.3 242.6 Non-cash purchase accounting adjustments 1.2 1.9 (Gain) loss from early extinguishment of debt (2.6) 3.0 Exit and disposal costs 1.0 9.3 HHI separation costs 1 3.9 8.4 HPC separation initiatives 1 13.4 4.2 Global ERP transformation 1 15.0 11.4 Tristar Business integration 1 — 7.0 HPC product recall 2 6.9 7.7 Gain from remeasurement of contingent consideration 3 — (1.5) Representation and warranty insurance proceeds 4 (65.0) — Litigation costs 5 2.9 3.0 HPC inventory disposal 6 — 20.6 Other 7 3.4 23.2 Adjusted EBITDA $ 371.8 $ 275.1 Net sales $ 2,963.9 $ 2,918.8 Net income (loss) from continuing operations margin 3.4 % (8.0) % Adjusted EBITDA margin 12.5 % 9.4 % ________________________________________ 1 Incremental costs associated with strategic transactions, restructuring and optimization initiatives, including, but not limited to, the acquisition or divestiture of a business, related integration or separation costs, or the development and implementation of strategies to optimize or restructure operations.
The Company's responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Company's Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.
The Company’s responsibility is limited to payments on the original terms negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution and continue to be recognized as accounts payable on the Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.
Such changes may not be determinable, but could adversely impact the fair value of the its reporting unit goodwill, intangible assets or other long-lived assets and increase the risk of impairment, particularly associated with those assets recently acquired through a business without generating excess value since the initial acquisition.
Such changes may not be determinable but could adversely impact the fair value of its reporting unit goodwill, intangible assets or other long-lived assets and increase the risk of impairment, particularly associated with those assets recently acquired through a business without generating excess value since the initial acquisition.
We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (where applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and acquisitions.
We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (where applicable). We believe this non-GAAP measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rates and acquisitions.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2022 results, please refer to Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company’s Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2022 results, please refer to Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company’s Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
For a discussion of our fiscal 2022 results, please refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company’s Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 22, 2022.
Additionally, the segment has subsequently realized unusual losses attributable to the recognition of product recalls for products associated with the brands, increased risks over the realizability of receivables and inventory, and recognized an impairment on assets including the acquired goodwill and tradename intangible assets.
Additionally, the segment has subsequently realized losses attributable to the recognition of product recalls for products associated with the brands, increased risks over the realizability of receivables and inventory, and recognized an impairment on assets including the acquired goodwill and tradename intangible assets.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management’s discussion of the financial results, liquidity and other key items related to our performance and should be read in conjunction with our Consolidated Financial Statements and related notes in this Annual Report.
We estimate that $149.7 million of valuation allowance related to domestic deferred tax assets cannot be released regardless of the amount of domestic operating income generated due to prior period ownership changes that limit the amount of NOLs and credits we can use.
We estimate that $131.7 million of valuation allowance related to domestic deferred tax assets cannot be released regardless of the amount of domestic operating income generated due to prior period ownership changes that limit the amount of NOLs and credits we can use.
Tristar Business Acquisition Following the purchase of the Tristar Business in February 2022, the Company and its HPC segment have been detrimentally impacted by aspects of the acquired business’ operations and products, which have negatively impacted subsequent operating performance and partner relationships of the acquired brands and segment.
Tristar Business Acquisition Following the purchase of the Tristar Business in February 2022, the Company and its HPC segment had been detrimentally impacted by aspects of the acquired business’ operations and products, which negatively impacted subsequent operating performance and partner relationships of the acquired brands and segment.
Employee benefit plan obligations The Company and its subsidiaries are sponsors to various defined benefit pension plans covering some of its employees that provide post-employment benefits of stated amounts for each year of service, including a number of other non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are covered by local law or coordinated with government-sponsored plans.
Employee benefit plan obligations The Company and its subsidiaries are sponsors to various defined benefit pension plans covering some of its employees that provide post-employment benefits of stated amounts for each year of service, including non-U.S. pension arrangements, including various retirement and termination benefit plans, some of which are covered by local law or coordinated with government-sponsored plans.
This section also provides a discussion of our contractual operations and other commercial commitments as well as our ability to fund future commitments and operating activities through sources of capital as of September 30, 2023.
This section also provides a discussion of our contractual operations and other commercial commitments as well as our ability to fund future commitments and operating activities through sources of capital as of September 30, 2024.
Segment Financial Data This section provides an analysis of our results of reportable segments for the years ended September 30, 2023 and 2022.
Segment Financial Data This section provides an analysis of our results of reportable segments for the years ended September 30, 2024 and 2023.
While the Company has not recognized an impairment for its goodwill, intangible assets or other long-lived assets, the assessment requires the consideration of a significant level of judgement and subjectivity, including the use of prospective financial information, which may be impacted by changes in the economic environment, future strategic business decisions, political, legal or regulatory conditions, competitive or market risk factors not readily identifiable or present, or other changes that may negatively impact prospective revenue generation or cash flow.
The assessment for the impairment of goodwill, intangible assets and other long-lived assets requires the consideration of a significant level of judgement and subjectivity, including the use of prospective financial information, which may be impacted by changes in the economic environment, future strategic business decisions, political, legal or regulatory conditions, competitive or market risk factors not readily identifiable or present, or other changes that may negatively impact prospective revenue generation or cash flow.
As of September 30, 2023, we have provided no significant residual U.S. taxes on earnings not yet taxed in the U.S. As of September 30, 2023, we project $1.2 million of additional tax from non-U.S. withholding and other taxes expected to be incurred on repatriation of foreign earnings.
As of September 30, 2024, we have provided no significant residual U.S. taxes on earnings not yet taxed in the U.S. As of September 30, 2024, we project $1.7 million of additional tax from non-U.S. withholding and other taxes expected to be incurred on repatriation of foreign earnings.
For a discussion of our fiscal 2021 results, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the Company's Annual Report on Form 10-K for the year ended September 30, 2022 filed with the SEC on November 23, 2021.
For a discussion of our fiscal 2022 results, please refer to Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations for the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on November 21, 2023.
Together with labor shortages and higher demand for talent, the current economic environment is driving higher wages. Our ability to meet labor needs, control wage and labor-related costs and minimize labor disruptions will be key to our success of operating our business and executing our business strategies.
Together with labor shortages and higher demand for talent, the current economic environment has driven higher wages. Our ability to meet labor needs, control wage and labor-related costs and minimize labor disruptions will be key to our success of operating our business and executing our business strategies.
See Note 21 - Segment Information in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion of operating and reporting segments. The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
See Note 21 - Segment Information in the Notes to the Consolidated Financial Statements for further discussion of operating and reporting segments. The Company evaluates qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
For those income tax positions where it is more likely than not that a tax benefit will not be sustained, the Company did not recognize a tax benefit. As of September 30, 2023, the total amount of unrecognized tax benefits, including interest and penalties, that if not recognized would affect the effective tax rate in future periods was $100.2 million.
For those income tax positions where it is more likely than not that a tax benefit will not be sustained, the Company did not recognize a tax benefit. As of September 30, 2024, the total amount of unrecognized tax benefits, including interest and penalties, that if not recognized would affect the effective tax rate in future periods was $108.5 million.
Inflation and Supply Chain Constraint s The Company has experienced an inflationary environment on a global basis in the wake of the COVID-19 pandemic and supply chain constraints such as increased labor shortages, increased freight and distribution costs from transportation and logistics, higher commodity costs, rising energy pricing, and foreign currency volatility.
The Company experienced an inflationary environment on a global basis in the wake of the COVID-19 pandemic, geopolitical instability and supply chain constraints such as labor shortages, increased freight and distribution costs from transportation and logistics, higher commodity costs, rising energy pricing, and foreign currency volatility.
See Note 13 - Leases of the Notes to the Consolidated Financial Statement included elsewhere in the Annual Report for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position, as well as additional disclosure on lease commitments that have not yet commenced and therefore not yet reflected as a obligation on the Consolidated Statements of Financial Position..
See Note 12 - Leases of the Notes to the Consolidated Financial Statement for further detail, including maturity schedule on outstanding finance and operating lease obligations for the following 5 years and thereafter, including imputed interest not reflected on the Consolidated Statements of Financial Position, as well as additional disclosure on lease commitments that have not yet commenced and therefore not yet reflected as an obligation on the Consolidated Statements of Financial Position.
At September 30, 2023, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 4.00% Notes due October 1, 2026, the 5.00% Notes due October 1, 2029, the 5.50% Notes due July 15, 2030, and the 3.875% Notes due March 15, 2031.
At September 30, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Exchangeable Notes due June 1, 2029, the 5.00% Notes due October 1, 2029, the 5.50% Notes due July 15, 2030, and the 3.875% Notes due March 15, 2031.
Refer to Item 1 - Business and Note 1 – Description of Business in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for an overview of our business.
Refer to Item 1 - Business and Note 1 - Description of Business in the Notes to the Consolidated Financial Statements for an overview of our business.
The Company may continue to make repayments on its debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of its outstanding Senior Notes, any of which will be dependent on various factors, including market conditions.
See Note 11 - Debt in the Notes to the Consolidated Financial Statements for further detail. The Company may continue to make repayments on its debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of its outstanding Senior Notes, any of which will be dependent on various factors, including market conditions.
They also facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants.
They facilitate comparisons between peer companies since interest, taxes, depreciation, and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants. See Note 11 - Debt in the Notes to the Consolidated Financial Statements for additional detail.
Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries. The following financial information consists of summarized financial information of the Obligor, presented on a combined basis. The “Obligor” consists of the financial statements of SBI as the debt issuer, SB/RH as a parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors.
Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries. See Note 11 - Debt for further detail. The following financial information consists of summarized financial information of the Obligor, presented on a combined basis. The “Obligor” consists of the financial statements of SBI as the debt issuer, SBH as a parent guarantor, and the domestic subsidiaries of SBI as subsidiary guarantors.
In addition to goodwill, the Company has indefinite-lived intangible assets that consist of acquired tradenames. On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.
On an annual basis, during the Company’s fourth quarter, or more frequently if triggering events occur, the Company tests for impairment by either performing a qualitative assessment or quantitative test for some or all indefinite-lived intangible assets.
The Company cannot reasonably predict the ultimate outcome of income tax audits currently in progress for certain of our companies. It is reasonably possible that during the next 12 months, some portion of our unrecognized tax benefits could be recognized.
The Company cannot reasonably predict the ultimate outcome of income tax audits currently in progress for certain of our companies. It is reasonably possible that during the next 12 months, some portion of our unrecognized tax benefits could be recognized. See Note 16 – Income Taxes in the Notes to the Consolidated Financial Statements for additional discussion.
The estimated fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between willing parties on an arms-length basis.
The estimated fair value represents the amount at which a reporting unit could be bought or sold in a current transaction between willing parties on an arms-length basis. In estimating the fair value of the reporting unit, we use both an income approach and a market approach.
See Note 10 - Property, Plant and Equipment and Note 13 - Leases in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further discussion. 46 Table of Contents A considerable amount of judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and assets subject to impairment testing.
See Note 12 - Leases in the Notes to the Consolidated Financial Statements for further discussion. 44 Table of Contents A considerable amount of judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and assets subject to impairment testing.
In estimating the fair value of the reporting unit, we use a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.
The income approach is a discounted cash flows methodology, which requires us to estimate future revenues, expenses, and capital expenditures and make assumptions about our weighted average cost of capital and perpetuity growth rate, among other variables.
The Company recognized $10.8 million as interest expense for the year ended September 30, 2023 from the write-down of deferred financing costs and original issuance discount. • During the year ended September 30, 2023, the Company repurchased of $61.4 million of its outstanding bonds resulting in the early extinguishment of the debt and the recognition of a gain from debt repurchases of $7.9 million for the year ended September 30, 2023 • Additionally, during the year ended September 30, 2023, and prior to the closing of the HHI divestiture, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.
The Company recognized $10.8 million as a loss from the early extinguishment of debt. • Additionally, during the year ended September 30, 2023, and prior to the closing of the HHI divestiture, the Company entered into the fourth amendment to the Credit Agreement to temporarily increase the maximum consolidated total net leverage ratio permitted to be no greater than 7.0 to 1.0 before returning to 6.0 to 1.0 at the earliest of (i) September 29, 2023, or (ii) 10 business days after the closing of the HHI divestiture or receipt of the related termination fee.
As of September 30, 2023, we have U.S. federal net operating loss carryforwards (“NOLs”) of $640.9 million, with a federal tax benefit of $134.6 million and future tax benefits related to state NOLs of $41.3 million. Our total valuation allowance for the tax benefit of deferred tax assets that may not be realized is $333.4 million at September 30, 2023.
As of September 30, 2024, we have U.S. federal net operating loss carryforwards (“NOLs”) of $569.2 million, with a federal tax benefit of $119.5 million and future tax benefits related to state NOLs of $42.8 million. Our total valuation allowance for the tax benefit of deferred tax assets that may not be realized is $321.4 million at September 30, 2024.
Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors such as COVID-19, or inflation and increased interest rates, many of which are beyond our control.
Our ability to achieve the anticipated cost savings and other benefits from such operating strategies may be affected by a number of other macro-economic factors, or inflation and increased interest rates, many of which are beyond our control. Moreover, the comparability of financial information may be impacted by incremental amounts attributable to such strategic transactions, restructuring and optimization initiatives.
(in millions) 2023 Statement of Operations Data Third-party net sales $ 1,842.1 Intercompany net sales to non-guarantor subsidiaries 11.1 Total net sales 1,853.2 Gross profit 542.1 Operating loss (322.5) Net income from continuing operations 0.1 Net income 2,006.3 Net income attributable to controlling interest 2,006.3 Statement of Financial Position Data Current Assets $ 2,773.6 Noncurrent Assets 1,974.9 Current Liabilities 1,398.6 Noncurrent Liabilities 1,868.2 The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of September 30, 2023 are as follows: (in millions) 2023 Statement of Financial Position Data Current receivables from non-guarantor subsidiaries $ 37.6 Long-term receivable from non-guarantor subsidiaries 104.0 Current payable to non-guarantor subsidiaries 283.1 Long-term debt with non-guarantor subsidiaries 2.0 45 Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP and fairly present our financial position and results of operations.
(in millions) 2024 Statement of Operations Data Third-party net sales $ 1,829.4 Intercompany net sales to non-guarantor subsidiaries 22.8 Total net sales 1,852.2 Gross profit 662.3 Operating income 22.2 Net loss from continuing operations (23.6) Net loss (6.1) Net loss attributable to controlling interest (6.1) Statement of Financial Position Data Current assets $ 1,228.0 Noncurrent assets 3,989.6 Current liabilities 901.6 Noncurrent liabilities 930.9 The Obligor’s amounts due from, due to the non-guarantor subsidiaries as of September 30, 2024, are as follows: (in millions) 2024 Statement of Financial Position Data Current receivables from non-guarantor subsidiaries $ 125.4 Long-term receivable from non-guarantor subsidiaries 30.7 Current payable to non-guarantor subsidiaries 59.7 Long-term debt with non-guarantor subsidiaries 20.2 43 Table of Contents Critical Accounting Policies and Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP and fairly present our financial position and results of operations.
We have undertaken various initiatives to reduce manufacturing and operating costs, which may have a significant impact on the comparability of financial results on the consolidated financial statements. These changes and updates are inherently difficult and are made even more difficult by current global economic conditions.
Additionally, we develop and enter into restructuring and optimization initiatives to improve efficiencies and utilization to reduce costs, increase revenues and improve margins, which may have a significant impact on the comparability of financial results on the consolidated financial statements. These changes and updates are inherently difficult and are made even more difficult by current global economic conditions.
The application of these accounting policies requires judgment and use of assumptions as to future events and outcomes that are uncertain and, as a result, actual results could differ from these estimates.
The application of these accounting policies requires judgment and use of assumptions as to future events and outcomes that are uncertain and, as a result, actual results could differ from these estimates. Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements for all relevant accounting policies.
Of this amount, $244.7 million relates to U.S. net deferred tax assets and $88.7 million relates to foreign net deferred tax assets.
Of this amount, $203.6 million relates to U.S. net deferred tax assets and $117.8 million relates to foreign net deferred tax assets.
The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SB/RH and SBI’s domestic subsidiaries.
The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Spectrum Brands Holdings, Inc., as parent guarantor, and SBI’s domestic subsidiaries.
The following is a summary of the Company’s net cash flows from continuing operations for the years ended September 30, 2023 and 2022: SBH SB/RH (in millions) 2023 2022 2023 2022 Operating activities $ 8.0 $ (231.5) $ (291.4) $ (263.5) Investing activities $ 3,191.9 $ (335.9) $ 3,191.9 $ (335.9) Financing activities $ (2,263.3) $ 490.7 $ (1,962.0) $ 523.1 Cash flows from operating activities Cash flows provided by operating activities for SBH continuing operations increased $239.5 million due to the a reduction in cash used for working capital, primarily with the reduced purchasing and overall inventory reduction compared to higher supply chain costs in the prior year, plus lower strategic transactions and restructuring initiative spending.
The following is a summary of the Company’s net cash flows from continuing operations for the years ended September 30, 2024 and 2023: (in millions) 2024 2023 Operating activities $ 269.8 $ 8.0 Investing activities $ 1,021.2 $ 3,191.9 Financing activities $ (1,578.2) $ (2,263.3) Cash flows from operating activities Cash flows provided by operating activities for continuing operations increased $261.8 million due to the reduction in cash used for working capital, primarily from improved sales and collections, reduced purchasing costs and overall inventory reduction compared to higher supply chain costs in the prior year, lower strategic transactions and restructuring initiative spending, and improved payment terms on payables, partially offset by the reduction in cash provided by receivables due to the suspension of receivables factoring.
Any such repurchases may be effected through a variety of means, including privately negotiated transactions, market transactions, tender offers, redemptions or as otherwise required or permitted by the instruments covering the Company's outstanding indebtedness. The Company also used $500.0 million of cash on hand following the HHI divestitures to repurchase shares of common stock through an accelerated share repurchase agreement.
Any such repurchases may be effected through a variety of means, including privately negotiated transactions, market transactions, tender offers, redemptions or as otherwise required or permitted by the instruments covering the Company’s outstanding indebtedness. The Company also continued to repurchase shares of common stock during the year ended September 30, 2024.
There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation.
See Note 14 - Supplier Financing Programs in the Notes to the Consolidated Financial Statements for additional detail. There are no guarantees provided by the Company or its subsidiaries and we do not enter into any agreements with the suppliers regarding their participation.
Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of September 30, 2023, the Company had borrowing availability of $586.9 million, net of outstanding letters of credit of $13.1 million, under our credit facility.
Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans.
Debt obligations Our debt obligations, excluding finance leases, have varying maturity dates with no material outstanding principal payments due within the following 12 months.
Debt obligations Our debt obligations, excluding finance leases, have varying maturity dates with no material outstanding principal payments due within the following 12 months. Refer to Note 11 - Debt in the Notes to the Consolidated Financial Statements for expiration dates and maturity schedules on outstanding debt obligations for the following 5 years and thereafter.
Most recently the Company disposed of certain inventory and products associated with the acquired brands after assessing, among other things, performance and quality standards. As of September 30, 2023, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company.
The Company disposed of certain inventory and products associated with the acquired brands, further discussed in Note 8 - Inventory in the Notes to the Consolidated Financial Statements . As of September 30, 2024, the Company believes it has assessed appropriate risks and recognized applicable losses and reserves reflecting the net assets of the Company.
See Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail.
See Note 10 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements for further discussion.
During the year ended September 30, 2023, the Company paid down borrowings on its outstanding Revolver Facility and Term Loan, redeemed its 5.75% Senior Notes due 2025, and engaged in open market repurchases of a portion of outstanding Senior Notes, resulting in total cash used towards the repayment of debt of $1,646.8 million.
During the year ended September 30, 2024, the Company paid down outstanding Senior Notes through a tender offer, plus engaged in open market repurchases of a portion of outstanding Senior Notes, resulting in total cash used towards the repayment of debt of $1,349.3 million.
Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. Following the closing of the HHI divestiture and receipt of related proceeds, the Company has temporarily suspended most of its receivable factoring activity and intends to terminate the remainder when contractually possible in Fiscal 2024.
Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. See Note 7 - Receivables in the Notes to the Consolidated Financial Statements for additional detail. The Company has temporarily suspended its receivable factoring activity.
In response to inflation, our segments have taken pricing actions to address rising costs and foreign currency fluctuations to mitigate impacts to our margins.
In response to inflation, our segments had previously taken pricing actions to address rising costs and foreign currency fluctuations to mitigate impacts to our margins. We can provide no assurance that such mitigation would be available in the future.
The following is a reconciliation of net sales to organic net sales of SBH and SB/RH for the year ended September 30, 2023 compared to net sales for the year ended September 30, 2022: September 30, 2023 Net Sales September 30, 2022 Variance (in millions, except %) Net Sales Effect of Changes in Currency Net Sales Excluding Effect of Changes in Currency Effect of Acquisitions Organic Net Sales GPC $ 1,139.0 $ 14.1 $ 1,153.1 $ — $ 1,153.1 $ 1,175.3 $ (22.2) (1.9 %) H&G 536.5 — 536.5 — 536.5 587.1 (50.6) (8.6 %) HPC 1,243.3 36.9 1,280.2 (89.9) 1,190.3 1,370.1 (179.8) (13.1 %) Total $ 2,918.8 $ 51.0 $ 2,969.8 $ (89.9) $ 2,879.9 $ 3,132.5 (252.6) (8.1 %) 34 Table of Contents Adjusted EBITDA and Adjusted EBITDA Margin.
The following is a reconciliation of net sales to organic net sales of for the year ended September 30, 2024, compared to net sales for the year ended September 30, 2023: 2024 Net Sales 2023 Variance (in millions, except %) Net Sales Effect of Changes in Currency Organic Net Sales GPC $ 1,151.5 $ (7.7) $ 1,143.8 $ 1,139.0 $ 4.8 0.4 % H&G 578.6 — 578.6 536.5 42.1 7.8 % HPC 1,233.8 6.1 1,239.9 1,243.3 (3.4) (0.3 %) Total $ 2,963.9 $ (1.6) $ 2,962.3 $ 2,918.8 43.5 1.5 % Adjusted EBITDA and adjusted EBITDA Margin.
The risk of future impairment for the Rejuvenate® and PowerXL® tradenames are based upon the results realized during the year ended September 30, 2023, and dependency upon the timing and realization of milestones, as well as the integration of the brands and synergies associated with the acquired businesses.
The risk of future impairment for the Rejuvenate® and PowerXL® tradenames are based upon the results realized during the year ended September 30, 2024, recent impairments on the respective tradenames and dependency upon the timing and realization of projected revenues and growth strategies.
See Note 9 - Inventory and Note 11 - Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for additional detail. Liquidity and Capital Resources This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended September 30, 2023 and 2022.
Liquidity and Capital Resources This section provides a discussion of our financial condition and an analysis of our cash flows for the years ended September 30, 2024 and 2023.
The Company also repurchased $34.7 million of additional shares through open market purchases during the year ended September 30, 2023. We may, from time to time, seek to repurchase additional shares of our common stock and any further repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors.
See Note 17 - Shareholders' Equity in the Notes to the Consolidated Financial Statements for further detail. We may, from time to time, seek to repurchase additional shares of our common stock and any further repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors.
Future contributions to defined benefit plans are not expected to be material to the operations and cash flow for the Company. Other commitments and obligations Other commitments and obligations include an outstanding mandatory repatriation tax liability of $15.0 million that is payable over the next 3 years, with $3.9 million due and payable in the next 12 months.
Other commitments and obligations Other commitments and obligations include an outstanding mandatory repatriation tax liability of $11.1 million that is payable over the next 2 years, with $5.2 million due and payable in the next 12 months.
Liquidity Outlook Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders.
There was no issuance of common stock, other than through the Company’s share-based compensation plan, which is recognized as a non-cash financing activity. 40 Table of Contents Liquidity Outlook Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders.
See Note 12 - Debt in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for additional detail. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income.
EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income.
Intangible and tangible assets with determinable useful lives are amortized or depreciated on a straight line basis over estimated useful lives. Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for more information about useful lives.
Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements for more information about useful lives.
In addition to the outstanding principal on our debt, we anticipate annual interest payments of $70.8 million in the aggregate and includes interest under our: (i) 4.00% Notes of $18.0 million; (ii) 5.00% Notes of $14.9 million; (iii) 5.50% Notes of $15.9 million; (iv) 3.875% Notes of $17.6 million; (v) interest of approximately $3.4 million attributable to finance leases; and (vi) interest cost of $1.0 million attributable to unused fee associated with the Revolver Facility.
In addition to the outstanding principal on our debt, we anticipate annual interest payments of approximately $22.1 million including unused fees associated with the Revolver Facility with interest of approximately $4.3 million attributable to finance leases.
While we have seen more stability in the recent economic environment, we are unable to predict how long the current inflationary environment will continue and we expect the economic environment to remain uncertain as we navigate the current geopolitical environment, post-pandemic volatility, labor challenges, changes in supply chain and the overall current economic environment. 33 Table of Contents Non-GAAP Measurements Our consolidated and segment results contain non-GAAP metrics such as organic net sales and Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization).
We are unable to predict how long the current environment will continue and we expect the economic environment to remain uncertain as we navigate the current geopolitical environment, post-pandemic volatility, labor challenges, changes in supply chain and the overall current economic environment.
See Note 15 - Employee Benefit Plans in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for further detail included projected payments towards the future obligation for the following 5 years and thereafter. The Company anticipates that benefit obligations will be predominantly paid through dedicated plan assets.
The Company’s recognizes an actuarial determined unfunded projected benefit obligation, net fair value of dedicated plan assets. See Note 15 - Employee Benefit Plans in the Notes to the Consolidated Financial Statements for further detail including the projected payments on the outstanding obligation for the following 5 years and thereafter.
Cash flows from investing activities Cash flows provided by investing activities for SBH continuing operations increased $3,527.8 million due to net cash proceeds from the HHI divestiture of $4,334.7 million, cash used in the prior year for the acquisition of the Tristar Business of $272.1 million and reduced capital expenditures.
Cash flows from investing activities Cash flows provided by investing activities for continuing operations decreased $2,170.7 million primarily due to the net cash proceeds from the HHI divestiture in the prior year and the investment of net proceeds in short-term investments into the current year.
At September 30, 2023, we believe there is approximately $40-50 million of foreign cash available for repatriation. 43 Table of Contents The majority of our business is not considered seasonal with a year round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.
The counterparties that hold our deposits consist of major financial institutions. The majority of our business is not considered seasonal with a year-round selling cycle that is overall consistent during the fiscal year with the exception of our H&G segment.
Interest on the notes is payable semi-annually in arrears and interest on borrowings under the Revolver Facility, if any, would be payable on various interest payment dates as provided in the Credit Agreement.
Interest on the notes is payable semi-annually in arrears and interest on borrowings under the Revolver Facility, if any, would be payable on various interest payment dates as provided in the Credit Agreement. 41 Table of Contents Lease obligations The Company enters into leases primarily pertaining to real estate for manufacturing facilities, distribution centers, office space, warehouses, and various equipment including automobiles, machinery, computers, and office equipment, amongst others.
We test the aggregate estimated fair value of our reporting units by comparison to our total market capitalization, including both equity and debt capital. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded for the difference between the fair value of the reporting unit goodwill and its carrying value.
The market approach is a guideline public company method that assesses value of our reporting unit based upon market multiples derived from financial results of selected comparable companies. We test the aggregate estimated fair value of our reporting units by comparison to our total market capitalization, including both equity and debt capital.
Cash flows provided by investing activities for SB/RH continuing operations increased $3,527.8 million due to the SBH items previously discussed. 42 Table of Contents Cash flows from financing activities Cash flows used by financing activities for SBH continuing operations increased $2,754.0 million due to the pay down of debt, debt repurchases and treasury share repurchases following the HHI divestiture.
Cash flows from financing activities Cash flows used by financing activities for continuing operations decreased $685.1 million due to the pay down of debt, debt repurchases and treasury share repurchases in the current and prior year following the HHI divestiture, and the net issuance of the Exchangeable Notes in the current year.
If impairment is determined to exist, any related impairment loss is calculated based on fair value. For the year ended September 30, 2023, the Company did recognize impairments associated with certain tangible fixed assets and operating leases.
If impairment is determined to exist, any related impairment loss is calculated based on fair value. For the year ended September 30, 2024, the Company recognized an impairment on a right of use operating lease asset associated with the HPC distribution facilities that were exited prior to end of its term.
The following is a summary of net sales by segment for the years ended September 30, 2023 and 2022 and the principal components of changes in net sales for the respective periods.
Gross Profit. The following is a summary of the gross profit and gross profit margin for the years ended September 30, 2024 and 2023, respectively, and the principal factors contributing to the change between periods.
(in millions) 2023 2022 Fiscal 2023 restructuring $ 7.4 $ — Fiscal 2022 restructuring 0.4 9.8 Global ERP transformation 11.4 13.1 Russia closing initiative 3.2 1.9 HPC brand portfolio transitions 2.5 1.3 GPC distribution center transition — 35.8 Global productivity improvement program — 5.1 Other project costs 10.5 11.1 Total $ 35.4 $ 78.1 Reported as: Net sales $ — $ 5.0 Cost of goods sold 1.0 1.0 Selling expense — 31.3 General & administrative expense 34.4 40.8 32 Table of Contents Refinancing Activity The following recent financing activity has a significant impact on the comparability of financial results on the consolidated financial statements. • During the year ended September 30, 2023, following the close of the HHI divestiture, the Company repaid its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche, along with the remaining $450.0 million aggregate principal amount of 5.750% Senior Notes due 2025 in full at the redemption price.
Refinancing Activity The following recent financing activity has a significant impact on the comparability of financial results on the consolidated financial statements. • On May 23, 2024, the Company completed its offering of $350.0 million principal amount of 3.375% Exchangeable Senior Notes due June 1, 2029 (the “Exchangeable Notes”), recognizing $11.8 million of fees and expenses which were capitalized as debt issuance costs and will be amortized over the term of the Exchangeable Notes. • Concurrent with the issuance of the Exchangeable Notes during the year ended September 30, 2024, the Company completed a tender offer on the aggregate outstanding principal balance of the 4.00% Senior Notes due 2026 (the “2026 Notes”), the 5.00% Senior Notes due 2029, the 5.50% Senior Notes due 2030, and the 3.875% Senior Notes due 2031 (the “2031 Notes”) (collectively, the “Tendered Notes”) and redeemed the remaining outstanding principal balance of the 2026 Notes, resulting in the reduction of the principal debt balance of $1,174.4 million and recognition of a loss on early extinguishment of $2.2 million. • During the years ended September 30, 2024 and 2023, the Company repurchased outstanding bonds in the open market at a discount resulting in the recognition of a gain on extinguishment of $4.7 million and $7.9 million, respectively. 36 Table of Contents • During the year ended September 30, 2023, following the close of the HHI divestiture in June 2023, the Company repaid its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche, along with the remaining $450.0 million aggregate principal amount of 5.750% Senior Notes due 2025 in full at the redemption price.
Income or loss attributable to discontinued operations primarily reflect the income from the discontinued operations of the HHI segment and the resulting gain on sale from the completion of the HHI Divestiture during the year ended September 30, 2023.
See Note 16– Income Taxes in the Notes to the Consolidated Financial Statements . Income From Discontinued Operations. Income from the prior year primarily reflects the income from the HHI segment prior to the completion of its divestiture in June 2023 and the realized gain on sale.
SBH The following is summarized consolidated results of operations for SBH for the years ended September 30, 2023 and 2022, respectively: (in millions, except %) 2023 2022 Variance Net sales $ 2,918.8 $ 3,132.5 $ (213.7) (6.8 %) Gross profit 924.3 990.4 (66.1) (6.7 %) Gross profit margin 31.7 % 31.6 % 10 bps Operating expenses $ 1,129.9 $ 967.2 $ 162.7 16.8 % Interest expense 127.0 99.4 27.6 27.8 % Interest income (38.3) (0.6) (37.7) n/m Gain on debt repurchase (7.9) — (7.9) n/m Other non-operating expense, net 3.8 14.7 (10.9) (74.1) % Income tax benefit (56.5) (13.3) (43.2) 324.8 % Net loss from continuing operations (233.7) (77.0) (156.7) 203.5 % Income from discontinued operations, net of tax 2,035.6 149.7 1,885.9 n/m Net income 1,801.9 72.7 1,729.2 n/m n/m = not meaningful Net Sales.
The following is summarized consolidated results of operations for the years ended September 30, 2024 and 2023, respectively: (in millions, except %) 2024 2023 Variance Net sales $ 2,963.9 $ 2,918.8 $ 45.1 1.5 % Gross profit 1,109.3 924.3 185.0 20.0 % Selling, general & administrative 958.5 899.6 58.9 6.5 % Impairment of goodwill — 111.1 (111.1) n/m Impairment of intangible assets 45.2 120.7 (75.5) (62.6) % Representation and warranty insurance proceeds (65.0) — (65.0) n/m Gain from remeasurement of contingent consideration liability — (1.5) 1.5 n/m Interest expense 58.5 116.1 (57.6) (49.6 %) Interest income (57.5) (38.3) (19.2) 50.1 % (Gain) loss from early extinguishment of debt (2.6) 3.0 (5.6) n/m Other non-operating expense, net 8.6 3.8 4.8 126.3 % Income tax expense (benefit) 64.3 (56.5) 120.8 n/m Net income (loss) from continuing operations 99.3 (233.7) 333.0 n/m Income from discontinued operations, net of tax 25.5 2,035.6 (2,010.1) (98.7 %) Net income 124.8 1,801.9 (1,677.1) (93.1 %) n/m = not meaningful 37 Table of Contents Net Sales.
Other non-operating expense, net decreased primarily due to less volatility of foreign currency. 40 Table of Contents Income Taxes. The effective tax rate was 19.5% for the year ended September 30, 2023 compared to 14.8% for the year ended September 30, 2022.
Income Taxes. The effective tax rate was 39.3% for the year ended September 30, 2024, compared to 19.5% for the year ended September 30, 2023.
This is a multi-year project that includes various costs, including software configuration and implementation costs that would be recognized as either capital expenditures or deferred costs in accordance with applicable accounting policies, with certain costs recognized as operating expense associated with project development and project management costs, and professional services with business partners engaged towards planning, design and business process review that would not qualify as software configuration and implementation costs.
Costs are expected to be incurred until a transaction is realized. 3 Costs attributable to a multi-year transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis, including project management and professional services for planning, design, and business process review that do not qualify as software configuration and implementation costs recognized as capital expenditures or deferred costs under applicable accounting principles.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP metric used by management, which we believe provide useful information to investors because they reflect the ongoing operating performance and trends of our segments, excluding certain non-cash based expenses and/or non-recurring items during each of the comparable periods.
Adjusted EBITDA and adjusted EBITDA margin are non-GAAP metrics used by management, which we believe are useful to investors to measure the operational strength and performance of our business.
Refer to Note 12 - Debt in the Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information. During the year ended September 30, 2023, the Company used $500.0 million for the repurchase of common stock under an accelerated share repurchase agreement, along with incremental open market share repurchases of $34.7 million.
Concurrent with the tender offer, we issued $350.0 million of Exchangeable Notes and paid premium on associated capped calls of $25.2 million. Refer to Note 11 - Debt in the Notes to Consolidated Financial Statements for additional information. During the year ended September 30, 2024, the Company used $482.7 million for the repurchase of common stock.
Refer to Note 2 - Significant Accounting Policies and Practices in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report for all relevant accounting policies. Goodwill, Intangible Assets and Other Long-Lived Assets The Company’s goodwill, intangible assets and tangible fixed assets are stated at historical cost, net of depreciation and amortization, less any provision for impairment.
Goodwill, Intangible Assets and Other Long-Lived Assets The Company’s goodwill, intangible assets and tangible fixed assets are stated at historical cost, net of depreciation and amortization, less any provision for impairment. Intangible and tangible assets with determinable useful lives are amortized or depreciated on a straight-line basis over estimated useful lives.
The following is a combined report of SBH and SB/RH, and the following discussion includes SBH and certain matters related to SB/RH as signified below. Unless the context indicates otherwise, the terms the “Company,” “we,” “our” or “us” are used to refer to SBH and its subsidiaries and SB/RH and its subsidiaries, collectively.
Unless the context indicates otherwise, the terms the “Company,” “we,” “our” or “us” are used to refer to SBH and its subsidiaries, collectively. Non-GAAP Measurements Our consolidated results contain non-GAAP metrics such as organic net sales, Adjusted EBITDA and Adjusted EBITDA margin.
(in millions, except %) 2023 2022 Variance GPC $ 1,139.0 $ 1,175.3 $ (36.3) (3.1 %) H&G 536.5 587.1 (50.6) (8.6 %) HPC 1,243.3 1,370.1 (126.8) (9.3 %) Net Sales $ 2,918.8 $ 3,132.5 (213.7) (6.8 %) (in millions) 2023 Net Sales for the year ended September 30, 2022 $ 3,132.5 Increase due to acquisition 89.9 Decrease in GPC (22.2) Decrease in H&G (50.6) Decrease in HPC (179.8) Foreign currency impact, net (51.0) Net Sales for the year ended September 30, 2023 $ 2,918.8 Gross Profit.
The following is a summary of net sales by segment for the years ended September 30, 2024 and 2023 and the principal components of changes in net sales for the respective periods: (in millions, except %) 2024 2023 Variance GPC $ 1,151.5 $ 1,139.0 $ 12.5 1.1 % H&G 578.6 536.5 42.1 7.8 % HPC 1,233.8 1,243.3 (9.5) (0.8 %) Net Sales $ 2,963.9 $ 2,918.8 45.1 1.5 % (in millions) 2024 Net Sales for the year ended September 30, 2023 $ 2,918.8 Increase in GPC 4.8 Increase in H&G 42.1 Decrease in HPC (3.4) Foreign currency impact, net 1.6 Net Sales for the year ended September 30, 2024 $ 2,963.9 Year Ended September 30, 2024 Volume Price Foreign Currency Total Organic GPC 0.9 % (0.5) % 0.7 % 1.1 % 0.4 % H&G 7.0 % 0.8 % — % 7.8 % 7.8 % HPC — % (0.3) % (0.5) % (0.8) % (0.3) % Total 1.7 % (0.2) % — % 1.5 % 1.5 % Refer to the Segment Financial Data section below for further discussion on net sales.
Acquisitions, Divestitures and Other Business Development Initiatives The Company periodically evaluates strategic transactions that may result in the acquisition of a business or assets that qualify as a business combination, or a divestiture of a business or assets that may be recognized as either a component of continuing operations or discontinued operations, depending on the significance to the consolidated group.
Strategic transactions, restructuring and optimization initiatives The Company periodically evaluates and enters into strategic transactions that may result in the acquisition or divestiture of a business which impacts the comparability of the financial results of the consolidated group and or segments.
Lease obligations The Company enters into leases primarily pertaining to real estate for manufacturing facilities, distribution centers, office space, warehouses, and various equipment including automobiles, machinery, computers, and office equipment, amongst others. Lease obligations with a term in excess of 12 months are recognized on the Company's Consolidated Statement of Financial Position.
Lease obligations with a term in excess of 12 months are recognized on the Consolidated Statement of Financial Position.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+3 added−3 removed4 unchanged
Biggest changeAs of September 30, 2023, and following the completion of the HHI divestiture, repayment of the Term Loan borrowings and borrowings under the Revolver Facility, there are no substantive outstanding debt obligations subject to variable rate fluctuations.
Biggest changeAs of September 30, 2024, there are no outstanding borrowings under the Revolver Facility and no additional substantive outstanding debt obligations subject to variable rate fluctuations.
A discussion of our accounting policies for derivative financial instruments is included in Note 14 - Derivatives in the Notes to the Consolidated Financial Statements included elsewhere in this Annual Report. Interest Rate Risk Borrowings on our Revolver Facility are subject variable interest rates.
A discussion of our accounting policies for derivative financial instruments is included in Note 13 - Derivatives in the Notes to the Consolidated Financial Statements . Interest Rate Risk Borrowings on our Revolver Facility are subject to variable interest rates.
The net impact on reported earnings, after also including the effect of the change in the underlying foreign currency-denominated exposures, would be a net gain of $17.1 million.
The net impact on reported earnings, after also including the effect of the change in the underlying foreign currency-denominated exposures, would be a net gain of $11.8 million. ITEM 8.
Removed
The related amounts payable to, or receivable from, the contract counter-parties are included in accounts payable or accounts receivable. 47 Table of Contents At September 30, 2023, we had $456.2 million equivalent of debt denominated in foreign currencies, which consist primarily of the Euro-denominated 4.00% Notes to the equivalent of $448.8 million, which are recorded in a U.S.
Added
The related amounts payable to, or receivable from, the contract counterparties are included in accounts payable or accounts receivable.
Removed
Dollar functional entity, and the remaining debt primarily consist of finance leases recorded in countries with the same functional currency as the debt. The 4.00% Notes are held as a net investment hedge of the translation of the Company’s net investments in Euro-denominated subsidiaries.
Added
At September 30, 2024, we had $7.0 million equivalent of debt denominated in foreign currencies, primarily consisting of finance leases located in international territories and recognized within the functional currency of the residing country. 45 Table of Contents At September 30, 2024, the potential change in fair value of outstanding foreign exchange derivative instruments, assuming a 10% unfavorable change in the underlying exchange rates, would be a loss of $86.3 million.
Removed
See Note 14 - Derivatives in the Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report, for further discussion. At September 30, 2023, the potential change in fair value of outstanding foreign exchange derivative instruments, assuming a 10% unfavorable change in the underlying exchange rates, would be a loss of $101.4 million.
Added
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required for this Item is included in this Annual Report on Form 10-K within Item 15, Exhibits, Financial Statements and Schedules, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

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