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July 31, 2024
Jeremy Smeltser
Chief Financial Officer
Spectrum Brands Holdings, Inc.
3001 Deming Way
Middleton, WI 53562
Re: Spectrum Brands Holdings, Inc.
Form 10-K for the Fiscal Year Ended September 30, 2023
Response dated June 26, 2024
File No. 001-04219
Dear Jeremy Smeltser:
We have reviewed your June 26, 2024 response to our comment letter and
have the
following comments.
Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this letter, we may have additional
comments. Unless we
note otherwise, any references to prior comments are to comments in our June
12, 2024 letter.
Form 10-K for the Fiscal Year Ended September 30, 2023
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Non-GAAP Measurements, page 34
1. Disclosure in your Form 10-K states that Adjusted EBITDA provides useful
information
to investors because it reflects the ongoing operating performance and
trends of your
segments, excluding certain non-cash based expenses and/or non-recurring
items during
each of the comparable periods. Please revise your disclosure in future
filings to more
clearly explain why Adjusted EBITDA on a consolidated basis is useful to
investors as a
non-GAAP performance measure. Refer to Item 10(e)(1)(i)(C) of Regulation
S-K.
2. We note that Adjusted EBITDA has been disclosed as the measure of profit
or loss for
your reportable segments pursuant to FASB ASC 280. However, you provide
a
reconciliation from Net income (loss) from continuing operations to
EBITDA and
Adjusted EBITDA for your reportable segments. In addition, it does not
appear that Net
income (loss) from continuing operations for your reportable segments
includes income
July 31, 2024
Page 2
tax expense or interest expense. Please tell us how you determined that
the presentation
provided is consistent with Items 10(e)(1)(i)(A) and (B) of Regulation
S-K. For additional
guidance, refer to Question 104.01 of the Division of Corporation
Finance Compliance
& Disclosure Interpretations on Non-GAAP Financial Measures.
3. Your March 29 response to comment 2 regarding the Tristar Business
acquisition and
integration adjustment refers to incremental compensation for personnel
supporting
transition and integration efforts during the transitionary period.
Please quantify these
costs for each of the last two fiscal years and describe the roles
performed by these
personnel.
4. Your May 20 response to comment 1 regarding the non-GAAP adjustments for
the HPC
brand portfolio transitions notes a shift in strategy required for the
utilization of your
brands towards brand development and acquisition to transition away from
use of the
Black & Decker tradename ( the B+D tradename ). Please tell us
whether actions such as
shifts in strategy and managing the transition of your business to new
brands are deemed
to be a normal activity considering your operations, revenue generating
activities, and
business strategy. Also, tell us the extent to which the sizeable
investment necessary to
transition away from the B+D tradename was a factor in applying
Question 100.01 of the
Division of Corporation Finance Compliance & Disclosure Interpretations
on Non-GAAP
Financial Measures to this adjustment.
5. With regards to costs associated with the Global ERP Transformation,
your March 29
response to comment 2 notes the non-GAAP adjustments include incremental
compensatory costs for a dedicated project management team. Please tell
us whether the
project management team is made up of employees or external
professionals and
consultants and describe their roles and responsibilities. In addition,
quantify the amount
of compensatory costs included in this non-GAAP adjustment for each of
the last two
fiscal years and the most recent interim period.
6. Your May 20 response to comment 2 regarding the Strategic Plan
Development
component of the non-GAAP adjustment for Other project costs explains
that you
engaged with a third-party consulting partner to assist in the
development of a long-term
strategic plan in consideration of the divestiture transactions that you
had executed or
were in process of executing. Please describe the services provided by
these consultants in
greater detail and further explain why costs incurred related to
long-term strategic
planning are not a normal, recurring operating expense per Question
100.01 of the
Division of Corporation Finance Compliance & Disclosure Interpretations
on Non-GAAP
Financial Measures.
7. We note from your June 26 response to comment 3 that the HPC Business
Transformation
component of Other project costs includes retention related costs for
two key executive
positions. Please revise to remove this adjustment as these costs appear
to be normal,
recurring operating expenses based on Question 100.01 of the Division of
Corporation
Finance Compliance & Disclosure Interpretations on Non-GAAP Financial
Measures.
8. Your May 20 response to comment 2 states that the Business Development
Office
component of Other project costs primarily consists of personnel costs
related to business
development activities, diligence, and transformation initiatives. As
these costs appear to
be normal, recurring operating expenses based on Question 100.01 of the
Division of
July 31, 2024
Page 3
Corporation Finance Compliance & Disclosure Interpretations on Non-GAAP
Financial
Measures, please revise to remove the related non-GAAP adjustment.
9. In your May 20 response to comment 2, you state that the recognition of
the IPL Product
Category Exit component of Other project costs was triggered by your
decision to
completely exit the product category. As the costs related to your exit
from the IPL
product category, such as the costs incurred to dispose of the remaining
product and parts,
appear to be normal, recurring operating expenses based on Question
100.01 of the
Division of Corporation Finance Compliance & Disclosure Interpretations
on Non-GAAP
Financial Measures, please revise to remove this adjustment.
10. Your response dated June 26 to comment 4 states that the unallocated
shared costs
adjustment relates to a shared operating center for the consolidated
group attributable to
the HHI segment that are excluded from the reporting of discontinued
operations. Please
revise to remove this non-GAAP adjustment as it appears that these costs
are normal,
recurring operating expenses based on Question 100.01 of the Division of
Corporation
Finance Compliance & Disclosure Interpretations on Non-GAAP Financial
Measures.
11. We note from your May 20 response to comment 5 that the costs associated
with the non-
GAAP adjustments for HPC product disposal were contributed by the
Tristar Business
acquisition, the realization of poor product performance, and quality
issues associated
with products from the acquisition. Please explain in greater detail why
these losses are
unusual (e.g., further address the relevant facts and circumstances
specific to the Tristar
Business acquisition, the timing of the inventory disposition, and the
link to product
recalls) and clarify the nature of the poor product performance and
quality issues noted in
your response.
12. Please clarify your May 20 response to comment 6 as it does not appear
to adequately
describe the circumstances leading to the product recalls and explain
how the activities
and actions taken were event driven and specific to responses required
by the CPSC. In
addition, explain the statement that facilitating product recalls is not
a component of your
normal operations and are not a substantial consideration for your
product history as risk
factor disclosure in your Form 10-K appears to indicate that you may be
subject to
product liability claims and product recalls in the ordinary course of
your business.
Please contact Dale Welcome at 202-551-3865 or Martin James at
202-551-3671 if you
have questions regarding comments on the financial statements and related
matters.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing