Spectrum Brands Holdings Inc
For the period ended Dec 29, 2024. Filed Feb 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 29, 2024 · Filed Feb 6, 2025
SPB$86.68-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000109177-24-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-29; filed 2025-02-06.
0000109177-25-000009
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 79 current paragraphs.
28 unchanged; 31 reworded; 20 added; 44 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 23 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
2 Incremental net costs from product recalls in the HPC segment. See Note 13 - Commitments and Contingenciesin the Notes to the Condensed Consolidated Financial Statements for further detail.
Current report
3 Litigation costs primarily associated with the Tristar Business acquisition. See Note 13 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for further detail.
Current report
4 Other is attributable to other strategic transaction, restructuring and optimization initiatives, and key executive severance and other one-time compensatory costs during the prior year.
Current report
For additional discussion and overview of the business, please refer to Item 1. Business, and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report.
Current report
Recent Developments
Current report
1 Costs attributable to the HHI divestiture effective June 2023 consisting of subsequent costs to facilitate separation and transition of systems and processes subject to transition services agreements (“TSAs”). Costs are expected to be incurred through the transition period of up to 24 months following the close of the transaction as the Company exits TSAs.
Current report
2 Costs attributable to efforts to facilitate a strategic separation of the HPC segment either through a spin, merger or sale, consisting of legal and professional fees to facilitate transaction opportunities and diligence, consult on tax and compliance implications, legal entity restructurings, system and process segregation, carve-out financials and the confidential filing of a Form 10 registration statement in July 2024. Costs are expected to be incurred until a transaction is realized.
Current report
4 Other costs are attributable to distribution center transitions.
Current report
Exit and Disposal Activity
Current report
The Company periodically recognizes exit and disposal costs primarily consisting of severance and contract termination costs that may be attributable to a reorganization or restructuring of the Company, cost savings initiatives, or in consideration of a recent strategic transaction. Such actions result in the recognition of costs to the Company that are considered incremental and not reflective of the continuing operating costs of the business and may impact the comparability of the consolidated business and its segments. During the three months ended December 29, 2024 and December 31, 2023, exit and disposal costs were $0.5 million, primarily consisting of accrued termination costs and recognized within Selling, General & Administrative Expense within the Condensed Consolidated Statements of Income.
Current report
Refinancing Activity
Current report
Gross profit and margin increased due to the increase in sales volume, cost improvements and favorable transaction foreign currency partially offset by ocean freight inflation and higher tariffs due to the expiration of exemptions for certain product lines.
Current report
Selling, general & administrative expenses decreased due to reduced overhead from cost savings initiatives offset by continued investment in marketing and advertising. Sales, marketing and advertising costs increased due to the Company's investment towards brand focused marketing and advertising initiatives across all segments to drive top line growth. Distribution costs decreased due to cost reduction and optimization within distribution centers. General & administrative costs decreased due to lowered overhead costs from cost improvement initiatives and a tradename impairment recognized in the prior year. Research & development costs were consistent between periods. Strategic transaction, restructuring and optimization costs, inclusive of exit & disposal costs, were consistent between periods.
Current report
Interest Income. Interest income decreased due to lower balance in term deposits following previously discussed refinancing activity in the prior year.
Current report
Gain From Early Extinguishment of Debt. During the three month period ended December 31, 2023, the Company recognized net gain from extinguishment of debt associated with previously discussed debt repurchase activity. There was no comparable activity during the three month period ended December 29, 2024.
Current report
Net sales decreased with an organic net sales decrease of $17.7 million, or 6.4%, excluding a favorable foreign currency impact of $0.8 million, from lower volumes, mainly in North America (“NA”) due to the pull forward of sales into the prior fiscal year in advance of the S4/Hana ERP implementation in October 2024 and overall slower retail sales during the period. Slower retail sales in NA was impacted by category softness in the Aquatics product category and consumer trade downs negatively impacting in the Companion Animal product category at retail. Overall sales decline was offset by an increase in Europe, Middle East and Africa (“EMEA”) sales with positive momentum in e-commerce for the Dog and Cat Food product category and further expansion of the Good Boy® brand with distribution outside of the United Kingdom and introduction of new products. Adjusted EBITDA decreased due to volume decrease with inflationary pressures in ocean freight and continued brand-focused investments with a margin increase from favorable mix and operational productivity.
Current report
Net sales and organic net sales increased due to higher distribution from earlier seasonal inventory build up for some retailers with improved placement and retail display strategy in anticipation of the upcoming season, primarily within our Controls and Repellent product categories, plus an increase in Household pest control products from a relatively warmer fall season extending retailer and consumer demand. Net sales were also benefited by the pull forward of sales into the current period due to a S4/Hana ERP implementation for H&G in January 2025 to ensure seasonal supply during the go-live. Adjusted EBITDA and margin increased due to higher volume, cost improvements and favorable trade variances offset by an increase in brand-focused investments and some inflation.
Current report
Net sales increased with an organic net sales increase of $10.7 million, or 3.1%, excluding an unfavorable foreign currency impact of $5.9 million. The increase is due to increased volume in the Personal Care product category with growth in e-commerce distribution globally and new listings at traditional retail in NA. The Home Appliances product category in EMEA also benefited from expanded distribution through e-commerce and new product listings while NA sales were negatively impacted by slower distribution and competitive pressures in traditional retail. Sales in Latin America were negatively impacted by distribution challenges within the region while gaining new distribution wins with product launches in the Personal Care product category. Adjusted EBITDA has remained flat with higher sales volumes and the benefit of cost improvement initiatives and favorable foreign currency offset by continued brand-focused investments, inflation in ocean freight, and expiration of tariff exclusions on certain product lines.
Current report
Cash flows from operating activities by continuing operations decreased $90.0 million, due to increased cash flow used in working capital, primarily attributable to inventory build up in H&G and timing of operational cash receipts from HPC holiday season, and lower interest income, offset by improved operating results, lower spending on strategic transaction, restructuring and optimization initiatives and lower cash interest.
Current report
Cash flows from investing activities for continuing operations decreased $139.5 million due to the decreased short term investment activity from the reduction of term deposits following previously discussed refinancing activity in the prior year.
Removed paragraphs (44)
Previous report
•Share based compensation costs consist of costs associated with long-term incentive compensation arrangements that generally consist of non-cash, stock-based compensation. See Note 12 – Share Based Compensation in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for further details;
Previous report
•Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value, and the incremental value in operating lease assets with below market rent, among others. During the three and nine month periods ended June 30, 2024 and July 2, 2023, the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent;
Previous report
•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets, when applicable. During the three month period ended June 30, 2024, the Company recognized impairment charges on a right of use operating lease asset associated with a HPC facility that was exited prior to the end of its term. See Note 6 - Property, Plant and Equipment in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion. During the nine month period ended June 30, 2024, the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with impairment charges on right of use operating lease assets associated with HPC distribution facilities that were exited prior to end of its term. See Note 7 - Goodwill and Intangiblesand Note 6 - Property Plant and Equipmentin Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion. During the three and nine periods ended July 2, 2023, the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term;
Previous report
•Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition realized during thenine month period ended June 30, 2024. Refer to Note 15 - Commitment and Contingencies, in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Previous report
•Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent. During the three and nine month periods ended June 30, 2024 and July 2, 2023, such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition. Refer to Note 15 - Commitment and Contingenciesin the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Previous report
•Gain or loss from the early extinguishment of debt realized through the repurchase or early redemption of outstanding debt obligations, net write-off of unamortized deferred debt issuance costs during the three and nine month periods ended June 30, 2024 and July 2, 2023. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Previous report
•Incremental costs associated with the recognition of product recall costs incurred by the HPC segment in collaboration with the CPSC, initiated at the end of the year ended September 30 2022 and during the year ended September 30, 2023, resulting in the accrual and recognition of incremental costs for the recall, product returns from customers, write-off of inventory on hand, and other costs such as notification, shipping and handling, rework and destruction of affected products, and consumer refunds, as needed. Such costs are not recurring and directly attributable to the recall event, excluding all other costs associated with product warranty and returns. See Note 15 - Commitments and Contingenciesin the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Previous report
•Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the nine month period ended July 2, 2023;
Previous report
•For the three and nine month periods ended July 2, 2023, the impact from the early settlement of foreign currency cash flow hedges during the year ended September 30, 2022, resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in excluded gains intended to mitigate costs during the year ending September 30, 2023; and
Previous report
•Other adjustments are attributable to: (1) key executive severance and other one-time compensatory costs; and (2) non-recurring unusual insurable losses, including the receipt of related insurance proceeds.
Previous report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the three month period ended June 30, 2024.
Previous report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the three month period ended July 2, 2023.
Previous report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the nine month period ended June 30, 2024.
Previous report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA, by segment, for the nine month period ended July 2, 2023.
Previous report
The Company is a diversified global branded consumer products company. We manage the businesses in three vertically integrated, product-focused segments: (i) Global Pet Care (“GPC”), (ii) Home and Garden (“H&G”), and (iii) Home and Personal Care (“HPC”). The Company manufactures, markets and/or distributes its products globally in the North America (“NA”), Europe, Middle East & Africa (“EMEA”), Latin America (“LATAM”) and Asia-Pacific (“APAC”) regions through a variety of trade channels, including retailers, wholesalers and distributors. We enjoy strong name recognition in our regions under our various brands and patented technologies across multiple product categories. Global and geographic strategic initiatives and financial objectives are determined at the corporate level. Each segment is responsible for implementing defined strategic initiatives and achieving certain financial objectives and has a president responsible for sales and marketing initiatives and financial results for all product lines within that segment on a global basis. The segments are supported through center-led shared service operations and enabling functions consisting of finance and accounting, information technology, legal, human resources, supply chain, and commercial operations. See Note 16 – Segment Information included in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for more information pertaining to segments of continuing operations. The following is an overview of the consolidated business, by segment, summarizing product categories and brands:
Previous report
•HHI Divestiture -On June 20, 2023, the Company completed its divestiture of its HHI segment. See Note 2 - Divestituresin the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail. The Company has incurred incremental project costs attributable to the divestiture, consisting of legal and professional fees to effect the realization and close of the transaction, separation and transition of systems and processes supporting the divested business and operations of enabling functions within transition services agreements ("TSAs"), plus incremental retention costs for personnel supporting such transition efforts. Incremental costs are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction as the Company exits various TSAs.
Previous report
•HPC Separation Initiatives -The Company has initiated projects to facilitate a strategic separation of the Company's HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or sale of the business and the retained GPC and H&G businesses of the consolidated group. Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations, including potential tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from the commingled operations of the Company, plus the segregation of systems and processes. Costs attributable to the initiative are expected to be incurred until a transaction is realized.
Previous report
•Fiscal 2023 and 2022 Restructuring -During the years ended September 30, 2023 and 2022, the Company entered into initiatives in response to continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of headcount reductions. Substantially all costs associated with the initiatives have been recognized in prior periods and any subsequent amounts are attributable to changes in estimates, headcounts and timing of communication.
Previous report
•Tristar Integration - During the year ended September 30, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Lagasse®, and Copper Chef® brands. The Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts. Substantially all costs have been incurred through September 30, 2023 and no further costs are anticipated in the subsequent periods.
Previous report
•Russia Closing Initiative -During the year ended September 30, 2022, the Company initiated the close of its commercial operations in Russia, predominantly supporting the HPC segment. The Company recognized impairment costs on working capital assets such as inventory and receivables that were not considered recoverable due to the restriction and suspension of commercial activity in Russia and has substantially liquidated all assets. Remaining costs primarily consist of administrative cost towards dissolution of the subsidiary.
Previous report
In addition to the initiatives discussed above, the Company regularly engages in other initiatives that may incur incremental costs which may not result in a realized transaction or are less significant initiatives and therefore have been separately disclosed and recognized as other project costs. The following is a summary of incremental costs for the three and nine month periods ended June 30, 2024 and July 2, 2023.
Previous report
Financing Activity
Previous report
•Following the close of the HHI divestiture on June 20, 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 aggregate principal of its 5.750% Senior Notes due 2025 in full at the redemptions price and repurchased a portion of its remaining outstanding Senior Notes.
Previous report
•On October 19, 2023 the Company entered into the Second Amended and Restated Credit Agreement (the "Credit Agreement"), refinancing the Company's previous credit agreement, extending maturity to October 19, 2028 and reduced capacity of the Revolver Facility to $500.0 million.
Previous report
See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for additional detail regarding debt and financing activity.
Previous report
Inflation, Supply Chain and Macroeconomic Environment.
Previous report
The Company has 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. 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. In response to inflation, our segments have 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 will be available in the future.
Previous report
While we have seen more stability in the recent economic environment and have not experienced significant disruption in our recent operating results, the risks of future negative impacts due to transportation, logistical or supply constraints remain present, and the Company could continue to experience corresponding incremental costs and margin pressures. 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.
Previous report
The Company does not maintain a significant level of operations within the territories directly affected by the Russia-Ukraine war and the Israel-Hamas war, including the Middle East, and we had previously closed the commercial operations within Russia to reduce risk and exposure, but the economic sanctions and hostilities attributable to such conflicts may negatively impact ours and our customers' financial viability and supply chains, which may negatively impact us, supply chain demands, or the demands or economic viability of our customers in other parts of the world.
Previous report
Gross profit and margin increases during the three and nine month periods are predominantly due to the lower cost inventory in the current periods with higher inflated inventoried costs that were realized during the prior periods and improved volume further contributing gross profit and margins. Price and mix did not substantively impact gross profit within the three and nine month periods, with some benefit realized within the nine month period from SKU rationalization initiatives earlier in the prior year and overall reduction in excess inventory sales. The impact from product recalls is due to a reissued product safety recall with the CPSC recognized during the nine period ended June 30, 2024, further discussed in Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report. Gross profit was also further benefited by the reduced costs towards restructuring and optimization initiatives.
Previous report
The increase in sales, marketing and advertising costs for both the three and nine month periods are due to the Company's investment towards brand marketing and advertising initiatives across all segments plus increased incentive compensation costs from higher than expected operating performance results. Distribution costs for the three month period were consistent to the prior year, but decreased relative to sales due to improved optimization and fulfillment at our distribution centers. Distribution costs for the nine month period decreased due to the improved optimization and fulfillment and decreased outbound freight costs compared to the prior nine month period. General & administrative costs for the three and nine month periods increased due to increased incentive compensation costs, partially offset by lowered overhead costs from prior year restructuring initiatives and decrease in bank fees related to reduced factoring on trade receivables. Increased research & development costs for the three and nine month periods are from the additional investment in new product development and innovation across all segments. Strategic transaction, restructuring and optimization costs for the three month period is consistent to the prior year with the close of the HHI divestiture in June 2023 compared to HPC separation initiatives in the current period. Strategic transaction, restructuring and optimization costs decreased due to reduced restructuring initiative spending with the completion of Tristar Business integration and other non-recurring HPC transformation initiatives that were not recurring in the current period.
Previous report
Impairment of Goodwill and Intangible Assets. Impairment of goodwill and intangible assets during the three month period ended July 2, 2023 was attributable to the impairment of the HPC reporting unit goodwill and the impairment of indefinite lived intangible assets associated with the Rejuvenate®, PowerXL® and George Foreman® tradenames without comparative impairment charges recognized in the three month period ended June 30, 2024. Impairment of intangible assets during the nine month period ended June 30, 2024 was attributable to triggering events earlier in the year resulting in impairment charges for the Rejuvenate® tradename and a non-core strategic tradename with impairment charges from the HPC reporting unit goodwill and the indefinite lived intangible assets for the Rejuvenate®, PowerXL® and George Foreman® tradenames realized in the prior year during the nine month period July 2, 2023. See Note 7 - Goodwill and Intangible Assetsin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Previous report
Representation and Warranty Insurance Proceeds. During the nine month period ended June 30, 2024, the Company recognized a gain of $65.0 million from its representation and warranty insurance policy associated with the Tristar Business acquisition. See Note 15 - Commitments and Contingenciesin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Previous report
Interest Income. Interest income increased due to interest on term deposits entered into using cash proceeds from the closing of the HHI divestiture in the prior year, with reduced term deposits following the previously discussed tender offer and bond redemption during the three month period ended June 30, 2024 .
Previous report
Loss (Gain) from early extinguishment of debt. During the three month period ended June 30, 2024, the Company recognized a net loss on the extinguishment of debt associated with the tender offer and bond redemption, whereas during the nine the period ended June 30, 2024 the Company recognized a gain from discounts realized on the repurchase of debt earlier in the year, partially offset by the loss on extinguishment associated with the tender offer and bond redemption. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail. Loss on early extinguishment of debt in the prior periods were attributable to the pay down of an outstanding term loan following the close of the HHI divestiture in June 2023.
Previous report
Net sales increased for the three month period from higher volumes through incremental distribution in e-commerce and the food and drug channels with some softness in mass retail. Volume growth was predominantly focused on consumables for both companion animal, including chews and treats and dog and cat food, and aquatics nutrition and consumables, partially offset by decreases in hard goods, such aquatic kits and environments. Volumes for the nine month period were adversely impacted by the decision to exit non-strategic categories and lower margin SKUs in the prior year, positively impacting mix and profitability for the nine month period. Organic net sales for the three month period ended June 30, 2024 increased $11.1 million, or 4.1%, excluding an unfavorable foreign currency impact of $1.2 million. Organic net sales for the nine month period decreased $3.5 million, or 0.4%, excluding a favorable foreign currency impact of $6.0 million.
Previous report
Segment net income and adjusted EBITDA for the three month period increased due to higher volume with improved margins from lower cost inventory compared to the prior period, and favorable mix, partially offset by increased investment in marketing and advertising and unfavorable foreign currency. Segment net income, adjusted EBITDA and margins for the nine month period increased due to lower cost inventory, positive product and channel mix, operating cost improvements due to savings from prior year initiatives, partially offset by increased investment in marketing and advertising and unfavorable foreign currency.
Previous report
Net sales increased during the three and nine month periods due to higher volume predominantly in the Controls product category and our indoor insect control products, with increased spring seasonal sales compared to the prior year. Favorable weather trends, with improved temperatures and precipitation levels during the three month period, drove increased retail traffic and accelerated replenishment distribution with larger home center and mass retail partners from allocated off-shelf and promotional space for these product categories. Volumes also increased in the Repellent product category with retailers with improved correlation between POS and retail orders compared to prior year distribution. Volume increases were partially offset by the decline in our Cleaning category during the three and nine month periods with soft consumer demand for certain product lines in this category and retail distribution losses. Late warmer fall weather extended the selling season in the prior year and further contributed to higher sales during the nine month period.
Previous report
Segment net loss, adjusted EBITDA the three and nine month period improved due to higher sales volume, with improved gross profit margins from reduced material and input costs and manufacturing efficiencies carrying into the fiscal year, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation. Segment net income for the nine month period ended June 30, 2024 was further impacted by a $39.0 million impairment charge on the Rejuvenate® indefinite lived intangible asset earlier in the year. Segment net loss for the three and nine month periods ended July 2, 2023 were further impacted by impairment charges of $8.0 million and $56.0 million, respectively, on the Rejuvenate® indefinite lived intangible asset.
Previous report
Net sales increased for the three month period was due to increased volume in personal care and home and kitchen product categories with increase in distribution in through continued growth in e-commerce and new product listings in NA with mass retail customers. Net sales for the nine month decreased from lower volumes in kitchen appliances during the first half of the fiscal year from reduced placements in NA from the prior year, influenced by category decline and exit of lower performance and reduced margin SKUs in the prior year, partially offset by volume growth in personal care on a global basis and overall higher volume distribution through e-commerce channels, plus opportunistic sales when a competitor filed for bankruptcy further benefiting the nine month period. Organic net sales for the three month period increased $17.0 million, or 6.1%, excluding a unfavorable foreign currency impact of $7.4 million. Organic net sales for the nine month period decreased $21.1 million, or 2.3%. excluding unfavorable foreign currency impact of $1.7 million.
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Reworded paragraphs (31)
Previous wording
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 the Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q ("the Quarterly Report") and our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the SEC on November 21, 2023 (the "2023 Annual Report"). The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contributed these differences include those discussed within "Forward Looking Statements" included elsewhere in this interim report, and in Item 1A. Risk Factors and "Forward-Looking Statements" included within our 2023 Annual Report.
Current wording
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 the Condensed Consolidated Financial Statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q ("the Quarterly Report") and our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed with the SEC on November 15, 2024 (the "2024 Annual Report"). The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contributed these differences include those discussed within "Forward Looking Statements" included elsewhere in this Quarterly Report, and in Item 1A. Risk Factors and "Forward-Looking Statements" included within our 2024 Annual Report.
Previous wording
Organic Net Sales. We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and impact from acquisitions (when 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 use organic net sales as one measure to monitor and evaluate our regional and segment performance. Organic growth is calculated by comparing organic net sales to net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination. We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior year.
Current wording
Organic Net Sales. 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. We use organic net sales as one measure to monitor and evaluate our regional and segment performance. Organic growth is calculated by comparing organic net sales to net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the current period net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination. We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior period.
Previous wording
The following is a reconciliation of reported net sales to organic net sales for the three and nine month period ended June 30, 2024 compared to net sales for the three and nine month period ended July 2, 2023:
Current wording
The following is a reconciliation of reported net sales to organic net sales for the three month period ended December 29, 2024 compared to net sales for the three month period ended December 31, 2023:
Previous wording
Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures used by management, which we believe provide useful information to investors because they reflect 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. 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. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA further excludes:
Current wording
Adjusted EBITDA and Adjusted EBITDA Margin. 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. These metrics provide investors additional information about our operating profitability for certain non-cash items, non-routine items we do not expect to continue at the same level in the future, as well as other items not core to our continuing operations. By providing these measures, together with a reconciliation of the most directly comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives, as securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management and our board of directors for internal purposes in evaluating our business performance, making budgeting decisions, and comparing our performance against other peer companies using similar measures. 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.
Previous wording
Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of reported net sales for the respective period and segment.
Current wording
EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA also excludes certain non-cash adjustments including share based compensation (see Note 10 - Share Based Compensation in the Notes to the Condensed Consolidated Financial Statementsfor further detail); impairment charges on property, plant and equipment, right of use lease assets, and goodwill and other intangible assets, (See Note 4- Property, Plant and Equipmentand Note 5 - Goodwill and Intangible Assetsin the Notes to the Condensed Consolidated Financial Statements for further detail, as applicable); gain or loss from the early extinguishment of debt through the repurchase or early redemption of debt (See Note 6 - Debt in the Notes to the Condensed Consolidated Financial Statements for further detail, as applicable); and purchase accounting adjustments recognized in income subsequent to an acquisition attributable to the step-up in value on assets acquired, including, but not limited to, inventory or lease assets. Additionally, the Company will further recognize adjustments from adjusted EBITDA for other costs, gains and losses that are considered significant, non-recurring, or otherwise not supporting the continuing operations and revenue generating activity of the segment or Company, including but not limited to, exit and disposal activities, or incremental costs associated with strategic transactions, restructuring and optimization initiatives such as the acquisition or divestiture of a business, related integration or separation costs, or the development and implementation of strategies to optimize or restructure the Company and its operations. Adjusted EBITDA margin is adjusted EBITDA as a percentage of reported net sales.
Previous wording
•Unallocated shared costs reflect the costs associated with certain shared and center-led administrative functions such as information technology, human resources, finance and accounting, supply chain and commercial operations, supporting the HHI business during the period the Company owned and operated the business through the close of the HHI divestiture on June 20, 2023. Such costs are excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations in accordance of US GAAP, but reflected as part of income from continuing operations for all periods presented, and requiring retroactive adjustment for all periods presented. HHI was previously a segment of the consolidated group and was excluded from the consolidated Adjusted EBITDA since being recognized as discontinued operations. As a result, for all periods in which HHI was owned and operated by the Company, including comparable periods requiring retroactive adjustment, the adjustment is recognized to reconcile net income from continuing operations to Adjusted EBITDA of the remaining segments of the consolidated group. With the close of the HHI divestiture on June 20, 2023, there is no adjustment recognized as such shared costs are mitigated through income from TSAs during the transition period post-separation, with subsequent restructuring initiatives to rightsize extraneous costs. See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Current wording
The following is a reconciliation of Net Income From Continuing Operations to Adjusted EBITDA and Adjusted EBITDA margin for the three month periods ended December 29, 2024 and December 31, 2023.
Previous wording
•Incremental project costs associated with strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments. Refer to the Strategic transactions, restructuring and optimization initiatives discussion within the Overview section for further discussion on the projects and initiatives;
Current wording
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. Refer to Strategic Transactions, Restructuring and Optimization Initiatives discussion within the Business Overview section for further detail.
Previous wording
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. 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 condensed consolidated financial statements. These changes and updates are inherently difficult and are made even more difficult by current global economic conditions. 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. The following strategic decisions have been considered as having a significant impact on the comparability of the financial results on the condensed consolidated financial statements and segment financial information.
Current wording
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. 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 condensed consolidated financial statements. These changes and updates are inherently difficult and 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. The following is a summary of costs attributable to strategic transactions and business development costs that are considered as potentially having a significant impact on the comparability of the financial results on the consolidated financial statements and segment financial information, for the respective projects during the three month periods ended December 29, 2024 and December 31, 2023:
Previous wording
•Global ERP Transformation - During the year ended September 30, 2021, the Company entered into a SAP S/4 HANA ERP transformation project to upgrade and implement our enterprise-wide operating systems to SAP S/4 HANA on a global basis. 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 engaged towards planning, design and business process review that do not qualify as software configuration and implementation costs. The Company has substantially completed the build phase and initiated a pilot deployment in the prior year with subsequent deployments planned later this year. Costs are anticipated to be incurred through various deployments expected through September 30, 2025.
Current wording
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. Costs are anticipated to be incurred through various deployments through September 30, 2025.
Previous wording
•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 $11.9 million of fees and expenses which were capitalized as debt issuance costs and will be amortized over the term of the Exchangeable Notes.
Current wording
•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.
Previous wording
•Concurrent with the issuance of the Exchangeable Notes, during the three month period ended June 30, 2024, the Company completed a tender offer of $1,160.5 million, including accrued and unpaid interest, 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 three month period ended June 30, 2024, net of the write-off of unamortized debt issuance costs.
Current wording
•Concurrent with the issuance of the Exchangeable Notes, 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 third quarter of the prior year.
Previous wording
•During the nine month period ended June 30, 2024, the Company repurchased outstanding bonds at a discount recognizing a gain on extinguishment of $4.7 million, net write-off of unamortized debt issuance costs.
Current wording
•During the year ended September 30, 2024, 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 in the prior period ended December 31, 2023.
Previous wording
The following is summarized consolidated results of operations for the three and nine month periods ended June 30, 2024 and July 2, 2023.
Current wording
The following is summarized consolidated results of operations for the three month periods ended December 29, 2024 and December 31, 2023.
Previous wording
Net Sales. The following is a summary of net sales by segment for the three and nine month periods ended June 30, 2024 and July 2, 2023, and the principal components of changes in net sales for the respective periods.
Current wording
Net Sales. The following is a summary of net sales by segment for the three month periods ended December 29, 2024 and December 31, 2023, and the principal components of changes in net sales between the respective periods.
Previous wording
Refer to thesegment financial data section below for further discussion on net sales results.
Current wording
Refer to the Segment Financial Data section below for further discussion on net sales results.
Previous wording
Gross Profit. The following is a summary of the gross profit and gross profit margin for the three and nine month periods ended June 30, 2024 and July 2, 2023, respectively, and the principal factors contributing to the change for the three and nine month periods.
Current wording
Gross Profit. The following is a summary of the gross profit and gross profit margin for the three month periods ended December 29, 2024 and December 31, 2023, respectively, and the principal factors contributing to the change between the respective periods.
Previous wording
Selling, general and administrative. The following summarizes the selling, general & administrative costs for the three and nine month periods ended June 30, 2024 and July 2, 2023, respectively, including amounts as a percentage of net sales for each respective period.
Current wording
Selling, General & Administrative. The following summarizes the selling, general & administrative costs for the three month periods ended December 29, 2024 and December 31, 2023, respectively, including amounts as a percentage of net sales for each respective period.
Previous wording
Interest Expense. Interest expense decreased during the three and nine month periods due to reduced debt borrowings following the close of the HHI divestiture in the prior year, plus the issuance of the Exchangeable Notes and tender offer and bond redemption during the three month period ended June 30, 2024, further reducing the outstanding principal balance and average borrowing rates during the three and nine month periods. See Note 8 - Debt in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Current wording
Interest Expense. Interest expense decreased during the three month periods due to reduced debt borrowings and lower average borrowing rates following previously discussed refinancing activity in the prior year.
Previous wording
Other Non-Operating Expense (Income), Net. Other non-operating income is primarily due to changes in foreign currency compared to the prior year.
Current wording
Other Non-Operating Expense, Net. Other non-operating expense is primarily due to changes in foreign currency compared to the prior year.
Previous wording
Income From Discontinued Operations. Income or loss attributable to discontinued operations in the prior period primarily reflect the income from the discontinued operations of the HHI segment as the divestiture was completed in the prior year on June 20, 2023. Income attributable to discontinued operations in the current period primarily reflect changes to indemnifications associated with the divested businesses and related tax provision adjustments. See Note 2 - Divestitures in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Current wording
Income From Discontinued Operations. Income from discontinued operations primarily reflect changes to indemnifications associated with divested businesses.
Previous wording
The following is a summary of cash flow from continuing operations for the nine month periods ended June 30, 2024 and July 2, 2023, respectively.
Current wording
The following is a summary of cash flow from continuing operations for the three month periods ended December 29, 2024 and December 31, 2023, respectively.
Previous wording
Cash flows used by financing activities for continuing operations decreased $142.4 million due to the issuance of $350.0 million Exchangeable Notes offset by the premium paid towards the associated capped call transactions, higher level of payment on outstanding debt from the tender call and bond redemption, market repurchase of bonds and the continued high level of treasury share repurchasing. Refer to Note 8 – Debt and Note 11 - Shareholders' Equityin the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information. There was no issuance of common stock, other than through the Company’s share-based compensation plans and which is recognized as non-cash financing activity. During the nine month periods ended June 30, 2024 and July 2, 2023, the Company made cash dividend payments of $38.8 million, or $0.42 per share, and $51.6 million, or $0.42 per share, respectively, which decreased due to the lower outstanding shares attributable to the treasure share repurchase activity in the current period.
Current wording
Cash flows from financing activities for continuing operations increased $342.5 million primarily from lower debt repayment and share repurchases activity. During the three month periods ended December 29, 2024 and December 31, 2023, the Company made cash dividend payments of $13.2 million, or $0.47 per share, and $14.1 million, or $0.42 per share, respectively, which decreased due to the lower outstanding shares following treasury share repurchases.
Previous wording
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. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. We believe the operating cash flow based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital. 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 June 30, 2024, the Company had borrowing availability of $490.4 million, net of outstanding letters of credit, under our credit facility.
Current wording
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. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility, we expect cash flows from operations to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital. 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 December 29, 2024, the Company had a total cash and cash equivalents of $179.9 million and borrowing availability of $490.8 million, net of outstanding letters of credit of $9.2 million, under our credit facility with a total liquidity of $670.7 million.
Previous wording
We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings. At June 30, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Notes, and the 3.875% Notes, due March 15, 2031.
Current wording
We maintain a capital structure that we believe provides us with sufficient access to credit markets. When combined with strong levels of cash flow from operations, our capital structure has provided the flexibility necessary to pursue strategic growth opportunities and return value to our shareholders. The Company’s access to capital markets and financing costs may depend on the Company’s credit ratings. None of the Company’s current borrowings are subject to default or acceleration as a result of a downgrading of credit ratings, although a downgrade of the Company’s credit ratings could increase fees and interest charges on future borrowings. As of December 29, 2024, we were in compliance with all covenants under the Credit Agreement and the indentures governing the 3.375% Notes, due June 1, 2029 and the 3.875% Notes, due March 15, 2031.
Previous wording
Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other strategic projects. Long-term financing needs depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term obligations. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group.
Current wording
Short-term financing needs primarily consist of working capital requirements, capital spending, periodic principal and interest payments on our long-term debt, and initiatives to support restructuring, integration or other strategic projects. Long-term financing needs depend largely on potential growth opportunities including acquisition activity, repayment or refinancing of our long-term obligations, and share repurchase activity, amongst others. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We also have long-term obligations associated with defined benefit plans with expected minimum required contributions that are not considered significant to the consolidated group.
Previous wording
The Company has substantially decreased its outstanding debt with the early extinguishment of debt following the receipt of proceeds from the completion of the HHI divestiture in June 2023 through various redemptions and repurchase transactions. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. The Company may make additional repayments on its remaining outstanding debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of our outstanding Senior Notes, any of which will be dependent on various factors, including market conditions. Any such repurchases may be affected 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.
Current wording
The Company substantially decreased its outstanding debt with the receipt of proceeds from the completion of the HHI divestiture in June 2023 through various redemptions and repurchase transactions. The Company may make additional repayments on its remaining outstanding 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. 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.
Previous wording
The Company has also continued to repurchase common shares during the three and nine period ended June 30, 2024. See Note 11 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report 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.
Current wording
The Company has continued to repurchase shares of common stock as further detailed in Note 9 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements. 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.
Previous wording
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. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality may require the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.
Current wording
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. H&G sales typically peak during the first six months of the calendar year (the Company's second and third fiscal quarters) due to customer seasonal purchasing patterns and the timing of promotional activity. This seasonality requires the Company to ship large quantities of products ahead of peak consumer buying season that can impact cash flow demands to meet manufacturing and inventory requirements earlier in the fiscal year, as well as extended credit terms and/or promotional discounts throughout the peak season.
Previous wording
From time to time the Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. The Company has temporarily suspended its receivable factoring activity. Additionally, the Company facilitates a voluntary supply chain financing program to provide suppliers with the opportunity to sell receivables due from the Company (the Company's trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution. See Note 1 - Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, for additional details. 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. 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 Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow.
Current wording
From time to time the Company enters into factoring agreements and customers' supply chain financing arrangements to provide for the sale of certain trade receivables to unrelated third-party financial institutions. The factored receivables are accounted for as a sale without recourse, and the balance of the receivables sold are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction, with the proceeds received recognized as an operating cash flow. Amounts received from customers for factored receivables are recognized as a payable and remitted to the factor based upon terms of the factoring agreements. The Company discontinued its receivable factoring activity in the prior year but may factor receivables in the future which will be dependent on various factors. Additionally, the Company facilitates a voluntary supply chain financing program to provide certain of its suppliers with the opportunity to sell receivables due from the Company (the Company's trade payables) to an unrelated third-party financial institution under the sole discretion of the supplier and the participating financial institution. 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. 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 Condensed Consolidated Balance Sheet with cash flow activity recognized as an operating cash flow. We do not believe the level of supplier based financing to be material.
Previous wording
See Note 1 – Basis of Presentation and Significant Accounting Policies in Notes to the Condensed Consolidated Financial Statements elsewhere included in this Quarterly Report for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.
Current wording
See Note 1 – Basis of Presentation and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements for information about accounting pronouncements that are newly adopted and recent accounting pronouncements not yet adopted.
Previous wording
SBI has issued the 3.375% Notes under the 2029 Indenture and the 3.875% Exchangeable Notes under the 2031 Indentures (collectively, the “Notes”). The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Spectrum Brands Holdings, Inc., as parent guarantor, and SBI’s domestic subsidiaries. The Notes and the related guarantees rank equally in right of payment with all of SBI and the guarantors’ existing and future senior indebtedness and rank senior in right of payment to all of SBI and the guarantors’ future indebtedness that expressively provide for its subordination to the Notes and the related guarantees. Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries. See Note 8 - Debt within the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 12 - Debt within the Notes to the Consolidated Financial Statements included elsewhere in our Annual Report within the Form 10-K for the year ended September 30, 2023.
Current wording
Spectrum Brands, Inc. (“SBI”) has issued the 3.375% Notes, due June 1, 2029, under the 2029 Indenture and the 3.875% Exchangeable Notes, due March 15, 2031, under the 2031 Indentures (collectively, the “Notes”). 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 Notes and the related guarantees rank equally in right of payment with all of SBI and the guarantors’ existing and future senior indebtedness and rank senior in right of payment to all of SBI and the guarantors’ future indebtedness that expressively provide for its subordination to the Notes and the related guarantees. Non-guarantor subsidiaries primarily consist of SBI’s foreign subsidiaries. See Note 11 - Debt within the Notes to the Consolidated Financial Statements within the 2024 Annual Report.