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SPECTRUM BRANDS HOLDINGS, INC.

(SPB)
  Report
Delayed Nyse  -  04:00 2022-09-23 pm EDT
42.86 USD   -3.88%
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SPECTRUM BRANDS HOLDINGS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/12/2022 | 10:05am EDT

Introduction


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. Unless the context indicates
otherwise, the term the "Company," "we," "our," or "us" are used to refer to
Spectrum Brands Holdings, Inc. and its subsidiaries ("SBH") and SB/RH Holdings,
LLC and its subsidiaries ("SB/RH"), collectively.

Business Overview


The Company is a diversified global branded consumer products company.  We
manage the businesses in three vertically integrated, product-focused segments:
(i) Home and Personal Care ("HPC"), (ii) Global Pet Care ("GPC"), and (iii) Home
and Garden ("H&G"). 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 18 - 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 types and brands:

  Segment                               Products                                            Brands

HPC                Home Appliances: Small kitchen appliances                

Home Appliances: Black & Decker®,

                   including toaster ovens, coffeemakers, slow              

Russell Hobbs®, George Foreman®,

                   cookers, blenders, hand mixers, grills, food             

PowerXL®, Emeril Legasse®, Copper Chef

                   processors, juicers, toasters, irons, kettles,           

®, Toastmaster®, Juiceman®,

                   bread makers, cookware, and cookbooks.                   

Farberware®, and Breadman®

                   Personal Care: Hair dryers, flat irons and               

Personal Care: Remington®, and

                   straighteners, rotary and foil electric shavers,         LumaBella®
                   personal groomers, mustache and beard trimmers,
                   body groomers, nose and ear trimmers, women's
                   shavers, and haircut kits.
GPC                Companion Animal: Rawhide chews, dog and cat            

Companion Animal: 8IN1® (8-in-1),

                   clean-up, training, health and grooming products,        

Dingo®, Nature's Miracle®, Wild

                   small animal food and care products, rawhide-free        

Harvest™, Littermaid®, Jungle®, Excel®,

                   dog treats, and wet and dry pet food for dogs and        

FURminator®, IAMS® (Europe only),

                   cats.                                                    

Eukanuba® (Europe only), Healthy-Hide®,

DreamBone®, SmartBones®, ProSense®,

Perfect Coat®, eCOTRITION®, Birdola®,

Good Boy®, Meowee!®, Wildbird®, and

Wafcol®

                   Aquatics: Consumer and commercial aquarium kits,         

Aquatics: Tetra®, Marineland®,

                   stand-alone tanks; aquatics equipment such as            

Whisper®, Instant Ocean®, GloFish®,

                   filtration systems, heaters and pumps; and               

OmegaOne® and OmegaSea®

                   aquatics consumables such as fish food, water
                   management and care.
H&G                Household: Household pest control solutions such         

Household: Hot Shot®, Black Flag®,

                   as spider and scorpion killers; ant and roach            

Real-Kill®, Ultra Kill®, The Ant Trap®

                   killers; flying insect killers; insect foggers;          

(TAT), and Rid-A-Bug®.

                   wasp and hornet killers; and bedbug, flea and tick
                   control products.
                   Controls: Outdoor insect and weed control                

Controls: Spectracide®, Garden Safe®,

                   solutions, and animal repellents such as aerosols,       

Liquid Fence®, and EcoLogic®.

                   granules, and ready-to-use sprays or hose-end
                   ready-to-sprays.
                   Repellents: Personal use pesticides and insect           

Repellents: Cutter® and Repel®.

                   repellent products, including aerosols, lotions,
                   pump sprays and wipes, yard sprays and citronella
                   candles.
                   Cleaning: Household surface cleaning, maintenance,       

Cleaning: Rejuvenate®

                   and restoration products, including bottled
                   liquids, mops, wipes and markers.


On September 8, 2021, the Company entered into a definitive Asset and Stock
Purchase Agreement ("ASPA") with ASSA ABLOY AB ("ASSA") to sell its Hardware and
Home Improvement ("HHI") segment for cash proceeds of $4.3 billion, subject to
customary purchase price adjustments (the "HHI Transaction"). HHI consists of
residential locksets and door hardware, including knobs, levers, deadbolts,
handle sets, and electronic and connected locks under the Kwikset®, Weiser®,
Baldwin®, Tell Manufacturing®, and EZSET® brands; kitchen and bath faucets and
accessories under the Pfister® brand; and builders' hardware consisting of
hinges, metal shapes, security hardware, rack and sliding door hardware, and
gate hardware under the National Hardware® and FANAL® brands. The Company's
assets and liabilities associated with the HHI disposal group have been
classified as held for sale, HHI operations have been classified as discontinued
operations, and notes to the condensed consolidated financial statements have
been updated for all periods presented to exclude information pertaining to
discontinued operations and reflect only the continuing operations of the
Company. Refer to Note 2 - Divestitures included in Notes to the Condensed
Consolidated Financial Statements, included elsewhere in this Quarterly Report
for more information on the HHI divestiture.

Pursuant to the ASPA either party may terminate the ASPA if the HHI Transaction
has not occurred on or prior to December 8, 2022 (the "End Date"). On July 14,
2022, the parties entered into an amendment to the ASPA (the "Amendment")
pursuant to which the End Date was extended to June 30, 2023. Except for the
foregoing amendment to the End Date, the ASPA remains in full force and effect
as written, including with respect to a termination fee of $350 million. The
Company continues to engage with antitrust regulators in the regulatory review
of the HHI Transaction and the extension is intended to provide the parties with
additional time (to the extent needed) to satisfy the conditions related to
receipt of governmental clearances. The parties are committed to closing the HHI
Transaction and the Company and ASSA both continue to expect that they will
obtain all the required governmental clearances and will close the HHI
Transaction.

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On February 18, 2022, the Company acquired the home appliances and cookware
products sold under the PowerXL®, Emeril, and Copper Chef® brands from Tristar
Products, Inc. (the "Tristar Business"). The net assets and operations of the
Tristar Business are integrated within the HPC segment. As part of the
acquisition, the PowerXL® and Copper Chef® brands were acquired outright by the
Company while the Emeril brand remains subject to a trademark license agreement
with the license holder (the "Emeril License"). Pursuant to the Emeril License,
the Company will continue to license the Emeril brands within the US, Canada,
Mexico, and the United Kingdom for certain designated product categories of
household appliances within the HPC segment, including small kitchen food
preparation products, indoor and outdoor grills and grill accessories, and
cookbooks. The Emeril License is set to expire effective December 31, 2022 with
options up to three one-year renewal periods following the initial expiration.
Under the terms of the agreement, we agreed to pay the license holder a
percentage of sales, with minimum annual royalty payments of $1.5 million,
increasing to $1.8 million in subsequent renewal periods. See Note 3 -
Acquisitions included in Notes to the Condensed Consolidated Financial
Statements, included elsewhere in this Quarterly Report for further detail.

Substantially all brands and tradenames are directly owned by the Company with
the exception of the Black & Decker® ("B&D") and Emeril Legasse® ("Emeril")
brands used by the HPC segment. The Company has a trademark license agreement
(the "License Agreement") with Stanley Black & Decker ("SBD") pursuant to which
we license the B&D brand in North America, Latin America (excluding Brazil) and
the Caribbean for four core categories of household appliances within the
Company's HPC segment: beverage products, food preparation products, garment
care products and cooking products. The Company renewed the License Agreement
through June 30, 2025, including a sell-off period from April 1, 2025 to June
30, 2025 whereby the Company can continue to sell and distribute but no longer
produce products subject to the License Agreement. Under the terms of the
License Agreement, we agree to pay SBD royalties based on a percentage of sales,
with minimum annual royalty payments of $15.0 million, with the exception of the
minimum annual royalty will no longer be applied effective January 1, 2024
through the expiration of the agreement. The License Agreement also requires us
to comply with maximum annual return rates for products. Subsequent to the
completion of the License Agreement, there are no non-competition provisions or
restrictions provided following its expiration. See Note 5 - Revenue Recognition
included in Notes to the Condensed Consolidated Financial Statements, included
elsewhere in this Quarterly Report for further detail on revenue concentration
from B&D branded products.

SB/RH is a wholly owned subsidiary of SBH. Spectrum Brands, Inc. ("SBI"), a
wholly-owned subsidiary of SB/RH incurred certain debt guaranteed by SB/RH and
domestic subsidiaries of SBI. See Note 10 - Debt for more information pertaining
to debt. The reportable segments of SB/RH are consistent with the segments of
SBH.

Acquisitions, Divestitures and Other Business Development Initiatives


The Company periodically evaluates strategic transactions that may result in the
acquisition of a business or assets that qualify as a business combination, or a
divestiture of a business or assets that may be recognized as either a component
of continuing operations or discontinued operations, depending on the
significance to the consolidated group. Acquisitions may impact the
comparability of the consolidated or segment financial information with the
inclusion of the operating results for the acquired business in periods
subsequent to acquisition date, the inclusion of acquired assets, both tangible
and intangible (including goodwill), and the related amortization, depreciation
or other non-cash purchase accounting adjustments of acquired assets.
Divestitures may impact the comparability of the consolidated or segment
financial information with the recognition of an impairment loss when held for
sale, gain or loss on disposition, or change in classification to discontinued
operations for qualifying transactions. Moreover, the comparability of
consolidated or segment financial information may be impacted by incremental
costs to facilitate and effect such transactions and initiatives to integrate
acquired business or separate divested operations and assets with the
consolidated group. The following strategic transactions 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.

•Tristar Business Acquisition - On February 18, 2022, the Company acquired 100%
of the Tristar Business that includes a portfolio of home appliances and
cookware products sold under the PowerXL®, Emeril, and Copper Chef® brands. The
net assets and operating results of the Tristar Business are included in the
Company's condensed consolidated financial statements and reported within the
HPC reporting segment for the three and nine month period ended July 3, 2022
effective as of the transaction date. See Note 3 - Acquisitions included in
Notes to the Condensed Consolidated Financial Statement, included elsewhere in
this Quarterly Report, for further detail. In addition to the transaction costs
of $13.5 million to effect the close of the transaction, recognized during the
nine month period ended July 3, 2022, 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 after the transaction date. Costs attributable to the
integration of the Tristar Business were initiated with the close of the
transaction and are projecting to continue through the year ending September 30,
2023.

•Rejuvenate Acquisition - On May 28, 2021, the Company acquired 100% of the
membership interests in For Life Products, LLC ("FLP"), a manufacturer of
household cleaning, maintenance, and restoration products sold under the
Rejuvenate® brand. The net assets and operating results of FLP are included in
the Company's condensed consolidated financial statements and reported within
the H&G reporting segment for the three and nine month periods ended July 3,
2022 and July 4, 2021, effective as of the transaction date. See Note 3 -
Acquisitions included in Notes to the Consolidated Financial Statements of our
Annual Report on Form 10-K for the year ended September 30, 2021, for further
detail. In addition to the transaction costs of $5.3 million to effect the close
of the transaction, recognized during the three and nine month period ended
July 4, 2021, the Company incurred incremental costs to combine and integrate
the acquired business with the H&G segment, primarily towards the integration of
systems and processes, transfer of inventory and integration to an existing H&G
distribution center, retention costs for personnel supporting transition and
integration efforts after the transaction date, plus incremental trade spend
realized from the transition of commercial operations practices and policies
(recognized as a reduction in net sales). Costs attributable to the integration
of the Rejuvenate business have been substantially complete.

•Armitage Acquisition - On October 26, 2020, the Company completed the
acquisition of Armitage Pet Care Ltd ("Armitage"), a pet treats and toys
business in Nottingham, United Kingdom including a portfolio of brands that
include the dog treats brand, Good Boy®, cat treats brand, Meowee!®, and
Wildbird® bird feed products, among others, that are predominantly sold within
the United Kingdom. The net assets and results of operations of Armitage are
included in the Company's condensed consolidated financial statements and
reported within the GPC reporting segment for the three and nine month periods
ended July 3, 2022 and July 4, 2021, effective as of the transaction date. See
Note 3 - Acquisitions included in Notes to the Consolidated Financial Statements
of our Annual Report on Form 10-K for the year ended September 30, 2021, for
further detail. In addition to the transaction costs of $5.1 million to effect
the close of the transaction recognized during the nine month period ended
July 4, 2021, the Company incurred incremental costs to combine and integrate
the acquired business with the GPC segment, primarily towards the integration of
systems and processes, transfer of inventory and integration to existing GPC
supply chain and distribution centers within the EMEA region, plus retention
costs for personnel supporting the transition and integration efforts after the
transaction date. Costs attributable to the integration of the Armitage business
have been substantially complete.

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•Omega Acquisition - On March 10, 2020, the Company acquired Omega Sea, LLC
("Omega"), a manufacturer and marketer of premium fish foods and consumable
goods for the home and commercial aquarium markets, primarily consisting of the
Omega brand. The net assets and results of operations of Omega are included in
the Company's condensed consolidated financial statements and reported within
GPC segment for the three and nine month periods ended July 3, 2022 and July 4,
2021. The Company incurred incremental costs to combine and integrate the
acquired business within the GPC segment, primarily towards the integration of
systems and process, transfer of inventory and production to an existing GPC
facility, including related exit and disposal costs of the assumed leased
facility, related start-up costs and operational inefficiencies attributable to
the transferred production, plus retention costs for personnel supporting the
transition and integration after the transaction date. Costs attributable to the
integration of the Omega business will be substantially realized by end of the
fiscal year ending September 30, 2022.

•HHI Divestiture - On September 8, 2021, the Company entered into a ASPA with
ASSA to sell its HHI segment. The consummation of the transaction is pending and
subject to customary conditions, including the absence of a material adverse
effect of HHI and certain antitrust conditions or other governmental
restrictions, amongst others. The Company's assets and liabilities associated
with HHI have been classified as held for sale and the HHI operations have been
classified as discontinued operations and are reported separately for all
periods presented. See Note 2 - Divestitures included in Notes to the Condensed
Consolidated Financial Statements, included elsewhere in this Quarterly Report
for further detail. The Company has incurred incremental costs attributable to
the pending divestiture, primarily consisting of legal and professional fees to
effect the realization of the ASPA, facilitate antitrust or other governmental
restrictions to consummate the transaction, preparation for separation of
systems and processes supporting the divested business and enabling functions
under a TSA, plus incremental retention costs for personnel supporting the
transition efforts. Incremental costs are expected to be incurred through the
consummation of the pending transaction to support TSA processes and mitigation
following the close of the sale, which are expected to be incurred for the
transition period of approximately 12-24 months following the close of the
transaction.

•HPC Separation - The Company has initiated projects to facilitate a strategic
separation of the Company's ownership in the 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 for a separation, 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. The realization of the transaction, if
any, is likely not to occur until after completion of the HHI divestiture. Costs
attributable to the initiative are expected to be incurred until a transaction
is realized or otherwise cancelled.

•Coevorden Operations - On March 29, 2020, the Company completed the sale of its
dog and cat food ("DCF") production facility and distribution center in
Coevorden, Netherlands with United Petfood Producers NV ("UPP"). See Note 2 -
Divestitures included in Notes to the Consolidated Financial Statements of our
Annual Report on Form 10-K for the year ended September 30, 2021, for further
detail. Following the separation of the Coevorden Operations, the Company has
incurred incremental costs attributable to a tolling charge for the continued
production of dog and cat food products through a three-year manufacturing
agreement with the buyer entered into concurrent with the sale, rent charges
associated with the transferred warehouse operated by the Company during an
18-month transition period following the sale, plus costs to facilitate the
transfer of the warehouse operations to the buyer and the movement of inventory
and distribution center operations to a new distribution center supporting GPC
operations in EMEA. Costs attributable to the tolling arrangement are expected
to be completed in March 2023.

The following is a summary of costs attributable to strategic transactions and
business development costs for the respective projects during three and nine
month periods ended July 3, 2022 and July 4, 2021. In addition to the
initiatives discussed above, the Company regularly engages in other business
development initiatives that may incur incremental costs which may not result in
a realized transaction or are less significant, and therefore have been
separately disclosed and recognized as other project costs.

                                                    Three Month Periods Ended                    Nine Month Periods Ended
(in millions)                                  July 3, 2022           July 

4, 2021 July 3, 2022 July 4, 2021 Tristar acquisition and integration $ 5.6 $

          -          $       20.0          $          -
Rejuvenate acquisition and integration                    -                   5.8                   7.0                   5.8
Armitage acquisition and integration                    0.1                   1.0                   1.4                   7.7
Omega integration                                       0.1                     -                   1.5                     -
HHI divestiture                                         0.6                     -                   6.1                     -
HPC separation initiatives                             10.7                  (0.5)                 15.4                  14.2
Coevorden operations separation                         1.9                   2.9                   7.3                   7.7
Other project costs                                     0.2                   1.9                   0.7                   6.0
Total                                        $         19.2          $       11.1          $       59.4          $       41.4
Reported as:
Net sales                                    $            -          $          -          $        0.7          $          -
Cost of goods sold                                      1.5                   1.6                   5.0                   4.7
General & administrative expense                       13.4                   9.5                  49.4                  36.7
Other non-operating expense, net                        4.3                     -                   4.3                     -


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Restructuring and Optimization Initiatives

We continually seek and develop operating strategies to improve our operational
efficiency, match our capacity and product costs to market demand and better
utilize our manufacturing and distribution resources in order to reduce costs,
increase revenues, increase or maintain our current profit margins. We have
undertaken various initiatives to reduce manufacturing and operating costs,
which may have a significant impact on the comparability of financial results on
the 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 such as COVID-19, or inflation increased interest rates,
many of which are beyond or control. The following initiatives 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.

•Fiscal 2022 Restructuring - The Company entered into a new initiative in response to changes observed within consumer products and retail markets, continued inflationary cost pressures and headwinds, resulting in the realization of a headcount reduction. Substantially all costs associated with the initiative have been recognized. See Note 4 - Restructuring Charges for further detail on related exit or disposal costs attributable to this initiative.


•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
capital expenditures or deferred costs in accordance with applicable accounting
policies, with certain costs recognized as operating expense associated with
project development and project management costs, and professional services with
business partners engaged towards planning, design and business process review
that would not qualify as software configuration and implementation costs. The
Company has substantially completed the design phase of the project and is
currently moving into the building and design phase.

•GPC Distribution Transition - During the year ended September 30, 2021, the GPC
segment entered into an initiative to update its supply chain and distribution
operations within the U.S. to address capacity needs, optimize and improve fill
rates attributable to recent growth in the business and consumer demand, and
improve overall operational effectiveness and throughput. The initiative
includes the transition of its third party logistics (3PL) service provider at
its existing distribution center, incorporating new facilities into the
distribution footprint by expanding warehouse capacity and securing additional
space to support long-term distribution and fulfillment, plus updating
engagement and processes with suppliers and its transportation and logistics
handlers. Incremental costs include one-time transition, implementation and
start-up cost with the new 3PL service provider, including the integration of
provider systems and technology, incentive-based compensation to maintain
performance during transition, duplicative and redundant costs, and incremental
costs for various disruptions in the operations during the transition period
including supplemental transportation and storage costs, incremental detention
and demurrage costs. See Note 4 - Restructuring Charges for further detail on
costs attributable to the program. The project has been substantially completed
with no significant anticipated future costs. Additionally, the Company
experienced an increase in customer fines and penalties during the transition
period (recognized as a reduction in net sales). Costs attributable to the
initiative are expected to be incurred through the end of the fiscal year ending
September 30, 2022.

•Global Productivity Improvement Program - During the year ended September 30,
2019, the Company initiated a company-wide, multi-year program, consisting of
various restructuring related initiatives to redirect resources and spending to
drive growth, identify cost savings and pricing opportunities through
standardization and optimization, develop organizational and operating
optimization, and reduce overall operational complexity across the Company. With
the Company's divestitures of GBL and GAC during the year ended September 30,
2019, the project focus includes the transition of the Company's continuing
operations in a post-divestiture environment and exiting of TSAs, which were
fully exited in January 2022. The initiative includes review of global processes
and organization design and structures, headcount reductions and transfers, and
rightsizing the Company's shared operations and commercial business strategy and
exit of certain internal production to third-party suppliers, among others,
resulting in the recognition of severance benefits and other exit and disposal
costs to facilitate such activity. See Note 4 - Restructuring Charges for
further detail on costs attributable to the program. The project has been
substantially completed with no significant anticipated future costs.

•HPC Brand Portfolio Transitions - In light of the acquisition of the Tristar
Business and the PowerXL® brand, the Company has initiated a project within its
HPC segment to assess and evaluate the current utilization of tradenames and
brands across its portfolio of home and kitchen appliance products. The project
will require incremental costs to facilitate potential transitions of branded
product offerings on global basis, including potential investment with our
supply base and retail partners to manage inventory and transition new branded
products to market.

•Russia Closing Initiative - The Company initiated an assessment of its
in-country commercial operations in Russia, predominantly supporting the HPC
segment, and other commercial activity directly impacted by the Russia-Ukraine
conflict. The Company has recognized impairment costs on inventory and
receivables that are at risk of recoverability as the Company has discontinued
importing products directly into Russia. The initiative may be subject to
further exit and disposal costs based upon future actions taken.

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The following is a summary of impact to operating results attributable to
restructuring initiatives and other optimization projects, incurred for the
respective projects during three and nine month periods ended July 3, 2022 and
July 4, 2021. In addition to the projects and initiatives discussed above, the
Company regularly incurs cost and engages in less significant restructuring and
optimization initiatives that individually are not substantial and occur over a
shorter time period (generally less than 12 months).

                                                    Three Month Periods Ended                    Nine Month Periods Ended
(in millions)                                  July 3, 2022           July 

4, 2021 July 3, 2022 July 4, 2021 Fiscal 2022 restructuring

                    $          8.1          $          -          $        8.1          $          -
Global ERP transformation                               3.4                   0.9                   9.4                   1.6
GPC distribution center transition                      8.4                   7.7                  28.3                   7.7
Global productivity improvement
program                                                 1.2                   4.8                   5.2                  15.7
HPC brand portfolio transitions                         0.3                     -                   0.3                     -
Russia closing initiative                                 -                     -                   3.6                     -
Other project costs                                     4.0                   0.5                  10.0                   2.1
Total                                        $         25.4          $       13.9          $       64.9          $       27.1
Reported as:
Net sales                                    $          0.3          $        3.7          $        4.2          $        3.7
Cost of goods sold                                      1.0                   0.7                   1.9                   2.1
Selling expense                                         8.1                   3.5                  24.1                   3.5
General & administrative expense                       16.0                   6.0                  34.7                  17.8


Refinancing Activity

Financing activity during and between comparable periods may have a significant
impact on the comparability of financial results on the condensed consolidated
financial statements.

•On February 3, 2022, the Company entered into the third amendment to the Credit
Agreement that provides for incremental capacity on the Revolver Facility of
$500 million that was used to support the acquisition of the Tristar Business
and the continuing operations and working capital requirements of the Company.
Borrowings under the incremental capacity are subject to a borrowing rate which
is subject to SOFR plus margin ranging from 1.75% to 2.75%, per annum or base
rate plus margin ranging from 0.75% to 1.75% per annum, with an increase by 25
basis points 270 days after the effective date of the third amendment and an
additional 25 basis points on each 90 day anniversary of such date.

•During the year ended September 30, 2021, the Company completed its offering of
$500.0 million aggregate principal amount of its 3.875% Notes and entered into a
new Term Loan Facility in the aggregate principal amount of $400.0 million on
March 3, 2021. The Company also redeemed $250.0 million of the 6.125% Notes and
$550.0 million of the 5.75% Notes, with a call premium of $23.4 million and
non-cash write-off of unamortized debt issuance costs of $7.9 million recognized
as interest expense.

Russia-Ukraine Conflict

The impacts of the Russia-Ukraine conflict and the sanctions imposed by other
nations in response to the conflict are evolving and may have an impact on the
Company's consolidated operations and cash flow attributable to operations and
distribution within the region. The Company does not maintain a significant
level of operations within Ukraine and continues to evaluate its strategy with
Russia and the existing operations within the territory. The Company does not
maintain material assets within Russia, and the Company's assets in Russia
consist mostly of working capital associated with the in-country distribution
operations. In response to matters within the territory, we have adjusted our
risks associated with the collectability and realizable value for working
capital within the region. Depending on the strategic direction we take towards
our existing operations in Russia, there may be incremental costs or potential
impairments to remediate.

COVID-19

The COVID-19 pandemic and the resulting regulations have caused economic and
social disruptions that contribute to ongoing uncertainties and may have an
impact on the operations, cash flow and net assets of the Company. Such impacts
may include, but are not limited to, volatility of demand for our products;
disruptions and cost implications in manufacturing and supply arrangements;
inability of third parties to meet obligations under existing arrangements; and
significant changes to the political and economic environments in which we
manufacture, sell, and distribute our products. The Company expects a
significant continuing inflationary environment, marked with higher
manufacturing, employment, and logistics costs as well as continued constraints
with transportation and supply chain disruptions. Additionally, there have also
been changes in consumer needs and spending during the COVID-19 pandemic, and
while we experienced an increase in demand for our products resulting from
changes driven by the pandemic, our teams continue to monitor demand shifts and
there can be no assurance as to the level of demand that will prevail throughout
the fiscal year. We believe the severity and duration of the COVID-19 pandemic
to be uncertain and may contribute to retail volatility and consumer purchase
behavior changes.

The COVID-19 pandemic has not had a materially negative impact on the Company's
liquidity position and we have not observed any material impairments. We
continue to actively monitor our global cash and liquidity, and if necessary,
could reinitiate mitigating efforts to manage non-critical spending and assess
operating spend to preserve cash and liquidity. We continue to generate
operating cash flows to meet our short-term liquidity needs, and we expect to
maintain access to the capital markets, although there can be no assurance of
our ability to do so. We expect the ultimate significance of the impact on our
financial condition, results of operations, and cash flows will be dictated by
the length of time that such circumstances continue, which will ultimately
depend on the unforeseeable duration and severity of the COVID-19 pandemic, the
emergence of variants and the effectiveness of vaccines against these variants,
and any governmental and public actions taken in response.

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Inflation and Supply Chain Constraints

While certain aspects of our financial results have been favorably impacted by
increased demand attributable to the COVID-19 pandemic, in addition to favorable
consumer conditions including incremental financial assistance provided by
various government agencies, our business continues to experience challenges
towards product availability to meet customer demand. We have experienced
increased labor shortages in the wake of the COVID-19 pandemic resulting in
transportation and supply chain disruptions. Together with labor shortages and
higher demand for talent, the current economic environment is driving higher
wages. Our ability to meet labor needs, control wage and labor-related costs and
minimize labor disruptions will be key to our success of operating our business
and executing our business strategies. Furthermore, our business is experiencing
an inflationary environment, which has negatively impacted our gross margin
rates. We are unable to predict how long the current inflationary environment,
including increased energy costs, will continue. Additionally, we have
experienced further supply chain disruptions from unanticipated shutdowns in our
supply base and limitations within transportation and logistics impacting
availability and increasing freight costs within the overall global supply
chain. We expect the economic environment to remain uncertain as we navigate the
current geopolitical environment, the COVID-19 pandemic, labor challenges,
supply chain constraints and the current inflationary environment, including
increasing energy and commodity prices.


Non-GAAP Measurements


Our consolidated and segment results contain non-GAAP metrics such as organic
net sales, and adjusted EBITDA ("Earnings Before Interest, Taxes, Depreciation,
Amortization") and adjusted EBITDA margin. While we believe organic net sales
and adjusted EBITDA are useful supplemental information, such adjusted results
are not intended to replace our financial results in accordance with Accounting
Principles Generally Accepted in the United States ("GAAP") and should be read
in conjunction with those GAAP results.

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 period's 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.

The following is a reconciliation of reported net sales to organic net sales for
the three and nine month periods ended July 3, 2022 compared to net sales for
the three and nine month periods ended July 4, 2021:

                                                                           July 3, 2022

Three Month Periods                                                        Net Sales
Ended                                               Effect of           Excluding Effect
(in millions, except                               Changes in            of Changes in              Effect of               Organic             Net Sales
%)                             Net Sales            Currency                Currency               Acquisitions            Net Sales           July 4, 2021                  Variance
HPC                          $    329.3          $       17.8          $         347.1          $         (65.8)         $    281.3          $       274.4          $    6.9             2.5  %
GPC                               290.2                  11.7                    301.9                        -               301.9                  257.3              44.6            17.3  %
H&G                               198.5                     -                    198.5                     (5.5)              193.0                  212.1             (19.1)           (9.0) %
Total                        $    818.0          $       29.5          $         847.5          $         (71.3)         $    776.2          $       743.8              32.4             4.4  %


                                                                                    July 3, 2022
                                                                                     Net Sales
                                                              Effect of          Excluding Effect
Nine Month Periods Ended                                     Changes in            of Changes in             Effect of             Organic             Net Sales
(in millions, except %)                  Net Sales            Currency               Currency              Acquisitions           Net Sales           July 4, 2021                  Variance
HPC                                     $ 1,025.2          $       34.2          $      1,059.4          $       (101.6)         $   957.8          $  
    950.8          $    7.0             0.7  %
GPC                                         887.5                  19.5                   907.0                    (8.8)             898.2                  826.3              71.9             8.7  %
H&G                                         470.3                     -                   470.3                   (26.6)             443.7                  463.2             (19.5)           (4.2) %
Total                                   $ 2,383.0          $       53.7    
     $      2,436.7          $       (137.0)         $ 2,299.7          $     2,240.3              59.4             2.7  %


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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:

•Stock based compensation costs consist of costs associated with long-term
incentive compensation arrangements that generally consist of non-cash,
stock-based compensation. During the nine month period ended July 4, 2021,
compensation costs included incentive bridge awards previously issued due to
changes in the Company's LTIP that allowed for cash based payment upon employee
election but do not qualify for shared-based compensation, which were fully
vested in November 2020. See Note 14 - Share Based Compensation in the Notes to
the Condensed Consolidated Financial Statements, included elsewhere in this
Quarterly Report, for further details;

•Incremental amounts attributable to strategic transactions and business
development 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. These
amounts are excluded from our performance metrics as they are reflective of
incremental investment by the Company towards business development activities,
incremental costs attributable to such transactions and are not considered
recurring or reflective of the continuing ongoing operations of the consolidated
group or segments;

•Incremental amounts realized towards restructuring and optimization projects
including, but not limited to, costs towards the development and implementation
of strategies to optimize operations and improve efficiency, reduce costs,
increase revenues, increase or maintain our current profit margins, including
recognition of one-time exit or disposal costs. These amounts are excluded from
our ongoing performance metrics as they are reflective of incremental investment
by the Company towards significant initiatives controlled by management,
incremental costs directly attributable to such initiatives, indirect impact or
disruption to operating performance during implementation, and are not
considered recurring or reflective of the continuing ongoing operations of the
consolidated group or segments;

•Unallocated shared costs associated with discontinued operations from certain
shared and center-led administrative functions the Company's business units
excluded from income from discontinued operations as they are not a direct cost
of the discontinued business but a result of indirect allocations, including but
not limited to, information technology, human resources, finance and accounting,
supply chain, and commercial operations. Amounts attributable to unallocated
shared costs would be mitigated through subsequent strategic or restructuring
initiatives, TSAs, elimination of extraneous costs, or re-allocations or
absorption of existing continuing operations following the completed sale of the
discontinued operations. See Note 2 - Divestitures in Notes to the Condensed
Consolidated Financial Statements, included elsewhere in this Quarterly Report
for further details;

•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;

•Non-cash gain from the reduction in the contingent consideration liability
recognized during the three and nine month periods ended July 3, 2022 associated
with the Tristar Business acquisition. See Note 3 - Acquisitions in the Notes to
the Condensed Consolidated Financial Statements, included elsewhere in this
Quarterly Report, for further details;

•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations;


•Gains attributable to the Company's investment in Energizer common stock during
the nine month period ended July 4, 2021. with such remaining shares sold in
January 2021. See Note 12 - Fair Value of Financial Instruments in the Notes to
the Condensed Consolidated Financial Statements, included elsewhere in this
Quarterly Report, for further details;

•Incremental reserves for non-recurring litigation or environmental remediation
activity including the proposed settlement on outstanding litigation matters at
our H&G division attributable to significant and unusual nonrecurring claims
with no previous history or precedent recognized during the nine month period
ended July 4, 2021 and the subsequent remeasurement during the nine month period
ended July 3, 2022;

•Proforma adjustment for operating losses of the Company's in-country Russia
operations that were directly attributable to the Company's closing initiatives
in Russia and constraints applied to the in-country commercial operations
resulting in a substantial decrease to in-country sales and incremental
operating losses being realized;

•Realized gain from early settlement on certain cash flow hedges in our EMEA
region prior to their stated maturity during the three and nine month periods
ended July 3, 2022 due to change in the Company's legal entity organizational
structure and forecasted purchasing strategy of HPC finished goods inventory
within the region. See Note 11- Derivatives in Notes to the Condensed
Consolidated Financial Statement, included elsewhere in this Quarterly Report
for further details;

•Other adjustments are primarily attributable to: (1) costs associated with Salus as they are not considered a component of the continuing commercial products company and (2) other key executive severance related costs.

Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of reported net sales for the respective period and segment.

                                       41

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The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended July 3, 2022 and July 4, 2021 for SBH.


SPECTRUM BRANDS HOLDINGS, INC.
(in millions)                                   HPC               GPC               H&G             Corporate          Consolidated
Three Month Period Ended July 3, 2022
Net income (loss) from continuing
operations                                  $   12.6          $   18.8          $   36.3          $    (64.7)         $       3.0
Income tax expense                                 -                 -                 -                 2.0                  2.0
Interest expense                                   -                 -                 -                26.0                 26.0
Depreciation                                     2.9               4.0               1.8                 3.6                 12.3
Amortization                                     4.7               5.6               2.8                   -                 13.1
EBITDA                                          20.2              28.4              40.9               (33.1)                56.4
Share based compensation                           -                 -                 -                (0.7)                (0.7)
Tristar acquisition and integration              5.6                 -                 -                   -                  5.6

Armitage integration                               -               0.1                 -                   -                  0.1
Omega integration                                  -               0.1                 -                   -                  0.1
HHI divestiture                                    -                 -                 -                 0.6                  0.6
HPC separation initiatives                         -                 -                 -                10.7                 10.7
Coevorden operations separation                    -               1.9                 -                   -                  1.9
Fiscal 2022 restructuring                        3.7               3.1               0.6                 0.7                  8.1
Global ERP transformation                          -                 -                 -                 3.4                  3.4
GPC distribution center transition                 -               8.4                 -                   -                  8.4
Global productivity improvement
program                                          0.5               0.2                 -                 0.5                  1.2
HPC brand portfolio transitions                  0.3                 -                 -                   -                  0.3
Russia closing initiatives                       1.4              (1.4)                -                   -                    -
Other project costs                              0.4               0.1                 -                 3.6                  4.1
Unallocated shared costs                           -                 -                 -                 7.0                  7.0
Non-cash purchase accounting
adjustments                                      4.3                 -                 -                   -                  4.3
Gain from contingent consideration
liability                                      (25.0)                -                 -                   -                (25.0)

Proforma in-country Russia operations            0.4                 -                 -                   -                  0.4
Gain on early settlement of cash flow
hedges                                          (8.2)                -                 -                   -                 (8.2)
Salus and other                                    -                 -               1.3                 0.1                  1.4
Adjusted EBITDA                             $    3.6          $   40.9          $   42.8          $     (7.2)         $      80.1
Net Sales                                   $  329.3          $  290.2          $  198.5          $        -          $     818.0
Adjusted EBITDA Margin                           1.1  %           14.1  %           21.6  %       $        -                  9.8  %
Three Month Period Ended July 4, 2021
Net (loss) income from continuing
operations                                  $   (2.7)         $   27.2          $   41.7          $    (68.1)         $      (1.9)
Income tax expense                                 -                 -                 -                10.0                 10.0
Interest expense                                   -                 -                 -                20.4                 20.4
Depreciation                                     3.4               4.1               1.7                 3.6                 12.8
Amortization                                     8.3               6.3               2.8                   -                 17.4
EBITDA                                           9.0              37.6              46.2               (34.1)                58.7
Share based compensation                           -                 -                 -                 7.7                  7.7
Rejuvenate acquisition and
integration                                        -                 -               5.8                   -                  5.8
Armitage integration                               -               1.0                 -                   -                  1.0

HPC separation initiatives                         -                 -                 -                (0.5)                (0.5)

Coevorden operations separation                    -               2.9                 -                   -                  2.9
Global ERP transformation                          -                 -                 -                 0.9                  0.9
GPC distribution center transition                 -               7.7                 -                   -                  7.7
Global productivity improvement
program                                          2.1                 -                 -                 2.7                  4.8
Other project costs                              0.7                 -               0.1                 1.6                  2.4
Unallocated shared costs                           -                 -                 -                 6.7                  6.7

Non-cash purchase accounting
adjustments                                        -                 -               1.3                   -                  1.3

Adjusted EBITDA                             $   11.8          $   49.2          $   53.4          $    (15.0)         $      99.4
Net Sales                                   $  274.4          $  257.3          $  212.1          $        -          $     743.8
Adjusted EBITDA margin                           4.3  %           19.1  %           25.2  %                -                 13.4  %


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The following is a reconciliation of net income to Adjusted EBITDA for the nine month periods ended July 3, 2022 and July 4, 2021 for SBH.


SPECTRUM BRANDS HOLDINGS, INC.
(in millions)                                         HPC                GPC               H&G            Corporate          Consolidated
Nine Month Period Ended July 3, 2022
Net income (loss) from continuing
operations                                        $    12.7          $   49.1          $   50.7          $  (164.8)         $      (52.3)
Income tax benefit                                        -                 -                 -              (20.8)                (20.8)
Interest expense                                          -                 -                 -               72.4                  72.4
Depreciation                                            9.2              11.1               5.4               10.9                  36.6
Amortization                                           14.2              17.1               8.6                  -                  39.9
EBITDA                                                 36.1              77.3              64.7             (102.3)                 75.8
Share based compensation                                  -                 -                 -               11.4                  11.4
Tristar acquisition and integration                    20.0                 -                 -                  -                  20.0
Rejuvenate integration                                    -                 -               7.0                  -                   7.0
Armitage integration                                      -               1.4                 -                  -                   1.4
Omega integration                                         -               1.5                 -                  -                   1.5
HHI divestiture                                           -                 -                 -                6.1                   6.1
HPC separation initiatives                                -                 -                 -               15.4                  15.4
Coevorden operations separation                           -               7.3                 -                  -                   7.3
Fiscal 2022 restructuring                               3.7               3.1               0.6                0.7                   8.1
Global ERP transformation                                 -                 -                 -                9.4                   9.4
GPC distribution center transition                        -              28.3                 -                  -                  28.3
Global productivity improvement
program                                                 2.5               0.9                 -                1.8                   5.2
HPC brand portfolio transitions                         0.3                 -                 -                  -                   0.3
Russia in-country closing initiatives                   3.4               0.2                 -                  -                   3.6
Other project costs                                     0.6               0.2                 -                9.9                  10.7
Unallocated shared costs                                  -                 -                 -               20.7                  20.7
Non-cash purchase accounting
adjustments                                             7.8                 -                 -                  -                   7.8
Gain from contingent consideration
liability                                             (25.0)                -                 -                  -                 (25.0)
Legal and environmental                                   -                 -              (0.5)                 -                  (0.5)
Proforma in-country Russia operations                   0.4                 -                 -                  -                   0.4
Gain on early settlement of cash flow
hedges                                                 (8.2)                -                 -                  -                  (8.2)
Salus and other                                           -                 -               1.3                0.4                   1.7
Adjusted EBITDA                                   $    41.6          $  120.2          $   73.1          $   (26.5)         $      208.4
Net sales                                         $ 1,025.2          $  887.5          $  470.3          $       -          $    2,383.0
Adjusted EBITDA margin                                  4.1  %           13.5  %           15.5  %               -                   8.7  %
Nine Month Period Ended July 4, 2021
Net income (loss) from continuing
operations                                        $    46.4          $   99.9          $   71.1          $  (208.2)         $        9.2
Income tax expense                                        -                 -                 -                5.3                   5.3
Interest expense                                          -                 -                 -               96.4                  96.4
Depreciation                                           10.5              11.6               6.2               10.9                  39.2
Amortization                                           21.8              18.2               8.2                  -                  48.2
EBITDA                                                 78.7             129.7              85.5              (95.6)                198.3
Share and incentive based
compensation                                              -                 -                 -               21.9                  21.9

Rejuvenate acquisition and
integration                                               -                 -               5.8                  -                   5.8
Armitage acquisition and integration                      -               7.7                 -                  -                   7.7

HPC separation initiatives                                -                 -                 -               14.2                  14.2

Coevorden operations separation                           -               7.7                 -                  -                   7.7
Global ERP transformation                                 -                 -                 -                1.6                   1.6
GPC distribution center transition                        -               7.7                 -                  -                   7.7
Global productivity improvement
program                                                 5.2               1.8                 -                8.7                  15.7
Other project costs                                     4.2               0.5                 -                3.4                   8.1
Unallocated shared costs                                  -                 -                 -               20.2                  20.2
Non-cash purchase accounting
adjustments                                               -               3.4               1.3                  -                   4.7
Gain on Energizer investment                              -                 -                 -               (6.9)                 (6.9)
Legal and environmental                                   -                 -               6.0                  -                   6.0
Salus and other                                           -                 -                 -                0.1                   0.1
Adjusted EBITDA                                   $    88.1          $  158.5          $   98.6          $   (32.4)         $      312.8
Net sales                                         $   950.8          $  826.3          $  463.2          $       -          $    2,240.3
Adjusted EBITDA margin                                  9.3  %           19.2  %           21.3  %               -                  14.0  %


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The following is a reconciliation of net income to Adjusted EBITDA for the three month periods ended July 3, 2022 and July 4, 2021 for SB/RH.


SB/RH HOLDINGS, LLC
(in millions)                                   HPC               GPC               H&G             Corporate          Consolidated
Three Month Period Ended July 3, 2022
Net income (loss) from continuing
operations                                  $   12.6          $   18.8          $   36.3          $    (64.0)         $       3.7
Income tax expense                                 -                 -                 -                 2.0                  2.0
Interest expense                                   -                 -                 -                26.1                 26.1
Depreciation                                     2.9               4.0               1.8                 3.6                 12.3
Amortization                                     4.7               5.6               2.8                   -                 13.1
EBITDA                                          20.2              28.4              40.9               (32.3)                57.2
Share and incentive based
compensation                                       -                 -                 -                (1.1)                (1.1)
Tristar acquisition and integration              5.6                 -                 -                   -                  5.6

Armitage integration                               -               0.1                 -                   -                  0.1
Omega integration                                  -               0.1                 -                   -                  0.1
HHI divestiture                                    -                 -                 -                 0.6                  0.6
HPC separation initiatives                         -                 -                 -                10.7                 10.7
Coevorden operations separation                    -               1.9                 -                   -                  1.9
Fiscal 2022 restructuring                        3.7               3.1               0.6                 0.7                  8.1
Global ERP transformation                          -                 -                 -                 3.4                  3.4
GPC distribution center transition                 -               8.4                 -                   -                  8.4
Global productivity improvement
program                                          0.5               0.2                 -                 0.5                  1.2
HPC brand portfolio transitions                  0.3                 -                 -                   -                  0.3
Russia closing initiatives                       1.4              (1.4)                -                   -                    -
Other project costs                              0.4               0.1                 -                 3.6                  4.1
Unallocated shared costs                           -                 -                 -                 7.0                  7.0
Non-cash purchase accounting
adjustments                                      4.3                 -                 -                   -                  4.3
Gain from contingent consideration
liability                                      (25.0)                -                 -                   -                (25.0)

Proforma in-country Russia operations            0.4                 -                 -                   -                  0.4
Gain on early settlement of cash flow
hedges                                          (8.2)                -                 -                   -                 (8.2)
Other                                              -                 -               1.3                 0.2                  1.5
Adjusted EBITDA                             $    3.6          $   40.9          $   42.8          $     (6.7)         $      80.6
Net Sales                                   $  329.3          $  290.2          $  198.5          $        -          $     818.0
Adjusted EBITDA margin                           1.1  %           14.1  %           21.6  %                -                  9.9  %

Three Month Period Ended July 4, 2021


Net (loss) income from continuing
operations                                  $   (2.7)         $   27.2          $   41.7          $    (67.2)         $      (1.0)
Income tax expense                                 -                 -                 -                10.6                 10.6
Interest expense                                   -                 -                 -                20.5                 20.5
Depreciation                                     3.4               4.1               1.7                 3.6                 12.8
Amortization                                     8.3               6.3               2.8                   -                 17.4
EBITDA                                           9.0              37.6              46.2               (32.5)                60.3
Share and incentive based
compensation                                       -                 -                 -                 7.1                  7.1

Rejuvenate acquisition and
integration                                        -                 -               5.8                   -                  5.8
Armitage integration                               -               1.0                 -                   -                  1.0

HPC separation initiatives                         -                 -                 -                (0.5)                (0.5)

Coevorden operations separation                    -               2.9                 -                   -                  2.9
Global ERP transformation                          -                 -                 -                 0.9                  0.9
GPC distribution center transition                 -               7.7                 -                   -                  7.7
Global productivity improvement
program                                          2.1                 -                 -                 2.7                  4.8
Other project costs                              0.7                 -               0.1                 1.6                  2.4
Unallocated shared costs                           -                 -                 -                 6.7                  6.7

Non-cash purchase accounting
adjustments                                        -                 -               1.3                   -                  1.3

Adjusted EBITDA                             $   11.8          $   49.2          $   53.4          $    (14.0)         $     100.4
Net Sales                                   $  274.4          $  257.3          $  212.1          $        -          $     743.8
Adjusted EBITDA margin                           4.3  %           19.1  %           25.2  %                -                 13.5  %


                                       44
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The following is a reconciliation of net income to Adjusted EBITDA for the nine
month periods ended July 3, 2022 and July 4, 2021 for SB/RH.
SB/RH HOLDINGS, LLC
(in millions)                                   HPC                GPC               H&G            Corporate         Consolidated
Nine Month Period Ended July 3, 2022
Net income (loss) from continuing
operations                                  $    12.7          $   49.1          $   50.7          $ (163.5)         $      (51.0)
Income tax benefit                                  -                 -                 -             (20.4)                (20.4)
Interest expense                                    -                 -                 -              72.7                  72.7
Depreciation                                      9.2              11.1               5.4              10.9                  36.6
Amortization                                     14.2              17.1               8.6                 -                  39.9
EBITDA                                           36.1              77.3              64.7            (100.3)                 77.8
Share based compensation                            -                 -                 -              10.7                  10.7
Tristar acquisition and integration              20.0                 -                 -                 -                  20.0
Rejuvenate integration                              -                 -               7.0                 -                   7.0
Armitage integration                                -               1.4                 -                 -                   1.4
Omega integration                                   -               1.5                 -                 -                   1.5
HHI divestiture                                     -                 -                 -               6.1                   6.1
HPC separation initiatives                          -                 -                 -              15.4                  15.4
Coevorden operations separation                     -               7.3                 -                 -                   7.3
Fiscal 2022 restructuring                         3.7               3.1               0.6               0.7                   8.1
Global ERP transformation                           -                 -                 -               9.4                   9.4
GPC distribution center transition                  -              28.3                 -                 -                  28.3
Global productivity improvement
program                                           2.5               0.9                 -               1.8                   5.2
HPC brand portfolio transitions                   0.3                 -                 -                 -                   0.3
Russia dissolution                                3.4               0.2                 -                 -                   3.6
Other project costs                               0.6               0.2                 -               9.9                  10.7
Unallocated shared costs                            -                 -                 -              20.7                  20.7
Non-cash purchase accounting
adjustments                                       7.8                 -                 -                 -                   7.8
Gain from contingent consideration
liability                                       (25.0)                -                 -                 -                 (25.0)
Legal and environmental                             -                 -              (0.5)                -                  (0.5)
Proforma in-country Russia operations             0.4                 -                 -                 -                   0.4
Gain on early settlement of cash flow
hedges                                           (8.2)                -                 -                 -                  (8.2)
Other                                               -                 -               1.3               0.1                   1.4
Adjusted EBITDA                             $    41.6          $  120.2          $   73.1          $  (25.5)         $      209.4
Net sales                                   $ 1,025.2          $  887.5    

$ 470.3 $ - $ 2,383.0 Adjusted EBITDA margin

                            4.1  %           13.5  %           15.5  %              -                   8.8  %
Nine Month Period Ended July 4, 2021
Net income (loss) from continuing
operations                                  $    46.4          $   99.9          $   71.1          $ (206.4)         $       11.0
Income tax expense                                  -                 -                 -               6.1                   6.1
Interest expense                                    -                 -                 -              96.6                  96.6
Depreciation                                     10.5              11.6               6.2              10.9                  39.2
Amortization                                     21.8              18.2               8.2                 -                  48.2
EBITDA                                           78.7             129.7              85.5             (92.8)                201.1
Share and incentive based
compensation                                        -                 -                 -              20.7                  20.7

Rejuvenate acquisition and
integration                                         -                 -               5.8                 -                   5.8
Armitage acquisition and integration                -               7.7                 -                 -                   7.7

HPC separation initiatives                          -                 -                 -              14.2                  14.2

Coevorden operations separation                     -               7.7                 -                 -                   7.7
Global ERP transformation                           -                 -                 -               1.6                   1.6
GPC distribution center transition                  -               7.7                 -                 -                   7.7
Global productivity improvement
program                                           5.2               1.8                 -               8.7                  15.7
Other project costs                               4.2               0.5                 -               3.4                   8.1
Unallocated shared costs                            -                 -                 -              20.2                  20.2
Non-cash purchase accounting
adjustments                                         -               3.4               1.3                 -                   4.7
Gain on Energizer investment                        -                 -                 -              (6.9)                 (6.9)
Legal and environmental                             -                 -               6.0                 -                   6.0
Other                                               -                 -                 -               0.1                   0.1
Adjusted EBITDA                             $    88.1          $  158.5          $   98.6          $  (30.8)         $      314.4
Net sales                                   $   950.8          $  826.3          $  463.2          $      -          $    2,240.3
Adjusted EBITDA margin                            9.3  %           19.2  %           21.3  %              -  %               14.0  %



                                       45

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