UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission File Number: 001-14669

HELEN OF TROY LIMITED

(Exact name of registrant as specified in its charter)


Bermuda						74-2692550
(State or other jurisdiction						(I.R.S. Employer
of incorporation or organization)						Identification No.)

Clarendon House

2 Church Street

Hamilton, Bermuda

(Address of principal executive offices)

1 Helen of Troy Plaza

El Paso, Texas 79912

(Registrant's United States Mailing Address) (Zip Code)

(915) 225-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, $0.10 par value per share

HELE

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has 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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). 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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of December ~~29, 2021,~~28, 2022, there were ~~24,137,065~~23,992,278 common shares, $0.10 par value per share, outstanding.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Note 1 - Basis of Presentation and Related Information	8
	Note 2 - New Accounting Pronouncements	910
	Note 3 - Assets and Liabilities Held for Sale	10
	Note 4 - ~~Accrued Expenses and Other Current Liabilities~~Acquisitions	11
	Note 5 - ~~Share-Based Compensation Plans~~	11
	~~Note 6 - Repurchases of Common Stock~~	11
	~~Note 7 - Restructuring Plan~~	12
	~~Note 8 - Commitments~~Accrued Expenses and ~~Contingencies~~	12
	~~Note 9 - Long-Term Debt~~Other Current Liabilities	14
	Note 106 - ~~Fair Value~~Share-Based Compensation Plans	1514
	Note 117 - ~~Financial Instruments and Risk Management~~Repurchases of Common Stock	1615
	Note 128 - ~~Accumulated Other Comprehensive Income (Loss~~Restructuring Plan)	1916
	Note 139 - ~~Segment Information~~Commitments and Contingencies	1917
	Note 1410 - ~~Income Taxes~~Long-Term Debt	20
	Note 11 - Fair Value	22
	Note 12 - Financial Instruments and Risk Management	23
	Note 13 - Accumulated Other Comprehensive Income (Loss)	26
	Note 14 - Segment Information	26
	Note 15 - Income Taxes	27
	Note 16 - Earnings Per Share	2128
	~~Note 16 - Subsequent Events~~	21

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2229

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4858

Item 4.	Controls and Procedures	4859

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	4959

Item 1A.	Risk Factors	5059

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5260

Item 6.	Exhibits	5361

SIGNATURES		5462

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except shares and par value)	(in thousands, except shares and par value)	November 30, 2021		February 28, 2021		(in thousands, except shares and par value)	November 30, 2022		February 28, 2022
Assets	Assets					Assets
Assets, current:	Assets, current:					Assets, current:
Cash and cash equivalents	Cash and cash equivalents	$	44,344	$	45,120	Cash and cash equivalents	$	45,337	$	33,381
Receivables - principally trade, less allowances of $627 and $998		505,933		382,449
Receivables - principally trade, less allowances of $2,024 and $843						Receivables - principally trade, less allowances of $2,024 and $843	505,555		457,623
Inventory	Inventory	585,811		481,611		Inventory	536,793		557,992
Prepaid expenses and other current assets	Prepaid expenses and other current assets	23,062		16,170		Prepaid expenses and other current assets	27,850		25,712
Income taxes receivable	Income taxes receivable	3,574		6,720		Income taxes receivable	6,866		5,430
Assets held for sale	Assets held for sale	2,265		39,867		Assets held for sale	—		1,942
Total assets, current	Total assets, current	1,164,989		971,937		Total assets, current	1,122,401		1,082,080

Property and equipment, net of accumulated depreciation of $157,287 and $140,379		165,061		136,535
Property and equipment, net of accumulated depreciation of $174,353 and $161,006						Property and equipment, net of accumulated depreciation of $174,353 and $161,006	335,234		205,378
Goodwill	Goodwill	739,901		739,901		Goodwill	1,063,309		948,873
Other intangible assets, net of accumulated amortization of $160,204 and $151,240		349,328		357,264
Other intangible assets, net of accumulated amortization of $163,913 and $150,309						Other intangible assets, net of accumulated amortization of $163,913 and $150,309	558,381		537,846
Operating lease assets	Operating lease assets	30,314		32,533		Operating lease assets	39,757		37,759
Deferred tax assets, net	Deferred tax assets, net	29,311		21,748		Deferred tax assets, net	2,620		3,628
Other assets	Other assets	8,501		3,570		Other assets	7,723		7,887
Total assets	Total assets	$	2,487,405	$	2,263,488	Total assets	$	3,129,425	$	2,823,451

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Liabilities, current:	Liabilities, current:					Liabilities, current:
Accounts payable, principally trade	Accounts payable, principally trade	$	306,049	$	334,807	Accounts payable, principally trade	$	232,460	$	308,178
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	296,362		271,179		Accrued expenses and other current liabilities	258,430		271,675
Income taxes payable	Income taxes payable	20,727		7,022		Income taxes payable	10,940		20,718
Long-term debt, current maturities	Long-term debt, current maturities	1,884		1,884		Long-term debt, current maturities	20,872		1,884
Liabilities held for sale	Liabilities held for sale	286		—		Liabilities held for sale	—		235
Total liabilities, current	Total liabilities, current	625,308		614,892		Total liabilities, current	522,702		602,690

Long-term debt, excluding current maturities	Long-term debt, excluding current maturities	445,584		341,746		Long-term debt, excluding current maturities	1,059,588		811,332
Lease liabilities, non-current	Lease liabilities, non-current	35,595		38,352		Lease liabilities, non-current	44,276		43,745
Deferred tax liabilities, net	Deferred tax liabilities, net	7,136		5,735		Deferred tax liabilities, net	31,307		21,582
Other liabilities, non-current	Other liabilities, non-current	18,824		23,416		Other liabilities, non-current	14,479		16,763
Total liabilities	Total liabilities	1,132,447		1,024,141		Total liabilities	1,672,352		1,496,112

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—		Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—
Common stock, $0.10 par. Authorized 50,000,000 shares; 24,136,351 and 24,405,921 shares issued and outstanding		2,414		2,441
Common stock, $0.10 par. Authorized 50,000,000 shares; 23,991,063 and 23,800,305 shares issued and outstanding						Common stock, $0.10 par. Authorized 50,000,000 shares; 23,991,063 and 23,800,305 shares issued and outstanding	2,399		2,380
Additional paid in capital	Additional paid in capital	298,708		283,396		Additional paid in capital	322,527		303,740
Accumulated other comprehensive loss		(1,066)		(11,656)
Accumulated other comprehensive income						Accumulated other comprehensive income	4,139		202
Retained earnings	Retained earnings	1,054,902		965,166		Retained earnings	1,128,008		1,021,017
Total stockholders' equity	Total stockholders' equity	1,354,958		1,239,347		Total stockholders' equity	1,457,073		1,327,339
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	2,487,405	$	2,263,488	Total liabilities and stockholders' equity	$	3,129,425	$	2,823,451

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Sales revenue, net	Sales revenue, net	$	624,884	$	637,737	$	1,641,335	$	1,589,424	Sales revenue, net	$	558,606	$	624,884	$	1,588,084	$	1,641,335
Cost of goods sold	Cost of goods sold	351,051		350,410		936,322		892,460		Cost of goods sold	301,930		351,051		898,791		936,322
Gross profit	Gross profit	273,833		287,327		705,013		696,964		Gross profit	256,676		273,833		689,293		705,013

Selling, general and administrative expense (“SG&A”)	Selling, general and administrative expense (“SG&A”)	183,788		186,630		482,467		439,646		Selling, general and administrative expense (“SG&A”)	169,020		183,788		515,974		482,467

Restructuring charges	Restructuring charges	5		(12)		380		355		Restructuring charges	10,463		5		15,241		380
Operating income	Operating income	90,040		100,709		222,166		256,963		Operating income	77,193		90,040		158,078		222,166

Non-operating income, net	Non-operating income, net	52		93		185		440		Non-operating income, net	5		52		185		185
Interest expense	Interest expense	3,206		2,926		9,508		9,568		Interest expense	13,149		3,206		26,688		9,508
Income before income tax	Income before income tax	86,886		97,876		212,843		247,835		Income before income tax	64,049		86,886		131,575		212,843

Income tax expense	Income tax expense	11,203		13,721		28,873		16,061		Income tax expense	12,223		11,203		24,482		28,873
Net income	Net income	$	75,683	$	84,155	$	183,970	$	231,774	Net income	$	51,826	$	75,683	$	107,093	$	183,970

Earnings per share (“EPS”):	Earnings per share (“EPS”):									Earnings per share (“EPS”):
Basic	Basic	$	3.14	$	3.37	$	7.60	$	9.20	Basic	$	2.16	$	3.14	$	4.47	$	7.60
Diluted	Diluted	3.10		3.34		7.52		9.14		Diluted	2.15		3.10		4.45		7.52

Weighted average shares used in computing EPS:	Weighted average shares used in computing EPS:									Weighted average shares used in computing EPS:
Basic	Basic	24,129		24,965		24,193		25,182		Basic	23,991		24,129		23,942		24,193
Diluted	Diluted	24,399		25,192		24,461		25,350		Diluted	24,078		24,399		24,086		24,461

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Net income	Net income	$	75,683	$	84,155	$	183,970	$	231,774	Net income	$	51,826	$	75,683	$	107,093	$	183,970
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income, net of tax:										Other comprehensive (loss) income, net of tax:
Cash flow hedge activity - interest rate swaps	Cash flow hedge activity - interest rate swaps	1,787		1,180		3,623		(696)		Cash flow hedge activity - interest rate swaps	995		1,787		4,502		3,623
Cash flow hedge activity - foreign currency contracts	Cash flow hedge activity - foreign currency contracts	3,358		855		6,967		(4,584)		Cash flow hedge activity - foreign currency contracts	(4,056)		3,358		(565)		6,967
Total other comprehensive income (loss), net of tax		5,145		2,035		10,590		(5,280)
Total other comprehensive (loss) income, net of tax										Total other comprehensive (loss) income, net of tax	(3,061)		5,145		3,937		10,590
Comprehensive income	Comprehensive income	$	80,828	$	86,190	$	194,560	$	226,494	Comprehensive income	$	48,765	$	80,828	$	111,030	$	194,560

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)


		Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders' Equity			Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity
(in thousands, including shares)	(in thousands, including shares)	Shares	Par Value										(in thousands, including shares)	Shares	Par Value
Balances at February 28, 2021		24,406	$	2,441	$	283,396	$	(11,656)	$	965,166	$	1,239,347
Net income		—	—		—		—		56,972		56,972

Other comprehensive loss, net of tax		—	—		—		(797)		—		(797)
Exercise of stock options		4	—		275		—		—		275
Issuance and settlement of restricted stock		177	18		(18)		—		—		—
Issuance of common stock related to stock purchase plan		13	1		2,337		—		—		2,338
Common stock repurchased and retired		(502)	(50)		(16,616)		—		(93,408)		(110,074)
Share-based compensation		—	—		14,020		—		—		14,020

Balances at May 31, 2021		24,098	$	2,410	$	283,394	$	(12,453)	$	928,730	$	1,202,081
Net income		—	—		—		—		51,315		51,315

Other comprehensive income, net of tax		—	—		—		6,242		—		6,242
Exercise of stock options		6	1		519		—		—		520
Issuance and settlement of restricted stock		2	—		—		—		—		—

Common stock repurchased and retired		(1)	—		(104)		—		(12)		(116)
Share-based compensation		—	—		7,780		—		—		7,780

Balances at August 31, 2021		24,105	$	2,411	$	291,589	$	(6,211)	$	980,033	$	1,267,822
Balances at February 28, 2022													Balances at February 28, 2022	23,800	$	2,380	$	303,740	$	202	$	1,021,017	$	1,327,339
Net income	Net income	—	—		—		—		75,683		75,683		Net income	—	—		—		—		24,595		24,595

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—		5,145		—		5,145		Other comprehensive income, net of tax	—	—		—		3,159		—		3,159
Exercise of stock options	Exercise of stock options	11	1		664		—		—		665		Exercise of stock options	8	1		658		—		—		659
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	22	2		(2)		—		—		—		Issuance and settlement of restricted stock	235	24		(24)		—		—		—
Issuance of common stock related to stock purchase plan	Issuance of common stock related to stock purchase plan	10	1		1,922		—		—		1,923		Issuance of common stock related to stock purchase plan	13	1		2,274		—		—		2,275
Common stock repurchased and retired	Common stock repurchased and retired	(12)	(1)		(2,014)		—		(814)		(2,829)		Common stock repurchased and retired	(89)	(9)		(18,113)		—		(102)		(18,224)
Share-based compensation	Share-based compensation	—	—		6,549		—		—		6,549		Share-based compensation	—	—		16,619		—		—		16,619

Balances at November 30, 2021		24,136	$	2,414	$	298,708	$	(1,066)	$	1,054,902	$	1,354,958
Balances at May 31, 2022													Balances at May 31, 2022	23,967	$	2,397	$	305,154	$	3,361	$	1,045,510	$	1,356,422
Net income													Net income	—	—		—		—		30,672		30,672

Other comprehensive income, net of tax													Other comprehensive income, net of tax	—	—		—		3,839		—		3,839

Issuance and settlement of restricted stock													Issuance and settlement of restricted stock	2	—		(1)		—		—		(1)

Common stock repurchased and retired													Common stock repurchased and retired	—	—		(81)		—		—		(81)
Share-based compensation													Share-based compensation	—	—		7,495		—		—		7,495

Balances at August 31, 2022													Balances at August 31, 2022	23,969	$	2,397	$	312,567	$	7,200	$	1,076,182	$	1,398,346
Net income													Net income	—	—		—		—		51,826		51,826

Other comprehensive loss, net of tax													Other comprehensive loss, net of tax	—	—		—		(3,061)		—		(3,061)

Issuance and settlement of restricted stock													Issuance and settlement of restricted stock	3	—		—		—		—		—
Issuance of common stock related to stock purchase plan													Issuance of common stock related to stock purchase plan	20	2		2,064		—		—		2,066
Common stock repurchased and retired													Common stock repurchased and retired	(1)	—		(45)		—		—		(45)
Share-based compensation													Share-based compensation	—	—		7,941		—		—		7,941

Balances at November 30, 2022													Balances at November 30, 2022	23,991	$	2,399	$	322,527	$	4,139	$	1,128,008	$	1,457,073

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity - Continued (Unaudited)


		Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Shareholders' Equity			Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
(in thousands, including shares)	(in thousands, including shares)	Shares	Par Value										(in thousands, including shares)	Shares	Par Value
Balances at February 29, 2020		25,194	$	2,519	$	268,043	$	(7,005)	$	898,166	$	1,161,723
Balances at February 28, 2021													Balances at February 28, 2021	24,406	$	2,441	$	283,396	$	(11,656)	$	965,166	$	1,239,347
Net income	Net income	—	—		—		—		60,286		60,286		Net income	—	—		—		—		56,972		56,972

Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—		(1,912)		—		(1,912)		Other comprehensive loss, net of tax	—	—		—		(797)		—		(797)
Exercise of stock options	Exercise of stock options	8	1		475		—		—		476		Exercise of stock options	4	—		275		—		—		275
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	165	17		(17)		—		—		—		Issuance and settlement of restricted stock	177	18		(18)		—		—		—
Issuance of common stock related to stock purchase plan	Issuance of common stock related to stock purchase plan	15	1		1,900		—		—		1,901		Issuance of common stock related to stock purchase plan	13	1		2,337		—		—		2,338
Common stock repurchased and retired	Common stock repurchased and retired	(61)	(6)		(9,895)		—		(112)		(10,013)		Common stock repurchased and retired	(502)	(50)		(16,616)		—		(93,408)		(110,074)
Share-based compensation	Share-based compensation	—	—		9,291		—		—		9,291		Share-based compensation	—	—		14,020		—		—		14,020

Balances at May 31, 2020		25,321	$	2,532	$	269,797	$	(8,917)	$	958,340	$	1,221,752
Balances at May 31, 2021													Balances at May 31, 2021	24,098	$	2,410	$	283,394	$	(12,453)	$	928,730	$	1,202,081
Net income	Net income	—	—		—		—		87,333		87,333		Net income	—	—		—		—		51,315		51,315

Other comprehensive loss, net of tax		—	—		—		(5,403)		—		(5,403)
Other comprehensive income, net of tax													Other comprehensive income, net of tax	—	—		—		6,242		—		6,242
Exercise of stock options	Exercise of stock options	4	1		370		—		—		371		Exercise of stock options	6	1		519		—		—		520
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	4	—		—		—		—		—		Issuance and settlement of restricted stock	2	—		—		—		—		—

Common stock repurchased and retired	Common stock repurchased and retired	(1)	—		(148)		—		—		(148)		Common stock repurchased and retired	(1)	—		(104)		—		(12)		(116)
Share-based compensation	Share-based compensation	—	—		4,624		—		—		4,624		Share-based compensation	—	—		7,780		—		—		7,780

Balances at August 31, 2020		25,328	$	2,533	$	274,643	$	(14,320)	$	1,045,673	$	1,308,529
Balances at August 31, 2021													Balances at August 31, 2021	24,105	$	2,411	$	291,589	$	(6,211)	$	980,033	$	1,267,822
Net income	Net income	—	—		—		—		84,155		84,155		Net income	—	—		—		—		75,683		75,683

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—		2,035		—		2,035		Other comprehensive income, net of tax	—	—		—		5,145		—		5,145
Exercise of stock options	Exercise of stock options	1	—		70		—		—		70		Exercise of stock options	11	1		664		—		—		665
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	20	2		(2)		—		—		—		Issuance and settlement of restricted stock	22	2		(2)		—		—		—
Issuance of common stock related to stock purchase plan	Issuance of common stock related to stock purchase plan	12	1		1,709		—		—		1,710		Issuance of common stock related to stock purchase plan	10	1		1,922		—		—		1,923
Common stock repurchased and retired	Common stock repurchased and retired	(967)	(97)		(5,870)		—		(186,833)		(192,800)		Common stock repurchased and retired	(12)	(1)		(2,014)		—		(814)		(2,829)
Share-based compensation	Share-based compensation	—	—		6,739		—		—		6,739		Share-based compensation	—	—		6,549		—		—		6,549

Balances at November 30, 2020		24,394	$	2,439	$	277,289	$	(12,285)	$	942,995	$	1,210,438
Balances at November 30, 2021													Balances at November 30, 2021	24,136	$	2,414	$	298,708	$	(1,066)	$	1,054,902	$	1,354,958

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)


		Nine Months Ended November 30,					Nine Months Ended November 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash (used) provided by operating activities:
Cash provided (used) by operating activities:						Cash provided (used) by operating activities:
Net income	Net income	$	183,970	$	231,774	Net income	$	107,093	$	183,970

Adjustments to reconcile net income to net cash (used) provided by operating activities:
Adjustments to reconcile net income to net cash provided (used) by operating activities:						Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization	Depreciation and amortization	26,082		27,995		Depreciation and amortization	33,330		26,082
Amortization of financing costs	Amortization of financing costs	738		772		Amortization of financing costs	792		738
Non-cash operating lease expense	Non-cash operating lease expense	6,910		4,910		Non-cash operating lease expense	7,558		6,910
Provision for credit losses	Provision for credit losses	292		3,445		Provision for credit losses	1,373		292
Non-cash share-based compensation	Non-cash share-based compensation	28,349		20,654		Non-cash share-based compensation	32,055		28,349

Gain on sale of North America Personal Care business		(513)		—
(Gain) loss on the sale or disposal of property and equipment		(2,274)		75
Gain on sale of Personal Care business						Gain on sale of Personal Care business	(1,336)		(513)

Loss (gain) on the sale or disposal of property and equipment						Loss (gain) on the sale or disposal of property and equipment	5		(2,274)

Deferred income taxes and tax credits	Deferred income taxes and tax credits	(8,721)		(4,132)		Deferred income taxes and tax credits	1,479		(8,721)
Changes in operating capital:
Changes in operating capital, net of effects of acquisitions of businesses:						Changes in operating capital, net of effects of acquisitions of businesses:
Receivables	Receivables	(139,292)		(155,492)		Receivables	(45,714)		(139,292)
Inventory	Inventory	(103,821)		(121,629)		Inventory	28,996		(103,821)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(6,765)		(2,915)		Prepaid expenses and other current assets	3,926		(6,765)
Other assets and liabilities, net	Other assets and liabilities, net	(6,110)		(6,617)		Other assets and liabilities, net	(1,113)		(6,110)
Accounts payable	Accounts payable	(30,549)		148,501		Accounts payable	(78,128)		(30,549)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	29,198		95,612		Accrued expenses and other current liabilities	(22,945)		29,198
Accrued income taxes	Accrued income taxes	17,452		6,793		Accrued income taxes	(17,848)		17,452
Net cash (used) provided by operating activities		(5,054)		249,746
Net cash provided (used) by operating activities						Net cash provided (used) by operating activities	49,523		(5,054)

Cash provided (used) by investing activities:
Cash (used) provided by investing activities:						Cash (used) provided by investing activities:
Capital and intangible asset expenditures	Capital and intangible asset expenditures	(41,529)		(19,423)		Capital and intangible asset expenditures	(146,194)		(41,529)
Proceeds from sale of North America Personal Care business		44,700		—
Net payments to acquire businesses, net of cash acquired						Net payments to acquire businesses, net of cash acquired	(146,342)		—
Proceeds from sale of Personal Care business						Proceeds from sale of Personal Care business	1,804		44,700
Proceeds from the sale of property and equipment	Proceeds from the sale of property and equipment	5,305		—		Proceeds from the sale of property and equipment	63		5,305
Net cash provided (used) by investing activities		8,476		(19,423)
Net cash (used) provided by investing activities						Net cash (used) provided by investing activities	(290,669)		8,476

Cash used by financing activities:
Proceeds from line of credit		461,400		917,400
Repayment of line of credit		(356,400)		(811,400)
Cash provided (used) by financing activities:						Cash provided (used) by financing activities:
Proceeds from revolving loans						Proceeds from revolving loans	633,500		461,400
Repayment of revolving loans						Repayment of revolving loans	(613,000)		(356,400)
Proceeds from term loans						Proceeds from term loans	250,000		—

Repayment of long-term debt	Repayment of long-term debt	(1,900)		(1,900)		Repayment of long-term debt	(3,462)		(1,900)
Payment of financing costs	Payment of financing costs	—		(3,796)		Payment of financing costs	(586)		—
Proceeds from share issuances under share-based compensation plans	Proceeds from share issuances under share-based compensation plans	5,721		4,528		Proceeds from share issuances under share-based compensation plans	5,000		5,721

Payments for repurchases of common stock	Payments for repurchases of common stock	(113,019)		(202,961)		Payments for repurchases of common stock	(18,350)		(113,019)
Net cash used by financing activities		(4,198)		(98,129)
Net cash provided (used) by financing activities						Net cash provided (used) by financing activities	253,102		(4,198)

Net (decrease) increase in cash and cash equivalents		(776)		132,194
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	11,956		(776)
Cash and cash equivalents, beginning balance	Cash and cash equivalents, beginning balance	45,120		24,467		Cash and cash equivalents, beginning balance	33,381		45,120
Cash and cash equivalents, ending balance	Cash and cash equivalents, ending balance	$	44,344	$	156,661	Cash and cash equivalents, ending balance	$	45,337	$	44,344

Supplemental non-cash investing activity:	Supplemental non-cash investing activity:					Supplemental non-cash investing activity:
Capital expenditures included in accounts payable	Capital expenditures included in accounts payable	$	8,140	$	—	Capital expenditures included in accounts payable	$	11,038	$	8,140

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

November 30, ~~2021~~2022

Note 1 - Basis of Presentation and Related Information

Corporate Overview

The accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the fiscal year ended February 28, ~~2021~~2022 (“Form 10-K”), and our other reports on file with the Securities and Exchange Commission (the “SEC”).

When used in these notes, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries, which are all wholly-owned. We refer to our common shares, par value $0.10 per share, as “common stock.” References to “the FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to accounting principles generally accepted in the United States of America (the “U.S.”). References to “ASU” refer to the codification of GAAP in the Accounting Standards Updates issued by the FASB. References to “ASC” refer to the codification of GAAP in the Accounting Standards Codification issued by the FASB.

We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. As of November 30, ~~2021,~~2022, we operated 3three reportable segments: ~~Housewares,~~Home & Outdoor, Health & ~~Home,~~Wellness, and Beauty. Our ~~Housewares~~Home & Outdoor segment provides a broad range of innovative consumer products for ~~the~~ home activities such as food preparation, cooking, cleaning and organization, as well as products for outdoor and on the go ~~to help with~~activities such as hydration, food ~~preparation, cooking, cleaning, organization, beverage service,~~storage, backpacks, and ~~other tasks to ease everyday living for families.~~travel gear. The Health & ~~Home~~Wellness segment provides ~~healthcare~~health and ~~home environment~~wellness products including ~~health care~~healthcare devices, thermometers, water and air filtration systems, humidifiers, and ~~small home appliances.~~fans. Our Beauty segment provides mass and prestige market beauty ~~appliance and personal care products~~appliances including hair styling appliances, grooming tools, decorative ~~haircare~~hair accessories, and ~~liquid~~prestige market liquid-based hair and personal care products.

During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with our global restructuring plan (as further described in Note 8) that resulted in the Health & Wellness and Beauty operating segments being combined into a single reportable segment, which will be referred to as “Beauty & Wellness.” In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and to how our Chief Executive Officer (“CEO”), our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. Therefore, beginning with our fiscal 2023 Form 10-K, our future disclosures will reflect two reportable segments, Home & Outdoor and Beauty & Wellness, and we will recast the prior period segment information to conform to the change in the composition of these reportable segments. Accordingly, our external reportable segments will continue to

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align with our internal reporting to enable users of the financial statements to better understand our performance, better assess our prospects for future net cash flows, and make more informed judgements about the Company as a whole.

Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Our fiscal reporting period ends on the last day in February. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico, Vietnam and the U.S.

During the fourth quarter of fiscal 2020, we committed to a plan to divest certain assets within our Beauty segment's mass channel personal care business, which included liquid, powder and aerosol products under brands such as Pert, Brut, Sure and Infusium (“Personal Care”). On June 7, 2021, we completed the sale of our North America Personal Care business ~~not including the Latin America and Caribbean regions,~~ to HRB Brands LLC, for $44.7 million in ~~cash. The net assets sold included intangible assets, inventory, certain net trade receivables, fixed assets~~cash and ~~certain accrued sales discounts and allowances relating to our North America Personal Care business. During the second quarter of fiscal 2022, we~~ recognized a gain on the sale in SG&A totaling $0.5 million. ~~We are continuing to negotiate~~On March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care ~~businesses~~business to HRB Brands LLC, ~~which we expect to close no later than~~for $1.8 million in cash and recognized a gain on the ~~end of fiscal 2022. Accordingly, we have continued to classify the identified net assets of the Latin~~

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~~America and Caribbean Personal Care businesses as held for sale.~~sale in SG&A totaling $1.3 million. See Note 3 for additional information.

~~In March 2020,~~On April 22, 2022, we completed the ~~World Health Organization declared~~acquisition of Recipe Products Ltd., a producer of innovative prestige hair care products for all types of curly and wavy hair under the ~~outbreak~~Curlsmith brand (“Curlsmith”). The total purchase consideration was $147.9 million in cash, net of a ~~novel coronavirus~~final net working capital adjustment and cash acquired. See Note 4 for additional information.

On December 29, 2021, we completed the acquisition of Osprey Packs, Inc. (“~~COVID-19”~~Osprey”) ~~to be~~, a ~~pandemic. The effects~~longtime U.S. leader in technical and everyday packs, for $409.3 million in cash, net of a final net working capital adjustment and cash acquired. Osprey is highly respected in the outdoor industry with a product lineup that includes a wide range of backpacks and daypacks for hiking, mountaineering, skiing, climbing, mountain biking, trail running, commuting, and school, as well as rugged adventure travel packs, wheeled luggage, and travel accessories. See Note 4 for additional information.

Macroeconomic trends and the COVID-19 pandemic have ~~had an unfavorable impact on certain parts of~~adversely impacted our ~~business. The impact includes the effect of temporary closures of certain customer stores or limited hours of operation, and materially lower store traffic, primarily~~business during fiscal ~~2021. Additionally, COVID-19~~2023. In response to rising inflation, the Federal Open Market Committee has ~~disrupted certain parts~~been raising interest rates, and has stated it intends to continue to raise rates into 2023. As a result, we incurred higher average interest rates compared to the same period last year, and we expect this trend to continue during the remainder of fiscal year 2023. While the actual timing and extent of the future increases in interest rates remains unknown, higher long-term interest rates are expected to significantly increase interest expense on our ~~supply chain.~~outstanding debt. High inflation and interest rates have also negatively impacted consumer disposable income, credit availability and spending, among others things, and may continue to have an adverse impact during the remainder of fiscal year 2023. Surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, have strained the global freight network, which ~~is resulting~~has resulted in higher costs, less capacity, component part and raw material shortages, and longer lead times. ~~These factors may impact our ability to fulfill some orders on a timely basis. Additionally, the~~The extent of ~~COVID-19's~~COVID-19’s impact on the demand for certain of our product lines in the future will depend on continuing future developments, including any new variants and surges in the ~~duration,~~ spread ~~and intensity~~ of ~~the pandemic,~~COVID-19, our continued ability to source and distribute our products, ~~as well as any future government actions affecting consumers~~the impact of COVID-19 on capital and financial markets, and the ~~global economy generally,~~related impact on consumer confidence and spending, all of which are uncertain and difficult to predict considering the ~~rapidly~~continuously evolving landscape. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

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Principles of Consolidation

The accompanying condensed consolidated financial statements are prepared in accordance with GAAP and include all of our subsidiaries. Our condensed consolidated financial statements are prepared in U.S. Dollars. All intercompany balances and transactions are eliminated in consolidation.

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Actual results may differ materially from those estimates.

~~Reclassifications~~

We have reclassified, combined or separately disclosed certain amounts in the prior years’ condensed consolidated financial statements and accompanying footnotes to conform with the current period’s presentation.

Note 2 - New Accounting Pronouncements

Except for the changes discussed below, there have been no changes in the information provided in our Form 10-K.

Not Yet Adopted

In ~~October 2021,~~September 2022, the FASB issued ASU ~~2021-08,~~ 2022-04,~~Business Combinations (Topic 805)~~ Liabilities—Supplier Finance Programs (Subtopic 405-50): ~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~Disclosure of Supplier Finance Program Obligations, which requires ~~contract assets and contract liabilities acquired~~a buyer in a ~~business combination~~supplier finance program to ~~be recognized~~disclose qualitative and ~~measured by~~quantitative information about its program to allow a user of the ~~acquirer on~~financial statements to understand the ~~acquisition date in accordance with ASC 606,~~ ~~Revenue~~program’s nature, activity during the period, changes from ~~Contracts with Customers. Prior~~period to ~~the issuance of this guidance, contract assets~~period, and ~~contract liabilities were recognized by the acquirer at fair value on the acquisition date.~~potential magnitude. The amendments in ASU ~~2021-08~~2022-04 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with ~~early~~the exception for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, and the guidance should be applied ~~prospectively to acquisitions occurring~~retrospectively, except for the amendment on ~~or after the effective date.~~rollforward information, which should be applied prospectively. This ASU will be effective for us in our Form 10-Q for the first quarter of fiscal ~~2024. We believe that~~2024, with the ~~adoption~~exception of ~~this ASU will not have a material impact~~the amendment on ~~our consolidated financial statements.~~

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~~In November 2021, the FASB issued ASU 2021-10,~~ ~~Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance~~,rollforward information, which requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy to other accounting guidance due to the lack of specific authoritative guidance in GAAP, (for example, a grant model within International Accounting Standard 20, ~~Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic 958-605,~~ ~~Not-For-Profit Entities - Revenue Recognition). This guidance excludes transactions in the scope of specific GAAP, such as tax incentives accounted for under ASC 740,~~ ~~Income Taxes. This new ASU is effective for annual periods beginning after December 15, 2021, with early adoption and retrospective or prospective application permitted. This ASU~~ will be effective for us in our Form 10-K for fiscal ~~2023.~~2025. We ~~believe that~~are currently evaluating the ~~adoption of~~impact this ~~ASU will not~~guidance may have ~~a material impact~~ on our consolidated financial statement disclosures.

Note 3 - Assets and Liabilities Held for Sale

During the fourth quarter of fiscal 2020, we committed to a plan to divest certain assets within our Personal Care business and accordingly, we classified the identified net assets of the disposal group as held for sale. On June 7, 2021, we completed the sale of our North America Personal Care business ~~not including the Latin America and Caribbean regions,~~ to HRB Brands LLC, for $44.7 million in ~~cash.~~cash and recognized a gain on the sale in SG&A totaling $0.5 million. On March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care business to HRB Brands LLC, for $1.8 million in cash and recognized a gain on the sale in SG&A totaling $1.3 million. The net assets sold included intangible assets, inventory, certain net trade receivables, fixed assets and certain accrued sales discounts and allowances relating to our ~~North America~~ Personal Care business. ~~During the second quarter~~As a result of ~~fiscal 2022,~~these dispositions, we recognized a gain on the sale in SG&A totaling $0.5 million. We are continuing to negotiate the sale of the Latin America and Caribbean Personal Care businesses to HRB Brands LLC, which we expect to close no ~~later than the end of fiscal 2022. Accordingly, we~~longer have ~~continued to classify the identified net~~any assets ~~of the Latin America and Caribbean Personal Care businesses~~or liabilities classified as held for sale.

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The carrying amounts of the major classes of assets and liabilities for our Personal Care business that were classified as held for sale ~~are~~were as follows:

(in thousands) November 30, 2021 February 28, 2021
Receivables, net of allowance of $34 and $30 $ 1,555 $ 7,979
Inventory 644 12,667
Property and equipment, net of accumulated depreciation of $152 and $403 66 100
Goodwill (1)
— 1,397
Other intangible assets (1)
— 17,724
Assets held for sale $ 2,265 $ 39,867
Accrued sales discounts and allowances $ 286 $ —
Liabilities held for sale $ 286 $ —


(in thousands)	February 28, 2022
Receivables, net of allowance of $23	$	1,265
Inventory	611
Property and equipment, net of accumulated depreciation of $152	66


Assets held for sale	$	1,942

Accrued sales discounts and allowances	$	235
Liabilities held for sale	$	235

~~(1)~~

Note 4 - Acquisitions

~~Goodwill~~

Curlsmith

On April 22, 2022, we completed the acquisition of Recipe Products Ltd., a producer of innovative prestige hair care products for all types of curly and ~~other~~wavy hair under the Curlsmith brand. Curlsmith's products are a category leader in the market for prestige haircare products for curly hair and include conditioners, shampoos and co-washes purposefully designed for the unique joys and challenges of all types of curls and textured hair. The Curlsmith brand and products were added to the Beauty segment. The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment of $2.1 million and cash acquired. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $2.7 million during the nine months ended November 30, 2022, which were recognized in SG&A within our condensed consolidated statement of income.

We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The goodwill recognized is attributable primarily to expected synergies including leveraging our Beauty segment's existing marketing and sales structure, as well as our global sourcing, distribution, shared service, and international go-to-market capabilities. The goodwill is not expected to be deductible for income tax purposes. We have provisionally determined the appropriate fair values of the acquired intangible assets asand completed our analysis of ~~February 28, 2021~~the economic lives of the assets acquired. We assigned $21.0 million to trade names and are ~~presented~~amortizing over a 20 year expected life. We assigned $12.0 million to customer relationships and are amortizing over a 19.5 year expected life, based on historical attrition rates.

During the second quarter of fiscal 2023, we made adjustments to provisional asset and liability balances, which resulted in a corresponding net increase to goodwill of ~~accumulated impairment~~$0.1 million. During the third quarter of fiscal 2023, we finalized the net working capital adjustment, which resulted in a $1.8 million reduction to the total purchase consideration and ~~accumulated amortization of $80,445 and $4,474, respectively.~~goodwill.

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The following table presents the preliminary estimated fair values of assets acquired and liabilities assumed at the acquisition date:


(in thousands)
Assets:
Receivables	$	4,211
Inventory	7,890
Prepaid expenses and other current assets	119
Property and equipment	212
Goodwill	116,844
Trade names - definite	21,000
Customer relationships - definite	12,000
Deferred tax assets, net	360
Total assets	162,636
Liabilities:
Accounts payable	1,401
Accrued expenses and other current liabilities	2,583
Income taxes payable	2,538
Deferred tax liabilities, net	8,187
Total liabilities	14,709
Net assets recorded	$	147,927

Both the fair value and gross contractual amount of receivables acquired was $4.2 million, as an immaterial amount is expected to be uncollectible.

The impact of the acquisition of Curlsmith on our condensed consolidated statements of income for the periods presented was as follows:


(in thousands, except earnings per share data)	Three Months Ended November 30, 2022		Nine Months Ended November 30, 2022 (1)
Sales revenue, net	$	13,091	$	26,544
Net income	2,077		3,953

EPS:
Basic	$	0.09	$	0.17
Diluted	$	0.09	$	0.16

(1)Represents approximately thirty-two weeks of operating results from Curlsmith, acquired on April 22, 2022.

The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Curlsmith had occurred on March 1, 2021. This supplemental pro forma information has been prepared for comparative purposes and would not necessarily indicate what may have occurred if the acquisition had been completed on March 1, 2021, and this information is not intended to be indicative of future results.


	Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands, except earnings per share data)	2022		2021		2022		2021
Sales revenue, net	$	558,606	$	635,476	$	1,595,176	$	1,669,919
Net income	51,826		77,586		109,006		184,846

EPS:
Basic	$	2.16	$	3.22	$	4.55	$	7.64
Diluted	$	2.15	$	3.18	$	4.53	$	7.56

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These amounts have been calculated after applying our accounting policies and adjusting the results of Curlsmith to reflect the effect of definite-lived intangible assets recognized as part of the business combination on amortization expense as if the acquisition had occurred on March 1, 2021.

Osprey

On December 29, 2021, we completed the acquisition of Osprey, a longtime U.S. leader in technical and everyday packs. Osprey is highly respected in the outdoor industry with a product lineup that includes a wide range of backpacks and daypacks for hiking, mountaineering, skiing, climbing, mountain biking, trail running, commuting, and school, as well as rugged adventure travel packs, wheeled luggage, and travel accessories. The Osprey brand and products were added to the Home & Outdoor segment. The total purchase consideration, net of cash acquired, was $409.3 million in cash, including the impact of a final $10.7 million favorable net working capital adjustment. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $0.1 million during the nine months ended November 30, 2022, which were recognized in SG&A within our condensed consolidated statement of income.

We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The goodwill recognized is attributable primarily to expected synergies including leveraging our information systems, shared service capabilities and international footprint. The goodwill is not expected to be deductible for income tax purposes. We have provisionally determined the appropriate fair values of the acquired intangible assets and completed our analysis of the economic lives of the assets acquired. We assigned $170.0 million to trade names which were determined to have an indefinite life. We assigned $22.0 million to customer relationships and are amortizing over a 4.5 year expected life, based on historical attrition rates.

During the first quarter of fiscal 2023, we finalized the net working capital adjustment, which resulted in a $1.6 million reduction to the total purchase consideration and we reduced the provisional accounts payable liability by $0.7 million, both with a corresponding decrease to goodwill totaling $2.3 million. During the second quarter of fiscal 2023, we made immaterial adjustments to provisional asset and liability balances, which resulted in a corresponding net increase to goodwill. During the third quarter of fiscal 2023, we made adjustments to provisional asset balances, which resulted in a corresponding net decrease to goodwill of $0.1 million.

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The following table presents the preliminary estimated fair values of assets acquired and liabilities assumed at the acquisition date:


(in thousands)
Assets:
Receivables	$	11,758
Inventory	30,001
Prepaid expenses and other current assets	3,699
Income taxes receivable	4,169
Property and equipment	11,576
Goodwill	206,564
Trade names - indefinite	170,000
Customer relationships - definite	22,000
Operating lease assets	2,155
Total assets	461,922
Liabilities:
Accounts payable	3,780
Accrued expenses and other current liabilities	7,334
Lease liabilities, non-current	1,719
Deferred tax liabilities, net	39,794
Total liabilities	52,627
Net assets recorded	$	409,295

Note 45 - Accrued Expenses and Other Current Liabilities

A summary of accrued expenses and other current liabilities iswas as follows:


(in thousands)	(in thousands)	November 30, 2021		February 28, 2021		(in thousands)	November 30, 2022		February 28, 2022
Accrued compensation, benefits and payroll taxes	Accrued compensation, benefits and payroll taxes	$	41,107	$	66,385	Accrued compensation, benefits and payroll taxes	$	25,679	$	55,405
Accrued sales discounts and allowances	Accrued sales discounts and allowances	68,729		59,426		Accrued sales discounts and allowances	79,564		69,120
Accrued sales returns	Accrued sales returns	34,960		29,434		Accrued sales returns	33,067		33,384
Accrued advertising	Accrued advertising	72,183		50,923		Accrued advertising	52,499		55,775
Other	Other	79,383		65,011		Other	67,621		57,991
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	296,362	$	271,179	Total accrued expenses and other current liabilities	$	258,430	$	271,675

Note 56 - Share-Based Compensation Plans

As part of our compensation structure, we grant share-based compensation awards to certain employees and non-employee members of our Board of Directors during the fiscal year. These awards may be subject to attainment of certain service conditions, performance conditions and/or market conditions. During the first quarter of fiscal ~~2022,~~2023, we granted ~~83,227~~36,088 service condition awards (“Service Condition Awards”) with a weighted average grant date fair value of ~~$219.02.~~$204.11. Additionally, we granted ~~143,340~~165,734 performance-based awards during the first quarter of fiscal ~~2022,~~2023, of which ~~71,670~~82,867 contained performance conditions (“Performance Condition Awards”) and ~~71,670~~82,867 contained market conditions (“Market Condition Awards”), with weighted average grant date fair values of ~~$216.20~~$204.11 and ~~$156.08,~~$152.91, respectively. Refer to our Form 10-K for further information on the Company's share-based compensation plans.

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We recorded share-based compensation expense in SG&A as follows:


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Stock options		$	—	$	3	$	—	$	18

Directors stock compensation	Directors stock compensation	160		161		483		525		Directors stock compensation	$	197	$	160	$	592	$	483
Service Condition Awards	Service Condition Awards	3,117		1,677		8,353		5,261		Service Condition Awards	2,211		3,117		7,488		8,353
Performance Condition Awards	Performance Condition Awards	1,622		4,407		14,706		13,873		Performance Condition Awards	3,252		1,622		17,293		14,706
Market Condition Awards	Market Condition Awards	1,115		—		3,504		—		Market Condition Awards	1,793		1,115		5,620		3,504
Employee stock purchase plan	Employee stock purchase plan	535		491		1,303		977		Employee stock purchase plan	488		535		1,062		1,303
Share-based compensation expense	Share-based compensation expense	6,549		6,739		28,349		20,654		Share-based compensation expense	7,941		6,549		32,055		28,349
Less income tax benefits	Less income tax benefits	(784)		(403)		(2,355)		(1,406)		Less income tax benefits	(474)		(784)		(2,128)		(2,355)
Share-based compensation expense, net of tax		$	5,765	$	6,336	$	25,994	$	19,248
Share-based compensation expense, net of income tax benefits										Share-based compensation expense, net of income tax benefits	$	7,467	$	5,765	$	29,927	$	25,994

Unrecognized Share-Based Compensation Expense

As of November 30, ~~2021,~~2022, our total unrecognized share-based compensation for all awards was ~~$33.8~~$41.3 million, which will be recognized over a weighted average amortization period of ~~2.2~~1.9 years. The total unrecognized share-based compensation reflects an estimate of target achievement for Performance Condition Awards granted during the first quarter of fiscal ~~2022~~2023 and fiscal ~~2021,~~2022, and a weighted average estimate of ~~175%~~150% of target achievement for Performance Condition Awards granted in fiscal ~~2020.~~2021.

Note 67 - Repurchases of Common Stock

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replaced our former repurchase ~~authorization, of which approximately $79.5 million remained.~~authorization. As of November 30, ~~2021,~~2022, our repurchase authorization allowed for the purchase of ~~$497.2~~$403.6 million of common stock.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of share-settled awards by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the ~~equity holder can be~~option or other share-based award holders are settled by having the holder tender back to us a number of shares at fair value equal to the amounts due. Net exercises are treated as purchases and retirements of shares.

The following table summarizes our share repurchase activity for the periods shown:


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021		2020		2021		2020		(in thousands, except share and per share data)	2022		2021		2022		2021
Common stock repurchased on the open market:	Common stock repurchased on the open market:									Common stock repurchased on the open market:
Number of shares	Number of shares	—		960,829		436,842		960,829		Number of shares	—		—		—		436,842
Aggregate value of shares	Aggregate value of shares	$	—	$	191,606	$	95,484	$	191,606	Aggregate value of shares	$	—	$	—	$	—	$	95,484
Average price per share	Average price per share	$	—	$	199.42	$	218.58	$	199.42	Average price per share	$	—	$	—	$	—	$	218.58

Common stock received in connection with share-based compensation:	Common stock received in connection with share-based compensation:									Common stock received in connection with share-based compensation:
Number of shares	Number of shares	12,059		6,115		78,206		67,740		Number of shares	382		12,059		90,341		78,206
Aggregate value of shares	Aggregate value of shares	$	2,829	$	1,194	$	17,535	$	11,355	Aggregate value of shares	$	45	$	2,829	$	18,350	$	17,535
Average price per share	Average price per share	$	234.56	$	195.26	$	224.22	$	167.63	Average price per share	$	117.44	$	234.56	$	203.12	$	224.22

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Note 78 - Restructuring Plan

~~In October 2017,~~During the second quarter of fiscal 2023, we ~~announced~~focused on developing a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (referred to as “Project ~~Refuel”~~Pegasus”) ~~intended~~. Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance ~~performance primarily in~~ the Beauty and former Nutritional Supplements segments. Project Refuel includes charges for a reduction-in-force and the elimination of certain contracts. During the first quarter of fiscal 2019, we expanded Project Refuel to include the realignment and streamliningefficiency of our supply chain network, optimize our indirect spending, and improve our cash flow and working capital, as well as other activities. We anticipate these initiatives will create operating efficiencies, as well as provide a platform to fund future growth investments.

During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with Project Pegasus that resulted in the Health & Wellness and Beauty operating segments being combined into a single reportable segment, which will be referred to as “Beauty & Wellness.” In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and to how our CEO, our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes.

As part of the Project Pegasus initiative focused on streamlining and simplifying the organization, we are announcing plans to further change the structure of our organization, which include the creation of a North America Regional Market Organization (“RMO”) responsible for sales and go to market strategies for all categories and channels in the U.S. and Canada, and further centralization of certain functions under shared services, particularly in operations and finance to better support our business segments and RMOs. This new structure, inclusive of the organizational structure changes described above resulting in the reportable segment change, will reduce the size of our global workforce by approximately 10%. The majority of the role reductions are expected to be completed by March 1, 2023. Nearly all of the remaining role reductions are expected to be completed before the end of fiscal year 2024. We ~~are targeting total~~believe that these changes better focus business segment resources on brand development, consumer-centric innovation and marketing, the RMOs on sales and go to market strategies, and shared services on their respective areas of expertise while also creating a more efficient and effective organizational structure.

Consistent with the second quarter of fiscal 2023, we continue to have the following expectations regarding Project Pegasus:

•Targeted annualized pre-tax operating profit improvements of approximately ~~$10.5~~$75 million to ~~$12.5~~$85 million, ~~over~~which we expect to begin in fiscal 2024 and be substantially achieved by the ~~duration~~end of fiscal 2026.

•Estimated cadence of the ~~plan. We estimate~~recognition of the ~~plan~~savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.

•Total profit improvements to be ~~completed during fiscal 2022~~realized approximately 60% through reduced cost of goods sold and ~~expect to incur total~~40% through lower SG&A.

•Total one-time pre-tax restructuring charges of approximately ~~$10.3~~$85 million to $95 million over the duration of the plan, which is expected to be completed during fiscal 2025 and will primarily be comprised of ~~which $9.6 million have been incurred through~~severance and employee related costs, professional fees, contract termination costs, and other exit and disposal costs.

•All of our operating segments and shared services will be impacted by the ~~third quarter of fiscal 2022. Restructuring provisions are determined based on estimates prepared at the time the restructuring actions are approved by management and are revised periodically.~~plan.

WeDuring the three and nine month periods ended November 30, 2022, we incurred ~~an insignificant amount~~$10.5 million and ~~$0.4~~$15.2 million, respectively, of pre-tax restructuring costs ~~during the three and nine months ended November 30, 2021, respectively,~~in connection with Project Pegasus, which are recorded as “Restructuring charges” in the condensed consolidated statements of income. ~~During~~We recognized an

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insignificant amount and $0.4 million, respectively, of pre-tax restructuring costs during the three and nine month periods ended November 30, 2021, ~~we made total cash~~under a prior restructuring ~~payments of $0.1 million and $0.5 million, respectively. Since implementing~~plan referred to as Project Refuel, ~~we have made total cash~~which was completed during the fourth quarter of fiscal 2022.

The following tables summarize restructuring ~~payments~~charges recorded as a result of ~~$9.6 million as~~Project Pegasus for the periods presented:


	Three Months Ended November 30, 2022
(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Severance and employee related costs	$	426	$	305	$	444	$	1,175
Professional fees	4,663		2,584		1,927		9,174
Contract termination	—		—		—		—
Other	1		4		109		114
Total restructuring charges	$	5,090	$	2,893	$	2,480	$	10,463


	Nine Months Ended November 30, 2022								Total Incurred Since Inception
(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Severance and employee related costs	$	898	$	2,231	$	889	$	4,018	$	4,018
Professional fees	4,663		2,712		1,927		9,302		9,302
Contract termination	—		1,500		—		1,500		1,500
Other	1		4		416		421		421
Total restructuring charges	$	5,562	$	6,447	$	3,232	$	15,241	$	15,241

The table below presents a rollforward of ~~November 30, 2021.~~our accruals related to Project Pegasus, which are included in accounts payable and accrued expenses and other current liabilities:


(in thousands)	Balance at February 28, 2022		Charges		Payments		Balance at November 30, 2022
Severance and employee related costs	$	—	$	4,018	$	2,805	$	1,213
Professional fees	—		9,302		2,196		7,106
Contract termination	—		1,500		—		1,500
Other	—		421		414		7
Total	$	—	$	15,241	$	5,415	$	9,826

Note 89 - Commitments and Contingencies

Legal Matters

We are involved in various legal claims and proceedings in the normal course of operations. We believe the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity, except as described below.

On December 23, 2021, Brita LP filed a complaint against Kaz USA, Inc. and Helen of Troy Limited in the United States District Court for the Western District of Texas (the “Patent Litigation”), alleging patent infringement by the Company relating to its PUR gravity-fed water filtration systems. In the Patent Litigation, Brita LP seeks monetary damages and injunctive relief relating to the alleged infringement. Brita LP simultaneously filed a complaint with the United States International Trade Commission (“ITC”) against Kaz USA, Inc., Helen of Troy Limited and five other companies that sell water filtration systems (the “ITC Action”). The complaint in the ITC Action also alleges patent infringement by the Company with respect to a limited set of PUR gravity-fed water filtration systems. In the ITC Action, Brita LP requested the ITC to initiate an unfair import investigation relating to such filtration systems. This action seeks injunctive relief to prevent entry of PUR products (and certain other products) into the U.S. and removal of

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existing inventory that is already in the U.S. On January 25, 2022, the ITC instituted the investigation requested by the ITC Action. Discovery closed in the ITC Action in May 2022, and approximately half of the originally identified PUR gravity-fed water filters have been removed from the case and are no longer included in the ITC Action. In August 2022, the parties participated in the evidentiary hearing, with additional supplemental hearings in October 2022, and are awaiting a final opinion. The Patent Litigation has been stayed pending resolution of the ITC Action. We intend to vigorously pursue our claims and defenses in these proceedings. However, we cannot predict the outcome of these proceedings, the amount or range of any potential loss, or when the proceedings will be resolved. Litigation is inherently unpredictable, and the resolution or disposition of these proceedings could, if adversely determined, have a material and adverse impact on our financial position and results of operations.

Regulatory Matters

~~As a global company, we~~Our operations are subject to ~~U.S.~~national, state, local, and ~~foreign regulations, including~~provincial jurisdictions' environmental, health and safety laws and regulations and industry-specific product certifications. Many of the products we sell are subject to product safety laws and regulations in various jurisdictions. These laws and regulations specify the maximum allowable levels of certain materials that may be contained in our products, provide statutory prohibitions against misbranded and adulterated products, establish ingredients and manufacturing procedures for certain products, specify product safety testing requirements, and set product identification, labeling and claim requirements. Additionally, some ~~of our~~ product lines within our Health & ~~Home~~Wellness segment are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as the U.S. Environmental Protection Agency (the “EPA”), U.S. Customs and Border Protection, the U.S. Food and Drug Administration, and the U.S. Consumer Product Safety Commission.

~~In our quarterly report on Form 10-Q for our first quarter of~~During fiscal 2022, ~~we disclosed that~~ we were in discussions with the EPA regarding the compliance of packaging claims on certain of our products in the air and water filtration categories and a limited subset of humidifier products within the Health & ~~Home~~Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging compliance discussions, ~~on May 27, 2021,~~ we voluntarily implemented a temporary stop shipment action ~~across this line of~~on the impacted products ~~in the U.S.~~ as we worked with the EPA towards an expedient resolution. In July 2021, the EPA approved modest changes to our labeling claims on packaging of existing water filtration products, which we implemented, and subsequently began shipping in limited quantities during the second quarter ofOur fiscal 2022. The shipping volume for these products has continued to increase and, in September 2021, we returned to a more normalized level of shipping activity. In August 2021, the EPA approved changes to our air filtration packaging and we implemented a repackaging plan. We began shipping limited quantities of the impacted products at the end of August 2021 and returned to a more normalized level of shipping activity in November 2021. We have also resolved the majority of the packaging compliance concerns on the limited subset of humidifier products and do not expect them to have a material impact on our consolidated financial results. Our2022 consolidated, and Health & ~~Home~~Wellness segment’s, net sales revenue, gross profit and operating income ~~for the nine months ended November 30, 2021, have been~~was materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging ~~plans after changes were approved by the EPA. While we have~~plans. We previously resumed normalized levels of shipping of the affected inventory and, during the third quarter of fiscal 2023, we ~~are still in process~~completed the repackaging of ~~repackaging~~ our existing inventory of ~~affected~~impacted products. IfAdditionally, as a result of continuing dialogue with the EPA, we ~~are not able to execute our~~executed further repackaging and relabeling plans on ~~schedule to meet demand, our net sales revenue, gross profit~~certain additional humidifier products and ~~operating income could continue to be materially and adversely impacted. At this time,~~certain additional air filtration products, which were also completed during the third quarter of fiscal 2023. Although, we are not aware of any fines or penalties related to this matter imposed against us by the ~~EPA. While we do not anticipate material fines or penalties,~~EPA, there can be no assurances that such fines or penalties will not be imposed.

~~During~~We recorded charges to cost of goods sold to write-off obsolete packaging for the affected products in our inventory on-hand and in-transit. We have also incurred additional compliance costs comprised of obsolete packaging, storage and other charges from vendors, which were recognized in cost of goods sold and incremental warehouse storage costs and legal fees, which were recognized in SG&A. We refer to these charges as “EPA compliance costs.” A summary of EPA compliance costs incurred during the periods presented follows:

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	Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands)	2022		2021		2022			2021
Cost of goods sold	$	370	$	306	$	16,928	1	$	13,775	2
SG&A	1,733		4,620		5,173			7,223
Total EPA compliance costs	$	2,103	$	4,926	$	22,101		$	20,998

(1)Includes a $4.4 million charge to write-off the obsolete packaging for the affected additional humidifier products and affected additional air filtration products in our inventory on-hand and in-transit as of the end of the first quarter of fiscal ~~2022, we recorded~~2023.

(2)Includes a $13.1 million charge to cost of goods sold to write-off the obsolete packaging for the affected air filtration, water filtration and humidifier products in our inventory on-hand and in-transit as of the end of the first quarter of fiscal 2022. During the second and third quarters of fiscal 2022, we incurred additional compliance costs of $3.0 million and $4.9 million, respectively, comprised of incremental warehouse storage costs and legal fees of $2.6 million and $4.6 million, respectively, which were recognized in SG&A, and storage and obsolete packaging charges from vendors of $0.4 million and $0.3 million, respectively, which were recognized in cost of goods sold. These charges are referred to throughout this Form 10-Q as “EPA compliance costs.”

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vendors, and legal fees, among other things. Such potential incremental EPA compliance costs will be expensed as incurred and could materially and adversely impact our consolidated and Health & ~~Home~~Wellness segment’s gross profit and operating income. In addition, our net sales revenue could be materially and adversely impacted by customer returns, an increase in sales discounts and allowances and by the potential impact of distribution losses at certain retailers. Additional impacts or more pronounced adverse impacts may arise that we are not currently aware of today. Accordingly, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today. For additional information refer to Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs” ~~and to Part II, Item 1A., “Risk Factors” included within this Form 10-Q.~~.

Weather-Related Incident

On March 30, 2022, a third-party facility that we utilize for inventory storage incurred severe damage from a weather-related incident. The inventory that was stored at this facility primarily related to our Health & Wellness and Beauty segments. While the inventory is insured, some seasonal inventory and inventory designated for specific customer promotions was not accessible and subsequently determined to be damaged, and as a result, unfavorably impacted our net sales revenue during the first quarter of fiscal 2023. As a result of the damages to the inventory stored at the facility, during the first quarter of fiscal 2023, we recorded a charge to write-off the damaged inventory totaling $34.4 million, of which $29.9 million and $4.5 million related to our Health & Wellness and Beauty segments, respectively. These charges were fully offset by probable insurance recoveries of $34.4 million also recorded during the first quarter of fiscal 2023, which represented anticipated insurance proceeds, not to exceed the amount of the associated losses, for which receipt was deemed probable. The charges for the damaged inventory and the expected insurance recoveries are included in cost of goods sold in our condensed consolidated statement of income for the nine months ended November 30, 2022. During the third quarter of fiscal 2023, we received proceeds of $34.5 million from our insurance carriers related to this incident which are included in cash flows from operating activities in our condensed consolidated statement of cash flows for the nine months ended November 30, 2022. The Company also received final confirmation from our insurance carriers during the third quarter of 2023 of an additional $11.5 million in proceeds, which was collected during December 2022. As a result, during the third quarter of fiscal 2023, the Company recorded a gain of $9.7 million, net of costs incurred to dispose of the inventory, as a reduction of SG&A expense in our condensed consolidated statements of income, of which $8.2 million and $1.5 million was related to our Health & Wellness and Beauty segments, respectively. Any potential future proceeds from our business interruption insurance will be recognized when received.

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Note 910 - Long-Term Debt

A summary of our long-term debt follows:

(in thousands) November 30, 2021 February 28, 2021
Mississippi Business Finance Corporation Loan (the “MBFC Loan”) (1) $ 16,707 $ 18,607
Credit Agreement (2) 434,000 329,000
Subtotal 450,707 347,607
Unamortized prepaid financing fees (3,239) (3,977)
Total long-term debt 447,468 343,630
Less: current maturities of long-term debt (1,884) (1,884)
Long-term debt, excluding current maturities $ 445,584 $ 341,746


(in thousands)	November 30, 2022		February 28, 2022
Mississippi Business Finance Corporation Loan (the “MBFC Loan”) (1)	$	14,807	$	16,707
Credit Agreement (1):
Revolving loans	820,000		799,500
Term loans	248,438		—
Total borrowings under Credit Agreement	1,068,438		799,500
Subtotal	1,083,245		816,207
Unamortized prepaid financing fees	(2,785)		(2,991)
Total long-term debt	1,080,460		813,216
Less: current maturities of long-term debt	(20,872)		(1,884)
Long-term debt, excluding current maturities	$	1,059,588	$	811,332

(1)The weighted average interest rates on borrowings outstanding under the MBFC Loan isand Credit Agreement as of November 30, 2022 were5.4% and 5.9%, respectively, compared to 1.2% for both as of February 28, 2022.

Aggregate annual maturities of our long-term debt as of November 30, 2022 are as follows:


(in thousands)
Fiscal 2023 (balance for remainder of fiscal year)	$	1,563
Fiscal 2024	21,057
Fiscal 2025	6,250
Fiscal 2026	1,054,375
Fiscal 2027	—
Thereafter	—

Total	$	1,083,245

Capitalized Interest

During the three and nine month periods ended November 30, 2022, we incurred interest costs totaling $14.8 million and $30.0 million, respectively, of which we capitalized $1.7 million and $3.3 million, respectively, as part of property and equipment in connection with the construction of a new distribution center. During the three and nine month periods ended November 30, 2021, we incurred interest costs totaling $3.2 million and $9.5 million, respectively, of which none was capitalized.

Credit Agreement

We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $1.25 billion and ~~bears~~matures on March 13, 2025. At February 28, 2022, the Credit Agreement bore floating interest ~~based on~~at either the Base Rate or the London Interbank Offered Rate (“LIBOR”), plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0% for Base Rate and LIBOR borrowings, respectively.

On June 28, 2022, we entered into an amendment to the Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The term loans will be payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans

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made, beginning in the third quarter of fiscal 2023, with the remaining balance due at the maturity date. The maturity date of the term loans is March 13, 2025, which is the same maturity date as the revolving loans under the Credit Agreement. The proceeds from the term loans were used to repay revolving loans under the Credit Agreement. We may prepay the term loans, in whole or in part, at any time without premium or penalty. Following the amendment, borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings. As a result of the notice for the qualified acquisition, the maximum leverage ratio is 4.00 to 1.00 through February 28, 2023, 3.75 to 1.00 through May 31, 2023 and 3.50 to 1.00 thereafter.

The Credit Agreement was subsequently amended on November 2, 2022, to, among other things, permit the Company to enter into certain supply chain financing programs, structured vendor payable programs, payable financing programs or other similar financing programs, subject to certain conditions. The amendment also provides that these permitted supply chain arrangements are excluded for purposes of determining compliance with the maximum leverage ratio.

As of November 30, 2022, the balance of outstanding letters of credit was $18.2 million and the amount available for revolving borrowings under our Credit Agreement was $411.8 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As a result of our exercise of the qualified acquisition notice under the Credit Agreement, as of November 30, 2022, these covenants effectively limited our ability to incur more than $262.2 million of additional debt from all sources, including the Credit Agreement.

The floating interest rates, on our borrowings under the Credit Agreement, are hedged with interest rate swaps to effectively fix interest rates on $125 million of the outstanding principal balance under the revolving loans as of both November 30, 2022 and February 28, 2022. In connection with amending our Credit Agreement in June 2022, we updated our associated interest rate swap contracts to replace LIBOR with Term SOFR as the reference interest rate during the second quarter of fiscal 2023. In accordance with ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ( “ASU 2020-04”), we elected to apply the hedge accounting practical expedients related to changes to the critical terms of a hedging instrument, hedged item or forecasted transaction and changes in designated hedged interest rate risk. Application of these practical expedients allowed us to maintain hedge accounting for our interest rate swap contracts. See Notes 11, 12, and 13 for additional information regarding our interest rate swaps.

Other Debt Agreements

We have an unsecured loan agreement with the Mississippi Business Finance Corporation (the “MBFC”), which was entered into in connection with the issuance by MBFC of taxable industrial development revenue bonds. At February 28, 2022, the MBFC Loan bore floating interest based on either LIBOR plus a margin of up to 2.0%, or a Base Rate plus a margin of up to 1.0%, as determined by the interest rate elected and the Net Leverage Ratio defined in the loan agreement. ~~The weighted average interest rate on borrowings outstanding was1.1% at both~~ ~~November 30, 2021~~ ~~and February 28, 2021.~~

~~(2)~~On August 26, 2022, we entered into an amendment to the loan agreement for the unsecured MBFC Loan to, among other things, replace LIBOR with Term SOFR (as defined in the loan agreement) as the reference interest rate.~~The Credit Agreement (defined below) is unsecured and bears floating~~Following the effective date of the amendment, borrowings under the MBFC Loan bear interest at either the Base Rate or ~~LIBOR,~~Term SOFR (both as defined in the loan agreement), plus a margin based on the Net Leverage Ratio (as defined in the ~~Credit Agreement)~~ loan agreement)of 0% to 1.0% and 1.0% to 2.0% for Base Rate and ~~LIBOR~~Term SOFR borrowings, ~~respectively. These~~ ~~floating interest rates are hedged with interest rate swaps to effectively fix interest rates on $225 million~~respectively, plus a credit spread of ~~the outstanding principal balance under the Credit Agreement (see Notes 10, 11, and 12~~0.10% for ~~additional information regarding interest rate swaps). The weighted average interest rate on borrowings outstanding was 1.1% at both~~ ~~November 30, 2021 and~~ ~~February 28, 2021.~~Term SOFR borrowings.

~~Credit Agreement~~

~~We have a credit agreement (the "Credit Agreement")~~Table of Contents

In connection with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $1.25 billion. As of November 30, 2021, the balance of outstanding letters of credit was $32.7 million and the amount available for borrowings was $783.3 million. Covenants inamending the Credit Agreement ~~limit~~and the ~~amount of total indebtedness we can incur. As of November 30, 2021, these covenants effectively limited our ability~~MBFC Loan to ~~incur more than $735.8 million of additional debt from all sources, including the Credit Agreement, or $783.3 million~~replace LIBOR with Term SOFR (as defined in the ~~event a qualified acquisition is consummated.~~respective agreements), we elected to apply the contract modification practical expedient in accordance with ASU 2020-04. Application of this practical expedient provided relief from the requirement to evaluate whether the modification resulted in an extinguishment and allowed us to account for the modification by prospectively adjusting the effective interest rate in the agreements.

Debt Covenants

As of November 30, ~~2021,~~2022, we were in compliance with all covenants as defined under the terms of the Credit Agreement and our other debt agreements.

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Note 1011 - Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. These inputs are classified into the following hierarchy:

Level 1:Quoted prices for identical assets or liabilities in active markets;

Level 2:Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable; and

Level 3:Unobservable inputs that reflect the reporting entity’s own assumptions.

Our financial assets and liabilities are classified as Level 2 because their valuation is dependent on observable inputs and other quoted prices for similar assets or liabilities, or model-derived valuations whose significant value drivers are observable. The following ~~tables present~~table presents the carrying amount and fair value of our financial assets and liabilities measured and recorded at fair value on a recurring basis and classified as Level 2 as follows:


		Carrying Amount and Fair Value					Carrying Amount and Fair Value

(in thousands)	(in thousands)	November 30, 2021		February 28, 2021		(in thousands)	November 30, 2022		February 28, 2022
Assets:	Assets:					Assets:
Cash equivalents (money market accounts)	Cash equivalents (money market accounts)	$	791	$	1,631	Cash equivalents (money market accounts)	$	401	$	438

Interest rate swaps						Interest rate swaps	3,112		—
Foreign currency derivatives	Foreign currency derivatives	3,448		33		Foreign currency derivatives	2,511		2,918
Total assets	Total assets	$	4,239	$	1,664	Total assets	$	6,024	$	3,356

Liabilities:	Liabilities:					Liabilities:

Interest rate swaps	Interest rate swaps	$	5,186	$	9,941	Interest rate swaps	$	—	$	2,781
Foreign currency derivatives	Foreign currency derivatives	658		6,550		Foreign currency derivatives	293		825
Total liabilities	Total liabilities	$	5,844	$	16,491	Total liabilities	$	293	$	3,606

The carrying amounts of cash, accounts payable, accrued expenses and other current liabilities and income taxes payable approximate fair value because of the short maturity of these items. The carrying amounts of receivables approximate fair value due to the effect of the related allowance for credit losses. The carrying amount of our floating rate long-term debt approximates its fair value.

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We use derivatives to manage our exposure to changes in foreign currency exchange rates, which ~~can~~ include foreign currency forward contracts ~~zero cost collars~~ and cross-currency debt swaps. In addition, we use interest rate swaps to manage our exposure to changes in interest rates. All of our derivative assets and liabilities are recorded at fair value. See Notes 1112 and 1213 for more information on our derivatives.

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Note 1112 - Financial Instruments and Risk Management

Foreign Currency Risk

The U.S. Dollar is the functional currency for the Company and all of its subsidiaries and is also the reporting currency for the Company. By operating internationally, we are subject to foreign currency risk from transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreign currencies. ~~For both the three~~Approximately 15% and ~~nine month periods ended November 30, 2021, approximately 10%~~13% of our net sales revenue was denominated in foreign currencies during the three and nine month periods ended November 30, 2022, respectively, compared to ~~11% and 12%, respectively,~~10% for both of the same periods last year. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars and ~~Canadian Dollars.~~Norwegian Kroner. We make most of our inventory purchases from ~~vendors~~manufacturers in ~~the~~ Asia ~~Pacific market~~ and primarily use the U.S. Dollar for such purchases.

In our condensed consolidated statements of income, foreign currency exchange rate gains and losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities are recognized in their respective income tax lines, and all other foreign currency exchange rate gains and losses are recognized in SG&A. During the three and nine month periods ended November 30, ~~2021,~~2022, we recorded foreign currency exchange rate net gains of $1.1 million and net losses of ~~$0.3 million and $0.8~~$1.4 million, respectively, in SG&A, compared to foreign currency exchange rate net ~~gains~~losses of ~~$0.4~~$0.3 million and ~~$0.5~~$0.8 million, respectively, for the same periods last year.

We mitigate certain foreign currency exchange rate risk by using ~~a series of foreign currency contracts, which can include~~ forward contracts and ~~zero-cost collars, designated as cash flow hedges, and mark-to-market~~ cross-currency debt swaps to protect against the foreign currency exchange rate risk inherent in our ~~forecasted~~ transactions denominated in foreign currencies. We do not enter into any derivatives or similar instruments for trading or other speculative purposes. ~~Our foreign currency~~Certain of our forward contracts are designated as cash flow hedges (“foreign currency contracts”) and are recorded on the balance sheet at fair value with changes in fair value recorded in Other Comprehensive Income (Loss) (“OCI”) until the hedge transaction is settled, at which point amounts are reclassified from Accumulated Other Comprehensive Income (Loss) (“AOCI”) to our condensed consolidated statements of income. ~~Derivatives~~Foreign currency derivatives for which we have not elected hedge accounting consist of our forward contracts and cross-currency debt swaps, and any changes in the fair value of ~~the~~these derivatives are recorded in our condensed consolidated statements of income. These undesignated derivatives are used to hedge monetary net asset and liability positions. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness. ~~Any ineffectiveness, which is not material for any period presented, is immediately recognized in our condensed consolidated statements of income.~~

Interest Rate Risk

Interest on our outstanding debt as of November 30, ~~2021~~2022 is based on floating interest rates. If short-term interest rates increase, we will incur higher interest expense on any future outstanding balances of floating rate debt. Floating interest rates are hedged with interest rate swaps to effectively fix interest rates on ~~$225.0~~$125.0 million of the outstanding principal balance under the Credit Agreement, which totaled ~~$434.0~~$1,068.4 million as of November 30, ~~2021.~~2022. Our interest rate swaps are designated as cash flow hedges and are recorded on the balance sheet at fair value with changes in fair value recorded in OCI until the hedge transaction is settled, at which point amounts are reclassified from AOCI to our condensed

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consolidated statements of income. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness. ~~Any ineffectiveness, which is not material for any period presented, is immediately recognized in our condensed consolidated statements of income.~~

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The following tables summarize the fair values of our derivative instruments as of the end of the periods presented:


(in thousands)	(in thousands)	November 30, 2021												(in thousands)	November 30, 2022
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- current		Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- current

Forward contracts - sell Euro	Forward contracts - sell Euro	Cash flow	2/2023	€	30,500	$	1,494	$	157	$	—	$	—	Forward contracts - sell Euro	Cash flow	11/2023	€	17,670	$	483	$	—	$	—	$	—
Forward contracts - sell Canadian Dollars	Forward contracts - sell Canadian Dollars	Cash flow	2/2023	$	34,700	344		148		—		—		Forward contracts - sell Canadian Dollars	Cash flow	2/2024	$	40,450	1,243		—		—		24
Forward contracts - sell Pounds	Forward contracts - sell Pounds	Cash flow	2/2023	£	28,250	953		352		—		—		Forward contracts - sell Pounds	Cash flow	1/2024	£	25,225	775		—		34		145

Forward contracts - sell Australian Dollars														Forward contracts - sell Australian Dollars	Cash flow	12/2022	A$	250	7		—		—		—
Forward contracts - sell Norwegian Kroner														Forward contracts - sell Norwegian Kroner	Cash flow	10/2023	kr	40,000	—		—		35		—
Interest rate swaps	Interest rate swaps	Cash flow	1/2024	$	225,000	—		—		2,411		2,775		Interest rate swaps	Cash flow	1/2024	$	125,000	2,660		452		—		—
Subtotal	Subtotal					2,791		657		2,411		2,775		Subtotal					5,168		452		69		169

Derivatives not designated under hedge accounting	Derivatives not designated under hedge accounting													Derivatives not designated under hedge accounting
Cross-currency debt swaps - Euro		(1)	4/2022	€	6,000	—		—		272		—
Cross-currency debt swaps - Pounds		(1)	4/2022	£	4,500	—		—		386		—

Forward contracts - buy Euro														Forward contracts - buy Euro	(1)	12/2022	€	606	3		—		—		—
Forward contracts - buy Pounds														Forward contracts - buy Pounds	(1)	12/2022	£	2,152	—		—		55		—
Subtotal	Subtotal					—		—		658		—		Subtotal					3		—		55		—
Total fair value	Total fair value					$	2,791	$	657	$	3,069	$	2,775	Total fair value					$	5,171	$	452	$	124	$	169


(in thousands)	(in thousands)	February 28, 2021												(in thousands)	February 28, 2022
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- current		Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- current

Forward contracts - sell Euro	Forward contracts - sell Euro	Cash flow	2/2022	€	39,000	$	—	$	—	$	1,851	$	—	Forward contracts - sell Euro	Cash flow	2/2023	€	17,000	$	1,224	$	—	$	—	$	—
Forward contracts - sell Canadian Dollars	Forward contracts - sell Canadian Dollars	Cash flow	2/2023	$	34,000	—		33		1,061		—		Forward contracts - sell Canadian Dollars	Cash flow	2/2023	$	40,000	475		—		—		—

Forward contracts - sell Pounds	Forward contracts - sell Pounds	Cash flow	2/2023	£	34,500	—		—		2,026		21		Forward contracts - sell Pounds	Cash flow	2/2023	£	24,000	1,219		—		—		—

Forward contracts - sell Australian Dollars	Forward contracts - sell Australian Dollars	Cash flow	11/2021	A$	4,000	—		—		18		—		Forward contracts - sell Australian Dollars	Cash flow	12/2022	A$	5,700	—		—		113		—
Interest rate swaps	Interest rate swaps	Cash flow	1/2024	$	225,000	—		—		4,407		5,534		Interest rate swaps	Cash flow	1/2024	$	125,000	—		—		1,446		1,335
Subtotal	Subtotal					—		33		9,363		5,555		Subtotal					2,918		—		1,559		1,335

Derivatives not designated under hedge accounting	Derivatives not designated under hedge accounting													Derivatives not designated under hedge accounting
Cross-currency debt swaps - Euro	Cross-currency debt swaps - Euro	(1)	4/2022	€	6,000	—		—		—		817		Cross-currency debt swaps - Euro	(2)	4/2022	€	6,000	—		—		244		—
Cross-currency debt swaps - Pounds	Cross-currency debt swaps - Pounds	(1)	4/2022	£	4,500	—		—		—		756		Cross-currency debt swaps - Pounds	(2)	4/2022	£	4,500	—		—		468		—
Subtotal	Subtotal					—		—		—		1,573		Subtotal					—		—		712		—
Total fair value	Total fair value					$	—	$	33	$	9,363	$	7,128	Total fair value					$	2,918	$	—	$	2,271	$	1,335

(1)These forward contracts, for which we have not elected hedge accounting, hedge monetary net asset and liability positions for the notional amounts reported, creating an economic hedge against currency movements.

(2)These cross-currency debt swaps, for which we have not elected hedge accounting, adjust the currency denomination of a portion of our outstanding debt to the Euro and British Pound, as applicable, for the notional amounts reported, creating an economic hedge against currency movements.

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The pre-tax effects of derivative instruments designated as cash flow hedges were as follows for the periods presented:

Three Months Ended November 30,
Gain (Loss)
Recognized in AOCI Gain (Loss) Reclassified
from AOCI into Income
(in thousands) 2021 Location 2021
Foreign currency contracts - cash flow hedges $ 3,686 Sales revenue, net $ (354)
Interest rate swaps - cash flow hedges 1,045 Interest expense (1,300)
Total $ 4,731 $ (1,654)

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	Three Months Ended November 30,
	Gain (Loss) Recognized in AOCI				Gain (Loss) Reclassified from AOCI into Income
(in thousands)	2022		2021		Location	2022		2021
Foreign currency contracts - cash flow hedges	$	(685)	$	3,686	Sales revenue, net	$	4,484	$	(354)
Interest rate swaps - cash flow hedges	1,471		1,045		Interest expense	168		(1,300)


Total	$	786	$	4,731		$	4,652	$	(1,654)

Three Months Ended November 30,
Gain (Loss)
Recognized in AOCI Gain (Loss) Reclassified
from AOCI into Income
(in thousands) 2020 Location 2020
Foreign currency contracts - cash flow hedges $ 452 SG&A $ (549)
Interest rate swaps - cash flow hedges 250 Interest expense (1,289)
Total $ 702 $ (1,838)

Nine Months Ended November 30,
Gain (Loss)
Recognized in AOCI Gain (Loss) Reclassified
from AOCI into Income
(in thousands) 2021 Location 2021
Foreign currency contracts - cash flow hedges $ 5,951 Sales revenue, net $ (2,441)
Interest rate swaps - cash flow hedges 821 Interest expense (3,934)
Total $ 6,772 $ (6,375)

Nine Months Ended November 30,
Gain (Loss)
Recognized in AOCI Gain (Loss) Reclassified
from AOCI into Income
(in thousands) 2020 Location 2020
Foreign currency contracts - cash flow hedges $ (5,405) SG&A $ 124
Interest rate swaps - cash flow hedges (4,132) Interest expense (3,222)
Total $ (9,537) $ (3,098)


	Nine Months Ended November 30,
	Gain (Loss) Recognized in AOCI				Gain (Loss) Reclassified from AOCI into Income
(in thousands)	2022		2021		Location	2022		2021
Foreign currency contracts - cash flow hedges	$	7,860	$	5,951	Sales revenue, net	$	8,395	$	(2,441)
Interest rate swaps - cash flow hedges	5,100		821		Interest expense	(793)		(3,934)


Total	$	12,960	$	6,772		$	7,602	$	(6,375)

The pre-tax effects of derivative instruments not designated under hedge accounting were as follows for the periods presented:


		Gain (Loss) Recognized in Income										Gain (Loss) Recognized in Income
			Three Months Ended November 30,				Nine Months Ended November 30,						Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands)	(in thousands)	Location	2021		2020		2021		2020		(in thousands)	Location	2022		2021		2022		2021
Forward contracts											Forward contracts	SG&A	$	(12)	$	—	$	(262)	$	—
Cross-currency debt swaps - principal	Cross-currency debt swaps - principal	SG&A	$	575	$	23	$	915	$	(1,075)	Cross-currency debt swaps - principal	SG&A	—		575		875		915
Cross-currency debt swaps - interest	Cross-currency debt swaps - interest	Interest expense	(1)		(2)		(3)		72		Cross-currency debt swaps - interest	Interest expense	—		(1)		—		(3)
Total	Total		$	574	$	21	$	912	$	(1,003)	Total		$	(12)	$	574	$	613	$	912

We expect a net gain of ~~$0.4~~$5.1 million associated with foreign currency contracts and interest rate swaps currently ~~reported~~recorded in AOCI to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as exchange rates and interest rates change and the underlying contracts settle. See Notes 1011 and 1213 to these condensed consolidated financial statements for more information.

Counterparty Credit Risk

Financial instruments, including foreign currency contracts, forward contracts, cross-currency debt swaps and interest rate swaps, expose us to counterparty credit risk for non-performance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial

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institutions with significant experience using such derivative instruments. We believe that the risk of incurring credit losses is remote.

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Note 1213 - Accumulated Other Comprehensive Income (Loss)

The changes in AOCI by component and related tax effects for the periods presented were as follows:


(in thousands)	(in thousands)	Interest Rate Swaps		Foreign Currency Contracts		Total		(in thousands)	Interest Rate Swaps		Foreign Currency Contracts		Total
Balance at February 29, 2020		$	(8,199)	$	1,194	$	(7,005)
Other comprehensive loss before reclassification		(4,132)		(5,405)		(9,537)
Amounts reclassified out of AOCI		3,222		(124)		3,098
Tax effects		214		945		1,159
Other comprehensive loss		(696)		(4,584)		(5,280)
Balance at November 30, 2020		$	(8,895)	$	(3,390)	$	(12,285)

Balance at February 28, 2021	Balance at February 28, 2021	$	(7,576)	$	(4,080)	$	(11,656)	Balance at February 28, 2021	$	(7,576)	$	(4,080)	$	(11,656)
Other comprehensive income before reclassification	Other comprehensive income before reclassification	821		5,951		6,772		Other comprehensive income before reclassification	821		5,951		6,772
Amounts reclassified out of AOCI	Amounts reclassified out of AOCI	3,934		2,441		6,375		Amounts reclassified out of AOCI	3,934		2,441		6,375
Tax effects	Tax effects	(1,132)		(1,425)		(2,557)		Tax effects	(1,132)		(1,425)		(2,557)
Other comprehensive income	Other comprehensive income	3,623		6,967		10,590		Other comprehensive income	3,623		6,967		10,590
Balance at November 30, 2021	Balance at November 30, 2021	$	(3,953)	$	2,887	$	(1,066)	Balance at November 30, 2021	$	(3,953)	$	2,887	$	(1,066)

Balance at February 28, 2022								Balance at February 28, 2022	$	(2,126)	$	2,328	$	202
Other comprehensive income before reclassification								Other comprehensive income before reclassification	5,100		7,860		12,960
Amounts reclassified out of AOCI								Amounts reclassified out of AOCI	793		(8,395)		(7,602)
Tax effects								Tax effects	(1,391)		(30)		(1,421)
Other comprehensive income (loss)								Other comprehensive income (loss)	4,502		(565)		3,937
Balance at November 30, 2022								Balance at November 30, 2022	$	2,376	$	1,763	$	4,139

See Notes 9, 10, 11 and 1112 to these condensed consolidated financial statements for additional information regarding our cash flow hedges.

Note 1314 - Segment Information

As of November 30, 2022, we operated three reportable segments consisting of Home & Outdoor, Health & Wellness and Beauty. During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with our global restructuring plan (as further described in Note 8) that resulted in the Health & Wellness and Beauty operating segments being combined into a single reportable segment, which will be referred to as “Beauty & Wellness.” In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and to how our CEO, our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. Therefore, beginning with our fiscal 2023 Form 10-K, our future disclosures will reflect two reportable segments, Home & Outdoor and Beauty & Wellness, and we will recast the prior period segment information to conform to the change in the composition of these reportable segments. Accordingly, our external reportable segments will continue to align with our internal reporting to enable users of the financial statements to better understand our performance, better assess our prospects for future net cash flows, and make more informed judgements about the Company as a whole.

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The following tables summarize segment information for the periods presented:


		Three Months Ended November 30, 2021									Three Months Ended November 30, 2022
(in thousands)	(in thousands)	Housewares		Health & Home		Beauty		Total		(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Sales revenue, net	Sales revenue, net	$	246,135	$	203,900	$	174,849	$	624,884	Sales revenue, net	$	228,937	$	180,483	$	149,186	$	558,606
Restructuring charges	Restructuring charges	—		—		5		5		Restructuring charges	5,090		2,893		2,480		10,463
Operating income	Operating income	43,239		13,573		33,228		90,040		Operating income	30,847		21,257		25,089		77,193
Capital and intangible asset expenditures	Capital and intangible asset expenditures	16,159		633		783		17,575		Capital and intangible asset expenditures	28,788		3,830		941		33,559
Depreciation and amortization	Depreciation and amortization	2,894		2,529		3,218		8,641		Depreciation and amortization	4,716		3,446		3,551		11,713


		Three Months Ended November 30, 2020									Three Months Ended November 30, 2021
(in thousands)	(in thousands)	Housewares		Health & Home		Beauty		Total		(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Sales revenue, net	Sales revenue, net	$	222,400	$	250,158	$	165,179	$	637,737	Sales revenue, net	$	246,135	$	203,900	$	174,849	$	624,884
Restructuring charges	Restructuring charges	(12)		—		—		(12)		Restructuring charges	—		—		5		5

Operating income	Operating income	37,658		30,478		32,573		100,709		Operating income	43,239		13,573		33,228		90,040
Capital and intangible asset expenditures	Capital and intangible asset expenditures	1,375		2,441		370		4,186		Capital and intangible asset expenditures	16,159		633		783		17,575
Depreciation and amortization	Depreciation and amortization	2,371		4,106		3,042		9,519		Depreciation and amortization	2,894		2,529		3,218		8,641

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		Nine Months Ended November 30, 2021									Nine Months Ended November 30, 2022
(in thousands)	(in thousands)	Housewares		Health & Home		Beauty		Total		(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Sales revenue, net	Sales revenue, net	$	654,997	$	549,475	$	436,863	$	1,641,335	Sales revenue, net	$	703,759	$	529,930	$	354,395	$	1,588,084
Restructuring charges	Restructuring charges	369		—		11		380		Restructuring charges	5,562		6,447		3,232		15,241
Operating income	Operating income	112,303		29,616		80,247		222,166		Operating income	102,722		12,505		42,851		158,078
Capital and intangible asset expenditures	Capital and intangible asset expenditures	36,196		3,613		1,720		41,529		Capital and intangible asset expenditures	133,939		8,269		3,986		146,194
Depreciation and amortization	Depreciation and amortization	8,257		7,879		9,946		26,082		Depreciation and amortization	13,704		9,279		10,347		33,330


		Nine Months Ended November 30, 2020									Nine Months Ended November 30, 2021
(in thousands)	(in thousands)	Housewares		Health & Home		Beauty		Total		(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total
Sales revenue, net	Sales revenue, net	$	564,891	$	661,568	$	362,965	$	1,589,424	Sales revenue, net	$	654,997	$	549,475	$	436,863	$	1,641,335
Restructuring charges	Restructuring charges	251		—		104		355		Restructuring charges	369		—		11		380

Operating income	Operating income	106,294		95,782		54,887		256,963		Operating income	112,303		29,616		80,247		222,166
Capital and intangible asset expenditures	Capital and intangible asset expenditures	6,912		10,346		2,165		19,423		Capital and intangible asset expenditures	36,196		3,613		1,720		41,529
Depreciation and amortization	Depreciation and amortization	6,743		12,331		8,921		27,995		Depreciation and amortization	8,257		7,879		9,946		26,082

The following table presents net sales revenue by geographic region, in U.S. Dollars:


	Three Months Ended November 30,								Nine Months Ended November 30,
(in thousands)	2022				2021				2022				2021
U.S. sales revenue, net	$	410,832	73.5	%	$	496,666	79.5	%	$	1,170,349	73.7	%	$	1,271,102	77.4	%
International sales revenue, net	147,774		26.5	%	128,218		20.5	%	417,735		26.3	%	370,233		22.6	%
Total sales revenue, net	$	558,606	100.0	%	$	624,884	100.0	%	$	1,588,084	100.0	%	$	1,641,335	100.0	%

Note 1415 - Income Taxes

We reorganized the Company in Bermuda in 1994 and many of our foreign subsidiaries are not directly or indirectly owned by a U.S. parent. As such, a large portion of our foreign income is not subject to U.S.

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taxation on a permanent basis under current law. Additionally, our intellectual property is largely owned by foreign subsidiaries, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective tax rate. The taxable income earned in each jurisdiction, whether U.S. or foreign, is determined by the subsidiary's operating results and transfer pricing and tax regulations in the related jurisdictions.

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions and other items.

On ~~March 11, 2021,~~August 16, 2022, the ~~American Rescue Plan~~Inflation Reduction Act (the ~~“ARP”~~“Act”) was enacted and signed into law. The ~~ARP~~Act is ~~an economic stimulus~~a budget reconciliation package ~~in response~~that includes significant law changes relating to ~~the COVID-19 outbreak which contains~~tax, climate change, energy, and health care. The tax provisions ~~that did~~include, among other items, a corporate alternative minimum tax of 15%, an excise tax of 1% on corporate stock buy-backs, energy-related tax credits, and additional IRS funding. We do not expect these tax provisions to have a material impact to our ~~condensed~~ consolidated financial statements.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted and signed into law. The CARES Act is an emergency economic stimulus package in response to the COVID-19 outbreak that contains numerous tax provisions. Among other things, the CARES Act included technical corrections to the effective date language in the Tax Cuts and Jobs Act, enacted into law on December 22, 2017 (the “Tax Act”), related to net operating loss carrybacks.

Upon the enactment of the Tax Act in fiscal 2018, there was a net operating loss on our balance sheet, which was measured using the U.S. statutory tax rate in effect prior to enactment. As a result of the Tax Act, we were required to record a one-time charge of $17.9 million in fiscal 2018, which included a charge of $9.4 million to remeasure the net operating loss at the reduced rate at which it was expected to reverse in the future. The CARES Act effectively reversed the impact of the Tax Act on our net operating loss, resulting in a corresponding tax benefit of $9.4 million recorded in the first quarter of fiscal 2021.

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~~year period, partially offset by~~and shifts in the mix of income in our various tax ~~jurisdictions.~~jurisdictions, which were partially offset by increases in tax benefits for discrete items. For the nine months ended November 30, ~~2021,~~2022, income tax expense as a percentage of income before income tax was ~~13.6%~~18.6% compared to ~~6.5%~~13.6% for the same period last ~~year,~~year. The year-over-year increase in the effective tax rate is primarily due to lower forecasted annual income before income taxes, shifts in the mix of income in our various tax jurisdictions, and ~~the benefit of the CARES Act~~an increase in ~~fiscal 2021, partially offset by the favorable comparative impact of increases in liabilities related to uncertain~~ tax ~~positions in the prior year period.~~expense for discrete items.

Note 1516 - Earnings Per Share

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during the period. We compute diluted earnings per share using the weighted average number of shares of common stock outstanding plus the effect of dilutive securities. Dilutive securities at any given point in time may consist of outstanding options to purchase common stock and issued and contingently issuable unvested restricted stock units, performance stock units, restricted stock awards and performance restricted stock awards and other ~~stock based~~stock-based awards. Anti-dilutive securities are not included in the computation of diluted earnings per share under the treasury stock method. See Note 56 to these condensed consolidated financial statements for more information regarding stock-based awards.

The following table presents our weighted average basic and diluted shares outstanding for the periods shown:


		Three Months Ended November 30,		Nine Months Ended November 30,			Three Months Ended November 30,		Nine Months Ended November 30,
(in thousands)	(in thousands)	2021	2020	2021	2020	(in thousands)	2022	2021	2022	2021
Weighted average shares outstanding, basic	Weighted average shares outstanding, basic	24,129	24,965	24,193	25,182	Weighted average shares outstanding, basic	23,991	24,129	23,942	24,193
Incremental shares from share-based compensation arrangements	Incremental shares from share-based compensation arrangements	270	227	268	168	Incremental shares from share-based compensation arrangements	87	270	144	268
Weighted average shares outstanding, diluted	Weighted average shares outstanding, diluted	24,399	25,192	24,461	25,350	Weighted average shares outstanding, diluted	24,078	24,399	24,086	24,461

Anti-dilutive securities	Anti-dilutive securities	20	4	16	149	Anti-dilutive securities	53	20	45	16

~~Note 16 - Subsequent Events~~

On December 29, 2021, we completed the acquisition of Osprey Packs, Inc., a longtime U.S. leader in technical and everyday packs. The total purchase consideration, net of cash acquired, was $414.7 million in cash, including the impact of a $5.3 million favorable customary closing net working capital adjustment. The acquisition was funded with cash on hand and a $435.0 million borrowing under our existing revolving credit facility. After giving effect to the borrowing, as of December 29, 2021, the remaining amount available for borrowings under our Credit Agreement was $351.8 million. The initial accounting for this business combination is in process. We incurred acquisition-related expenses of $1.6 million during the third quarter of fiscal 2022, which were recognized in SG&A within our condensed consolidated statements of income.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements included under Part I, Item 1., “Financial Statements.” The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations. Actual results may differ materially due to a number of factors, including those discussed in Part II, Item 1A.,“Risk Factors,” and in the section entitled “Information Regarding Forward-Looking Statements” following this MD&A, and in Part I, Item 3., “Quantitative and Qualitative Disclosures About Market Risk” in this report, as well as in Part ~~II,~~I, Item IA., “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended February 28, ~~2021~~2022 (“Form 10-K”) and its other filings with the Securities and Exchange Commission (the “SEC”). When used in this MD&A, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries. Throughout this MD&A, we refer to our Leadership Brands, which are brands that have number-one and number-two positions in their respective categories and include OXO, ~~Honeywell, Braun, PUR,~~ Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.

This MD&A, including the tables under the headings “Operating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income, Diluted EPS, Adjusted Income (non-GAAP), and Adjusted Diluted EPS (non-GAAP),” reports operating income, operating margin, net income and diluted earnings per share (“EPS”) without the impact of acquisition-related expenses, EPA compliance costs, gain from insurance recoveries, restructuring charges, ~~tax reform,~~ amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based measures presented in our condensed consolidated statements of income. We believe that adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges and benefits on applicable income, margin and earnings per share measures. We also believe that these non-GAAP measures facilitate a more direct comparison of our performance to our competitors. We further believe that including the excluded charges and benefits would not accurately reflect the underlying performance of our operations for the period in which the charges and benefits are incurred, even though such charges and benefits may be incurred and reflected in our GAAP financial results in the near future. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS are not prepared in accordance with GAAP, are not an alternative to GAAP financial information and may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information. These non-GAAP measures are discussed further and reconciled to their applicable GAAP-based measures contained in this MD&A beginning on page ~~37.~~46.

There were no material changes to the key financial measures discussed in our Form 10-K.

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Overview

We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. We have built leading market positions through new product innovation, product quality and competitive pricing. We currently operate in three segments consisting of ~~Housewares,~~Home & Outdoor, Health & ~~Home,~~Wellness, and Beauty.

During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with our global restructuring plan (as further described below) that resulted in the Health & Wellness and Beauty operating segments being combined into a single reportable segment, which will be referred to as “Beauty & Wellness.” In connection with these organizational structure changes, corresponding changes were made to how our business is managed, how results are reported internally and to how our Chief Executive Officer (“CEO”), our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. Therefore, beginning with our fiscal 2023 Form 10-K, our future disclosures will reflect two reportable segments, Home & Outdoor and Beauty & Wellness, and we will recast the prior period segment information to conform to the change in the composition of these reportable segments. Accordingly, our external reportable segments will continue to align with our internal reporting to enable users of the financial statements to better understand our performance, better assess our prospects for future net cash flows, and make more informed judgements about the Company as a whole.

In fiscal 2015, we launched a five-year transformational strategy designed to improve the performance of our business segments and strengthen our shared service capabilities. Fiscal 2019 marked the completion of Phase I of our multi-year transformation strategy, which delivered performance across a wide range of measures. We improved organic sales growth by focusing on our Leadership Brands, made strategic acquisitions, became a more efficient operating company with strong global shared services, upgraded our organization and culture, improved inventory turns and return on invested capital, and returned capital to shareholders.

Fiscal 2020 began Phase II of our transformation, which iswas designed to drive the next five years of progress. The long-term objectives of Phase II include improved organic sales growth, continued margin expansion, and strategic and effective capital deployment. Phase II includes continued investment in our Leadership Brands, with a focus on growing them through consumer-centric innovation, expanding them more aggressively outside the United States of America (the “U.S.”), and adding new brands through acquisition. We are building further shared service capability and operating efficiency, as well as focusing on attracting, retaining, unifying and training the best people. Additionally, we are ~~enhancing~~continuing to enhance and ~~consolidating~~consolidate our environmental, social and governance efforts and ~~accelerating~~accelerate programs related to diversity, equity, inclusion and ~~inclusion~~belonging to support our Phase II transformation.

InDuring the second quarter of fiscal ~~2018,~~2023, we ~~announced~~focused on developing a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (referred to as “Project ~~Refuel”~~Pegasus”) ~~intended~~. Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the performance primarily in the Beauty and former Nutritional Supplements segments. Project Refuel includes charges for a reduction-in-force and the elimination of certain contracts. During the first quarter of fiscal 2019, we expanded Project Refuel to include the realignment and streamliningefficiency of our supply chain ~~structure.~~network, optimize our indirect spending, and improve our cash flow and working capital, as well as other activities. We anticipate these initiatives will create operating efficiencies, as well as provide a platform to fund future growth investments.

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As part of the Project Pegasus initiative focused on streamlining and simplifying the organization, we are ~~targeting total~~announcing plans to further change the structure of our organization, which include the creation of a North America Regional Market Organization (“RMO”) responsible for sales and go to market strategies for all categories and channels in the U.S. and Canada, and further centralization of certain functions under shared services, particularly in operations and finance to better support our business segments and RMOs. This new structure, inclusive of the organizational structure changes described above resulting in the reportable segment change, will reduce the size of our global workforce by approximately 10%. The majority of the role reductions are expected to be completed by March 1, 2023. Nearly all of the remaining role reductions are expected to be completed before the end of fiscal year 2024. We believe that these changes better focus business segment resources on brand development, consumer-centric innovation and marketing, the RMOs on sales and go to market strategies, and shared services on their respective areas of expertise while also creating a more efficient and effective organizational structure.

Consistent with the second quarter of fiscal 2023, we continue to have the following expectations regarding Project Pegasus:

•Estimated cadence of the ~~plan. We estimate~~recognition of the ~~plan~~savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.

•Total profit improvements to be ~~completed during fiscal 2022~~realized approximately 60% through reduced cost of goods sold and ~~expect to incur total~~40% through lower selling, general and administrative expense (“SG&A”).

•Total one-time pre-tax restructuring charges of approximately ~~$10.3~~$85 million to $95 million over the duration of the plan, which is expected to be completed during fiscal 2025 and will primarily be comprised of ~~which $9.6 million~~severance and employee related costs, professional fees, contract termination costs, and other exit and disposal costs.

•All of our operating segments and shared services will be impacted by the plan.

In addition, we have ~~been incurred through~~implemented plans to reduce inventory levels, increase inventory turns, and improve cash flow and working capital. Improvements related to these initiatives began in the third quarter of fiscal ~~2022.~~2023 and we expect improvements to continue during the remainder of fiscal 2023 and into fiscal 2024. Expectations regarding our Project Pegasus initiatives and our ability to realize targeted savings, including expectations concerning costs and savings, are based on management’s estimates available at the time and are subject to a number of assumptions that could materially impact our estimates.

During the three and nine month periods ended November 30, 2022, we incurred $10.5 million and $15.2 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statements of income. See Note 78 to the accompanying condensed consolidated financial statements for additional information.

Consistent with our strategy of focusing resources on our Leadership Brands, during the fourth quarter of fiscal 2020, we committed to a plan to divest certain assets within our Beauty segment's mass channel personal care business, which included liquid, powder and aerosol products under brands such as Pert, Brut, Sure and Infusium (“Personal Care”). On June 7, 2021, we completed the sale of our North America Personal Care business ~~not including the Latin America and Caribbean regions,~~ to HRB Brands LLC, for $44.7 million in ~~cash.~~cash and recognized a gain on the sale in SG&A totaling $0.5 million. On March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care business to HRB Brands LLC, for $1.8 million in cash and recognized a gain on the sale in SG&A totaling $1.3 million. The net assets sold included intangible assets, inventory, certain net trade receivables, fixed assets and certain accrued sales discounts and allowances relating to our ~~North America~~ Personal Care business. ~~During the second quarter~~As a result of ~~fiscal 2022,~~these dispositions, we recognized a gain on the sale in selling, general and administrative expense (“SG&A”) totaling $0.5 million. We are continuing to negotiate the sale of the Latin America and Caribbean Personal Care businesses to HRB Brands LLC, which we expect to close no ~~later than the end of fiscal 2022. Accordingly, we~~longer have ~~continued to classify the identified net~~any assets ~~of the Latin America and Caribbean Personal Care businesses~~or liabilities classified as held for sale. ~~See Note 3 to the accompanying condensed consolidated financial statements for additional information.~~

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~~Subsequent~~On April 22, 2022, we completed the acquisition of Recipe Products Ltd., a producer of innovative prestige hair care products for all types of curly and wavy hair under the Curlsmith brand (“Curlsmith”). The Curlsmith brand and products were added to the ~~end~~Beauty segment. The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment and cash acquired. We incurred pre-tax acquisition expenses of $2.7 million during the nine months ended November 30, 2022, which were recognized in SG&A within our ~~third quarter, on~~condensed consolidated statement of income.

On December 29, 2021, we completed the acquisition of Osprey Packs, Inc. (“Osprey”), a longtime U.S. leader in technical and everyday ~~packs.~~packs, for $409.3 million in cash, net of a final net working capital adjustment and cash acquired. Osprey is highly respected in the outdoor industry with a product lineup that includes a wide range of backpacks and daypacks for hiking, mountaineering, skiing, climbing, mountain biking, trail running, commuting, and school, as well as rugged adventure travel packs, wheeled luggage, and travel accessories. The Osprey brand and products were added to the Home & Outdoor segment.

We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $1.25 billion and matures on March 13, 2025. On June 28, 2022, we entered into an amendment to the Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. Accordingly, we updated our interest rate swap contracts associated with the Credit Agreement borrowings to replace LIBOR with Term SOFR as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The Credit Agreement was subsequently amended on November 2, 2022, to, among other things, permit the Company to enter into certain supply chain financing programs, structured vendor payable programs, payable financing programs or other similar financing programs, subject to certain conditions. The amendment also provides that these permitted supply chain arrangements are excluded for purposes of

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~~purchase consideration, net~~determining compliance with the maximum leverage ratio. In addition, we have an unsecured loan agreement with the Mississippi Business Finance Corporation (the “MBFC”), which was entered into in connection with the issuance by MBFC of ~~cash acquired, was $414.7 million~~taxable industrial development revenue bonds (the “MBFC Loan”). On August 26, 2022, we entered into an amendment to the loan agreement for the unsecured MBFC Loan to, among other things, replace LIBOR with Term SOFR (as defined in ~~cash, including~~ the impact of a $5.3 million favorable customary closing net working capital adjustment. The acquisition was funded with cash on hand and borrowings from our existing revolving credit facility. We incurred acquisition-related expenses of $1.6 million duringloan agreement) as the ~~third quarter of fiscal 2022, which were recognized in SG&A within our~~reference interest rate.For additional information, see Note 10 to the accompanying condensed consolidated financial statements ~~of income.~~and below under “Credit Agreement and Other Debt Agreements.”

Significant Trends Impacting the Business

Impact of ~~COVID-19~~Macroeconomic Trends

InBeginning in March 2020, interest rates were at historically low levels, primarily due to impacts to the ~~World Health Organization declared~~U.S economy caused by COVID-19. More recently, higher consumer demand, lower interest rates, global supply chain disruption, and other factors have contributed to rapidly accelerating economic inflation. To offset the ~~outbreak~~impacts of inflation, since March 2022, the Federal Open Market Committee has been raising interest rates, and has stated it intends to continue to raise rates into 2023. During 2023 we have incurred higher average interest rates compared to the same period last year, and we expect this trend to continue during the remainder of fiscal year 2023. While the actual timing and extent of the future increases in interest rates remains unknown, higher long-term interest rates are expected to significantly increase interest expense on our outstanding debt. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflict, including the current conflict between Russia and Ukraine, or other geopolitical events. High inflation and interest rates have also negatively impacted consumer disposable income, credit availability and spending, among others, which have adversely impacted our business, financial condition, cash flows and results of operations and may continue to have an adverse impact during the remainder of fiscal year 2023. See further discussion below under “Consumer Spending and Changes in Shopping Preferences.” We expect continued uncertainty in our business and the global economy due to pressure from inflation, supply chain disruptions, volatility in employment trends and consumer confidence, ongoing uncertainties related to any new surges and responses to COVID-19, any of which may adversely impact our results.

Consumer Spending and Changes in Shopping Preferences

Our business depends upon discretionary consumer demand for most of our products and primarily operates within mature and highly developed consumer markets. The principal driver of our operating performance is the strength of the U.S. retail economy. Approximately 74% and 79% of our consolidated net sales revenue was from U.S. shipments during the three month periods ended November 30, 2022 and 2021, respectively. For the nine month periods ended November 30, 2022 and 2021, U.S. shipments were approximately 74% and 77% of our consolidated net sales revenue.

Among other things, high levels of inflation and interest rates may negatively impact consumer disposable income, credit availability and spending. Consumer purchases of discretionary items, including the products that we offer, generally decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a ~~novel coronavirus (“COVID-19”)~~reduction in consumer confidence. Additionally, the ongoing COVID-19 pandemic increases this uncertainty and may further impact the global supply chain, capital and financial markets and consumer confidence and spending. Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers is predicated on their ability to sell to the end consumer. During the second and third quarters of fiscal year 2023, we experienced an adverse impact on orders from customers as they aimed to rebalance their inventory levels due to lower consumer demand and shifts in consumer spending patterns. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation, changes in consumer spending

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patterns, and global supply chain disruptions. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Our concentration of sales reflects the evolution of consumer shopping preferences to online or multichannel shopping experiences. Our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 26% and 23% of our total consolidated net sales revenue for the three and nine month periods ended November 30, 2022, respectively, and grew approximately 3% and 1%, respectively, as compared to the same periods in the prior year.

For the three and nine month periods ended November 30, 2021, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 23% and 22% of our total consolidated net sales revenue, respectively, and both declined approximately 7%, compared to the same periods in the prior year.

With the continued growth in online sales across the retail landscape, many brick and mortar retailers are aggressively looking for ways to improve their customer delivery capabilities to be able to meet customer expectations. As a ~~pandemic. The effects~~result, it will become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of ~~the~~our customers, as well as to increase our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers.

Continuing Impact of COVID-19

The COVID-19 pandemic have had an unfavorable impact on certain parts of our business. The impact includes the effect of temporary closures of certain customer stores, or limited hours of operation, and materially lower store traffic, primarily during fiscal 2021. Additionally, COVID-19 has disruptedcontinues to disrupt certain parts of our supply ~~chain.~~chain, which in certain cases has limited our ability to fulfill demand and may limit our ability to fulfill demand in the future. Surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, have strained the global freight network, which ~~is resulting~~has resulted in higher costs, less capacity, and longer lead times. ~~These factors may impact our ability to fulfill some orders on a timely basis. Additionally, the~~During fiscal 2023, we have been adversely impacted by COVID-19 related global supply chain disruptions and cost increases. The extent of COVID-19’s impact on the demand for certain of our product lines in the future will depend on continuing future developments, including any new variants and surges in the ~~duration,~~ spread ~~and intensity~~ of ~~the pandemic,~~COVID-19, our continued ability to source and distribute our products, ~~as well as any future government actions affecting consumers~~the impact of COVID-19 on capital and financial markets, and the ~~global economy generally,~~related impact on consumer confidence and spending, all of which are uncertain and difficult to predict considering the ~~rapidly~~continuously evolving landscape. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Future developments are outside of our control, are highly uncertain and cannot be predicted. If the COVID-19 impact or potential economic downturn is prolonged, then it can further increase the difficulty of planning for operations. These and other potential impacts of the current public health crisis could therefore materially and adversely affect our business, financial condition, cash flows and results of operations.

Global Supply Chain and Related Cost Inflation Trends

~~Surges~~During fiscal 2021 and 2022, surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, ~~have continued to strain~~strained the global supply chain network, which ~~has~~ resulted in carrier-imposed capacity restrictions, carrier delays, and longer lead times. ~~Demand~~This increased demand for Chinese imports ~~has caused shipment receiving~~ and ~~unloading backlogs at many U.S. ports that have been unable to keep pace with unprecedented inbound container volume. The situation has been further exacerbated by~~ COVID-19 illness and protocols ~~at many port locations. Due~~within China caused disruptions to ~~the backlog and increasing trade imbalance with China, many shipping containers are not being sent back~~global supply chains. This increased demand led to ~~China, or are being sent to China empty. With continued increases in demand for containers, limited supply and freight vendors bearing the cost of shipping empty containers,~~ the market cost of inbound freight ~~has increased~~increasing by several multiples compared to calendar year 2020 averages. ~~In addition to increasing cost trends,~~The disruptions in the global supply chain and freight networks also resulted in shortages of qualified drivers, which limited inbound and outbound shipment capacity and increased our ~~third party manufacturing partners are not equipped to hold meaningful amounts~~costs of ~~inventory~~goods sold and ~~if shipping container capacity remains limited or unavailable, they could pause manufacturing, which could ultimately impact our ability to meet consumer demand on a timely basis.~~certain operating expenses. Demand for raw materials, components and semiconductor chips impacted by the supply chain challenges described above ~~have~~has created surges in prices and shortages of these materials may become more significant which could further increase our costs. Further, in the U.S., the surge in demand ~~along with COVID-19 related government stimulus~~for labor and rising hourly labor wages have created labor shortages and higher labor costs. ~~The majority of~~During fiscal 2023, as consumer demand has slowed in reaction to a highly inflationary economic environment, global supply chain capacity has improved and freight costs have begun to recede from their previous peaks. These global supply chain disruptions and related inflationary cost trends have adversely impacted our ~~hourly labor is employed in our distribution centers~~business, financial condition, cash flows and ~~these factors may increase our costs and negatively impact our ability to attract and retain qualified associates.~~

results

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of operations. Continuation of adverse trends, or more pronounced adverse impacts may arise which could have further negative impacts to our business, results of operations and financial condition.

EPA Compliance Costs

Some ~~of our~~ product lines within our Health & ~~Home~~Wellness segment are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as the U.S. Environmental Protection Agency (the “EPA”), U.S. Customs and Border Protection, the U.S. Food and Drug Administration, and the U.S. Consumer Product Safety Commission.

~~In our quarterly report on Form 10-Q for our first quarter of~~During fiscal 2022, ~~we disclosed that~~ we were in discussions with the EPA regarding the compliance of packaging claims on certain of our products in the air and water filtration categories and a limited subset of humidifier products within the Health & ~~Home~~Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging compliance discussions, ~~on May 27, 2021,~~ we voluntarily implemented a temporary stop shipment action ~~across this line of~~on the impacted products ~~in the U.S.~~ as we worked with the EPA towards an expedient resolution. In July 2021, the EPA approved modest changes to our labeling claims on packaging of existing water filtration products, which we implemented, and subsequently began shipping in limited quantities during the second quarter ofOur fiscal 2022. The shipping volume for these products has continued to increase and, in September 2021, we returned to a more normalized level of shipping activity. In August 2021, the EPA approved changes to our air filtration packaging and we implemented a repackaging plan. We began shipping limited quantities of the impacted products at the end of August 2021 and returned to a more normalized level of shipping activity in November 2021. We have also resolved the majority of the packaging compliance concerns on the limited subset of humidifier products and do not expect them to have a material impact on our consolidated financial results.~~Our~~2022 consolidated, and Health & ~~Home~~Wellness segment’s, net sales revenue, gross profit and operating income ~~for the nine months ended November 30, 2021, have been~~was materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging ~~plans after changes were approved by the EPA. While we have~~plans. We previously resumed normalized levels of shipping of the affected inventory and, during the third quarter of fiscal 2023, we ~~are still in process~~completed the repackaging of ~~executing~~ our existing inventory of impacted products. Additionally, as a result of continuing dialogue with the EPA, we executed further repackaging ~~plans. If we are not able to execute our repackaging~~and relabeling plans on ~~schedule to meet demand, our net sales revenue, gross profit~~certain additional humidifier products and ~~operating income could continue to be materially and adversely impacted. The extent to~~certain additional air filtration products, which ~~net sales revenue, gross profit and operating income could be impacted will primarily depend on product demand and~~were also completed during the ~~duration~~third quarter of time required to repackage the affected inventory. In addition, our net sales revenue could be materially and adversely impacted by customer returns, an increase in sales discounts and allowances and by the potential impact of distribution losses at certain retailers.fiscal 2023.

We recorded charges to cost of goods sold to write-off obsolete packaging for the affected products in our inventory on-hand and in-transit. We have also incurred additional compliance costs comprised of obsolete packaging, storage and other charges from vendors, which were recognized in cost of goods sold and incremental warehouse storage costs and legal fees, which were recognized in SG&A. We refer to these charges as “EPA compliance costs.” A summary of EPA compliance costs incurred during the periods presented follows:


	Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands)	2022		2021		2022			2021
Cost of goods sold	$	370	$	306	$	16,928	1	$	13,775	2
SG&A	1,733		4,620		5,173			7,223
Total EPA compliance costs	$	2,103	$	4,926	$	22,101		$	20,998

~~During~~(1)Includes a $4.4 million charge to write-off the obsolete packaging for the affected additional humidifier products and affected additional air filtration products in our inventory on-hand and in-transit as of the end of the first quarter of fiscal ~~2022, we recorded~~2023.

In addition, ~~during the second and third quarters of fiscal 2022,~~ we incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products ~~and expect to continue to incur and capitalize such costs as we continue to repackage~~beginning in the ~~remainder of the inventory during the fourth~~second quarter of fiscal ~~2022.~~2022 through completion of the repackaging in the third quarter of fiscal 2023. We also expect to incur additional compliance costs, which may include incremental ~~freight,~~ warehouse storage costs, charges from vendors, and legal fees, among other things. Such potential incremental EPA compliance costs will be expensed as incurred and could materially and adversely impact our consolidated and Heath & ~~Home~~Wellness segment's gross profit and operating income. Additional impacts or more pronounced adverse impacts may arise that we are not currently aware of today. Accordingly, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today.

~~At this time,~~Although, we are not aware of any fines or penalties related to this matter imposed against us by the ~~EPA. While we do not anticipate material fines or penalties,~~EPA, there can be no assurances that such fines or penalties will not be imposed.

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See Note 89 to our condensed consolidated financial statements for additional ~~information and Part II, Item 1A., “Risk Factors” in this Form 10-Q for additional information on our related material risks.~~information.

~~Potential Impact~~Table of ~~Tariffs~~Contents

Since 2019, the Office of the U.S. Trade Representative (“USTR”) has imposed, and in certain cases subsequently reduced or removed, additional tariffs on products imported from China. We purchase a high concentration of our products from unaffiliated manufacturers located in China. This concentration exposes us to risks associated with doing business globally, including changes in tariffs. Any alteration of trade agreements and terms between China and the U.S., including limiting trade with China, imposing additional tariffs on imports from China and potentially imposing other restrictions on exports from China to the U.S. may result in further and/or higher tariffs or retaliatory trade measures by China. Furthermore, in certain cases, we have been successful in obtaining tariff exclusions from the USTR on certain products that we import. These exclusions generally expire after a designated period of time. In the case that a tariff exclusion is not granted or extended, higher tariffs would be assessed on the related products.

Foreign Currency Exchange Rate Fluctuations

Due to the nature of our operations, we have exposure to the impact of fluctuations in exchange rates from transactions that are denominated in a currency other than our functional currency (the U.S. Dollar). Such transactions include sales, certain inventory purchases and operating expenses. The most significant currencies affecting our operating results are the British Pound, Euro, Canadian Dollar, Mexican Peso and ~~Mexican Peso.~~Norwegian Kroner.

For the three months ended November 30, ~~2021,~~2022, changes in foreign currency exchange rates had ~~a favorable~~an unfavorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $7.1 million, or 1.1%, compared to a favorable year-over-year impact of $1.2 million, or 0.2%~~, compared to $1.7 million, or 0.4%~~ for the same period last year. For the nine months ended November 30, ~~2021,~~2022, changes in foreign currency exchange rates had ~~a favorable~~an unfavorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $14.8 million, or 0.9%, compared to a favorable year-over-year impact of $8.8 million, or 0.6%~~, compared to an unfavorable impact of $3.2 million, or 0.3%~~ for the same period last year.

~~Consumer Spending and Changes in Shopping Preference~~s

Our business depends upon discretionary consumer demand for most of our products and primarily operates within mature and highly developed consumer markets. The principal driver of our operating performance is the strength of the U.S. retail economy. Approximately 79% and 80% of our consolidated net sales revenue was from U.S. shipments during the three month periods ended November 30, 2021 and 2020, respectively. For the nine month periods ended November 30, 2021 and 2020, U.S. shipments were approximately 77% and 79% of our consolidated net sales revenue.

Our concentration of sales reflects the evolution of consumer shopping preferences to online or multichannel shopping experiences. Our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 23% and 22% of our total consolidated net sales revenue for the three and nine month periods ended November 30, 2021, respectively, and both declined approximately 7%, compared to the same periods in the prior year.

For the three and nine month periods ended November 30, 2020, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 24% and 25%, respectively, of our total consolidated net sales revenue, and grew approximately 34% and 33%, respectively, compared to the same periods in the prior year.

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capabilities in order to meet the changing demands of our customers, as well as to increase our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers.

Variability of the Cough/Cold/Flu Season

Sales in several of our Health & ~~Home~~Wellness segment categories are highly correlated to the severity of winter weather and cough/cold/flu incidence. In the U.S., the cough/cold/flu season historically runs from November through March, with peak activity normally in January to March. The ~~2020-2021~~2021-2022 cough/cold/flu season was below historical averages, but higher than the 2020-2021 season, which experienced historically low incidence levels due to COVID-19 prevention measures including mask-wearing, remote learning, work from home, and reduced travel, brick and mortar shopping, and group gatherings. ~~For the 2019-2020 season, cough/cold/flu incidence was slightly higher than the 2018-2019 season, which was a below average season.~~

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RESULTS OF OPERATIONS

The following tables provide selected operating data, in U.S. Dollars, as a percentage of net sales revenue, and as a year-over-year percentage change.


		Three Months Ended November 30,								% of Sales Revenue, net					Three Months Ended November 30,								% of Sales Revenue, net
(in thousands)	(in thousands)	2021		2020		$ Change		% Change		2021		2020		(in thousands)	2022 (1)(2)		2021		$ Change		% Change		2022		2021
Sales revenue by segment, net	Sales revenue by segment, net													Sales revenue by segment, net
Housewares		$	246,135	$	222,400	$	23,735	10.7	%	39.4	%	34.9	%
Health & Home		203,900		250,158		(46,258)		(18.5)	%	32.6	%	39.2	%
Home & Outdoor														Home & Outdoor	$	228,937	$	246,135	$	(17,198)	(7.0)	%	41.0	%	39.4	%
Health & Wellness														Health & Wellness	180,483		203,900		(23,417)		(11.5)	%	32.3	%	32.6	%
Beauty	Beauty	174,849		165,179		9,670		5.9	%	28.0	%	25.9	%	Beauty	149,186		174,849		(25,663)		(14.7)	%	26.7	%	28.0	%
Total sales revenue, net	Total sales revenue, net	624,884		637,737		(12,853)		(2.0)	%	100.0	%	100.0	%	Total sales revenue, net	558,606		624,884		(66,278)		(10.6)	%	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	351,051		350,410		641		0.2	%	56.2	%	54.9	%	Cost of goods sold	301,930		351,051		(49,121)		(14.0)	%	54.1	%	56.2	%
Gross profit	Gross profit	273,833		287,327		(13,494)		(4.7)	%	43.8	%	45.1	%	Gross profit	256,676		273,833		(17,157)		(6.3)	%	45.9	%	43.8	%
SG&A	SG&A	183,788		186,630		(2,842)		(1.5)	%	29.4	%	29.3	%	SG&A	169,020		183,788		(14,768)		(8.0)	%	30.3	%	29.4	%

Restructuring charges	Restructuring charges	5		(12)		17		*		—	%	—	%	Restructuring charges	10,463		5		10,458		*		1.9	%	—	%
Operating income	Operating income	90,040		100,709		(10,669)		(10.6)	%	14.4	%	15.8	%	Operating income	77,193		90,040		(12,847)		(14.3)	%	13.8	%	14.4	%
Non-operating income, net	Non-operating income, net	52		93		(41)		(44.1)	%	—	%	—	%	Non-operating income, net	5		52		(47)		(90.4)	%	—	%	—	%
Interest expense	Interest expense	3,206		2,926		280		9.6	%	0.5	%	0.5	%	Interest expense	13,149		3,206		9,943		*		2.4	%	0.5	%
Income before income tax	Income before income tax	86,886		97,876		(10,990)		(11.2)	%	13.9	%	15.3	%	Income before income tax	64,049		86,886		(22,837)		(26.3)	%	11.5	%	13.9	%
Income tax expense	Income tax expense	11,203		13,721		(2,518)		(18.4)	%	1.8	%	2.2	%	Income tax expense	12,223		11,203		1,020		9.1	%	2.2	%	1.8	%

Net income	Net income	$	75,683	$	84,155	$	(8,472)	(10.1)	%	12.1	%	13.2	%	Net income	$	51,826	$	75,683	$	(23,857)	(31.5)	%	9.3	%	12.1	%

		Nine Months Ended November 30,								% of Sales Revenue, net					Nine Months Ended November 30,								% of Sales Revenue, net
(in thousands)	(in thousands)	2021		2020		$ Change		% Change		2021		2020		(in thousands)	2022 (1)(2)		2021		$ Change		% Change		2022		2021
Sales revenue by segment, net	Sales revenue by segment, net													Sales revenue by segment, net
Housewares		$	654,997	$	564,891	$	90,106	16.0	%	39.9	%	35.5	%
Health & Home		549,475		661,568		(112,093)		(16.9)	%	33.5	%	41.6	%
Home & Outdoor														Home & Outdoor	$	703,759	$	654,997	$	48,762	7.4	%	44.3	%	39.9	%
Health & Wellness														Health & Wellness	529,930		549,475		(19,545)		(3.6)	%	33.4	%	33.5	%
Beauty	Beauty	436,863		362,965		73,898		20.4	%	26.6	%	22.8	%	Beauty	354,395		436,863		(82,468)		(18.9)	%	22.3	%	26.6	%
Total sales revenue, net	Total sales revenue, net	1,641,335		1,589,424		51,911		3.3	%	100.0	%	100.0	%	Total sales revenue, net	1,588,084		1,641,335		(53,251)		(3.2)	%	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	936,322		892,460		43,862		4.9	%	57.0	%	56.1	%	Cost of goods sold	898,791		936,322		(37,531)		(4.0)	%	56.6	%	57.0	%
Gross profit	Gross profit	705,013		696,964		8,049		1.2	%	43.0	%	43.9	%	Gross profit	689,293		705,013		(15,720)		(2.2)	%	43.4	%	43.0	%
SG&A	SG&A	482,467		439,646		42,821		9.7	%	29.4	%	27.7	%	SG&A	515,974		482,467		33,507		6.9	%	32.5	%	29.4	%

Restructuring charges	Restructuring charges	380		355		25		7.0	%	—	%	—	%	Restructuring charges	15,241		380		14,861		*		1.0	%	—	%
Operating income	Operating income	222,166		256,963		(34,797)		(13.5)	%	13.5	%	16.2	%	Operating income	158,078		222,166		(64,088)		(28.8)	%	10.0	%	13.5	%
Non-operating income, net	Non-operating income, net	185		440		(255)		(58.0)	%	—	%	—	%	Non-operating income, net	185		185		—		—	%	—	%	—	%
Interest expense	Interest expense	9,508		9,568		(60)		(0.6)	%	0.6	%	0.6	%	Interest expense	26,688		9,508		17,180		*		1.7	%	0.6	%
Income before income tax	Income before income tax	212,843		247,835		(34,992)		(14.1)	%	13.0	%	15.6	%	Income before income tax	131,575		212,843		(81,268)		(38.2)	%	8.3	%	13.0	%
Income tax expense	Income tax expense	28,873		16,061		12,812		79.8	%	1.8	%	1.0	%	Income tax expense	24,482		28,873		(4,391)		(15.2)	%	1.5	%	1.8	%

Net income	Net income	$	183,970	$	231,774	$	(47,804)	(20.6)	%	11.2	%	14.6	%	Net income	$	107,093	$	183,970	$	(76,877)	(41.8)	%	6.7	%	11.2	%

(1)The three and nine month periods ended November 30, 2022 include approximately thirteen and thirty-two weeks of operating results from Curlsmith, respectively, which was acquired on April 22, 2022. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

(2)The three and nine month periods ended November 30, 2022 include operating results from Osprey, which was acquired on December 29, 2021. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

* Calculation is not meaningful.

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Third Quarter Fiscal ~~2022~~2023 Financial Results

•Consolidated net sales revenue decreased ~~2.0%~~10.6%, or ~~$12.9~~$66.3 million, to ~~$624.9~~$558.6 million for the three months ended November 30, ~~2021,~~2022, compared to ~~$637.7~~$624.9 million for the same period last year.

•Consolidated operating income decreased ~~10.6%~~14.3%, or ~~$10.7~~$12.8 million, to ~~$90.0~~$77.2 million for the three months ended November 30, ~~2021,~~2022, compared to ~~$100.7~~$90.0 million for the same period last year. Consolidated operating margin decreased ~~1.4~~0.6 percentage points to ~~14.4%~~13.8% of consolidated net sales revenue for the three months ended November 30, ~~2021,~~2022, compared to ~~15.8%~~14.4% for the same period last year.

•Consolidated adjusted operating income decreased ~~5.2%~~12.7%, or ~~$5.8~~$13.4 million, to ~~$106.1~~$92.7 million for the three months ended November 30, ~~2021,~~2022, compared to ~~$111.9~~$106.1 million for the same period last year. Consolidated adjusted operating margin decreased ~~0.6~~0.4 percentage points to ~~17.0%~~16.6% of consolidated net sales revenue for the three months ended November 30, ~~2021,~~2022, compared to ~~17.6%~~17.0% for the same period last year.

•Net income decreased ~~10.1%~~31.5%, or ~~$8.5~~$23.9 million, to ~~$75.7~~$51.8 million for the three months ended November 30, ~~2021,~~2022, compared to ~~$84.2~~$75.7 million for the same period last year. Diluted EPS decreased ~~7.2%~~30.6% to ~~$3.10~~$2.15 for the three months ended November 30, ~~2021,~~2022, compared to ~~$3.34~~$3.10 for the same period last year.

•Adjusted income decreased ~~4.4%~~26.9%, or ~~$4.1~~$24.4 million, to ~~$90.6~~$66.3 million for the three months ended November 30, ~~2021,~~2022, compared to ~~$94.8~~$90.6 million for the same period last year. Adjusted diluted EPS decreased ~~1.1%~~26.1% to ~~$3.72~~$2.75 for the three months ended November 30, ~~2021,~~2022, compared to ~~$3.76~~$3.72 for the same period last year.

Year-To-Date Fiscal ~~2022~~2023 Financial Results

•Consolidated net sales revenue ~~increased 3.3%~~decreased 3.2%, or ~~$51.9~~$53.3 million, to ~~$1,641.3~~$1,588.1 million for the nine months ended November 30, ~~2021,~~2022, compared to ~~$1,589.4~~$1,641.3 million for the same period last year.

•Consolidated operating income decreased ~~13.5%~~28.8%, or ~~$34.8~~$64.1 million, to ~~$222.2~~$158.1 million for the nine months ended November 30, ~~2021,~~2022, compared to ~~$257.0~~$222.2 million for the same period last year. Consolidated operating margin decreased ~~2.7~~3.5 percentage points to ~~13.5%~~10.0% of consolidated net sales revenue for the nine months ended November 30, ~~2021,~~2022, compared to ~~16.2%~~13.5% for the same period last year.

•Consolidated adjusted operating income decreased ~~3.1%~~17.1%, or ~~$9.0~~$48.2 million, to ~~$282.5~~$234.2 million for the nine months ended November 30, ~~2021,~~2022, compared to ~~$291.5~~$282.5 million for the same period last year. Consolidated adjusted operating margin decreased ~~1.1~~2.4 percentage points to ~~17.2%~~14.8% of consolidated net sales revenue for the nine months ended November 30, ~~2021,~~2022, compared to ~~18.3%~~17.2% for the same period last year.

•Net income decreased ~~20.6%~~41.8%, or ~~$47.8~~$76.9 million, to ~~$184.0~~$107.1 million for the nine months ended November 30, ~~2021,~~2022, compared to ~~$231.8~~$184.0 million for the same period last year. Diluted EPS decreased ~~17.7%~~40.8% to ~~$7.52~~$4.45 for the nine months ended November 30, ~~2021,~~2022, compared to ~~$9.14~~$7.52 for the same period last year.

•Adjusted income decreased ~~5.5%~~25.6%, or ~~$14.0~~$61.8 million, to ~~$240.9~~$179.1 million for the nine months ended November 30, ~~2021,~~2022, compared to ~~$254.9~~$240.9 million for the same period last year. Adjusted diluted

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EPS decreased ~~2.0%~~24.5% to ~~$9.85~~$7.44 for the nine months ended November 30, ~~2021,~~2022, compared to ~~$10.05~~$9.85 for the same period last year.

Consolidated and Segment Net Sales Revenue

The following tables summarize the impact that Organic business, ~~and~~ foreign currency and acquisitions had on our net sales revenue by segment:


		Three Months Ended November 30,													Three Months Ended November 30,
(in thousands)	(in thousands)	Housewares			Health & Home			Beauty			Total			(in thousands)	Home & Outdoor			Health & Wellness			Beauty			Total
Fiscal 2021 sales revenue, net		$	222,400		$	250,158		$	165,179		$	637,737
Fiscal 2022 sales revenue, net														Fiscal 2022 sales revenue, net	$	246,135		$	203,900		$	174,849		$	624,884
Organic business	Organic business	23,601			(46,595)			8,943			(14,051)			Organic business	(57,262)			(22,046)			(36,242)			(115,550)
Impact of foreign currency	Impact of foreign currency	134			337			727			1,198			Impact of foreign currency	(3,191)			(1,371)			(2,512)			(7,074)

Acquisition (1)														Acquisition (1)	43,255			—			13,091			56,346
Change in sales revenue, net	Change in sales revenue, net	23,735			(46,258)			9,670			(12,853)			Change in sales revenue, net	(17,198)			(23,417)			(25,663)			(66,278)
Fiscal 2022 sales revenue, net		$	246,135		$	203,900		$	174,849		$	624,884
Fiscal 2023 sales revenue, net														Fiscal 2023 sales revenue, net	$	228,937		$	180,483		$	149,186		$	558,606

Total net sales revenue growth (decline)	Total net sales revenue growth (decline)	10.7		%	(18.5)		%	5.9		%	(2.0)		%	Total net sales revenue growth (decline)	(7.0)		%	(11.5)		%	(14.7)		%	(10.6)		%
Organic business	Organic business	10.6		%	(18.6)		%	5.4		%	(2.2)		%	Organic business	(23.3)		%	(10.8)		%	(20.7)		%	(18.5)		%
Impact of foreign currency	Impact of foreign currency	0.1		%	0.1		%	0.4		%	0.2		%	Impact of foreign currency	(1.3)		%	(0.7)		%	(1.4)		%	(1.1)		%

Acquisition														Acquisition	17.6		%	—		%	7.5		%	9.0		%

Nine Months Ended November 30,
(in thousands) Housewares Health & Home Beauty Total
Fiscal 2021 sales revenue, net $ 564,891 $ 661,568 $ 362,965 $ 1,589,424
Organic business 88,812 (116,302) 70,640 43,150
Impact of foreign currency 1,294 4,209 3,258 8,761
Change in sales revenue, net 90,106 (112,093) 73,898 51,911
Fiscal 2022 sales revenue, net $ 654,997 $ 549,475 $ 436,863 $ 1,641,335
Total net sales revenue growth (decline) 16.0 % (16.9) % 20.4 % 3.3 %
Organic business 15.7 % (17.6) % 19.5 % 2.7 %
Impact of foreign currency 0.2 % 0.6 % 0.9 % 0.6 %


	Nine Months Ended November 30,
(in thousands)	Home & Outdoor			Health & Wellness			Beauty			Total
Fiscal 2022 sales revenue, net	$	654,997		$	549,475		$	436,863		$	1,641,335
Organic business	(85,186)			(16,939)			(104,759)			(206,884)
Impact of foreign currency	(7,950)			(2,606)			(4,253)			(14,809)
Acquisition (1)	141,898			—			26,544			168,442
Change in sales revenue, net	48,762			(19,545)			(82,468)			(53,251)
Fiscal 2023 sales revenue, net	$	703,759		$	529,930		$	354,395		$	1,588,084

Total net sales revenue growth (decline)	7.4		%	(3.6)		%	(18.9)		%	(3.2)		%
Organic business	(13.0)		%	(3.1)		%	(24.0)		%	(12.6)		%
Impact of foreign currency	(1.2)		%	(0.5)		%	(1.0)		%	(0.9)		%
Acquisition	21.7		%	—		%	6.1		%	10.3		%

(1)Beauty segment's sales from acquisition for the three and nine month periods ended November 30, 2022 includes approximately thirteen and thirty-two weeks of operating results from Curlsmith, respectively, which was acquired on April 22, 2022. Home & Outdoor segment's sales from acquisition for the three and nine month periods ended November 30, 2022 includes operating results from Osprey, which was acquired on December 29, 2021. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

In the above tables, Organic business refers to our net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand was acquired, excluding the impact that foreign currency remeasurement had on reported net sales revenue. Net sales revenue from internally developed brands or product lines is considered Organic business activity.

We define Core business as strategic business that we expect to be an ongoing part of our operations, and Non-Core business as business or net assets (including net assets held for sale) that we expect to divest within a year of its designation as Non-Core. During the fourth quarter of fiscal 2020, we committed to a plan to divest certain assets within our Personal Care business. ~~As a result, sales from our Personal Care business are included in Non-Core business for all periods presented.~~ On June 7, 2021, we

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completed the sale of our North America Personal Care ~~business. Sales from our~~business and on March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care ~~businesses continue to be~~business. Accordingly, sales from our Personal Care business were included in Non-Core business for all historical periods ~~presented as the related net~~presented. As a result of these dispositions, we no longer have any results of operations from Non-Core business or any assets ~~continue to be~~or liabilities classified as held for sale.

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The following tables summarize the impact that Core business and Non-Core (Personal Care) business had on our net sales revenue by segment:


	Three Months Ended November 30,
(in thousands)	Home & Outdoor			Health & Wellness			Beauty			Total
Fiscal 2022 sales revenue, net	$	246,135		$	203,900		$	174,849		$	624,884
Core business	(17,198)			(23,417)			(21,288)			(61,903)
Non-Core business (Personal Care)	—			—			(4,375)			(4,375)
Change in sales revenue, net	(17,198)			(23,417)			(25,663)			(66,278)
Fiscal 2023 sales revenue, net	$	228,937		$	180,483		$	149,186		$	558,606

Total net sales revenue decline	(7.0)		%	(11.5)		%	(14.7)		%	(10.6)		%
Core business	(7.0)		%	(11.5)		%	(12.2)		%	(9.9)		%
Non-Core business (Personal Care)	—		%	—		%	(2.5)		%	(0.7)		%

Three Months Ended November 30,
(in thousands) Housewares Health & Home Beauty Total
Fiscal 2021 sales revenue, net $ 222,400 $ 250,158 $ 165,179 $ 637,737
Core business 23,735 (46,258) 25,266 2,743
Non-Core business (Personal Care) — — (15,596) (15,596)
Change in sales revenue, net 23,735 (46,258) 9,670 (12,853)
Fiscal 2022 sales revenue, net $ 246,135 $ 203,900 $ 174,849 $ 624,884
Total net sales revenue growth (decline) 10.7 % (18.5) % 5.9 % (2.0) %
Core business 10.7 % (18.5) % 15.3 % 0.4 %
Non-Core business (Personal Care) — % — % (9.4) % (2.4) %


		Nine Months Ended November 30,													Nine Months Ended November 30,
(in thousands)	(in thousands)	Housewares			Health & Home			Beauty			Total			(in thousands)	Home & Outdoor			Health & Wellness			Beauty			Total
Fiscal 2021 sales revenue, net		$	564,891		$	661,568		$	362,965		$	1,589,424
Fiscal 2022 sales revenue, net														Fiscal 2022 sales revenue, net	$	654,997		$	549,475		$	436,863		$	1,641,335
Core business	Core business	90,106			(112,093)			106,090			84,103			Core business	48,762			(19,545)			(52,231)			(23,014)
Non-Core business (Personal Care)	Non-Core business (Personal Care)	—			—			(32,192)			(32,192)			Non-Core business (Personal Care)	—			—			(30,237)			(30,237)
Change in sales revenue, net	Change in sales revenue, net	90,106			(112,093)			73,898			51,911			Change in sales revenue, net	48,762			(19,545)			(82,468)			(53,251)
Fiscal 2022 sales revenue, net		$	654,997		$	549,475		$	436,863		$	1,641,335
Fiscal 2023 sales revenue, net														Fiscal 2023 sales revenue, net	$	703,759		$	529,930		$	354,395		$	1,588,084

Total net sales revenue growth (decline)	Total net sales revenue growth (decline)	16.0		%	(16.9)		%	20.4		%	3.3		%	Total net sales revenue growth (decline)	7.4		%	(3.6)		%	(18.9)		%	(3.2)		%
Core business	Core business	16.0		%	(16.9)		%	29.2		%	5.3		%	Core business	7.4		%	(3.6)		%	(12.0)		%	(1.4)		%
Non-Core business (Personal Care)	Non-Core business (Personal Care)	—		%	—		%	(8.9)		%	(2.0)		%	Non-Core business (Personal Care)	—		%	—		%	(6.9)		%	(1.8)		%

Leadership Brand and Other Net Sales Revenue

The following tables summarize our Leadership Brand and other net sales revenue:

Three Months Ended November 30,
(in thousands) 2021 2020 $ Change % Change
Leadership Brand sales revenue, net $ 506,982 $ 508,210 $ (1,228) (0.2) %
All other sales revenue, net 117,902 129,527 (11,625) (9.0) %
Total sales revenue, net $ 624,884 $ 637,737 $ (12,853) (2.0) %


		Nine Months Ended November 30,									Three Months Ended November 30,
(in thousands)	(in thousands)	2021		2020		$ Change		% Change		(in thousands)	2022		2021		$ Change		% Change
Leadership Brand sales revenue, net(1)	Leadership Brand sales revenue, net(1)	$	1,329,858	$	1,288,614	$	41,244	3.2	%	Leadership Brand sales revenue, net(1)	$	451,500	$	506,982	$	(55,482)	(10.9)	%
All other sales revenue, net	All other sales revenue, net	311,477		300,810		10,667		3.5	%	All other sales revenue, net	107,106		117,902		(10,796)		(9.2)	%
Total sales revenue, net	Total sales revenue, net	$	1,641,335	$	1,589,424	$	51,911	3.3	%	Total sales revenue, net	$	558,606	$	624,884	$	(66,278)	(10.6)	%


	Nine Months Ended November 30,
(in thousands)	2022		2021		$ Change		% Change
Leadership Brand sales revenue, net (1)	$	1,338,849	$	1,329,858	$	8,991	0.7	%
All other sales revenue, net	249,235		311,477		(62,242)		(20.0)	%
Total sales revenue, net	$	1,588,084	$	1,641,335	$	(53,251)	(3.2)	%

(1)The three and nine months ended November 30, 2022 include operating results from Osprey, which was acquired on December 29, 2021. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

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Consolidated Net Sales Revenue

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Consolidated net sales revenue decreased ~~$12.9~~$66.3 million, or ~~2.0%~~10.6%, to ~~$624.9~~$558.6 million, compared to ~~$637.7~~$624.9 million. The decline was primarily driven by a decrease from Organic business of $115.6 million, or 18.5%, primarily due to:

•lower sales in all segments due to lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the unfavorable comparative impact of approximately $15 million from earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and

•a net sales revenue decline of $4.4 million in Non-Core business due to the sale of our Personal Care business.

These factors were partially offset by the impact of customer price increases related to rising freight and product costs and an increase in sales of humidification products in our Health & Wellness segment.

The Osprey and Curlsmith acquisitions contributed $43.3 million and $13.1 million, respectively, or 9.0% to consolidated net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $7.1 million, or 1.1%.

Net sales revenue from our Leadership Brands was $451.5 million, compared to $507.0 million for the same period last year, representing a decrease of 10.9%.

Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Consolidated net sales revenue decreased $53.3 million, or 3.2%, to $1,588.1 million, compared to $1,641.3 million. The decline was driven by a decrease from Organic business of ~~$14.1~~$206.9 million, or ~~2.2%, primarily due to:~~

•~~a decrease in sales in our Health & Home segment as a result of the EPA packaging compliance matter and related stop shipment actions and stronger COVID-19 driven demand for healthcare~~

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~~and healthy living products, primarily in thermometry and air filtration, in the comparative prior year period; and~~

•~~a net sales revenue decline in Non-Core business primarily due to the sale of our North America Personal Care business during the second quarter of fiscal 2022.~~

~~These factors were partially offset by:~~

•higher brick and mortar and online channel sales in our Beauty and Housewares segments due primarily to strong consumer demand, earlier than typical customer orders as retailers accelerated orders into the third quarter to try to avoid supply chain disruptions during the holiday season and the favorable comparative impact of COVID-19 reduced store traffic and a soft back to school season in the prior year period;

•~~the impact of customer price increases related to rising freight and product costs; and~~

•~~higher sales in the club and closeout channels.~~

~~Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $1.2 million, or 0.2%.~~

~~Net sales revenue from our Leadership Brands was $507.0 million, compared to $508.2 million for the same period last year, representing a decline of 0.2%.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

~~Consolidated net sales revenue increased $51.9 million, or 3.3%, to $1,641.3 million, compared to $1,589.4 million. Growth was driven by an increase from Organic business of $43.2 million, or 2.7%~~12.6%, primarily reflecting:

•~~higher brick and mortar and online channel~~lower sales in ~~our Beauty and Housewares~~all segments due ~~primarily~~ to ~~strong~~lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the ~~favorable~~unfavorable comparative ~~impact~~impacts of ~~COVID-19 related store closures, reduced store traffic and a soft back to school season in the prior year period, and earlier than typical customer orders as~~approximately $20 million from retailers that accelerated orders into the ~~third~~fourth quarter ~~to try to avoid supply chain disruptions during the holiday season;~~

•~~growth in consolidated international sales;~~

•~~higher sales in the club and closeout channels; and~~

•~~the favorable impact~~ of fiscal 2022, approximately $15 million from orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of the late-February winter storm in the U.S. (“Winter Storm Uri”). that were shipped in the first quarter of fiscal 2022 and approximately $15 million of earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and

•a net sales revenue decline of $30.2 million in Non-Core business due to the sale of our Personal Care business.

These factors were partially offset by:

•~~a decrease~~an increase in sales in our Health & ~~Home~~Wellness segment air filtration, humidification and water filtration categories as a result of the EPA packaging compliance matter and related stop shipment actions ~~and stronger COVID-19 driven demand for healthcare and healthy living products, primarily in thermometry and air filtration,~~ in the comparative prior year ~~period;~~period and higher seasonal heaters and humidification product sales;

•~~a net sales revenue decline in Non-Core business primarily due to the sale of our North America Personal Care business during the second quarter of fiscal 2022.~~

~~Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $8.8 million, or 0.6%.~~

~~Net sales revenue from our Leadership Brands was $1,329.9 million, compared to $1,288.6 million for the same period last year, representing an increase of 3.2%.~~

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~~Segment Net Sales Revenue~~

~~Housewares~~

~~Comparison of Third Quarter Fiscal 2022 to Third Quarter Fiscal 2021~~

~~Net sales revenue increased $23.7 million, or 10.7%, to $246.1 million, compared to $222.4 million. Growth was driven by an increase from Organic business of $23.6 million, or 10.6%, primarily due to:~~

•higher ~~brick~~prestige market personal care category sales in our Beauty segment; and mortar and online channel sales driven by strong consumer demand, earlier than typical customer orders as retailers accelerated orders into the third quarter to try to avoid supply chain disruptions during the holiday season and the favorable comparative impact of COVID-19 reduced store traffic and a soft back to school season in the prior year period;

•the impact of customer price increases related to rising freight and product ~~costs;~~

•~~higher sales in the club and closeout channels; and~~

•~~growth in international sales.~~costs.

The Osprey and Curlsmith acquisitions contributed $141.9 million and $26.5 million, respectively, or 10.3% to consolidated net sales revenue growth.

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Net sales revenue was ~~favorably~~also unfavorably impacted by net foreign currency fluctuations of approximately ~~$0.1~~$14.8 million, or ~~0.1%~~0.9%.

Net sales revenue from our Leadership Brands was $1,338.8 million, compared to $1,329.9 million for the same period last year, representing an increase of 0.7%.

Segment Net Sales Revenue

Home & Outdoor

Comparison of Third Quarter Fiscal 2023 to Third Quarter Fiscal 2022

Net sales revenue decreased $17.2 million, or 7.0%, to $228.9 million, compared to $246.1 million. The decline was driven by a decrease from Organic business of $57.3 million, or 23.3%, primarily due to:

•declines in sales primarily due to lower consumer demand driven by shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the unfavorable comparative impact of earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and

•lower sales in the club channel.

These factors were partially offset by higher sales in the closeout channel and the impact of customer price increases related to rising freight and product costs.

The Osprey acquisition contributed $43.3 million, or 17.6%, to segment net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $3.2 million, or 1.3%.

Comparison of First Nine Months of Fiscal ~~2022~~2023 to First Nine Months of Fiscal ~~2021~~2022

Net sales revenue increased ~~$90.1~~$48.8 million, or ~~16.0%~~7.4%, to $703.8 million, compared to $655.0 million, ~~compared~~primarily due to ~~$564.9 million. Growth~~the contribution from the acquisition of Osprey of $141.9 million, or 21.7%, to segment net sales revenue growth. This growth was ~~driven~~partially offset by ~~an increase~~a decrease from Organic business of ~~$88.8~~$85.2 million, or ~~15.7%~~13.0%, primarily due to:

•~~higher brick and mortar and online channel~~declines in sales primarily due to lower consumer demand driven by ~~strong~~shifts in consumer ~~demand,~~ spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the ~~favorable~~unfavorable comparative impacts of retailers that accelerated orders into the fourth quarter of fiscal 2022, orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of ~~COVID-19 related store closures, reduced store traffic and a soft back to school season~~Winter Storm Uri that were shipped in the ~~prior year period,~~first quarter of fiscal 2022 and earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders ~~into the third quarter~~ to try to avoid supply chain disruptions during the prior year holiday season; and

•lower sales in the club channel.

These factors were partially offset by higher sales in the closeout channel and the impact of customer price increases related to rising freight and product costs.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $8.0 million, or 1.2%.

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Health & Wellness

Comparison of Third Quarter Fiscal 2023 to Third Quarter Fiscal 2022

Net sales revenue decreased $23.4 million, or 11.5%, to $180.5 million, compared to $203.9 million. The decline was driven by a decrease from Organic business of $22.0 million, or 10.8%, primarily due to lower sales of thermometry, seasonal categories, water filtration, and air filtration products primarily driven by lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels.

These factors were partially offset by:

•an increase in sales of humidification products;

•growth in international sales;

•~~higher sales in the club and closeout channels;~~ and

•the ~~favorable~~impact of customer price increases related to rising freight and product costs.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $1.4 million, or 0.7%.

Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Net sales revenue decreased $19.5 million, or 3.6%, to $529.9 million, compared to $549.5 million. The decline was driven by a decrease from Organic business of $16.9 million, or 3.1%, primarily due to:

•lower sales of thermometry and air filtration products primarily driven by lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the unfavorable comparative impact of orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of Winter Storm ~~Uri.~~Uri that were shipped in the first quarter of fiscal 2022; and

•

~~Net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $1.3 million, or 0.2%.~~

~~Health & Home~~

~~Comparison of Third Quarter Fiscal 2022 to Third Quarter Fiscal 2021~~

Net sales revenue decreased $46.3 million, or 18.5%, to $203.9 million, compared to $250.2 million. The decline was driven by a decrease from Organic business of $46.6 million, or 18.6%, primarily due to a decrease in sales due to stronger COVID-19 driven demand for healthcare and healthy living products, primarily in thermometry and air filtration, in the comparative prior year period and a decrease in sales of air filtration products as a result of the EPA packaging compliance matter.seasonal fan sales.

These factors were partially offset by by:

•an increase in sales of ~~humidification products and new product introductions.~~

~~Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $0.3 million, or 0.1%.~~

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~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

Net sales revenue decreased $112.1 million, or 16.9%, to $549.5 million, compared to $661.6 million. The decline was driven by a decrease from Organic business of $116.3 million, or 17.6%, primarily due to:

•~~a decrease in both brick and mortar and online sales of~~ air filtration, humidification and water filtration ~~and humidification~~ products as a result of the EPA packaging compliance matter and related stop shipment ~~actions;~~actions in the comparative prior year period;

•higher seasonal heaters and humidification product sales; and

•the impact of customer price increases related to rising freight and product costs.

Net sales revenue was also unfavorably impacted by net foreign currency fluctuations of approximately $2.6 million, or 0.5%.

Beauty

Comparison of Third Quarter Fiscal 2023 to Third Quarter Fiscal 2022

Net sales revenue decreased $25.7 million, or 14.7%, to $149.2 million, compared to $174.8 million. The decline was driven by a decrease from Organic business of $36.2 million, or 20.7%, primarily due to:

•reduced hair appliances category sales driven by lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•a decline in Non-Core business net sales ~~of thermometers and air filtration products~~revenue due to ~~stronger COVID-19 driven demand for healthcare and healthy living products in~~ the ~~comparative prior year period; and~~

•~~the unfavorable impact on sales~~sale of ~~air filtration products driven by greater wildfire activity on the west coast of the U.S. in the comparative prior year period.~~our Personal Care business.

These factors were partially offset by ~~an increase~~the impact of customer price increases related to rising freight and product costs.

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The Curlsmith acquisition contributed $13.1 million, or 7.5%, to segment net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $2.5 million, or 1.4%.

Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Net sales revenue decreased $82.5 million, or 18.9%, to $354.4 million, compared to $436.9 million. The decline was driven by a decrease from Organic business of $104.8 million, or 24.0%, primarily reflecting:

•reduced hair appliances category sales due to lower consumer demand, shifts in ~~sales~~consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels;

•the unfavorable comparative impacts of ~~fans, heaters and new product introductions, as well as~~retailers that accelerated orders into the ~~favorable impact~~fourth quarter of fiscal 2022, orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of Winter Storm ~~Uri.~~

~~Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $4.2 million, or 0.6%.~~

~~Beauty~~

~~Comparison of Third Quarter Fiscal 2022 to Third Quarter Fiscal 2021~~

Net sales revenue increased $9.7 million, or 5.9%, to $174.8 million, compared to $165.2 million. The increase was driven by an increase from Organic business of $8.9 million, or 5.4%. The increase from Organic business primarily reflects higher appliance sales due to:

•~~higher brick and mortar and online channel sales driven by strong consumer demand, the favorable comparative impact of COVID-19 reduced store traffic~~Uri that were shipped in the ~~prior year period,~~first quarter of fiscal 2022 and earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders ~~into the third quarter~~ to try to avoid supply chain disruptions during the prior year holiday season;

•~~new product introductions;~~

•~~higher international sales;~~ and

•~~expanded distribution primarily~~a decline in Non-Core business net sales revenue due to the ~~club channel.~~sale of our Personal Care business.

These factors were partially offset by ~~a decline in~~higher prestige market personal care category sales and the impact of customer price increases related to rising freight and product costs.

~~Non-Core business~~

The Curlsmith acquisition contributed $26.5 million, or 6.1%, to segment net sales revenue ~~primarily due to the sale of the North America Personal Care business during the second quarter of fiscal 2022.~~growth.

Net sales revenue was ~~favorably~~unfavorably impacted by net foreign currency fluctuations of approximately ~~$0.7~~$4.3 million, or ~~0.4%.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

Net sales revenue increased $73.9 million, or 20.4%, to $436.9 million, compared to $363.0 million. The increase was driven by an increase from Organic business of $70.6 million, or 19.5%. The increase from Organic business primarily reflects:

•higher brick and mortar and online channel sales driven by strong consumer demand, the favorable comparative impact of COVID-19 related store closures and reduced store traffic in the prior year period, and earlier than typical customer orders as retailers accelerated orders into the third quarter to try to avoid supply chain disruptions during the holiday season;

•~~new product introductions;~~

•~~expanded distribution primarily in the club channel;~~

•~~the favorable comparative impact of constrained supply levels in the prior year period;~~

•~~higher international sales; and~~

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•~~the favorable impact of orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to Winter Storm Uri.~~

~~These factors were partially offset by a decline in Non-Core business net sales revenue primarily due to the sale of the North America Personal Care business during the second quarter of fiscal 2022.~~

~~Net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $3.3 million, or 0.9%~~1.0%.

Consolidated Gross Profit Margin

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Consolidated gross profit margin ~~decreased 1.3~~increased 2.1 percentage points to ~~43.8%~~45.9%, compared to ~~45.1%~~43.8%. The ~~decrease~~increase in consolidated gross profit margin was primarily due to:

•a favorable mix of more Home & Outdoor sales within our consolidated net sales revenue;

•a more favorable customer mix within the Home & Outdoor segment; and

•a more favorable product mix within the Beauty segment primarily due to the acquisition of Curlsmith.

These factors were partially offset by a less favorable product mix within the Home & Outdoor segment due to the acquisition of Osprey and the net ~~unfavorable~~dilutive impact of ~~higher inbound freight expense~~inflationary costs and related customer price ~~increases;~~increases.

Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Consolidated gross profit margin increased 0.4 percentage points to 43.4%, compared to 43.0%. The increase in consolidated gross profit margin was primarily due to a more favorable product mix within the Beauty segment primarily due to the acquisition of Curlsmith and a more favorable customer mix within the Home & Outdoor segment.

These factors were partially offset by:

•the unfavorable impact of less Beauty segment sales within our consolidated net sales revenue;

•an increase in EPA compliance costs recognized in cost of goods sold in the Health & ~~Home~~Wellness segment of ~~$0.3~~$3.2 million; ~~and~~

•a less favorable ~~channel mix within the Housewares segment.~~

~~These factors were partially offset by a more favorable~~ product mix within the ~~Housewares~~Home & Outdoor segment due to the acquisition of Osprey; and ~~Beauty segments and a favorable mix of more Housewares and Beauty sales within our consolidated net sales revenue.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

~~Consolidated gross profit margin decreased 0.9 percentage points to 43.0%, compared to 43.9%. The decrease in consolidated gross profit margin was primarily due to:~~

•the ~~unfavorable~~net dilutive impact of ~~higher inbound freight expense;~~inflationary costs and related customer price increases.

•~~EPA compliance costs recognized in cost of goods sold in the Health & Home segment of $13.8 million; and~~

•~~a less favorable channel mix within the Housewares segment.~~

~~These factors were partially offset by a more favorable product mix within the Beauty segment and a favorable mix~~Table of ~~more Housewares and Beauty sales within our consolidated net sales revenue.~~

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Consolidated SG&A

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Consolidated SG&A ratio increased ~~0.1 percentage~~ 0.9 percentage points to ~~29.4%~~30.3%, compared to ~~29.3%~~29.4%. The increase in the consolidated SG&A ratio was primarily due to:

•the unfavorable leverage impact of the decrease in net sales;

•higher ~~personnel~~salary and wage costs;

•higher marketing expense;

•~~unfavorable operating leverage;~~increased amortization expense;

•higher ~~distribution expense;~~

•~~EPA compliance costs of $4.6 million in the Health & Home segment;~~outbound freight costs; and

•higher ~~acquisition-related expense in connection with the Osprey transaction.~~share-based compensation expense.

These factors were partially offset by:

•~~lower royalty expense;~~a gain from insurance recoveries on damaged inventory of $9.7 million;

•reduced annual incentive compensation expense;

•~~lower marketing expense;~~

•~~lower amortization expense;~~

•~~a decrease in bad debt expense; and~~

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•the favorable leverage impact of customer price increases related to ~~rising freight~~inflationary costs;

•a decrease in EPA compliance costs of $2.9 million in the Health & Wellness segment; and ~~product costs.~~

•the favorable comparative impact of acquisition-related expense incurred in connection with the Osprey transaction during the prior year period.

Comparison of First Nine Months of Fiscal ~~2022~~2023 to First Nine Months of Fiscal ~~2021~~2022

Consolidated SG&A ratio increased ~~1.7 percentage~~ 3.1 percentage points to ~~29.4%~~32.5%, compared to ~~27.7%~~29.4%. The increase in the consolidated SG&A ratio was primarily due to:

•the ~~comparative~~unfavorable leverage impact of ~~higher personnel and marketing expenses due to cost reduction initiatives~~the decrease in ~~the prior year period related to the uncertainty of COVID-19;~~net sales;

•higher distribution expense;

•increased salary and wage costs;

•higher ~~share-based compensation~~marketing expense;

•increased amortization expense;

•an increase in outbound freight costs; and

•~~EPA compliance costs of $7.2 million in the Health & Home segment as a result of the EPA packaging compliance matter and related stop shipment actions.~~higher share-based compensation expense.

These factors were partially offset by:

•reduced ~~royalty expense;~~

•~~decreased~~ annual incentive compensation expense;

•~~reduced amortization expense; and~~

•the favorable leverage impact of customer price increases related to ~~rising freight~~inflationary costs;

•a gain from insurance recoveries on damaged inventory of $9.7 million; and ~~product costs.~~

•a decrease in EPA compliance costs of $2.1 million in the Health & Wellness segment.

Restructuring Charges

~~Comparison of Third Quarter Fiscal~~During the three and nine month periods ended November 30, 2022, ~~to Third Quarter Fiscal 2021~~

Wewe incurred ~~insignificant amounts~~$10.5 million and $15.2 million, respectively, of pre-tax restructuring costs ~~under~~in connection with Project ~~Refuel~~Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statements of income and were primarily comprised of professional fees and severance and employee related costs. We recognized an insignificant amount and $0.4 million, respectively, of pre-tax restructuring costs during the three and nine month periods ended November 30, 2021, ~~and 2020.~~

~~Comparison of First Nine Months of Fiscal 2022~~under a prior restructuring plan referred to ~~First Nine Months of Fiscal 2021~~

~~During both the nine months ended November 30, 2021 and 2020, we incurred $0.4 million of pre-tax restructuring costs under~~as Project Refuel, ~~primarily related to employee severance and termination benefits. Restructuring costs incurred~~which was completed during the ~~nine months ended November 30, 2020 also included contract termination costs.~~fourth quarter of fiscal 2022.

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Operating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment

In order to provide a better understanding of the ~~comparative~~ impact of certain items on our operating income, the tables that follow report the comparative pre-tax impact of acquisition-related expenses, EPA compliance costs, gain from insurance recoveries, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable, on operating income and operating margin for each segment and in total for the periods presented below. Adjusted operating income and adjusted operating margin may be considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


		Three Months Ended November 30, 2021																	Three Months Ended November 30, 2022
(In thousands)		Housewares				Health & Home				Beauty				Total
(in thousands)																		(in thousands)	Home & Outdoor (1)				Health & Wellness				Beauty (2)				Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	43,239	17.6	%	$	13,573	6.7	%	$	33,228	19.0	%	$	90,040	14.4	%	Operating income, as reported (GAAP)	$	30,847	13.5	%	$	21,257	11.8	%	$	25,089	16.8	%	$	77,193	13.8	%

Acquisition-related expenses	Acquisition-related expenses	1,605		0.7	%	—		—	%	—		—	%	1,605		0.3	%	Acquisition-related expenses	(2)		—	%	—		—	%	2		—	%	—		—	%
EPA compliance costs	EPA compliance costs	—		—	%	4,926		2.4	%	—		—	%	4,926		0.8	%	EPA compliance costs	—		—	%	2,103		1.2	%	—		—	%	2,103		0.4	%
Gain from insurance recoveries																		Gain from insurance recoveries	—		—	%	(8,167)		(4.5)	%	(1,509)		(1.0)	%	(9,676)		(1.7)	%
Restructuring charges	Restructuring charges	—		—	%	—		—	%	5		—	%	5		—	%	Restructuring charges	5,090		2.2	%	2,893		1.6	%	2,480		1.7	%	10,463		1.9	%
Subtotal	Subtotal	44,844		18.2	%	18,499		9.1	%	33,233		19.0	%	96,576		15.5	%	Subtotal	35,935		15.7	%	18,086		10.0	%	26,062		17.5	%	80,083		14.3	%
Amortization of intangible assets	Amortization of intangible assets	525		0.2	%	572		0.3	%	1,897		1.1	%	2,994		0.5	%	Amortization of intangible assets	1,756		0.8	%	582		0.3	%	2,314		1.6	%	4,652		0.8	%
Non-cash share-based compensation	Non-cash share-based compensation	2,339		1.0	%	2,717		1.3	%	1,493		0.9	%	6,549		1.0	%	Non-cash share-based compensation	2,169		0.9	%	2,665		1.5	%	3,107		2.1	%	7,941		1.4	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	47,708	19.4	%	$	21,788	10.7	%	$	36,623	20.9	%	$	106,119	17.0	%	Adjusted operating income (non-GAAP)	$	39,860	17.4	%	$	21,333	11.8	%	$	31,483	21.1	%	$	92,676	16.6	%


		Three Months Ended November 30, 2020																	Three Months Ended November 30, 2021
(In thousands)		Housewares				Health & Home				Beauty				Total
(in thousands)																		(in thousands)	Home & Outdoor				Health & Wellness				Beauty				Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	37,658	16.9	%	$	30,478	12.2	%	$	32,573	19.7	%	$	100,709	15.8	%	Operating income, as reported (GAAP)	$	43,239	17.6	%	$	13,573	6.7	%	$	33,228	19.0	%	$	90,040	14.4	%

Acquisition-related expenses																		Acquisition-related expenses	1,605		0.7	%	—		—	%	—		—	%	1,605		0.3	%
EPA compliance costs																		EPA compliance costs	—		—	%	4,926		2.4	%	—		—	%	4,926		0.8	%
Restructuring charges	Restructuring charges	(12)		—	%	—		—	%	—		—	%	(12)		—	%	Restructuring charges	—		—	%	—		—	%	5		—	%	5		—	%
Subtotal	Subtotal	37,646		16.9	%	30,478		12.2	%	32,573		19.7	%	100,697		15.8	%	Subtotal	44,844		18.2	%	18,499		9.1	%	33,233		19.0	%	96,576		15.5	%
Amortization of intangible assets	Amortization of intangible assets	523		0.2	%	2,454		1.0	%	1,524		1.0	%	4,501		0.7	%	Amortization of intangible assets	525		0.2	%	572		0.3	%	1,897		1.1	%	2,994		0.5	%
Non-cash share-based compensation	Non-cash share-based compensation	2,712		1.2	%	2,359		0.9	%	1,668		1.0	%	6,739		1.1	%	Non-cash share-based compensation	2,339		1.0	%	2,717		1.3	%	1,493		0.9	%	6,549		1.0	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	40,881	18.4	%	$	35,291	14.1	%	$	35,765	21.7	%	$	111,937	17.6	%	Adjusted operating income (non-GAAP)	$	47,708	19.4	%	$	21,788	10.7	%	$	36,623	20.9	%	$	106,119	17.0	%


		Nine Months Ended November 30, 2021																	Nine Months Ended November 30, 2022
(In thousands)		Housewares				Health & Home				Beauty				Total
(in thousands)																		(in thousands)	Home & Outdoor (1)				Health & Wellness				Beauty (2)				Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	112,303	17.1	%	$	29,616	5.4	%	$	80,247	18.4	%	$	222,166	13.5	%	Operating income, as reported (GAAP)	$	102,722	14.6	%	$	12,505	2.4	%	$	42,851	12.1	%	$	158,078	10.0	%

Acquisition-related expenses	Acquisition-related expenses	1,605		0.2	%	—		—	%	—		—	%	1,605		0.1	%	Acquisition-related expenses	117		—	%	—		—	%	2,667		0.8	%	2,784		0.2	%
EPA compliance costs	EPA compliance costs	—		—	%	20,998		3.8	%	—		—	%	20,998		1.3	%	EPA compliance costs	—		—	%	22,101		4.2	%	—		—	%	22,101		1.4	%
Gain from insurance recoveries																		Gain from insurance recoveries	—		—	%	(8,167)		(1.5)	%	(1,509)		(0.4)	%	(9,676)		(0.6)	%
Restructuring charges	Restructuring charges	369		0.1	%	—		—	%	11		—	%	380		—	%	Restructuring charges	5,562		0.8	%	6,447		1.2	%	3,232		0.9	%	15,241		1.0	%
Subtotal	Subtotal	114,277		17.4	%	50,614		9.2	%	80,258		18.4	%	245,149		14.9	%	Subtotal	108,401		15.4	%	32,886		6.2	%	47,241		13.3	%	188,528		11.9	%
Amortization of intangible assets	Amortization of intangible assets	1,562		0.2	%	1,709		0.3	%	5,692		1.3	%	8,963		0.5	%	Amortization of intangible assets	5,255		0.7	%	1,743		0.3	%	6,664		1.9	%	13,662		0.9	%
Non-cash share-based compensation	Non-cash share-based compensation	11,047		1.7	%	10,229		1.9	%	7,073		1.6	%	28,349		1.7	%	Non-cash share-based compensation	10,807		1.5	%	11,078		2.1	%	10,170		2.9	%	32,055		2.0	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	126,886	19.4	%	$	62,552	11.4	%	$	93,023	21.3	%	$	282,461	17.2	%	Adjusted operating income (non-GAAP)	$	124,463	17.7	%	$	45,707	8.6	%	$	64,075	18.1	%	$	234,245	14.8	%

3746

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		Nine Months Ended November 30, 2020																	Nine Months Ended November 30, 2021
(In thousands)		Housewares				Health & Home				Beauty				Total
(in thousands)																		(in thousands)	Home & Outdoor				Health & Wellness				Beauty				Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	106,294	18.8	%	$	95,782	14.5	%	$	54,887	15.1	%	$	256,963	16.2	%	Operating income, as reported (GAAP)	$	112,303	17.1	%	$	29,616	5.4	%	$	80,247	18.4	%	$	222,166	13.5	%
Acquisition-related expenses																		Acquisition-related expenses	1,605		0.2	%	—		—	%	—		—	%	1,605		0.1	%

EPA compliance costs																		EPA compliance costs	—		—	%	20,998		3.8	%	—		—	%	20,998		1.3	%
Restructuring charges	Restructuring charges	251		—	%	—		—	%	104		—	%	355		—	%	Restructuring charges	369		0.1	%	—		—	%	11		—	%	380		—	%
Subtotal	Subtotal	106,545		18.9	%	95,782		14.5	%	54,991		15.2	%	257,318		16.2	%	Subtotal	114,277		17.4	%	50,614		9.2	%	80,258		18.4	%	245,149		14.9	%
Amortization of intangible assets	Amortization of intangible assets	1,541		0.3	%	7,415		1.1	%	4,571		1.3	%	13,527		0.9	%	Amortization of intangible assets	1,562		0.2	%	1,709		0.3	%	5,692		1.3	%	8,963		0.5	%
Non-cash share-based compensation	Non-cash share-based compensation	8,024		1.4	%	7,166		1.1	%	5,464		1.5	%	20,654		1.3	%	Non-cash share-based compensation	11,047		1.7	%	10,229		1.9	%	7,073		1.6	%	28,349		1.7	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	116,110	20.6	%	$	110,363	16.7	%	$	65,026	17.9	%	$	291,499	18.3	%	Adjusted operating income (non-GAAP)	$	126,886	19.4	%	$	62,552	11.4	%	$	93,023	21.3	%	$	282,461	17.2	%

(1)The three and nine month periods ended November 30, 2022 include operating results from Osprey, which was acquired on December 29, 2021. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

(2)The three and nine month periods ended November 30, 2022 include approximately thirteen and thirty-two weeks of operating results from Curlsmith, respectively, which was acquired on April 22, 2022. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

Consolidated Operating Income

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Consolidated operating income was $77.2 million, or 13.8% of net sales revenue, compared to $90.0 million, or 14.4% of net sales ~~revenue, compared to $100.7 million, or 15.8% of net sales~~ revenue. The ~~1.4~~0.6 percentage point decrease in consolidated ~~operating margin was primarily due to:~~

•~~the net unfavorable impact of higher inbound freight expense and related customer price increases;~~

•~~increased personnel expense;~~

•~~higher distribution expense;~~

•~~unfavorable operating leverage;~~

•~~EPA compliance costs of $4.9 million in the Health & Home segment;~~

•~~a less favorable channel mix within the Housewares segment; and~~

•~~higher acquisition-related expense in connection with the Osprey transaction.~~

~~These factors were partially offset by:~~

•~~a favorable product mix within the Housewares and Beauty segments and a favorable mix of more Housewares and Beauty sales within our consolidated net sales revenue;~~

•~~lower royalty expense;~~

•~~reduced annual incentive compensation expense;~~

•~~lower marketing expense;~~

•~~lower amortization expense; and~~

•~~a decrease in bad debt expense.~~

~~Consolidated adjusted operating income decreased 5.2% to $106.1 million, or 17.0% of net sales revenue, compared to $111.9 million, or 17.6% of net sales revenue.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

Consolidated operating income was $222.2 million, or 13.5% of net sales revenue, compared to $257.0 million, or 16.2% of net sales revenue. The 2.7 percentage point decrease in consolidated operating margin was primarily due to:

•~~the comparative impact of higher personnel and marketing expenses due to cost reduction initiatives in the prior year period related to the uncertainty of COVID-19;~~

•~~higher inbound freight expense due to rising freight rates and container supply shortages;~~

•~~EPA compliance costs of $21.0 million in the Health & Home segment;~~

•~~increased distribution expense;~~

•~~a less favorable channel mix within the Housewares segment; and~~

•~~higher share-based compensation expense.~~

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~~These factors were partially offset by:~~

•~~a favorable product mix within the Beauty segment and a favorable mix of more Housewares and Beauty sales within our consolidated net sales revenue;~~

•~~reduced royalty expense;~~

•~~decreased annual incentive compensation expense; and~~

•~~reduced amortization expense.~~

~~Consolidated adjusted operating income decreased 3.1% to $282.5 million, or 17.2% of net sales revenue, compared to $291.5 million, or 18.3% of net sales revenue.~~

~~Housewares~~

~~Comparison of Third Quarter Fiscal 2022 to Third Quarter Fiscal 2021~~

~~Operating income was $43.2 million, or 17.6% of segment net sales revenue, compared to $37.7 million, or 16.9% of segment net sales revenue. The 0.7 percentage poin~~t ~~increase in segment operating margin was primarily due to:~~

•~~favorable operating leverage;~~

•~~favorable product mix; and~~

•~~reduced annual incentive compensation expense.~~

~~These factors were partially offset by:~~

•~~the net unfavorable impact of higher inbound freight expense and related customer price increases;~~

•~~a less favorable channel mix;~~

•~~an increase in marketing expense; and~~

•~~higher acquisition-related expense in connection with the Osprey transaction.~~

~~Adjusted operating income increased 16.7%to $47.7 million, or 19.4% of segment net sales revenue, compared to $40.9 million, or 18.4% of segment net sales revenue.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

Operating income was $112.3 million, or 17.1% of segment net sales revenue, compared to $106.3 million, or 18.8% of segment net sales revenue. The 1.7 percentage point decrease in segment operating margin was primarily due to:

•~~a less favorable channel mix;~~

•~~the unfavorable impact of higher inbound freight expense;~~

•~~an increase in marketing expense;~~

•~~higher share-based compensation expense; and~~

•~~higher distribution expense.~~

~~These factors were partially offset by favorable operating leverage.~~

~~Adjusted operating income increased 9.3%to $126.9 million, or 19.4% of segment net sales revenue, compared to $116.1 million, or 20.6% of segment net sales revenue.~~

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~~Health & Home~~

~~Comparison of Third Quarter Fiscal 2022 to Third Quarter Fiscal 2021~~

~~Operating income was $13.6 million, or 6.7% of segment net sales revenue, compared to $30.5 million, or 12.2% of segment net sales revenue. The 5.5 percentage point decrease in segment~~ operating margin was primarily due to:

•unfavorable operating leverage;

•~~the net unfavorable impact~~restructuring charges of ~~higher inbound ocean freight expense and related customer price increases;~~

•~~EPA compliance costs of $4.9~~$10.5 million;

•~~higher distribution expense; and~~

•~~increase in inventory obsolescence expense.~~

~~These factors were partially offset by:~~

•~~a decrease in marketing expenses;~~

•~~lower inbound air freight expense;~~

•~~reduced amortization expense; and~~

•~~decreased annual incentive compensation expense.~~

~~Adjusted operating income decreased 38.3% to $21.8 million, or 10.7% of segment net sales revenue, compared to $35.3 million, or 14.1% of segment net sales revenue.~~

~~Comparison of First Nine Months of Fiscal 2022 to First Nine Months of Fiscal 2021~~

Operating income was $29.6 million, or 5.4% of segment net sales revenue, compared to $95.8 million, or 14.5% of segment net sales revenue. The 9.1 percentage point decrease in segment operating margin was primarily due to:

•~~unfavorable operating leverage;~~

•the unfavorable impact of ~~higher inbound ocean freight expense;~~less Beauty segment sales within our consolidated net sales revenue;

•~~EPA compliance costs~~a less favorable product mix within the Home & Outdoor segment due to the acquisition of ~~$21.0 million;~~Osprey;

•higher ~~personnel expense;~~salary and wage costs;

•higher outbound freight costs;

•increased ~~distribution expense;~~

•~~increase in inventory obsolescence~~amortization expense; and

•higher share-based compensation expense.

These factors were partially offset by:

•a ~~decrease in marketing expenses;~~gain from insurance recoveries on damaged inventory of $9.7 million;

•~~lower inbound air freight~~reduced annual incentive compensation expense;

•a decrease in EPA compliance costs of $2.8 million in the Health & Wellness segment;

•the favorable comparative impact of acquisition-related expense incurred in connection with the Osprey transaction during the prior year period;

•a more favorable customer mix within the Home & Outdoor segment; and

•a more favorable product mix within the Beauty segment primarily due to the acquisition of Curlsmith.

Consolidated adjusted operating income decreased 12.7% to $92.7 million, or 16.6% of net sales revenue, compared to $106.1 million, or 17.0% of net sales revenue.

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Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Consolidated operating income was $158.1 million, or 10.0% of net sales revenue, compared to $222.2 million, or 13.5% of net sales revenue. The 3.5 percentage point decrease in consolidated operating margin was primarily due to:

•unfavorable operating leverage;

•higher distribution expense;

•increased salary and wage costs;

•a less favorable product mix within the Home & Outdoor segment due to the acquisition of Osprey;

•an increase in restructuring charges of $14.9 million;

•higher marketing expense;

•increased amortization expense;

•an increase in outbound freight costs; and

•higher share-based compensation expense.

These factors were partially offset by:

•a favorable mix of more Home & Outdoor sales within our consolidated net sales revenue;

•reduced annual incentive compensation expense;

•a gain from insurance recoveries of $9.7 million;

•a more favorable product mix within the Beauty segment primarily due to the acquisition of Curlsmith; and

•a more favorable customer mix within the Home & Outdoor segment.

Consolidated adjusted operating income decreased 17.1% to $234.2 million, or 14.8% of net sales revenue, compared to $282.5 million, or 17.2% of net sales revenue.

Home & Outdoor

Comparison of Third Quarter Fiscal 2023 to Third Quarter Fiscal 2022

Operating income was $30.8 million, or 13.5% of segment net sales revenue, compared to $43.2 million, or 17.6% of segment net sales revenue. The 4.1 percentage point decrease in segment operating margin was primarily due to:

•the impact of the acquisition of Osprey, which has a lower operating margin than the rest of the Home & Outdoor segment;

•increased salary and wage costs;

•restructuring charges of $5.1 million; and

•unfavorable operating leverage.

These factors were partially offset by:

•reduced annual incentive compensation expense;

•a decrease in distribution expense;

•the net impact of inflationary costs and related customer price increases;

•lower inventory obsolescence expense; and

•a more favorable customer mix.

Adjusted operating income decreased 16.5%to $39.9 million, or 17.4% of segment net sales revenue, compared to $47.7 million, or 19.4% of segment net sales revenue.

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Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Operating income was $102.7 million, or 14.6% of segment net sales revenue, compared to $112.3 million, or 17.1% of segment net sales revenue. The 2.5 percentage point decrease in segment operating margin was primarily due to:

•the impact of the acquisition of Osprey, which has a lower operating margin than the rest of the Home & Outdoor segment;

•an increase in distribution expense;

•higher salary and wage costs; and

•an increase in restructuring charges of $5.2 million.

These factors were partially offset by:

•a more favorable customer mix; and

•reduced annual incentive compensation expense.

Adjusted operating income decreased 1.9%to $124.5 million, or 17.7% of segment net sales revenue, compared to $126.9 million, or 19.4% of segment net sales revenue.

Health & Wellness

Comparison of Third Quarter Fiscal 2023 to Third Quarter Fiscal 2022

Operating income was $21.3 million, or 11.8% of segment net sales revenue, compared to $13.6 million, or 6.7% of segment net sales revenue. The 5.1 percentage point increase in segment operating margin was primarily due to:

•a gain from insurance recoveries on damaged inventory of $8.2 million;

•a decrease in EPA compliance costs of $2.8 million;

•lower inventory obsolescence expense;

•the net impact of inflationary costs and related customer price increases;

•decreased annual incentive compensation expense;

•reduced salary and wage costs;

•lower outbound freight costs; and

•an increase in duty refunds received.

These factors were partially offset by:

•unfavorable operating leverage;

•restructuring charges of $2.9 million; and

•higher distribution expense.

Adjusted operating income decreased 2.1% to $21.3 million, or 11.8% of segment net sales revenue, compared to $21.8 million, or 10.7% of segment net sales revenue.

Comparison of First Nine Months of Fiscal 2023 to First Nine Months of Fiscal 2022

Operating income was $12.5 million, or 2.4% of segment net sales revenue, compared to $29.6 million, or 5.4% of segment net sales revenue. The 3.0 percentage point decrease in segment operating margin was primarily due to:

•higher distribution expense;

•unfavorable operating leverage;

•restructuring charges of $6.4 million;

•the unfavorable comparative impact of tariff exclusion refunds received in ~~fiscal 2022;~~the prior year period;

•an increase in EPA compliance costs of $1.1 million;

•higher marketing expense;

•an increase in legal fees;

•an increase in share-based compensation expense; and

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•increased outbound freight costs.

These factors were partially offset by:

•a gain from insurance recoveries on damaged inventory of $8.2 million;

•the net impact of inflationary costs and related customer price increases;

•reduced ~~amortization expense;~~salary and wage costs; and

•decreased annual incentive compensation expense.

Adjusted operating income decreased ~~43.3%~~26.9% to $45.7 million, or 8.6% of segment net sales revenue, compared to $62.6 million, or 11.4% of segment net sales ~~revenue, compared to $110.4 million, or 16.7% of segment net sales~~ revenue.

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Beauty

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Operating income was $25.1 million, or 16.8% of segment net sales revenue, compared to $33.2 million, or 19.0% of segment net sales ~~revenue, compared to $32.6 million, or 19.7% of segment net sales~~ revenue. The ~~0.7~~2.2 percentage point decrease in segment operating margin was primarily due to:

•unfavorable operating leverage;

•increased salary and wage costs;

•restructuring charges of $2.5 million;

•higher share-based compensation expense;

•the net ~~unfavorable~~dilutive impact of ~~higher inbound freight expense~~inflationary costs and related customer price increases;

•an increase in inventory obsolescence expense;

•higher ~~marketing~~distribution expense;

•increased outbound freight costs; and

•an increase in ~~personnel expense; and~~

•~~the unfavorable impact of foreign currency exchange fluctuations.~~amortization expense.

These factors were partially offset by:

•~~a more favorable product mix;~~

•~~reduced royalty expense as a result of the amended Revlon trademark license;~~decreased annual incentive compensation expense;

•a ~~decrease in outbound freight costs;~~gain from insurance recoveries on damaged inventory of $1.5 million;

•~~lower bad debt expense;~~

•~~lower inventory obsolescence expense;~~favorable foreign currency exchange rate impacts; and

•a more favorable ~~operating leverage.~~product mix primarily due to the acquisition of Curlsmith.

Adjusted operating income ~~increased 2.4%~~decreased 14.0% to ~~$36.6~~$31.5 million, or ~~20.9%~~21.1% of segment net sales revenue, compared to ~~$35.8~~$36.6 million, or ~~21.7%~~20.9% of segment net sales revenue.

Comparison of First Nine Months of Fiscal ~~2022~~2023 to First Nine Months of Fiscal ~~2021~~2022

Operating income was $42.9 million, or 12.1% of segment net sales revenue, compared to $80.2 million, or 18.4% of segment net sales ~~revenue, compared to $54.9 million, or 15.1% of segment net sales~~ revenue. The ~~3.3~~6.3 percentage point ~~increase~~decrease in segment operating margin was primarily due to:

•~~favorable~~unfavorable operating leverage;

•~~a more favorable product mix;~~increased salary and wage costs;

•~~reduced royalty expense as a result of the amended Revlon trademark license;~~

•~~lower inventory obsolescence~~higher distribution expense;

•~~a decrease~~an increase in ~~outbound freight costs;~~marketing expense;

•higher share-based compensation expense;

•the net dilutive impact of inflationary costs and related customer price increases;

•restructuring charges of $3.2 million;

•higher acquisition-related expense in connection with the Curlsmith transaction; and

•~~a decrease~~an increase in ~~bad debt~~amortization expense.

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These factors were partially offset by:

•~~increased marketing~~decreased annual incentive compensation expense;

•the ~~unfavorable impact~~gain from insurance recoveries on damaged inventory of ~~higher inbound freight expense;~~$1.5 million;

•~~higher personnel expense;~~

•~~higher share-based compensation~~lower inventory obsolescence expense; and

•a more favorable product mix primarily due to the ~~unfavorable impact~~acquisition of ~~foreign currency exchange fluctuations.~~Curlsmith.

Adjusted operating income ~~increased 43.1%~~decreased 31.1% to $64.1 million, or 18.1% of segment net sales revenue, compared to $93.0 million, or 21.3% of segment net sales ~~revenue, compared to $65.0 million, or 17.9% of segment net sales~~ revenue.

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Interest Expense

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Interest expense was ~~$3.2~~$13.1 million, compared to ~~$2.9~~$3.2 million. The increase in interest expense was primarily due to higher average levels of debt outstanding, including borrowings to fund the acquisitions of Osprey and Curlsmith as well as construction of a new distribution center, and higher average interest rates compared to the same period last year.

Comparison of First Nine Months of Fiscal ~~2022~~2023 to First Nine Months of Fiscal ~~2021~~2022

Interest expense was ~~$9.5~~$26.7 million, compared to ~~$9.6~~$9.5 million. The ~~decrease~~increase in interest expense was primarily due to ~~lower average interest rates, partially offset by~~ higher average levels of debt outstanding, including borrowings to fund the acquisitions of Osprey and Curlsmith as well as construction of a new distribution center, and higher average interest rates compared to the same period last year.

Income Tax Expense

The period-over-period comparison of our effective tax rate is often impacted by the mix of taxable income in our various tax jurisdictions. Due to our organization in Bermuda and the ownership structure of our foreign subsidiaries, many of which are not owned directly or indirectly by a U.S. parent company, an immaterial amount of our foreign income is subject to U.S. taxation on a permanent basis under current law. Additionally, our intellectual property is largely owned by our foreign subsidiaries, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective tax rate.

For the three months ended November 30, ~~2021,~~2022, income tax expense as a percentage of income before income tax was ~~12.9%~~19.1% compared to ~~14.0%~~12.9% for the same period last year. The year-over-year ~~decrease~~increase in the effective tax rate is primarily due to ~~increases in liabilities related to uncertain~~lower forecasted annual income before income tax ~~positions in the prior year period, partially offset by~~and shifts in the mix of income in our various tax ~~jurisdictions.~~jurisdictions, which were partially offset by increases in tax benefits for discrete items. For the nine months ended November 30, ~~2021,~~2022, income tax expense as a percentage of income before income tax was ~~13.6%~~18.6% compared to ~~6.5%~~13.6% for the same period last ~~year,~~year. The year-over-year increase in the effective tax rate is primarily due to lower forecasted annual income before income taxes, shifts in the mix of income in our various tax jurisdictions, and ~~the benefit of the CARES Act~~an increase in ~~fiscal 2021, partially offset by the favorable comparative impact of increases in liabilities related to uncertain~~ tax ~~positions in the prior year period.~~

expense for discrete items.

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Net Income, Diluted EPS, Adjusted Income (non-GAAP), and Adjusted Diluted EPS (non-GAAP)

In order to provide a better understanding of the impact of certain items on our income and diluted EPS, the tables that follow report the comparative after-tax impact of acquisition-related expenses, EPA compliance costs, gain from insurance recoveries, restructuring charges, ~~tax reform,~~ amortization of intangible assets, and non-cash share-based compensation, as applicable, on income and diluted EPS for the periods presented below. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


		Three Months Ended November 30, 2021													Three Months Ended November 30, 2022
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	86,886	$	11,203	$	75,683	$	3.56	$	0.46	$	3.10	As reported (GAAP)	$	64,049	$	12,223	$	51,826	$	2.66	$	0.51	$	2.15

Acquisition-related expenses	Acquisition-related expenses	1,605		58		1,547		0.07		—		0.06		Acquisition-related expenses	—		—		—		—		—		—
EPA compliance costs	EPA compliance costs	4,926		74		4,852		0.20		—		0.20		EPA compliance costs	2,103		32		2,071		0.09		—		0.09
Gain from insurance recoveries														Gain from insurance recoveries	(9,676)		(121)		(9,555)		(0.40)		(0.01)		(0.40)
Restructuring charges	Restructuring charges	5		—		5		—		—		—		Restructuring charges	10,463		131		10,332		0.43		0.01		0.43

Subtotal	Subtotal	93,422		11,335		82,087		3.83		0.46		3.36		Subtotal	66,939		12,265		54,674		2.78		0.51		2.27
Amortization of intangible assets	Amortization of intangible assets	2,994		197		2,797		0.12		0.01		0.11		Amortization of intangible assets	4,652		534		4,118		0.19		0.02		0.17
Non-cash share-based compensation	Non-cash share-based compensation	6,549		784		5,765		0.27		0.03		0.24		Non-cash share-based compensation	7,941		474		7,467		0.33		0.02		0.31
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	102,965	$	12,316	$	90,649	$	4.22	$	0.50	$	3.72	Adjusted (non-GAAP)	$	79,532	$	13,273	$	66,259	$	3.30	$	0.55	$	2.75

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											24,399		Weighted average shares of common stock used in computing diluted EPS											24,078


		Three Months Ended November 30, 2020													Three Months Ended November 30, 2021
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	97,876	$	13,721	$	84,155	$	3.89	$	0.55	$	3.34	As reported (GAAP)	$	86,886	$	11,203	$	75,683	$	3.56	$	0.46	$	3.10

Acquisition-related expenses														Acquisition-related expenses	1,605		58		1,547		0.07		—		0.06
EPA compliance costs														EPA compliance costs	4,926		74		4,852		0.20		—		0.20
Restructuring charges	Restructuring charges	(12)		—		(12)		—		—		—		Restructuring charges	5		—		5		—		—		—

Subtotal	Subtotal	97,864		13,721		84,143		3.89		0.55		3.34		Subtotal	93,422		11,335		82,087		3.83		0.46		3.36
Amortization of intangible assets	Amortization of intangible assets	4,501		204		4,297		0.18		0.01		0.17		Amortization of intangible assets	2,994		197		2,797		0.12		0.01		0.11
Non-cash share-based compensation	Non-cash share-based compensation	6,739		403		6,336		0.27		0.02		0.25		Non-cash share-based compensation	6,549		784		5,765		0.27		0.03		0.24
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	109,104	$	14,328	$	94,776	$	4.33	$	0.57	$	3.76	Adjusted (non-GAAP)	$	102,965	$	12,316	$	90,649	$	4.22	$	0.50	$	3.72

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											25,192		Weighted average shares of common stock used in computing diluted EPS											24,399

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		Nine Months Ended November 30, 2021													Nine Months Ended November 30, 2022
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	212,843	$	28,873	$	183,970	$	8.70	$	1.18	$	7.52	As reported (GAAP)	$	131,575	$	24,482	$	107,093	$	5.46	$	1.02	$	4.45

Acquisition-related expenses	Acquisition-related expenses	1,605		58		1,547		0.07		—		0.06		Acquisition-related expenses	2,784		2		2,782		0.12		—		0.12
EPA compliance costs	EPA compliance costs	20,998		315		20,683		0.86		0.01		0.85		EPA compliance costs	22,101		332		21,769		0.92		0.01		0.90
Gain from insurance recoveries														Gain from insurance recoveries	(9,676)		(121)		(9,555)		(0.40)		(0.01)		(0.40)
Restructuring charges	Restructuring charges	380		6		374		0.02		—		0.02		Restructuring charges	15,241		192		15,049		0.63		0.01		0.62

Subtotal	Subtotal	235,826		29,252		206,574		9.64		1.20		8.45		Subtotal	162,025		24,887		137,138		6.73		1.03		5.69
Amortization of intangible assets	Amortization of intangible assets	8,963		603		8,360		0.37		0.02		0.34		Amortization of intangible assets	13,662		1,581		12,081		0.57		0.07		0.50
Non-cash share-based compensation	Non-cash share-based compensation	28,349		2,355		25,994		1.16		0.10		1.06		Non-cash share-based compensation	32,055		2,128		29,927		1.33		0.09		1.24
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	273,138	$	32,210	$	240,928	$	11.17	$	1.32	$	9.85	Adjusted (non-GAAP)	$	207,742	$	28,596	$	179,146	$	8.63	$	1.19	$	7.44

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											24,461		Weighted average shares of common stock used in computing diluted EPS											24,086


		Nine Months Ended November 30, 2020													Nine Months Ended November 30, 2021
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	247,835	$	16,061	$	231,774	$	9.78	$	0.63	$	9.14	As reported (GAAP)	$	212,843	$	28,873	$	183,970	$	8.70	$	1.18	$	7.52

Acquisition-related expenses														Acquisition-related expenses	1,605		58		1,547		0.07		—		0.06
EPA compliance costs														EPA compliance costs	20,998		315		20,683		0.86		0.01		0.85
Restructuring charges														Restructuring charges	380		6		374		0.02		—		0.02

Restructuring charges		355		2		353		0.01		—		0.01
Tax reform		—		9,357		(9,357)		—		0.37		(0.37)
Subtotal	Subtotal	248,190		25,420		222,770		9.79		1.00		8.79		Subtotal	235,826		29,252		206,574		9.64		1.20		8.45
Amortization of intangible assets	Amortization of intangible assets	13,527		651		12,876		0.53		0.03		0.51		Amortization of intangible assets	8,963		603		8,360		0.37		0.02		0.34
Non-cash share-based compensation	Non-cash share-based compensation	20,654		1,406		19,248		0.82		0.06		0.76		Non-cash share-based compensation	28,349		2,355		25,994		1.16		0.10		1.06
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	282,371	$	27,477	$	254,894	$	11.14	$	1.08	$	10.05	Adjusted (non-GAAP)	$	273,138	$	32,210	$	240,928	$	11.17	$	1.32	$	9.85

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											25,350		Weighted average shares of common stock used in computing diluted EPS											24,461

Comparison of Third Quarter Fiscal ~~2022~~2023 to Third Quarter Fiscal ~~2021~~2022

Net ~~Income~~income was ~~$75.7~~$51.8 million, compared to ~~$84.2~~$75.7 million. Diluted EPS was ~~$3.10,~~$2.15, compared to ~~$3.34.~~$3.10. Diluted EPS decreased primarily due to lower operating income in the ~~Health~~Home & ~~Home segment~~Outdoor and Beauty segments, higher interest expense and an increase in the effective income tax rate, partially offset by higher operating income in the ~~Housewares and Beauty segments, a decrease in the effective income tax rate~~Health & Wellness segment and lower weighted average diluted shares outstanding.

Adjusted income decreased ~~$4.1~~$24.4 million, or ~~4.4%~~26.9%, to ~~$90.6~~$66.3 million, compared to ~~$94.8~~$90.6 million. Adjusted diluted EPS decreased ~~1.1%~~26.1% to ~~$3.72,~~$2.75, compared to ~~$3.76.~~$3.72.

Comparison of First Nine Months of Fiscal ~~2022~~2023 to First Nine Months of Fiscal ~~2021~~2022

Net Income was ~~$184.0~~$107.1 million, compared to ~~$231.8~~$184.0 million. Diluted EPS was ~~$7.52,~~$4.45, compared to ~~$9.14.~~$7.52. Diluted EPS decreased primarily due to lower operating income, higher interest expense and an increase in the ~~Health & Home segment and a higher~~ effective income tax rate, ~~primarily due to the tax reform benefit recognized in the prior year period,~~ partially offset by ~~higher operating income in the Housewares and Beauty segments and~~ lower weighted average diluted shares outstanding.

Adjusted income decreased ~~$14.0~~$61.8 million, or ~~5.5%~~25.6%, to ~~$240.9~~$179.1 million, compared to ~~$254.9~~$240.9 million. Adjusted diluted EPS decreased ~~2.0%~~24.5% to ~~$9.85,~~$7.44, compared to ~~$10.05.~~$9.85.

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~~Financial Condition,~~ Liquidity and Capital Resources

~~Selected measures of our liquidity and capital resources are shown for the periods below:~~

Nine Months Ended November 30,
2021 2020
Accounts receivable turnover (days) (1) 76.4 70.0
Inventory turnover (times) (1) 2.3 3.6
Working capital (in thousands)
$ 539,681 $ 491,563
Current ratio 1.9:1 1.8:1
Ending debt to ending equity ratio 33.0% 36.4%
Return on average equity (1) 16.4% 18.9%

~~(1)~~Accounts receivable turnover, inventory turnover and return on average equity computations use 12 month trailing net sales revenue, cost of goods sold or net income components as required by the particular measure. The current and four prior quarters' ending balances of accounts receivable, inventory and equity are used for the purposes of computing the average balance component as required by the particular measure.

We principally rely on our cash flow from operations and borrowings under our Credit Agreement ~~(as defined below)~~ to finance our operations, capital and intangible asset expenditures, acquisitions and share repurchases. Historically, our principal uses of cash to fund our operations have included operating expenses, primarily

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SG&A, and working capital, predominantly for inventory purchases and the extension of credit to our retail customers. We have typically been able to ~~typically~~ generate positive cash flow from operations sufficient to fund our operating activities. In the past, we have utilized a combination of available cash and existing, or additional, sources of financing to fund strategic acquisitions, share repurchases and capital investments. We had ~~$44.3~~$45.3 million in cash and cash equivalents at November 30, ~~2021.~~2022. As of November 30, ~~2021,~~2022, the amount of cash and cash equivalents held by our foreign subsidiaries was ~~$23.9~~$34.1 million. During the first quarter of fiscal 2023, we acquired Curlsmith for $147.9 million in cash, net of cash acquired. The acquisition was funded with cash on hand and borrowings under our Credit Agreement. We have no existing activities involving special purpose entities or off-balance sheet financing.

On June 28, 2022, we entered into an amendment to our Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The Credit Agreement was subsequently amended on November 2, 2022, to, among other things, permit the Company to enter into certain supply chain financing programs, structured vendor payable programs, payable financing programs or other similar financing programs, subject to certain conditions. The amendment also provides that these permitted supply chain arrangements are excluded for purposes of determining compliance with the maximum leverage ratio. In addition, on August 26, 2022, we entered into an amendment to the loan agreement for the unsecured MBFC Loan to, among other things, replace LIBOR with Term SOFR (as defined in the loan agreement) as the reference interest rate. For additional information, see Note 10 to the accompanying condensed consolidated financial statements and below under “Credit Agreement and Other Debt Agreements.”

We believe our short-term liquidity requirements will primarily consist of working capital requirements, capital expenditures and interest payments on our debt. We expect elevated outstanding borrowings under the Credit Agreement during fiscal 2023 in comparison to fiscal 2022 due to borrowings to fund the acquisitions of Osprey and Curlsmith and our new distribution center, coupled with the impact of lower consumer demand and shifts in consumer spending patterns. If interest rates continue to increase as expected and adverse economic changes occur, our access to credit on favorable interest rate terms may be impacted. In an economic downturn, we may also be unable to raise capital through debt or equity financings on terms acceptable to us or at all. Covenants in our Credit Agreement could also have consequences on our operations, including restricting or delaying our ability to obtain additional financing, potentially limiting our ability to adjust to rapidly changing market conditions or respond to business opportunities. Additionally, in challenging and uncertain economic environments, we cannot predict when macroeconomic uncertainty may arise, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business and our liquidity requirements.

Based on our current financial condition and current operations, we believe that cash flows from operations and available financing sources will continue to provide sufficient capital resources to fund our foreseeable short- and long-term liquidity requirements.

We continue to evaluate acquisition opportunities on a regular basis. We may finance acquisition activity with available cash, the issuance of shares of common stock, additional debt, or other sources of financing, depending upon the size and nature of any such transaction and the status of the capital markets at the time of such acquisition. Subsequent to the end of our third quarter of fiscal 2022, we completed the acquisition of Osprey, which was funded with cash on hand and a $435.0 million borrowing under our existing revolving credit facility. For additional information, see Note 16 to the accompanying condensed consolidated financial statements.

We may also elect to repurchase additional shares of common stock under our Board of Directors' authorization, subject to limitations contained in our debt agreements and based upon our assessment of a number of factors, including share price, trading volume and general market conditions, working capital

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requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities. We may finance share repurchases with available cash, additional debt or other sources of financing. For additional information, see Part II, Item 5. “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities” in our Form 10-K and Part II, Item 2., “Unregistered Sales of Equity Securities and Use of ~~Proceeds"~~Proceeds” in this report.

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Operating Activities

Operating activities ~~used~~provided net cash of ~~$5.1~~$49.5 million for the nine months ended November 30, 2021, compared to net cash provided of $249.7 million for the same period last year. The decrease in cash provided by operating activities was primarily driven by a decrease in cash earnings and increases in cash used for accounts payable primarily for inventory purchases, incentive compensation payments and tax withholding settlements, partially offset by an increase in accrued income taxes.

~~Investing Activities~~

~~Investing activities provided net cash of $8.5 million during the nine months ended November 30, 2021,~~2022, compared to net cash used of ~~$19.4~~$5.1 million for the same period last year. The increase in cash provided by operating activities was primarily driven by decreases in cash used for inventory purchases and accounts receivable to extend credit to our retail customers, partially offset by a decrease in cash earnings and an increase in cash used for income taxes.

Investing Activities

Investing activities used net cash of $290.7 million during the nine months ended November 30, 2022, compared to net cash provided of $8.5 million for the same period last year. The increase in cash used by investing activities was primarily due to the acquisition of Curlsmith during the first quarter of fiscal 2023, an increase in capital and intangible asset expenditures and the comparative impact of proceeds received from the sale of our North America Personal Care business in the ~~second quarter of fiscal 2022 and sale of property and equipment, partially offset by an increase in capital and intangible asset expenditures.~~prior year period. We made investments in capital and intangible asset expenditures of ~~$41.5~~$146.2 million during the nine months ended November 30, ~~2021,~~2022, compared to ~~$19.4~~$41.5 million for the same period last year. The increase in capital and intangible asset expenditures was primarily for ~~land and initial~~ construction expenditures inclusive of capitalized interest related to a new ~~2 million square foot~~ distribution center for our ~~Housewares~~Home & Outdoor segment. Capital and intangible asset expenditures during both periods also included expenditures for tools, molds, and other production equipment and computer, software, furniture and other equipment.

Financing Activities

Financing activities ~~used~~provided net cash of ~~$4.2~~$253.1 million during the nine months ended November 30, ~~2021,~~2022, compared to net cash used of ~~$98.1~~$4.2 million for the same period last year. The ~~decrease~~increase in cash ~~used~~provided by financing activities is primarily due to an increase in net proceeds from our Credit Agreement, including net proceeds from the term loans, and a decrease in open market repurchases of common stock.

Credit Agreement and Other Debt Agreements

Credit Agreement

~~We have a credit agreement (the "Credit Agreement")~~Our Credit Agreement with Bank of America, N.A., as administrative agent, and other lenders ~~that~~ provides for an unsecured total revolving commitment of $1.25 ~~billion.~~ billion and matures on March 13, 2025. On June 28, 2022, we entered into an amendment to the Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. Accordingly, we updated our interest rate swap contracts associated with the Credit Agreement borrowings to replace LIBOR with Term SOFR as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The term loans will be payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans made, beginning in the third quarter of fiscal 2023, with the remaining balance due at the maturity date. The maturity date of the term loans is

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March 13, 2025, which is the same maturity date as the revolving loans under the Credit Agreement. The proceeds from the term loans were used to repay revolving loans under the Credit Agreement. We may prepay the term loans, in whole or in part, at any time without premium or penalty. Following the amendment, borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings. As a result of the notice for the qualified acquisition, the maximum leverage ratio is 4.00 to 1.00 through February 28, 2023, 3.75 to 1.00 through May 31, 2023 and 3.50 to 1.00 thereafter.

As of November 30, ~~2021,~~2022, the outstanding revolving loan principal balance was ~~$434.0~~$1,068.4 million (excluding prepaid financing fees), the balance of outstanding letters of credit was ~~$32.7~~$18.2 million and the amount available for borrowings under the Credit Agreement was ~~$783.3~~$411.8 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As a result of our exercise of the qualified acquisition notice under the Credit Agreement, as of November 30, ~~2021,~~2022, these covenants effectively limited our ability to incur more than ~~$735.8~~$262.2 million of additional debt from all sources, including the Credit ~~Agreement, or $783.3 million in the event a qualified acquisition is consummated.~~Agreement.

~~Subsequent~~Other Debt Agreements

On August 26, 2022, we entered into an amendment to the ~~end~~loan agreement for the unsecured MBFC Loan to, among other things, replace LIBOR with Term SOFR (as defined in the loan agreement) as the reference interest rate.Following the effective date of the amendment, borrowings under the MBFC Loan bear interest at either the Base Rate or Term SOFR (both as defined in the loan agreement), plus a margin based on the Net Leverage Ratio (as defined in the loan agreement)of 0% to 1.0% and 1.0% to 2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings.

As of November 30, 2022, the aggregate principal balance of the MBFC Loan was $14.8 million (excluding prepaid financing fees).

All of our ~~third quarter~~debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of ~~fiscal 2022, we borrowed $435.0 million~~its subsidiaries. Our debt agreements require the maintenance of certain key financial covenants and also contain other customary covenants, including, among other things, covenants restricting or limiting us, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on our properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends. Our debt agreements also contain customary events of default, including failure to pay principal or interest when due, among others. Our debt agreements are cross-defaulted to each other. Upon an event of default under our ~~Credit Agreement in connection with~~debt agreements, the ~~acquisition~~holders or lenders may, among other things, accelerate the maturity of ~~Osprey.~~any amounts outstanding under our debt agreements. The ~~proceeds~~commitments of the ~~borrowing and cash on hand were used~~lenders to ~~pay all of the cash consideration payable for the acquisition, including amounts for cash acquired. After giving effect~~make loans to ~~the borrowing, as of December 29, 2021, the remaining amount available for borrowings~~us under ~~our Credit Agreement was $351.8 million. As of December 29, 2021, covenants in~~ the Credit Agreement ~~did~~are several and not ~~limit~~joint. Accordingly, if any lender fails to make loans to us, our ~~ability~~available liquidity could be reduced by an amount up to ~~incur $351.8 million~~the aggregate amount of ~~additional debt~~such lender’s commitments under the Credit Agreement.

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~~Other Debt Agreements~~

As of November 30, 2021, we have an aggregate principal balance of $16.7 million (excluding prepaid financing fees) under an unsecured loan agreement with the Mississippi Business Finance Corporation.

~~As of November 30, 2021, there have been no material changes to the information provided in our Form 10-K.~~

New Accounting Guidance

For information on recently adopted and issued accounting pronouncements, see Note 2 to the accompanying condensed consolidated financial statements.

Information Regarding Forward-Looking Statements

Certain ~~written~~statements in this report, including those in documents and ~~oral statements~~our other filings with the SEC referenced herein, may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. ~~This includes statements made in this report, in other filings with the SEC, in press releases, and in certain other oral and written presentations.~~ Generally, the words “anticipates”, “believes”, “expects”, “plans”, “may”, “will”, “might”, “would”, “should”, “seeks”, “estimates”, “project”, “predict”, “potential”, “currently”, “continue”, “intends”, “outlook”, “forecasts”, “targets”, “could”, and other similar words identify forward-looking statements. All statements that address operating results, events or developments that may occur in the future, including statements related to sales, ~~earnings per share~~expenses, EPS results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we will realize our expectations or that our assumptions will prove correct. Forward-looking statements speak only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We believe that these risks include but are not limited to the risks described or referenced in this report and that are otherwise described from time to time in our SEC reports as filed. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

Such risks are not limited to, but may include:

•the occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer data;

•a cybersecurity breach, obsolescence or interruptions in the operation of our central global Enterprise Resource Planning systems and other peripheral information systems;

•the geographic concentration and peak season capacity of certain U.S. distribution facilities which increase our risk to disruptions that could affect our ability to deliver products in a timely manner;

•our ability to successfully manage the demand, supply, and operational challenges associated with the actual or perceived effects of COVID-19 and any similar future public health crisis, pandemic or epidemic;

•our ability to ~~deliver~~develop and introduce a continuing stream of innovative new products to ~~our customers in a timely manner and according to their fulfillment standards;~~meet changing consumer preferences;

•actions taken by large customers that may adversely affect our gross profit and operating results;

•~~our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn, including from the effects of COVID-19;~~

•our dependence on sales to several large customers and the risks associated with any loss of, or substantial decline in, sales to top customers;

•our dependence on third-party manufacturers, most of which are located in Asia, and any inability to obtain products from such manufacturers;

•our ability to deliver products to our customers in a timely manner and according to their fulfillment standards;

•the risks associated with trade barriers, exchange controls, expropriations, and other risks associated with domestic and foreign operations including uncertainty and business interruptions resulting from political changes and actions in the U.S. and abroad, such as the current conflict between Russia and Ukraine, and volatility in the global credit and financial markets and economy;

•our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, any public health crises (including any lingering effects of new surges in COVID-19) or similar

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conditions;

•the risks associated with the use of licensed trademarks from or to third parties;

•the risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors;

•our reliance on our CEO and a limited number of other key senior officers to operate our business;

•expectations regarding our global restructuring plan initiatives and our ability to realize targeted savings, including expectations concerning costs and savings, are based on management’s estimates available at the time and are subject to a number of assumptions that could materially impact our estimates;

•expectations regarding recent acquisitions (including Curlsmith and Osprey) and any future acquisitions or divestitures, including our ability to realize related synergies along with our ability to effectively integrate acquired businesses or disaggregate divested businesses;

•~~our reliance on our Chief Executive Officer~~the risks of potential changes in laws and ~~a limited number of other key senior officers to operate our business;~~

•~~obsolescence or interruptions in the operation of our central global Enterprise Resource Planning systems~~regulations, including environmental, employment and ~~other peripheral information systems;~~

•~~occurrence of cyber incidents or failure by us or our third-party service providers to maintain cybersecurity~~health and safety and tax laws, and the ~~integrity~~costs and complexities of ~~confidential internal or customer data;~~

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•~~our dependence on third-party manufacturers, most of which are located in the Asia Pacific market, and any inability to obtain products from~~compliance with such ~~manufacturers;~~laws;

•the risks associated with ~~weather conditions, the duration~~increased focus and ~~severity of the cold and flu season~~expectations on climate change and other ~~related factors;~~

•~~the geographic concentration~~environmental, social and ~~peak season capacity of certain U.S. distribution facilities which increase our risk to disruptions that could affect the our ability to deliver products in a timely manner;~~

•~~the risks associated with the use of licensed trademarks from or to third parties;~~

•~~our ability to develop and introduce a continuing stream of innovative new products to meet changing consumer preferences;~~

•~~the risks associated with trade barriers, exchange controls, expropriations, and other risks associated with domestic and foreign operations;~~governance matters;

•the risks associated with significant changes in or our compliance with regulations, interpretations or product certification requirements;

•~~the risks associated with our discussions with the EPA on the implementation of compliance plans related to certain of our products within the Health & Home segment;~~

•the risks associated with global legal developments regarding privacy and data security that could result in changes to our business practices, penalties, increased cost of operations, or otherwise harm our business;

•~~the risks associated with accounting for tax positions and the resolution of tax disputes;~~

•~~the risks of potential changes in laws and regulations, including environmental, health and safety and tax laws, and the costs and complexities of compliance with such laws;~~

•our ability to continue to avoid classification as a Controlled Foreign Corporation;

•the risks associated with legislation enacted in Bermuda and Barbados in response to the European Union’s review of harmful tax competition;

•the risks associated with accounting for tax positions and the resolution of tax disputes;

•the risks of significant tariffs or other restrictions being placed on imports from China, Mexico or ~~Mexico~~Vietnam or any retaliatory trade measures taken by China, Mexico or ~~Mexico;~~Vietnam;

•the risks associated with product recalls, product liability and other claims against us;

•associated financial risks including but not limited to, significant impairment of our goodwill, indefinite-lived and definite-lived intangible assets or other long-lived assets;

•~~the risks associated with foreign currency exchange rate fluctuations;~~

•increased costs of raw materials, energy and transportation;

•~~projections of product demand, sales and net income, which are highly subjective in nature, and from which future sales and net income could vary in a material amount; and~~

•the risks to our liquidity or cost of capital which may be materially adversely affected by constraints or changes in the capital and credit markets and limitations under our financing ~~arrangements.~~arrangements;

•the risks associated with foreign currency exchange rate fluctuations; and

•projections of product demand, sales and net income, which are highly subjective in nature, and from which future sales and net income could vary in a material amount.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information provided in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in our Form ~~10-K.~~10-K, other than the amendments to our Credit Agreement, associated interest rate swap contracts and the MBFC Loan discussed herein under “Credit Agreement and Other Debt Agreements” and the current trends and developments discussed herein under “Significant Trends Impacting the Business.” Assuming an increase to market rates of 1.0% as of November 30, 2022, we would incur an increase to our annual interest expense, net of the effect of our interest rate swaps, of approximately $9.6 million. Additional information regarding our risk management activities can be found in Notes 9, 10, 11 and 1112 to the accompanying ~~unaudited~~ condensed consolidated financial statements.

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ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), maintains disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to provide

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reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, including our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended November 30, ~~2021.~~2022. Based upon that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of November 30, ~~2021,~~2022, the end of the period covered by this quarterly report on Form 10-Q.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

In connection with the evaluation described above, we identified no change in our internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act that occurred during our fiscal quarter ended November 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~EPA Regulatory Matter~~

~~In our quarterly report on Form 10-Q for our first quarter of fiscal 2022, we disclosed that we were~~ in ~~discussions with the EPA regarding the compliance of packaging claims on certain~~Part 1, Item 3. “Legal Proceedings” of our ~~products in~~Form 10-K. Since the ~~air and water filtration categories and a limited subset~~filing of humidifier products within the Health & Home segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging compliance discussions, on May 27, 2021, we voluntarily implemented a temporary stop shipment action across this line of products in the U.S. while we worked with the EPA towards an expedient resolution. In July 2021, the EPA approved modest changes to our labeling claims on packaging of existing water filtration products, which we implemented, and subsequently began shipping in limited quantities during the second quarter of fiscal 2022. The shipping volume for these products has continued to increase and, in September 2021, we returned to a more normalized level of shipping activity. In August 2021, the EPA approved changes to our air filtration packaging and we implemented a repackaging plan. We began shipping limited quantities of the impacted products at the end of August 2021 and returned to a more normalized level of shipping activity in November 2021. We have also resolved the majority of the packaging compliance concerns on the limited subset of humidifier products and do not expect them to have a material impact on our consolidated financial results. Our consolidated and Health & Home segment’s net sales revenue, gross profit and operating income for the nine months ended November 30, 2021,Form 10-K, there have been ~~materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging plans after~~no material changes ~~were approved by the EPA. While we have resumed normalized levels of shipping of the affected inventory, we are still~~ in ~~process of repackaging~~ our ~~existing inventory of affected products. If we are not able to execute our repackaging plans on schedule to meet demand, our net sales revenue, gross~~

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profit and operating income could continue to be materially and adversely impacted. At this time, we are not aware of any fines or penalties related to this matter imposed against us by the EPA. While we do not anticipate material fines or penalties, there can be no assurances that such fines or penalties will not be imposed.

See Note 8 to our condensed consolidated financial statements, Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs” and Part II, Item 1A., “Risk Factors” in this Form 10-Q for additional information.legal proceedings from those disclosed therein.

ITEM 1A. RISK FACTORS

The ownership of our common stock involves a number of risks and uncertainties. When evaluating the Company and our business before making an investment decision regarding our securities, potential investors should carefully consider the risk factors and uncertainties described in Part 1, Item 1A. “Risk Factors” of our ~~annual report on~~ Form 10-K and in Part II, Item 1A. “Risk Factors” of our Form 10-Q for the ~~fiscal year~~period ended ~~February 28, 2021 (“~~August 31, 2022 (our “Q2 Form ~~10-K”~~10-Q”). Since the filing of our Form 10-K, there have been no material changes in our risk factors from those disclosed therein except as ~~follows.~~set forth in our Q2 Form 10-Q.

~~Significant changes in or our compliance with regulations, interpretations or product certification requirements could adversely impact our operations.~~

As a global company, we are subject to U.S. and foreign regulations, including environmental, health and safety laws, and industry-specific product certifications. Many of the products we sell are subject to product safety laws and regulations in various jurisdictions. These laws and regulations specify the maximum allowable levels of certain materials that may be contained in our products, provide statutory prohibitions against misbranded and adulterated products, establish ingredients and manufacturing procedures for certain products, specify product safety testing requirements, and set product identification, labeling and claim requirements. For example, thermometers distributed by our Health & Home segment must comply with various regulations governing the production and distribution of medical devices.

Additionally, some of our product lines within our Health & Home segment are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as the U.S. Environmental Protection Agency (the “EPA”), U.S. Customs and Border Protection, the U.S. Food and Drug Administration, and the U.S. Consumer Product Safety Commission.

In our quarterly report on Form 10-Q for our first quarter of fiscal 2022, we disclosed that we were in discussions with the EPA regarding the compliance of packaging claims on certain of our products in the air and water filtration categories and a limited subset of humidifier products within the Health & Home segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging compliance discussions, on May 27, 2021, we voluntarily implemented a temporary stop shipment action across this line of products in the U.S. while we worked with the EPA towards an expedient resolution. In July 2021, the EPA approved modest changes to our labeling claims on packaging of existing water filtration products, which we implemented, and subsequently began shipping in limited quantities during the second quarter of fiscal 2022. The shipping volume for these products has continued to increase and, in September 2021, we returned to a more normalized level of shipping activity. In August 2021, the EPA approved changes to our air filtration packaging and we implemented a repackaging plan. We began shipping limited quantities of the impacted products at the end of August 2021 and returned to a more normalized level of shipping activity in November 2021. We have also resolved the majority of the packaging compliance concerns on the limited subset of humidifier products and do not expect them to have a material impact on our consolidated financial results.~~Our consolidated and Health & Home segment’s net sales revenue, gross profit and operating income for the nine months ended November 30, 2021, have been materially and~~

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adversely impacted by the stop shipment actions and the time needed to execute repackaging plans after changes were approved by the EPA. While we have resumed normalized levels of shipping of the affected inventory, we are still in process of repackaging our existing inventory of affected products. If we are not able to execute our repackaging plans on schedule to meet demand, our net sales revenue, gross profit and operating income could continue to be materially and adversely impacted. The extent to which net sales revenue, gross profit and operating income could be impacted will primarily depend on product demand and the duration of time required to repackage the affected inventory. In addition, our net sales revenue could be materially and adversely impacted by customer returns, an increase in sales discounts and allowances and by the potential impact of distribution losses at certain retailers. There can also be no assurance that fines or penalties will not be imposed by the EPA.

During the first quarter of fiscal 2022, we recorded a $13.1 million charge to cost of goods sold to write-off the obsolete packaging for the affected products in our inventory on-hand and in-transit as of the end of the first quarter of fiscal 2022. During the second and third quarters of fiscal 2022, we incurred additional compliance costs of $3.0 million and $4.9 million, respectively, comprised of incremental warehouse storage costs and legal fees of $2.6 million and $4.6 million, respectively, which were recognized in SG&A, and storage and obsolete packaging charges from vendors of $0.4 million and $0.3 million, respectively, which were recognized in cost of goods sold.In addition, during the second and third quarters of fiscal 2022, we incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products and expect to continue to incur and capitalize such costs as we continue to repackage the remainder of the inventory during the fourth quarter of fiscal 2022.We also expect to incur additional compliance costs, which may include incremental freight, warehouse storage costs, charges from vendors, and legal fees, among other things. Such potential incremental EPA compliance costs will be expensed as incurred and could materially and adversely impact our consolidated and Heath & Home segment's gross profit and operating income. The consequences of the compliance requirements and other matters pertaining to our discussions with the EPA are inherently uncertain. Accordingly, additional impacts or more pronounced adverse impacts may arise that we are not currently aware of today. As a result, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today. For additional information refer to Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs” in this Form 10-Q.

The ongoing compliance efforts with the EPA related to our Health & Home products, as well as significant new regulations, material changes to existing regulations, or greater oversight, enforcement or changes in interpretation of existing regulations, could further delay or interrupt distribution of our products in the U.S. and other countries, result in fines or penalties or cause our costs of compliance to increase. Additionally, we cannot guarantee that our products will receive regulatory approval in all countries. Similarly, some of our Beauty segment’s customers require that our Beauty appliances comply with various safety certifications, including UL certifications. Significant new certification requirements or changes to existing certification requirements could further delay or interrupt distribution of our products, or make them more costly to produce.

We are not able to predict the nature of potential changes to, or enforcement of laws, regulations, product certification requirements, repeals or interpretations. Nor are we able to predict the impact that any of these changes would have on our business in the future. Further, if we were found to be noncompliant with applicable laws and regulations in these or other areas, we could be subject to governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, any of which could have a material adverse effect on our business, results of operations and financial condition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In August 2021, our Board of Directors authorized the repurchase of up to $500 million of our outstanding common stock. The authorization became effective August 25, 2021, for a period of three years, and replaced our former repurchase ~~authorization, of which approximately $79.5 million remained.~~authorization. These repurchases may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities. See Note 67 to the accompanying condensed consolidated financial statements for additional information.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of ~~share settled~~share-settled awards by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the ~~equity holder can be~~option or other share-based award holders are settled by having the holder tender back to us a number of shares at fair value equal to the amounts due. Net exercises are treated as purchases and retirements of shares. The following table summarizes our share repurchase activity for the periods shown:

Period Total Number of
Shares Purchased (1) Average Price
Paid per Share Total Number of
Shares Purchased as Part of Publicly
Announced Plans
or Programs Maximum Dollar Value of
Shares that May
Yet be Purchased
Under the Plans
or Programs
(in thousands) (2)
September 1 to September 30, 2021 5,557 $ 239.19 5,557 $ 498,671
October 1 to October 31, 2021 6,036 229.28 6,036 497,287
November 1 to November 30, 2021 466 247.75 466 497,171
Total 12,059 $ 234.56 12,059


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
September 1 through September 30, 2022	362	$	115.56	362	$	403,641
October 1 through October 31, 2022	7	100.50		7	403,640
November 1 through November 30, 2022	13	178.83		13	403,638
Total	382	$	117.44	382

(1)The number of shares includes shares of common stock acquired from ~~employees~~associates who tendered shares to: (i) satisfy the tax withholding on equity awards as part of our long-term incentive plans or (ii) satisfy the exercise price on stock option exercises. For the three months ended November 30, ~~2021,~~2022, there were no common stock open market purchases.

(2)Reflects the remaining dollar value of shares that could be purchased under our current stock repurchase authorization through the expiration or termination of the plan. For additional information, see Note 67 to the accompanying condensed consolidated financial statements.

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ITEM 6.

EXHIBITS

(a)

Exhibits

10.1

Fifth Amendment to Amended and Restated Credit Agreement dated November 2, 2022, by and among Helen of Troy Texas Corporation, a Texas corporation, the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 4, 2022).

31.1*

Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32**

Joint certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended November 30, ~~2021,~~2022, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders' Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to the Condensed Consolidated Financial Statements.

104

Cover Page, Interactive Data File formatted in iXBRL and contained in Exhibit 101.

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HELEN OF TROY LIMITED
		(Registrant)

Date:	January ~~7, 2022~~6, 2023	/s/ Julien R. Mininberg
		Julien R. Mininberg
		Chief Executive Officer, Director and Principal Executive Officer

Date:	January ~~7, 2022~~6, 2023	/s/ Matthew J. Osberg
		Matthew J. Osberg
		Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

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Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
September 1 to September 30, 2021	5,557	$	239.19	5,557	$	498,671
October 1 to October 31, 2021	6,036	229.28		6,036	497,287
November 1 to November 30, 2021	466	247.75		466	497,171
Total	12,059	$	234.56	12,059