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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to______
| | | | | | | | | | | | | | |
Commission File No. | | Name of Registrant, State of Incorporation, Address of Principal Offices, and Telephone No. | | IRS Employer Identification No. |
| | | | |
1-4219 | | Spectrum Brands Holdings, Inc. | | 74-1339132 |
(a Delaware corporation)
3001 Deming Way
Middleton, WI 53562
(608) 275-3340
www.spectrumbrands.com
| | | | | | | | | | | | | | |
333-192634-03 | | SB/RH Holdings, LLC | | 27-2812840 |
(a Delaware limited liability company)
3001 Deming Way
Middleton, WI 53562
(608) 275-3340
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| | | | | | | | | | | | | | |
Spectrum Brands Holdings, Inc. | Yes | ☒ | No | ☐ |
SB/RH Holdings, LLC | Yes | ☒ | No | ☐ |
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
| | | | | | | | | | | | | | |
Spectrum Brands Holdings, Inc. | Yes | ☒ | No | ☐ |
SB/RH Holdings, LLC | Yes | ☒ | No | ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Registrant | | Large Accelerated Filer | | Accelerated Filer | | Non-accelerated Filer | | Smaller Reporting Company |
Spectrum Brands Holdings, Inc. | | X | | | | | | |
SB/RH Holdings, LLC | | | | | | X | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| | | | | | | | | | | | | | |
Spectrum Brands Holdings, Inc. | Yes | ☐ | No | ☒ |
SB/RH Holdings, LLC | Yes | ☐ | No | ☒ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§232.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter
| | | | | | | | | | | | | | |
Spectrum Brands Holdings, Inc. | Yes | ☐ | No | ☒ |
SB/RH Holdings, LLC | Yes | ☐ | No | ☒ |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| | | | | | | | | | | | | | |
Spectrum Brands Holdings, Inc. | | ☐ | | |
SB/RH Holdings, LLC | | ☐ | | |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| | | | | | | | | | | | | | | | | | | | |
Registrant | | Title of Each Class | | Trading Symbol | | Name of Exchange On Which Registered |
Spectrum Brands Holdings, Inc. | | Common Stock, $0.01 par value | | SPB | | New York Stock Exchange |
As of February 8, 2023, there were 41,004,457 shares outstanding of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.
SB/RH Holdings, LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this report with a reduced disclosure format as permitted by general instruction H(2).
Forward-Looking Statements
We have made or implied certain forward-looking statements in this document. All statements, other than statements of historical facts included or incorporated by reference in this document, including the statements under Management’s Discussion and Analysis of Financial Condition and Results of Operations, without limitation, statements or expectations regarding our business strategy, future operations, financial condition, estimated revenues, projected costs, earnings power, projected synergies, prospects, plans and objectives of management, outcome of any litigation and information concerning expected actions of third parties are forward-looking statements. When used in this report, the words future, anticipate, pro forma, seek, intend, plan, envision, estimate, believe, belief, expect, project, forecast, outlook, earnings framework, goal, target, could, would, will, can, should, may and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
Since these forward-looking statements are based upon our current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control and some of which may change rapidly, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation:
•the COVID-19 pandemic, economic, social and political conditions or civil unrest, terrorist attacks, acts of war, natural disasters, other public health concerns or unrest in the United States ("U.S.") or the international markets impacting our business, customers, employees (including our ability to retain and attract key personnel), manufacturing facilities, suppliers, capital markets, financial condition and results of operations, all of which tend to aggravate the other risks and uncertainties we face;
•the impact of a number of local, regional and global uncertainties could negatively impact our business;
•the negative effect of the armed conflict between Russia and Ukraine and its impact on those regions and surrounding regions, including on our operations and on those of our customers, suppliers and other stakeholders;
•our increased reliance on third-party partners, suppliers and distributors to achieve our business objectives;
•the impact of expenses resulting from the implementation of new business strategies, divestitures or current and proposed restructuring and optimization activities, including distribution center changes which are complicated and involve coordination among a number of stakeholders, including our suppliers and transportation and logistics handlers;
•the impact of our indebtedness and financial leverage position on our business, financial condition and results of operations;
•the impact of restrictions in our debt instruments on our ability to operate our business, finance our capital needs or pursue or expand business strategies;
•any failure to comply with financial covenants and other provisions and restrictions of our debt instruments;
•the effects of general economic conditions, including the impact of, and changes to tariffs and trade policies, inflation, recession or fears of a recession, depression or fears of a depression, labor costs and stock market volatility or monetary or fiscal policies in the countries where we do business;
•the impact of fluctuations in transportation and shipment costs, fuel costs, commodity prices, costs or availability of raw materials or terms and conditions available from suppliers, including suppliers’ willingness to advance credit;
•interest rate fluctuations;
•changes in foreign currency exchange rates that may impact our purchasing power, pricing and margin realization within international jurisdictions;
•the loss of, significant reduction in or dependence upon, sales to any significant retail customer(s), including their changes in retail inventory levels and management thereof;
•competitive promotional activity or spending by competitors, or price reductions by competitors;
•the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;
•changes in consumer spending preferences and demand for our products, particularly in light of economic stress and the COVID-19 pandemic;
•our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;
•our ability to successfully identify, implement, achieve and sustain productivity improvements, cost efficiencies (including at our manufacturing and distribution operations) and cost savings;
•the seasonal nature of sales of certain of our products;
•the impact weather conditions may have on the sales of certain of our products;
•the effects of climate change and unusual weather activity as well as our ability to respond to future natural disasters and pandemics and to meet our environmental, social and governance goals;
•the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);
•public perception regarding the safety of products that we manufacture and sell, including the potential for environmental liabilities, product liability claims, litigation and other claims related to products manufactured by us and third parties;
•the impact of existing, pending or threatened litigation, government regulation or other requirements or operating standards applicable to our business;
•the impact of cybersecurity breaches or our actual or perceived failure to protect company and personal data, including our failure to comply with new and increasingly complex global data privacy regulations;
•changes in accounting policies applicable to our business;
•our discretion to adopt, conduct, suspend or discontinue any share repurchase program (including our discretion to conduct purchases, if any, in a variety of manners including open-market purchases or privately negotiated transactions);
•our ability to utilize net operating loss carry-forwards to offset tax liabilities from future taxable income;
•our ability to consummate the announced Hardware and Home Improvement ("HHI") divestiture on the expected terms and within the anticipated time period, or at all, which is dependent on the parties' ability to satisfy certain closing conditions and our ability to realize the benefits of the transaction, including reducing the financial leverage of the Company, investing in the organic growth of the Company, funding any future acquisitions, returning capital to shareholders, and/or maintaining our quarterly dividends;
•our ability to overcome, or timely overcome, the U.S. Department of Justice's ("DOJ") complaint to enjoin the proposed acquisition of the Company's HHI business by ASSA ABLOY ("ASSA"), including ASSA's ability to complete the dispositions that it has proposed to resolve all the alleged competitive concerns (i.e., the disposition of its Emtek business and its smart residential business in the U.S. and Canada);
•the risk that regulatory approvals that are required to complete the proposed HHI divestiture may not be realized, may take longer than expected or may impose adverse conditions;
•our ability to successfully integrate the February 18, 2022, acquisition of the home appliances and cookware products business from Tristar Products, Inc. (the "Tristar Business") into the Company's Home and Personal Care ("HPC") business and realize the benefits of this acquisition;
•our ability to separate the Company's HPC business and create an independent Global Appliances business on expected terms, and within the anticipated time period, or at all, and to realize the potential benefits of such business;
•our ability to create a pure play consumer products company composed of our Global Pet Care ("GPC") and Home & Garden ("H&G") business and to realize the expected benefits of such creation, and within the anticipated time period, or at all;
•our ability to successfully implement further acquisitions or dispositions and the impact of any such transactions on our financial performance;
•the impact of actions taken by significant stockholders; and
•the unanticipated loss of key members of senior management and the transition of new members of our management teams to their new roles.
Some of the above-mentioned factors are described in further detail in the sections entitled Risk Factors in our annual and quarterly reports (including this report), as applicable. You should assume the information appearing in this report is accurate only as of the end of the period covered by this report, or as otherwise specified, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the U.S. and the rules and regulations of the United States Securities and Exchange Commission (“SEC”), we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
SPECTRUM BRANDS HOLDINGS, INC.
SB/RH HOLDINGS, LLC
TABLE OF CONTENTS
This report is a combined report of Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC. The combined notes to the condensed consolidated financial statements include notes representing Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Financial Position
As of January 1, 2023 and September 30, 2022
(unaudited)
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(in millions) | | January 1, 2023 | | September 30, 2022 |
Assets | | | | |
Cash and cash equivalents | | $ | 228.0 | | | $ | 243.7 | |
Trade receivables, net | | 269.8 | | | 247.4 | |
Other receivables | | 121.1 | | | 95.7 | |
Inventories | | 702.3 | | | 780.6 | |
Prepaid expenses and other current assets | | 48.3 | | | 51.2 | |
Current assets of business held for sale | | 1,811.1 | | | 1,816.7 | |
Total current assets | | 3,180.6 | | | 3,235.3 | |
Property, plant and equipment, net | | 264.2 | | | 263.8 | |
Operating lease assets | | 78.6 | | | 82.5 | |
Deferred charges and other | | 66.6 | | | 38.7 | |
Goodwill | | 965.0 | | | 953.1 | |
Intangible assets, net | | 1,210.8 | | | 1,202.2 | |
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Total assets | | $ | 5,765.8 | | | $ | 5,775.6 | |
Liabilities and Shareholders' Equity | | | | |
Current portion of long-term debt | | $ | 12.5 | | | $ | 12.3 | |
Accounts payable | | 365.2 | | | 453.1 | |
Accrued wages and salaries | | 26.4 | | | 28.4 | |
Accrued interest | | 49.1 | | | 27.6 | |
Other current liabilities | | 201.1 | | | 203.0 | |
Current liabilities of business held for sale | | 427.0 | | | 463.7 | |
Total current liabilities | | 1,081.3 | | | 1,188.1 | |
Long-term debt, net of current portion | | 3,267.7 | | | 3,144.5 | |
Long-term operating lease liabilities | | 52.5 | | | 56.0 | |
Deferred income taxes | | 62.7 | | | 60.1 | |
Other long-term liabilities | | 62.2 | | | 57.8 | |
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Total liabilities | | 4,526.4 | | | 4,506.5 | |
Commitments and contingencies (Note 16) | |
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Shareholders' equity | | | | |
Common stock | | 0.5 | | | 0.5 | |
Additional paid-in capital | | 2,011.5 | | | 2,032.5 | |
Accumulated earnings | | 323.9 | | | 362.1 | |
Accumulated other comprehensive loss, net of tax | | (288.9) | | | (303.1) | |
Treasury stock | | (814.2) | | | (828.8) | |
Total shareholders' equity | | 1,232.8 | | | 1,263.2 | |
Non-controlling interest | | 6.6 | | | 5.9 | |
Total equity | | 1,239.4 | | | 1,269.1 | |
Total liabilities and equity | | $ | 5,765.8 | | | $ | 5,775.6 | |
See accompanying notes to the condensed consolidated financial statements
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Income
For the three month periods ended January 1, 2023 and January 2, 2022
(unaudited)
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(in millions, except per share) | | January 1, 2023 | | January 2, 2022 | | | | |
Net sales | | $ | 713.3 | | | $ | 757.2 | | | | | |
Cost of goods sold | | 511.4 | | | 537.9 | | | | | |
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Gross profit | | 201.9 | | | 219.3 | | | | | |
Selling | | 131.3 | | | 146.3 | | | | | |
General and administrative | | 84.6 | | | 89.2 | | | | | |
Research and development | | 6.2 | | | 7.6 | | | | | |
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Total operating expenses | | 222.1 | | | 243.1 | | | | | |
Operating loss | | (20.2) | | | (23.8) | | | | | |
Interest expense | | 33.4 | | | 21.8 | | | | | |
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Other non-operating (income) expense, net | | (1.5) | | | 0.6 | | | | | |
Loss from continuing operations before income taxes | | (52.1) | | | (46.2) | | | | | |
Income tax benefit | | (12.1) | | | (16.0) | | | | | |
Net loss from continuing operations | | (40.0) | | | (30.2) | | | | | |
Income from discontinued operations, net of tax | | 19.5 | | | 38.8 | | | | | |
Net (loss) income | | (20.5) | | | 8.6 | | | | | |
Net income from continuing operations attributable to non-controlling interest | | 0.3 | | | — | | | | | |
Net income from discontinued operations attributable to non-controlling interest | | 0.1 | | | 0.4 | | | | | |
Net (loss) income attributable to controlling interest | | $ | (20.9) | | | $ | 8.2 | | | | | |
Amounts attributable to controlling interest | | | | | | | | |
Net loss from continuing operations attributable to controlling interest | | $ | (40.3) | | | $ | (30.2) | | | | | |
Net income from discontinued operations attributable to controlling interest | | 19.4 | | | 38.4 | | | | | |
Net (loss) income attributable to controlling interest | | $ | (20.9) | | | $ | 8.2 | | | | | |
Earnings Per Share | | | | | | | | |
Basic earnings per share from continuing operations | | $ | (0.99) | | | $ | (0.73) | | | | | |
Basic earnings per share from discontinued operations | | 0.48 | | | 0.93 | | | | | |
Basic earnings per share | | $ | (0.51) | | | $ | 0.20 | | | | | |
Diluted earnings per share from continuing operations | | $ | (0.99) | | | $ | (0.73) | | | | | |
Diluted earnings per share from discontinued operations | | 0.48 | | | 0.93 | | | | | |
Diluted earnings per share | | $ | (0.51) | | | $ | 0.20 | | | | | |
Dividend per share | | $ | 0.42 | | | $ | 0.42 | | | | | |
Weighted Average Shares Outstanding | | | | | | | | |
Basic | | 40.9 | | | 41.3 | | | | | |
Diluted | | 40.9 | | | 41.3 | | | | | |
See accompanying notes to the condensed consolidated financial statements
SPECTRUM BRANDS HOLDINGS, INC
Condensed Consolidated Statements of Comprehensive Income
For the three month periods ended January 1, 2023 and January 2, 2022
(unaudited)
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| | Three Month Periods Ended | | |
(in millions) | | January 1, 2023 | | January 2, 2022 | | | | |
Net (loss) income | | $ | (20.5) | | | $ | 8.6 | | | | | |
Other comprehensive (loss) income | | | | | | | | |
Foreign currency translation adjustment | | | | | | | | |
Foreign currency translation gain (loss) | | 60.5 | | | (3.8) | | | | | |
Unrealized (loss) gain from net investment hedge | | (33.9) | | | 10.6 | | | | | |
Foreign currency translation adjustment before tax | | 26.6 | | | 6.8 | | | | | |
Deferred tax effect | | 8.8 | | | (4.5) | | | | | |
Foreign currency translation adjustment, net | | 35.4 | | | 2.3 | | | | | |
Unrealized (loss) gain on derivative instruments | | | | | | | | |
Unrealized (loss) gain on hedging activity before reclassification | | (25.4) | | | 1.2 | | | | | |
Net reclassification for gain to income from continuing operations | | (2.5) | | | (2.1) | | | | | |
Net reclassification for gain to income from discontinued operations | | — | | | (0.5) | | | | | |
Unrealized loss on hedging instruments after reclassification | | (27.9) | | | (1.4) | | | | | |
Deferred tax effect | | 7.2 | | | 4.5 | | | | | |
Net unrealized (loss) gain on hedging derivative instruments | | (20.7) | | | 3.1 | | | | | |
Defined benefit pension loss | | | | | | | | |
Defined benefit pension (loss) gain before reclassification | | (2.3) | | | 0.6 | | | | | |
Net reclassification for loss to income from continuing operations | | 0.9 | | | 1.0 | | | | | |
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Defined benefit pension (loss) gain after reclassification | | (1.4) | | | 1.6 | | | | | |
Deferred tax effect | | 1.2 | | | (2.9) | | | | | |
Net defined benefit pension loss | | (0.2) | | | (1.3) | | | | | |
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Net change to derive comprehensive income for the period | | 14.5 | | | 4.1 | | | | | |
Comprehensive (loss) income | | (6.0) | | | 12.7 | | | | | |
Comprehensive income from continuing operations attributable to non-controlling interest | | 0.2 | | | — | | | | | |
Comprehensive income from discontinuing operations attributable to non-controlling interest | | 0.1 | | | 0.1 | | | | | |
Comprehensive (loss) income attributable to controlling interest | | $ | (6.3) | | | $ | 12.6 | | | | | |
See accompanying notes to the condensed consolidated financial statements
SPECTRUM BRANDS HOLDINGS, INC
Condensed Consolidated Statements of Shareholders' Equity
For the three month period ended January 1, 2023
(unaudited)
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| | Common Stock | | Additional Paid-in Capital | | Accumulated Earnings | | Accumulated Other Comprehensive Loss | | Treasury Stock | | Total Shareholders' Equity | | Non- controlling Interest | | Total Equity |
(in millions) | | Shares | | Amount | | | | | | | |
Balances at September 30, 2022 | | 40.8 | | | $ | 0.5 | | | $ | 2,032.5 | | | $ | 362.1 | | | $ | (303.1) | | | $ | (828.8) | | | $ | 1,263.2 | | | $ | 5.9 | | | $ | 1,269.1 | |
Net (loss) income from continuing operations | | — | | | — | | | — | | | (40.3) | | | — | | | — | | | (40.3) | | | 0.3 | | | (40.0) | |
Income from discontinued operations, net of tax | | — | | | — | | | — | | | 19.4 | | | — | | | — | | | 19.4 | | | 0.1 | | | 19.5 | |
Other comprehensive income, net of tax | | — | | | — | | | — | | | — | | | 14.2 | | | — | | | 14.2 | | | 0.3 | | | 14.5 | |
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Restricted stock issued and related tax withholdings | | 0.2 | | | — | | | (25.1) | | | — | | | — | | | 14.6 | | | (10.5) | | | — | | | (10.5) | |
Share based compensation | | — | | | — | | | 4.1 | | | — | | | — | | | — | | | 4.1 | | | — | | | 4.1 | |
Dividends declared | | — | | | — | | | — | | | (17.3) | | | — | | | — | | | (17.3) | | | — | | | (17.3) | |
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Balances at January 1, 2023 | | 41.0 | | | $ | 0.5 | | | $ | 2,011.5 | | | $ | 323.9 | | | $ | (288.9) | | | $ | (814.2) | | | $ | 1,232.8 | | | $ | 6.6 | | | $ | 1,239.4 | |
SPECTRUM BRANDS HOLDINGS, INC
Condensed Consolidated Statements of Shareholders' Equity
For the three month period ended January 2, 2022
(unaudited)
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| | Common Stock | | Additional Paid-in Capital | | Accumulated Earnings | | Accumulated Other Comprehensive Loss | | Treasury Stock | | Total Shareholders' Equity | | Non- controlling Interest | | Total Equity |
(in millions) | | Shares | | Amount | | | | | | | |
Balances at September 30, 2021 | | 41.8 | | | $ | 0.5 | | | $ | 2,063.8 | | | $ | 359.9 | | | $ | (235.3) | | | $ | (717.0) | | | $ | 1,471.9 | | | $ | 7.1 | | | $ | 1,479.0 | |
Loss from continuing operations | | — | | | — | | | — | | | (30.2) | | | — | | | — | | | (30.2) | | | — | | | (30.2) | |
Income from discontinued operations, net of tax | | — | | | — | | | — | | | 38.4 | | | — | | | — | | | 38.4 | | | 0.4 | | | 38.8 | |
Other comprehensive income, net of tax | | — | | | — | | | — | | | — | | | 4.0 | | | — | | | 4.0 | | | 0.1 | | | 4.1 | |
Treasury stock repurchases | | (1.1) | | | — | | | — | | | — | | | — | | | (110.0) | | | (110.0) | | | — | | | (110.0) | |
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Restricted stock issued and related tax withholdings | | 0.3 | | | — | | | (46.6) | | | — | | | — | | | 22.2 | | | (24.4) | | | — | | | (24.4) | |
Share based compensation | | — | | | — | | | 8.3 | | | — | | | — | | | — | | | 8.3 | | | — | | | 8.3 | |
Dividends declared | | — | | | — | | | — | | | (17.7) | | | — | | | — | | | (17.7) | | | — | | | (17.7) | |
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Balances as of January 2, 2022 | | 41.0 | | | $ | 0.5 | | | $ | 2,025.5 | | | $ | 350.4 | | | $ | (231.3) | | | $ | (804.8) | | | $ | 1,340.3 | | | $ | 7.6 | | | $ | 1,347.9 | |
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See accompanying notes to the condensed consolidated financial statements
SPECTRUM BRANDS HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
For the three month periods ended January 1, 2023 and January 2, 2022
(unaudited)
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| | Three Month Periods Ended |
(in millions) | | January 1, 2023 | | January 2, 2022 |
Cash flows from operating activities | | | | |
Net (loss) income | | $ | (20.5) | | | $ | 8.6 | |
Income from discontinued operations, net of tax | | 19.5 | | | 38.8 | |
Net loss from continuing operations | | (40.0) | | | (30.2) | |
Adjustments to reconcile net (loss) income to net cash from operating activities: | | | | |
Depreciation | | 12.2 | | | 12.2 | |
Amortization | | 10.4 | | | 13.3 | |
Share based compensation | | 3.3 | | | 5.6 | |
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Amortization of debt issuance costs and debt discount | | 2.0 | | | 1.4 | |
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Gain from remeasurement of contingent consideration liability | | (1.5) | | | — | |
Non-cash purchase accounting adjustments | | 0.5 | | | — | |
Deferred tax benefit | | (18.4) | | | (27.3) | |
Net changes in operating assets and liabilities | | (25.5) | | | (230.8) | |
Net cash used by operating activities from continuing operations | | (57.0) | | | (255.8) | |
Net cash used by operating activities from discontinued operations | | (7.2) | | | (15.3) | |
Net cash used by operating activities | | (64.2) | | | (271.1) | |
Cash flows from investing activities | | | | |
Purchases of property, plant and equipment | | (10.0) | | | (14.1) | |
Proceeds from disposal of property, plant and equipment | | — | | | 0.1 | |
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Net cash used by investing activities from continuing operations | | (10.0) | | | (14.0) | |
Net cash used by investing activities from discontinued operations | | (3.6) | | | (5.0) | |
Net cash used by investing activities | | (13.6) | | | (19.0) | |
Cash flows from financing activities | | | | |
Payment of debt | | (3.3) | | | (3.2) | |
Proceeds from issuance of debt | | 90.0 | | | 465.0 | |
Payment of debt issuance costs | | (2.3) | | | — | |
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Treasury stock purchases | | — | | | (110.0) | |
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Dividends paid to shareholders | | (17.1) | | | (17.3) | |
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Share based award tax withholding payments, net of proceeds upon vesting | | (10.5) | | | (24.5) | |
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Net cash provided by financing activities from continuing operations | | 56.8 | | | 310.0 | |
Net cash used by financing activities from discontinued operations | | (0.4) | | | (0.4) | |
Net cash provided by financing activities | | 56.4 | | | 309.6 | |
Effect of exchange rate changes on cash and cash equivalents | | 5.7 | | | (2.5) | |
Net change in cash, cash equivalents and restricted cash in continuing operations | | (15.7) | | | 17.0 | |
Cash, cash equivalents, and restricted cash, beginning of period | | 243.9 | | | 190.0 | |
Cash, cash equivalents, and restricted cash, end of period | | $ | 228.2 | | | $ | 207.0 | |
Supplemental disclosure of cash flow information | | | | |
Cash paid for interest associated with continued operations | | $ | 16.6 | | | $ | 14.7 | |
Cash paid for interest associated with discontinued operations | | 8.9 | | | 12.1 | |
Cash paid for taxes associated with continued operations | | 6.1 | | | 6.6 | |
Cash paid for taxes associated with discontinued operations | | 6.0 | | | 6.4 | |
Non cash investing activities | | | | |
Acquisition of property, plant and equipment through finance leases | | $ | 0.1 | | | $ | 0.2 | |
Non cash financing activities | | | | |
Issuance of shares through stock compensation plan | | $ | 27.2 | | | $ | 33.4 | |
See accompanying notes to the condensed consolidated financial statements
SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Financial Position
As of January 1, 2023 and September 30, 2022
(unaudited)
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(in millions) | | January 1, 2023 | | September 30, 2022 |
Assets | | | | |
Cash and cash equivalents | | $ | 226.7 | | | $ | 242.4 | |
Trade receivables, net | | 269.8 | | | 247.4 | |
Other receivables | | 210.8 | | | 183.1 | |
Inventories | | 702.3 | | | 780.6 | |
Prepaid expenses and other current assets | | 48.3 | | | 51.2 | |
Current assets of business held for sale | | 1,811.1 | | | 1,816.7 | |
Total current assets | | 3,269.0 | | | 3,321.4 | |
Property, plant and equipment, net | | 264.2 | | | 263.8 | |
Operating lease assets | | 78.6 | | | 82.5 | |
Deferred charges and other | | 42.4 | | | 38.1 | |
Goodwill | | 965.0 | | | 953.1 | |
Intangible assets, net | | 1,210.8 | | | 1,202.2 | |
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Total assets | | $ | 5,830.0 | | | $ | 5,861.1 | |
Liabilities and Shareholder's Equity | | | | |
Current portion of long-term debt | | $ | 12.5 | | | $ | 12.3 | |
Accounts payable | | 365.8 | | | 453.3 | |
Accrued wages and salaries | | 26.4 | | | 28.4 | |
Accrued interest | | 49.1 | | | 27.6 | |
Other current liabilities | | 198.9 | | | 197.3 | |
Current liabilities of business held for sale | | 427.0 | | | 463.7 | |
Total current liabilities | | 1,079.7 | | | 1,182.6 | |
Long-term debt, net of current portion | | 3,267.7 | | | 3,144.5 | |
Long-term operating lease liabilities | | 52.5 | | | 56.0 | |
Deferred income taxes | | 256.4 | | | 279.3 | |
Other long-term liabilities | | 70.1 | | | 65.6 | |
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Total liabilities | | 4,726.4 | | | 4,728.0 | |
Commitments and contingencies (Note 16) | | | | |
Shareholder's equity | | | | |
Other capital | | 2,158.0 | | | 2,164.6 | |
Accumulated deficit | | (773.8) | | | (736.0) | |
Accumulated other comprehensive loss, net of tax | | (288.8) | | | (303.0) | |
Total shareholder's equity | | 1,095.4 | | | 1,125.6 | |
Non-controlling interest | | 8.2 | | | 7.5 | |
Total equity | | 1,103.6 | | | 1,133.1 | |
Total liabilities and equity | | $ | 5,830.0 | | | $ | 5,861.1 | |
See accompanying notes to the condensed consolidated financial statements
SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Income
For the three month periods ended January 1, 2023 and January 2, 2022
(unaudited)
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| | Three Month Periods Ended | | |
(in millions) | | January 1, 2023 | | January 2, 2022 | | | | |
Net sales | | $ | 713.3 | | | $ | 757.2 | | | | | |
Cost of goods sold | | 511.4 | | | 537.9 | | | | | |
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Gross profit | | 201.9 | | | 219.3 | | | | | |
Selling | | 131.3 | | | 146.3 | | | | | |
General and administrative | | 84.5 | | | 88.9 | | | | | |
Research and development | | 6.2 | | | 7.6 | | | | | |
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Total operating expenses | | 222.0 | | | 242.8 | | | | | |
Operating loss | | (20.1) | | | (23.5) | | | | | |
Interest expense | | 33.4 | | | 21.8 | | | | | |
Other non-operating (income) expense, net | | (1.5) | | | 0.6 | | | | | |
Loss from continuing operations before income taxes | | (52.0) | | | (45.9) | | | | | |
Income tax benefit | | (12.2) | | | (15.8) | | | | | |
Net loss from continuing operations | | (39.8) | | | (30.1) | | | | | |
Income from discontinued operations, net of tax | | 19.5 | | | 38.8 | | | | | |
Net (loss) income | | (20.3) | | | 8.7 | | | | | |
Net income from continuing operations attributable to non-controlling interest | | 0.3 | | | — | | | | | |
Net income from discontinued operations attributable to non-controlling interest | | 0.1 | | | 0.4 | | | | | |
Net (loss) income attributable to controlling interest | | $ | (20.7) | | | $ | 8.3 | | | | | |
Amounts attributable to controlling interest | | | | | | | | |
Net loss from continuing operations attributable to controlling interest | | $ | (40.1) | | | $ | (30.1) | | | | | |
Net income from discontinued operations attributable to controlling interest | | 19.4 | | | 38.4 | | | | | |
Net (loss) income attributable to controlling interest | | $ | (20.7) | | | $ | 8.3 | | | | | |
See accompanying notes to the condensed consolidated financial statements
SB/RH HOLDINGS, LLC
Condensed Consolidated Statements of Comprehensive Income
For the three month periods ended January 1, 2023 and January 2, 2022
(unaudited)
| | | | | | | | | | | | | | | | | | |
| | Three Month Periods Ended | | |
(in millions) | | January 1, 2023 | | January 2, 2022 | | | | |
Net (loss) income | | $ | (20.3) | | | $ | 8.7 | | | | | |
Other comprehensive (loss) income | | | | | | | | |
Foreign currency translation adjustment | | | | | | | | |
Foreign currency translation gain (loss) | | 60.5 | | | (3.8) | | | | | |
Unrealized gain (loss) from net investment hedge | | (33.9) | | | 10.6 | | | | | |
Foreign currency translation adjustment before tax | | 26.6 | | | 6.8 | | | | | |
Deferred tax effect | | 8.8 | | | (4.5) | | | | | |
Foreign currency translation adjustment, net | | 35.4 | | | 2.3 | | | | | |
Unrealized (loss) gain on derivative instruments | | | | | | | | |
Unrealized (loss) gain on hedging activity before reclassification | | (25.4) | | | 1.2 | | | | | |
Net reclassification for gain to income from continuing operations | | (2.5) | | | (2.1) | | | | | |
Net reclassification for gain to income from discontinued operations | | — | | | (0.5) | | | | | |
Unrealized loss on hedging instruments after reclassification | | (27.9) | | | (1.4) | | | | | |
Deferred tax effect | | 7.2 | | | 4.5 | | | | | |
Net unrealized (loss) gain on hedging derivative instruments | | (20.7) | | | 3.1 | | | | | |
Defined benefit pension loss | | | | | | | | |
Defined benefit pension (loss) gain before reclassification | | (2.3) | | | 0.6 | | | | | |
Net reclassification for loss to income from continuing operations | | 0.9 | | | 1.0 | | | | | |
| | | | | | | | |
Defined benefit pension (loss) gain after reclassification | | (1.4) | | | 1.6 | | | | | |
Deferred tax effect | | 1.2 | | | (2.9) | | | | | |
Net defined benefit pension loss | | (0.2) | | | (1.3) | | | | | |
| | | | | | | | |
Net change to derive comprehensive income for the period | | 14.5 | | | 4.1 | | | | | |
Comprehensive (loss) income | | (5.8) | | | 12.8 | | | | | |
Comprehensive income from continuing operations attributable to non-controlling interest | | 0.2 | | | — | | | | | |
Comprehensive income from discontinuing operations attributable to non-controlling interest | | 0.1 | | | 0.1 | | | | | |
Comprehensive (loss) income attributable to controlling interest | | $ | ( |