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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 August 31, 20222023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to __
Commission File Number: 001-14669
helenoftroylogoa15.jpg
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 filerAccelerated filer
Non-accelerated filerSmaller 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 September 29, 2022,28, 2023, there were 23,990,07423,742,747 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 
   
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
 
   
   
   
   
   
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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)August 31, 2022February 28, 2022(in thousands, except shares and par value)August 31, 2023February 28, 2023
AssetsAssets  Assets  
Assets, current:Assets, current:  Assets, current:  
Cash and cash equivalentsCash and cash equivalents$39,650 $33,381 Cash and cash equivalents$24,214 $29,073 
Receivables - principally trade, less allowances of $1,718 and $843507,261 457,623 
Receivables, less allowances of $5,144 and $1,678Receivables, less allowances of $5,144 and $1,678387,498 377,604 
InventoryInventory643,192 557,992 Inventory435,681 455,485 
Prepaid expenses and other current assetsPrepaid expenses and other current assets34,647 25,712 Prepaid expenses and other current assets28,950 24,721 
Income taxes receivableIncome taxes receivable13,066 5,430 Income taxes receivable12,349 5,158 
Assets held for sale 1,942 
Total assets, currentTotal assets, current1,237,816 1,082,080 Total assets, current888,692 892,041 
Property and equipment, net of accumulated depreciation of $173,614 and $161,006306,340 205,378 
Property and equipment, net of accumulated depreciation of $156,406 and $178,961Property and equipment, net of accumulated depreciation of $156,406 and $178,961336,349 351,793 
GoodwillGoodwill1,065,214 948,873 Goodwill1,066,730 1,066,479 
Other intangible assets, net of accumulated amortization of $159,261 and $150,309562,751 537,846 
Other intangible assets, net of accumulated amortization of $177,825 and $168,574Other intangible assets, net of accumulated amortization of $177,825 and $168,574544,958 553,883 
Operating lease assetsOperating lease assets40,940 37,759 Operating lease assets37,555 38,751 
Deferred tax assets, netDeferred tax assets, net2,657 3,628 Deferred tax assets, net2,996 2,781 
Assets held for saleAssets held for sale17,179 — 
Other assetsOther assets9,490 7,887 Other assets7,201 7,987 
Total assetsTotal assets$3,225,208 $2,823,451 Total assets$2,901,660 $2,913,715 
Liabilities and Stockholders' EquityLiabilities and Stockholders' Equity  Liabilities and Stockholders' Equity  
Liabilities, current:Liabilities, current:  Liabilities, current:  
Accounts payable, principally trade$311,622 $308,178 
Accounts payableAccounts payable$258,669 $190,598 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities235,133 271,675 Accrued expenses and other current liabilities195,359 200,718 
Income taxes payableIncome taxes payable15,484 20,718 Income taxes payable12,132 14,778 
Long-term debt, current maturitiesLong-term debt, current maturities20,872 1,884 Long-term debt, current maturities6,235 6,064 
Liabilities held for sale 235 
Total liabilities, currentTotal liabilities, current583,111 602,690 Total liabilities, current472,395 412,158 
Long-term debt, excluding current maturitiesLong-term debt, excluding current maturities1,148,870 811,332 Long-term debt, excluding current maturities838,668 928,348 
Lease liabilities, non-currentLease liabilities, non-current45,630 43,745 Lease liabilities, non-current41,036 42,672 
Deferred tax liabilities, netDeferred tax liabilities, net34,643 21,582 Deferred tax liabilities, net34,747 28,048 
Other liabilities, non-currentOther liabilities, non-current14,608 16,763 Other liabilities, non-current12,931 13,678 
Total liabilitiesTotal liabilities1,826,862 1,496,112 Total liabilities1,399,777 1,424,904 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies
Stockholders' equity:Stockholders' equity:  Stockholders' equity:  
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issuedCumulative 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; 23,968,992 and 23,800,305 shares issued and outstanding2,397 2,380 
Common stock, $0.10 par. Authorized 50,000,000 shares; 23,719,204 and 23,994,405 shares issued and outstandingCommon stock, $0.10 par. Authorized 50,000,000 shares; 23,719,204 and 23,994,405 shares issued and outstanding2,372 2,399 
Additional paid in capitalAdditional paid in capital312,567 303,740 Additional paid in capital330,227 317,277 
Accumulated other comprehensive income
Accumulated other comprehensive income
7,200 202 Accumulated other comprehensive income
3,686 4,947 
Retained earningsRetained earnings1,076,182 1,021,017 Retained earnings1,165,598 1,164,188 
Total stockholders' equityTotal stockholders' equity1,398,346 1,327,339 Total stockholders' equity1,501,883 1,488,811 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$3,225,208 $2,823,451 Total liabilities and stockholders' equity$2,901,660 $2,913,715 

See accompanying notes to condensed consolidated financial statements.
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HELEN OF TROY LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited) 

Three Months Ended August 31,Six Months Ended August 31, Three Months Ended August 31,Six Months Ended August 31,
(in thousands, except per share data)(in thousands, except per share data)2022202120222021(in thousands, except per share data)2023202220232022
Sales revenue, netSales revenue, net$521,400 $475,228 $1,029,478 $1,016,451 Sales revenue, net$491,563 $521,400 $966,235 $1,029,478 
Cost of goods soldCost of goods sold299,954 264,640 596,861 585,271 Cost of goods sold261,910 299,954 520,951 596,861 
Gross profitGross profit221,446 210,588 432,617 431,180 Gross profit229,653 221,446 445,284 432,617 
Selling, general and administrative expense (“SG&A”)Selling, general and administrative expense (“SG&A”)169,724 142,928 346,954 298,679 Selling, general and administrative expense (“SG&A”)179,191 169,724 346,826 346,954 
Restructuring chargesRestructuring charges4,776 369 4,778 375 Restructuring charges3,617 4,776 10,972 4,778 
Operating incomeOperating income46,946 67,291 80,885 132,126 Operating income46,845 46,946 87,486 80,885 
Non-operating income, netNon-operating income, net113 31 180 133 Non-operating income, net148 113 285 180 
Interest expenseInterest expense9,166 3,307 13,539 6,302 Interest expense13,654 9,166 27,706 13,539 
Income before income taxIncome before income tax37,893 64,015 67,526 125,957 Income before income tax33,339 37,893 60,065 67,526 
Income tax expenseIncome tax expense7,221 12,700 12,259 17,670 Income tax expense5,958 7,221 10,103 12,259 
Net incomeNet income$30,672 $51,315 $55,267 $108,287 Net income$27,381 $30,672 $49,962 $55,267 
Earnings per share (“EPS”):Earnings per share (“EPS”):  Earnings per share (“EPS”):  
BasicBasic$1.28 $2.13 $2.31 $4.47 Basic$1.14 $1.28 $2.08 $2.31 
DilutedDiluted1.28 2.11 2.29 4.42 Diluted1.14 1.28 2.07 2.29 
Weighted average shares used in computing EPS:Weighted average shares used in computing EPS:  Weighted average shares used in computing EPS:  
BasicBasic23,969 24,101 23,917 24,225 Basic23,918 23,969 23,984 23,917 
DilutedDiluted24,056 24,347 24,089 24,492 Diluted24,041 24,056 24,088 24,089 

See accompanying notes to condensed consolidated financial statements.
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HELEN OF TROY LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited) 

Three Months Ended August 31,Six Months Ended August 31, Three Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Net incomeNet income$30,672 $51,315 $55,267 $108,287 Net income$27,381 $30,672 $49,962 $55,267 
Other comprehensive income, net of tax:
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Cash flow hedge activity - interest rate swapsCash flow hedge activity - interest rate swaps1,301 1,079 3,507 1,836 Cash flow hedge activity - interest rate swaps2,768 1,301 (324)3,507 
Cash flow hedge activity - foreign currency contractsCash flow hedge activity - foreign currency contracts2,538 5,163 3,491 3,609 Cash flow hedge activity - foreign currency contracts(314)2,538 (937)3,491 
Total other comprehensive income, net of tax3,839 6,242 6,998 5,445 
Total other comprehensive income (loss), net of taxTotal other comprehensive income (loss), net of tax2,454 3,839 (1,261)6,998 
Comprehensive incomeComprehensive income$34,511 $57,557 $62,265 $113,732 Comprehensive income$29,835 $34,511 $48,701 $62,265 

See accompanying notes to condensed consolidated financial statements.
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HELEN OF TROY LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

Common StockAdditional Paid in CapitalAccumulated Other Comprehensive (Loss) IncomeRetained EarningsTotal Stockholders' EquityCommon StockAdditional Paid in CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal Stockholders' Equity
(in thousands, including shares)(in thousands, including shares) SharesPar
Value
(in thousands, including shares) SharesPar
Value
Balances at February 28, 202124,406 $2,441 $283,396 $(11,656)$965,166 $1,239,347 
Balances at February 28, 2022Balances at February 28, 202223,800 $2,380 $303,740 $202 $1,021,017 $1,327,339 
Net incomeNet income— — — — 56,972 56,972 Net income— — — — 24,595 24,595 
Other comprehensive loss, net of tax— — — (797)— (797)
Other comprehensive income, net of taxOther comprehensive income, net of tax— — — 3,159 — 3,159 
Exercise of stock optionsExercise of stock options— 275 — — 275 Exercise of stock options658 — — 659 
Issuance and settlement of restricted stockIssuance and settlement of restricted stock177 18 (18)— — — Issuance and settlement of restricted stock235 24 (24)— — — 
Issuance of common stock related to stock purchase planIssuance of common stock related to stock purchase plan13 2,337 — — 2,338 Issuance of common stock related to stock purchase plan13 2,274 — — 2,275 
Common stock repurchased and retiredCommon stock repurchased and retired(502)(50)(16,616)— (93,408)(110,074)Common stock repurchased and retired(89)(9)(18,113)— (102)(18,224)
Share-based compensationShare-based compensation— — 14,020 — — 14,020 Share-based compensation— — 16,619 — — 16,619 
Balances at May 31, 202124,098 $2,410 $283,394 $(12,453)$928,730 $1,202,081 
Balances at May 31, 2022Balances at May 31, 202223,967 $2,397 $305,154 $3,361 $1,045,510 $1,356,422 
Net incomeNet income— — — — 51,315 51,315 Net income— — — — 30,672 30,672 
Other comprehensive income, net of taxOther comprehensive income, net of tax— — — 6,242 — 6,242 Other comprehensive income, net of tax— — — 3,839 — 3,839 
Exercise of stock options519 — — 520 
Issuance and settlement of restricted stockIssuance and settlement of restricted stock— — — — — Issuance and settlement of restricted stock— (1)— — (1)
Common stock repurchased and retiredCommon stock repurchased and retired(1)— (104)— (12)(116)Common stock repurchased and retired— — (81)— — (81)
Share-based compensationShare-based compensation— — 7,780 — — 7,780 Share-based compensation— — 7,495 — — 7,495 
Balances at August 31, 202124,105 $2,411 $291,589 $(6,211)$980,033 $1,267,822 
Balances at August 31, 2022Balances at August 31, 202223,969 $2,397 $312,567 $7,200 $1,076,182 $1,398,346 

Balances at February 28, 202223,800 $2,380 $303,740 $202 $1,021,017 $1,327,339 
Balances at February 28, 2023Balances at February 28, 202323,994 $2,399 $317,277 $4,947 $1,164,188 $1,488,811 
Net incomeNet income    24,595 24,595 Net income    22,581 22,581 
Other comprehensive income, net of tax   3,159  3,159 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax   (3,715) (3,715)
Exercise of stock optionsExercise of stock options8 1 658   659 Exercise of stock options5 1 211   212 
Issuance and settlement of restricted stockIssuance and settlement of restricted stock235 24 (24)   Issuance and settlement of restricted stock120 12 (12)   
Issuance of common stock related to stock purchase planIssuance of common stock related to stock purchase plan13 1 2,274   2,275 Issuance of common stock related to stock purchase plan23 2 2,166   2,168 
Common stock repurchased and retiredCommon stock repurchased and retired(89)(9)(18,113) (102)(18,224)Common stock repurchased and retired(45)(4)(4,442)  (4,446)
Share-based compensationShare-based compensation  16,619   16,619 Share-based compensation  9,297   9,297 
Balances at May 31, 202223,967 $2,397 $305,154 $3,361 $1,045,510 $1,356,422 
Balances at May 31, 2023Balances at May 31, 202324,097 $2,410 $324,497 $1,232 $1,186,769 $1,514,908 
Net incomeNet income    30,672 30,672 Net income    27,381 27,381 
Other comprehensive income, net of taxOther comprehensive income, net of tax   3,839  3,839 Other comprehensive income, net of tax   2,454  2,454 
Issuance and settlement of restricted stockIssuance and settlement of restricted stock2  (1)  (1)Issuance and settlement of restricted stock4      
Common stock repurchased and retiredCommon stock repurchased and retired  (81)  (81)Common stock repurchased and retired(382)(38)(1,499) (48,552)(50,089)
Share-based compensationShare-based compensation  7,495   7,495 Share-based compensation  7,229   7,229 
Balances at August 31, 202223,969 $2,397 $312,567 $7,200 $1,076,182 $1,398,346 
Balances at August 31, 2023Balances at August 31, 202323,719 $2,372 $330,227 $3,686 $1,165,598 $1,501,883 

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)
Six Months Ended August 31, Six Months Ended August 31,
(in thousands)(in thousands)20222021(in thousands)20232022
Cash used by operating activities:  
Cash provided (used) by operating activities:Cash provided (used) by operating activities:  
Net incomeNet income$55,267 $108,287 Net income$49,962 $55,267 
Adjustments to reconcile net income to net cash used 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 amortizationDepreciation and amortization21,617 17,441 Depreciation and amortization24,606 21,617 
Amortization of financing costsAmortization of financing costs512 489 Amortization of financing costs616 512 
Non-cash operating lease expenseNon-cash operating lease expense5,186 4,434 Non-cash operating lease expense3,941 5,186 
Provision for credit lossesProvision for credit losses963 510 Provision for credit losses3,671 963 
Non-cash share-based compensationNon-cash share-based compensation24,114 21,800 Non-cash share-based compensation16,526 24,114 
Gain on sale of Personal Care businessGain on sale of Personal Care business(1,336)(513)Gain on sale of Personal Care business (1,336)
Gain on the sale or disposal of property and equipmentGain on the sale or disposal of property and equipment(20)(1,640)Gain on the sale or disposal of property and equipment(246)(20)
Deferred income taxes and tax creditsDeferred income taxes and tax credits3,977 (8,207)Deferred income taxes and tax credits6,845 3,977 
Changes in operating capital, net of effects of acquisitions of businesses:Changes in operating capital, net of effects of acquisitions of businesses:  Changes in operating capital, net of effects of acquisitions of businesses:  
ReceivablesReceivables(46,754)(62,604)Receivables(14,427)(46,754)
InventoryInventory(77,348)(124,506)Inventory19,804 (77,348)
Prepaid expenses and other current assetsPrepaid expenses and other current assets575 (4,982)Prepaid expenses and other current assets(5,391)575 
Other assets and liabilities, netOther assets and liabilities, net(2,040)(4,545)Other assets and liabilities, net(253)(2,040)
Accounts payableAccounts payable3,333 6,080 Accounts payable71,990 3,333 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities(43,767)(26,414)Accrued expenses and other current liabilities(10,317)(43,767)
Accrued income taxesAccrued income taxes(19,731)16,032 Accrued income taxes(9,595)(19,731)
Net cash used by operating activities
(75,452)(58,338)
Net cash provided (used) by operating activities
Net cash provided (used) by operating activities
157,732 (75,452)
Cash (used) provided by investing activities:  
Cash used by investing activities:Cash used by investing activities:  
Capital and intangible asset expendituresCapital and intangible asset expenditures(112,635)(23,954)Capital and intangible asset expenditures(20,557)(112,635)
Net payments to acquire businesses, net of cash acquiredNet payments to acquire businesses, net of cash acquired(148,111)— Net payments to acquire businesses, net of cash acquired (148,111)
Proceeds from sale of Personal Care businessProceeds from sale of Personal Care business1,804 44,700 Proceeds from sale of Personal Care business 1,804 
Proceeds from the sale of property and equipmentProceeds from the sale of property and equipment20 3,208 Proceeds from the sale of property and equipment246 20 
Net cash (used) provided by investing activities(258,922)23,954 
Net cash used by investing activities
Net cash used by investing activities
(20,311)(258,922)
Cash provided by financing activities:  
Cash (used) provided by financing activities:Cash (used) provided by financing activities:  
Proceeds from revolving loansProceeds from revolving loans573,500 342,500 Proceeds from revolving loans261,150 573,500 
Repayment of line of credit(465,000)(212,500)
Repayment of revolving loansRepayment of revolving loans(348,150)(465,000)
Proceeds from term loansProceeds from term loans250,000 — Proceeds from term loans 250,000 
Repayment of long-term debtRepayment of long-term debt(1,900)(1,900)Repayment of long-term debt(3,125)(1,900)
Payment of financing costsPayment of financing costs(586)— Payment of financing costs (586)
Proceeds from share issuances under share-based compensation plansProceeds from share issuances under share-based compensation plans2,934 3,133 Proceeds from share issuances under share-based compensation plans2,380 2,934 
Payments for repurchases of common stockPayments for repurchases of common stock(18,305)(110,190)Payments for repurchases of common stock(54,535)(18,305)
Net cash provided by financing activities
340,643 21,043 
Net cash (used) provided by financing activitiesNet cash (used) provided by financing activities(142,280)340,643 
Net increase (decrease) in cash and cash equivalents
6,269 (13,341)
Net (decrease) increase in cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
(4,859)6,269 
Cash and cash equivalents, beginning balanceCash and cash equivalents, beginning balance33,381 45,120 Cash and cash equivalents, beginning balance29,073 33,381 
Cash and cash equivalents, ending balanceCash and cash equivalents, ending balance$39,650 $31,779 Cash and cash equivalents, ending balance$24,214 $39,650 
Supplemental non-cash investing activity:Supplemental non-cash investing activity:Supplemental non-cash investing activity:
Capital expenditures included in accounts payableCapital expenditures included in accounts payable$8,484 $2,927 Capital expenditures included in accounts payable$2,790 $8,484 

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)
August 31, 20222023

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 August 31, 20222023 and February 28, 2022,2023, 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, 20222023 (“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 August 31, 2022,2023, we operated threetwo reportable segments: Home & Outdoor and Beauty & Wellness. 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 and in Note 8) that resulted in our previous Health & Wellness and Beauty. Beauty operating segments being combined into a single reportable segment, which is referred to herein 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 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. As a result of these changes, our disclosures reflect two reportable segments, Home & Outdoor and Beauty & Wellness. Comparative prior period segment information in this report has been recast to conform to this change in our reportable segments. 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 future net cash flows, and make more informed judgments about the Company as a whole.

Our Home & Outdoor segment provides a broad range of outstanding world-class brands that help consumers enjoy an outdoor lifestyle and make everyday living better. Our innovative consumer products for home activities such asinclude food preparation, cooking, cleaning, organization, and organization, as well asbeverage service. Our outdoor performance range includes hydration products, for outdoor and on the go activities such as hydration, food storage, backpacks, and travel gear.gear to ease your journey and inspire your next adventure. The HealthBeauty & Wellness segment provides healthconsumers with a broad range of
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outstanding world-class brands for beauty and wellnesswellness. In Beauty, we deliver innovation through products including healthcare devices, thermometers, water and air filtration systems, humidifiers, and fans. Our Beauty segment provides mass and prestige market beauty appliances includingsuch as hair styling appliances, grooming tools, decorative hair accessories, and prestige market liquid-based hairliquid-, solid-, and powder-based personal care products.products that help make everyone look and feel more beautiful. On the Wellness side, we are there when you need us most with highly regarded humidifiers, thermometers, water and air purifiers, heaters, and fans.

Our business is seasonal due to different calendar events, holidays and seasonal weather and illness 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 fourthsecond quarter of fiscal 2020,2023, we committedfocused on developing a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (referred to as “Project Pegasus”). See Note 8 for additional information.

On April 22, 2022, we completed the acquisition of Recipe Products Ltd., a planproducer of innovative prestige hair care products for all types of curly and wavy hair under the Curlsmith brand (“Curlsmith”). The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment and cash acquired. The Curlsmith brand and products were added to divestthe Beauty & Wellness segment. See Note 4 for additional information.

During fiscal 2022 and fiscal 2023, we divested certain assets within our Beauty & Wellness 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 to HRB Brands LLC, for $44.7 million in 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. See Note 3 for additional information.

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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 total purchase consideration was $149.7 million in cash, net of a preliminary closing 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. (“Osprey”), a 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 adversely impacted our business in the first and second quarters of fiscal 2023. In response to rising inflation, the Federal Open Market Committee has been raising interest rates, and has stated it intends to continue to raise rates throughout the remainder of 2022 and possibly 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 throughout 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. 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 throughout 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 has resulted in higher costs, less capacity, component part and raw material shortages, and longer lead times. 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 spread of COVID-19, our continued ability to source and distribute our products, the impact of COVID-19 on capital and financial markets, and the related impact on consumer confidence and spending, all of which are uncertain and difficult to predict considering the continuously evolving landscape. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

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 or combined certain amounts in the prior year's accompanying footnotes to conform with the current year's presentation.

Note 2 - New Accounting Pronouncements

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

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 to HRB Brands LLC, for $44.7 million in 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
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CareAdopted

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in ASU 2022-04 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with the exception for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The guidance should be applied retrospectively, except for the amendment on rollforward information, which should be applied prospectively. This ASU was effective for us in the first quarter of fiscal 2024, with the exception of the amendment on rollforward information, which will be effective for us in our Form 10-K for fiscal 2025. We adopted this ASU during the first quarter of fiscal 2024 and the adoption did not have an impact on our consolidated financial statement disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to HRB Brands LLC,be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Prior to the issuance of this guidance, contract assets and contract liabilities were recognized by the acquirer at fair value on the acquisition date. The amendments in ASU 2021-08 are effective for $1.8fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, and should be applied prospectively to acquisitions occurring on or after the effective date. We adopted this ASU during the first quarter of fiscal 2024 and the adoption did not have an impact on our consolidated financial statements.

Note 3 - Assets Held for Sale

On August 29, 2023, we entered into an agreement to sell our distribution and office facilities in El Paso, Texas, which provides for closing subsequent to a due diligence period. Accordingly, we classified the associated property and equipment totaling $17.2 million, net of accumulated depreciation of $36.8 million, as held for sale as of August 31, 2023.

Subsequent to the end of our second quarter of fiscal 2024, on September 28, 2023, we completed the sale of our distribution and office facilities in cashEl Paso, Texas for a sales price of $50.6 million, less transaction costs of $1.1 million. Concurrently, we entered into an agreement to leaseback the office facilities for a period of up to 18 months substantially rent free, which we estimate to have a fair value of approximately $1.9 million. The transaction qualifies for sales recognition under the sale leaseback accounting requirements. Accordingly, we increased the sales price by the $1.9 million of prepaid rent and recognizedexpect to recognize a gain on the sale inof approximately $34.2 million within SG&A totaling $1.3 million.during the third quarter of fiscal year 2024, of which approximately $18.0 million and $16.2 million will be recognized by our Beauty & Wellness and Home & Outdoor segments, respectively. The netrelated assets sold included intangible assets, inventory, certain net trade receivables, fixed assetswill be derecognized from the consolidated balance sheet, and certain accrued sales discountsat lease commencement, we will record an operating lease asset, which includes the imputed rent payments described above, and allowances relatingan operating lease liability. We plan to use the proceeds from the sale to repay amounts outstanding under our Personal Care business. As a result of these dispositions, we no longer have any assets or liabilities classified as held for sale.long-term debt agreement.

The carrying amounts of the major classes of assets and liabilities for our Personal Care business that were classified as held for sale were as follows:
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(in thousands)February 28, 2022
Receivables, net of allowance of $23$1,265 
Inventory611 
Property and equipment, net of accumulated depreciation of $15266 
  Assets held for sale$1,942 
Accrued sales discounts and allowances$235 
  Liabilities held for sale$235 


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Note 4 - Acquisitions

Acquisition of 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 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 & Wellness segment. The total purchase consideration was $149.7$147.9 million in cash, net of a preliminary closingfinal net working capital adjustment of $0.3$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 six months ended August 31, 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 & Wellness 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 and completed our analysis of the economic lives of the assets acquired. We assigned $21.0 million to trade names and are 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 $0.1 million. We also finalized the net working capital adjustment during fiscal 2023, which resulted in a $1.8 million reduction to the total purchase consideration and goodwill. During the first quarter of fiscal 2024, we made final adjustments to provisional liability balances, which resulted in a corresponding increase to goodwill of $0.3 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$4,211 
Inventory7,890 
Prepaid expenses and other current assets119 
Property and equipment212 
Goodwill118,613117,108 
Trade names - definite21,000 
Customer relationships - definite12,000 
Deferred tax assets, net360 
Total assets164,405162,900 
Liabilities:
Accounts payable1,401 
Accrued expenses and other current liabilities2,5832,813 
Income taxes payable2,5382,572 
Deferred tax liabilities, net8,187 
Total liabilities14,70914,973 
Net assets recorded$149,696147,927 

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Both the fair value and gross contractual amount of receivables acquired was $4.2 million, as an immaterial amount iswas 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 August 31, 2022 (1)
Six Months Ended
August 31, 2022 (1) (2)
Sales revenue, net$10,207 $13,453 
Net income1,437 1,876 
EPS:
Basic$0.06 $0.08 
Diluted$0.06 $0.08 


(in thousands, except earnings per share data)
Three Months Ended
August 31, 2022
Six Months Ended
August 31, 2022 (1)
Sales revenue, net$10,207 $13,453 
Net income1,437 1,876 
EPS:
Basic$0.06 $0.08 
Diluted$0.06 $0.08 
(1)Net income and EPS amounts include allocations for corporate expenses, interest expense and income tax expense.
(1)(2)Represents approximately nineteen 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 woulddoes 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
August 31,
Six Months Ended
August 31,
(in thousands, except earnings per share data)(in thousands, except earnings per share data)2022202120222021(in thousands, except earnings per share data)Three Months Ended August 31, 2022Six Months Ended
August 31, 2022
Sales revenue, netSales revenue, net$521,400 $483,586 $1,036,570 $1,034,443 Sales revenue, net$521,400 $1,036,570 
Net incomeNet income30,672 52,156 57,180 107,260 Net income30,672 57,180 
EPS:EPS:EPS:
BasicBasic$1.28 $2.16 $2.39 $4.43 Basic$1.28 $2.39 
DilutedDiluted$1.28 $2.14 $2.37 $4.38 Diluted$1.28 $2.37 

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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 six months ended August 31, 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.

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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 
Inventory30,056 
Prepaid expenses and other current assets3,699 
Income taxes receivable4,169 
Property and equipment11,386 
Goodwill206,699 
Trade names - indefinite170,000 
Customer relationships - definite22,000 
Operating lease assets2,155 
Total assets461,922 
Liabilities:
Accounts payable3,780 
Accrued expenses and other current liabilities7,334 
Lease liabilities, non-current1,719 
Deferred tax liabilities, net39,794 
Total liabilities52,627 
Net assets recorded$409,295 

Note 5 - Accrued Expenses and Other Current Liabilities

A summary of accrued expenses and other current liabilities was as follows:
(in thousands)(in thousands)August 31, 2022February 28, 2022(in thousands)August 31, 2023February 28, 2023
Accrued compensation, benefits and payroll taxesAccrued compensation, benefits and payroll taxes$20,643 $55,405 Accrued compensation, benefits and payroll taxes$31,947 $17,380 
Accrued sales discounts and allowancesAccrued sales discounts and allowances72,380 69,120 Accrued sales discounts and allowances48,908 63,881 
Accrued sales returnsAccrued sales returns29,639 33,384 Accrued sales returns23,240 28,498 
Accrued advertisingAccrued advertising54,591 55,775 Accrued advertising35,112 36,931 
OtherOther57,880 57,991 Other56,152 54,028 
Total accrued expenses and other current liabilitiesTotal accrued expenses and other current liabilities$235,133 $271,675 Total accrued expenses and other current liabilities$195,359 $200,718 

Note 6 - 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.
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During the first quarter of fiscal 2023,2024, we granted 36,08894,807 service condition awards (“Service Condition Awards”) with a weighted average grant date fair value of $204.11.$110.85. Additionally, we granted 165,734252,522 performance-based awards during the first quarter of fiscal 2023,2024, of which 82,867126,318 contained performance conditions (“Performance Condition Awards”) and 82,867126,204 contained market conditions (“Market Condition Awards”), with weighted average grant date fair values of $204.11$110.85 and $152.91,$80.50, 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 August 31,Six Months Ended
August 31,
Three Months Ended August 31,Six Months Ended
August 31,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Directors stock compensationDirectors stock compensation$222 $163 $395 $323 Directors stock compensation$196 $222 $393 $395 
Service Condition AwardsService Condition Awards2,160 3,296 5,277 5,236 Service Condition Awards2,878 2,160 6,198 5,277 
Performance Condition AwardsPerformance Condition Awards3,196 3,061 14,041 13,084 Performance Condition Awards1,113 3,196 3,136 14,041 
Market Condition AwardsMarket Condition Awards1,917 1,260 3,827 2,389 Market Condition Awards3,042 1,917 6,189 3,827 
Employee stock purchase planEmployee stock purchase plan — 574 768 Employee stock purchase plan — 610 574 
Share-based compensation expenseShare-based compensation expense7,495 7,780 24,114 21,800 Share-based compensation expense7,229 7,495 16,526 24,114 
Less income tax benefitsLess income tax benefits(570)(712)(1,654)(1,571)Less income tax benefits(385)(570)(1,026)(1,654)
Share-based compensation expense, net of income tax benefitsShare-based compensation expense, net of income tax benefits$6,925 $7,068 $22,460 $20,229 Share-based compensation expense, net of income tax benefits$6,844 $6,925 $15,500 $22,460 

Unrecognized Share-Based Compensation Expense

As of August 31, 2022,2023, our total unrecognized share-based compensation for all awards was $50.8$32.9 million, which will be recognized over a weighted average amortization period of 2.12.0 years. The total unrecognized share-based compensation reflects an estimate of target achievement for Performance Condition Awards granted during the first quarter of fiscal 20232024, and fiscal 2022, and a weighted averagean estimate of 150%zero percent of target achievement for Performance Condition Awards granted in fiscal 2021.2023 and fiscal 2022.

Note 7 - Repurchases of Common Stock

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. As of August 31, 2022,2023, our repurchase authorization allowed for the purchase of $403.7$349.1 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 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.

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The following table summarizes our share repurchase activity for the periods shown:
Three Months Ended August 31,Six Months Ended August 31, Three Months Ended August 31,Six Months Ended August 31,
(in thousands, except share and per share data)(in thousands, except share and per share data)2022202120222021(in thousands, except share and per share data)2023202220232022
Common stock repurchased on the open market:Common stock repurchased on the open market: Common stock repurchased on the open market: 
Number of sharesNumber of shares —  436,842 Number of shares381,200 — 381,200 — 
Aggregate value of sharesAggregate value of shares$ $— $ $95,484 Aggregate value of shares$50,006 $— $50,006 $— 
Average price per shareAverage price per share$ $— $ $218.58 Average price per share$131.18 $— $131.18 $— 
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 sharesNumber of shares501 503 89,959 66,147 Number of shares765 501 45,397 89,959 
Aggregate value of sharesAggregate value of shares$81 $116 $18,305 $14,706 Aggregate value of shares$83 $81 $4,529 $18,305 
Average price per shareAverage price per share$163.28 $229.76 $203.49 $222.32 Average price per share$108.00 $163.28 $99.75 $203.49 

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Note 8 - Restructuring Plan

During the second quarter of fiscal 2023, we focused on developing Project Pegasus, a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (referred to as “Project Pegasus”).costs. Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency 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 our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which is referred to herein 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 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 our initiative focused on streamlining and simplifying the organization, we made further changes to the structure of our organization, during the fourth quarter of fiscal 2023, 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 these role reductions were completed by March 1, 2023. 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.

During the second quarter of fiscal 2024, we announced plans to geographically consolidate the U.S. Beauty business, currently located in El Paso, Texas, and Irvine, California, and co-locate it with our Wellness business in the Boston, Massachusetts area. This geographical consolidation and relocation is the next step in our initiative to streamline and simplify the organization and it is expected to be
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completed during fiscal 2025. We expect these changes will enable a greater opportunity to capture synergies and enhance collaboration and innovation within the Beauty & Wellness segment.

We have updated our expectations regarding Project Pegasus charges. We now estimate lower total one-time pre-tax restructuring charges of approximately $60 million to $65 million over the duration of the plan. We now expect these charges to be completed during fiscal 2025. We previously had estimated total pre-tax restructuring charges of approximately $85 million to $95 million, which was initially expected to be substantially completed by the end of fiscal 2024. In addition, we now have the following expectations regarding Project Pegasus:Pegasus charges:
Pre-tax restructuring charges to be comprised of approximately $22 million to $25 million of severance and employee related costs, $30 million of professional fees, $5 million of contract termination costs, and $3 million to $5 million of other exit and disposal costs.
All of our operating segments and shared services will be impacted by the plan and pre-tax restructuring charges include approximately $17 million to $19 million in Home & Outdoor and $43 million to $46 million in Beauty & Wellness.
Pre-tax restructuring charges represent primarily cash expenditures, which are expected to be substantially paid by the end of fiscal 2025.

We continue to have the following expectations regarding Project Pegasus savings:
Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which we expect to substantially begin in fiscal 2024 and be substantially achieved by the end of fiscal 2026.
Estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.
Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A.
Total one-time pre-tax restructuring charges of approximately $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 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.

During both the three and six month periods ended August 31, 2022,2023, we incurred $4.8$3.6 million and $11.0 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which arewere recorded as “Restructuring charges” in the condensed consolidated statementsstatement of income. We recognized $0.4$4.8 million of pre-tax restructuring costs during both the three and six month periods ended August 31, 2021, under a prior restructuring plan referred to as2022 in connection with Project Refuel, which was completed during the fourth quarter of fiscal 2022.Pegasus.

The following tables summarize restructuring charges recorded as a result of Project Pegasus for the periods presented:
Three Months Ended August 31, 2022Three Months Ended August 31, 2023
(in thousands)(in thousands)Home &
Outdoor
Health &
Wellness
BeautyTotal(in thousands)Home &
Outdoor
Beauty &
Wellness
Total
Severance and employee related costsSeverance and employee related costs$472 $1,926 $443 $2,841 Severance and employee related costs$87 $501 $588 
Professional feesProfessional fees— 128 — 128 Professional fees1,182 1,719 2,901 
Contract terminationContract termination— 1,500 — 1,500 Contract termination— 108 108 
OtherOther— — 307 307 Other18 20 
Total restructuring chargesTotal restructuring charges$472 $3,554 $750 $4,776 Total restructuring charges$1,271 $2,346 $3,617 

 Six Months Ended August 31, 2022Total
Incurred Since Inception
(in thousands)Home &
Outdoor
Health &
Wellness
BeautyTotal
Severance and employee related costs$472 $1,926 $445 $2,843 $2,843 
Professional fees— 128 — 128 128 
Contract termination— 1,500 — 1,500 1,500 
Other— — 307 307 307 
Total restructuring charges$472 $3,554 $752 $4,778 $4,778 

Three Months Ended August 31, 2022
(in thousands)Home &
Outdoor
Beauty &
Wellness
Total
Severance and employee related costs$472 $2,369 $2,841 
Professional fees— 128 128 
Contract termination— 1,500 1,500 
Other— 307 307 
Total restructuring charges$472 $4,304 $4,776 
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 Six Months Ended August 31, 2023Total
Incurred Since Inception
(in thousands)Home &
Outdoor
Beauty & WellnessTotal
Severance and employee related costs$571 $909 $1,480 $10,933 
Professional fees3,451 5,076 8,527 25,276 
Contract termination— 796 796 1,331 
Other39 130 169 794 
Total restructuring charges$4,061 $6,911 $10,972 $38,334 

 Six Months Ended August 31, 2022
(in thousands)Home &
Outdoor
Beauty &
Wellness
Total
Severance and employee related costs$472 $2,371 $2,843 
Professional fees— 128 128 
Contract termination— 1,500 1,500 
Other— 307 307 
Total restructuring charges$472 $4,306 $4,778 

The tabletables below presentspresent a rollforward of our accruals related to Project Pegasus, which are included in accounts payable and accrued expenses and other current liabilities:
(in thousands)(in thousands)Balance at February 28, 2022ChargesPaymentsBalance at August 31, 2022(in thousands)Balance at February 28, 2023ChargesPaymentsBalance at August 31, 2023
Severance and employee related costsSeverance and employee related costs$— $2,843 $802 $2,041 Severance and employee related costs$3,173 $1,480 $(3,422)$1,231 
Professional feesProfessional fees— 128 128 — Professional fees3,201 8,527 (10,635)1,093 
Contract terminationContract termination— 1,500 — 1,500 Contract termination160 796 (956)— 
OtherOther— 307 307 — Other34 169 (203)— 
TotalTotal$— $4,778 $1,237 $3,541 Total$6,568 $10,972 $(15,216)$2,324 

(in thousands)Balance at February 28, 2022ChargesPaymentsBalance at August 31, 2022
Severance and employee related costs$— $2,843 $(802)$2,041 
Professional fees— 128 (128)— 
Contract termination— 1,500 — 1,500 
Other— 307 (307)— 
Total$— $4,778 $(1,237)$3,541 

Note 9 - 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 unrelated 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
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action seeks injunctive relief to prevent entry of certain accused PUR products (and certain other products) into the U.S. and removalcessation of marketing and sales of 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 were 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. On February 28, 2023, the ITC Trial”)issued an Initial Determination in the ITC Action, tentatively ruling against Kaz USA, Inc. and are awaitingthe other unrelated respondents. The ITC has a final opinion.guaranteed review process, and thus all respondents, including Kaz USA, Inc., filed a petition with the ITC for a full review of the Initial Determination. On September 19, 2023, the ITC issued its Final Determination in the Company’s favor. The ITC determined there was no violation by the Company and terminated the investigation. The Patent Litigation has beenremains stayed pending resolution offor the ITC Action.time being, but we believe the stay will be lifted in the near future. We intend to vigorously pursue our claims and defenses in these proceedings. However, we cannot predict the outcome of these legal proceedings, the amount or range of any potential loss, or when the proceedings will be resolved.resolved, or customer acceptance of any replacement water filter. 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

Our operations are subject to national, state, local, and provincial jurisdictions'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, someSome product lines within our HealthBeauty & 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.

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During fiscal 2022, 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 HealthBeauty & 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, we voluntarily implemented a temporary stop shipment action on the impacted products as we worked with the EPA towards an expedient resolution. Our fiscal 2022 consolidated, and Health & Wellness segment’s, net sales revenue, gross profit and operating income was materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging plans. While we haveWe resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we are still in processcompleted the repackaging of repackaging our existing inventory of impacted products.products during fiscal 2023. Additionally, as a result of continuing dialogue with the EPA, we are executingexecuted further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration products.products, which were also completed during fiscal 2023. 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. Although we are not aware of any fines or penalties related to this matter imposed against us by the EPA at this time, there can be no assurances that such fines or penalties will not be imposed.imposed in the future.

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

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The following table provides a summary of EPA compliance costs incurred during the periods presented follows:presented:
Three Months Ended August 31,Six Months Ended August 31,
(in thousands)2022202120222021
Cost of goods sold$7,103 $357 $16,558 1$13,469 2
SG&A1,251 2,603 3,440 2,603 
Total EPA compliance costs$8,354 $2,960 $19,998 $16,072 

Three Months Ended August 31,Six Months Ended August 31,
(in thousands)2023202220232022
Cost of goods sold$ $7,103 $ $16,558 1
SG&A 1,251  3,440 
Total EPA compliance costs$ $8,354 $ $19,998 
(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 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.

In addition, we have incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products sincebeginning in the second quarter of fiscal 2022 and expect to continue to incur and capitalize such costs as we continue to repackage inventory. We also expect to incur additional compliance costs, which may include incremental 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 Health & Wellness segment’s gross profit and operating income. In addition, our net sales revenue could be materially and adversely impacted by customer returns, an increasethrough completion of the repackaging in sales discounts and allowances and by the potential impactthird quarter 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.fiscal 2023. 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”.


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Weather-Related Incident

On March 30, 2022, a third-party facility that we utilizeutilized for inventory storage incurred severe damage from a weather-related incident. The inventory that was stored at this facility primarily related to our HealthBeauty & Wellness and Beauty segments.segment. While the inventory iswas 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 during the first quarter of which $29.9 million and $4.5 million related to our Health & Wellness and Beauty segments, respectively.fiscal 2023. These charges were fully offset by probable insurance recoveries of $34.4 million also recorded during the first quarter of fiscal 2023, which representrepresented 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 six months ended August 31, 2022. Any potential futureDuring the third and fourth quarters of fiscal 2023, we received proceeds totaling $46.0 million from our property insurance abovecarriers related to this incident, which were included in cash flows from operating activities in our condensed consolidated statements of cash flows. As a result, during the amountthird quarter of associated losses, andfiscal 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 business interruption insurance will be recognized when received.condensed consolidated statement of income.

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Note 10 - Long-Term Debt
A summary of our long-term debt follows:
(in thousands)(in thousands)August 31, 2022February 28, 2022(in thousands)August 31, 2023February 28, 2023
Mississippi Business Finance Corporation Loan (the “MBFC Loan”) (1)$14,807 $16,707 
Credit Agreement (1):Credit Agreement (1):Credit Agreement (1):
Revolving loansRevolving loans908,000 799,500 Revolving loans603,000 690,000 
Term loansTerm loans250,000 — Term loans243,750 246,875 
Total borrowings under Credit AgreementTotal borrowings under Credit Agreement1,158,000 799,500 Total borrowings under Credit Agreement846,750 936,875 
Subtotal1,172,807 816,207 
Unamortized prepaid financing feesUnamortized prepaid financing fees(3,065)(2,991)Unamortized prepaid financing fees(1,847)(2,463)
Total long-term debtTotal long-term debt1,169,742 813,216 Total long-term debt844,903 934,412 
Less: current maturities of long-term debtLess: current maturities of long-term debt(20,872)(1,884)Less: current maturities of long-term debt(6,235)(6,064)
Long-term debt, excluding current maturitiesLong-term debt, excluding current maturities$1,148,870 $811,332 Long-term debt, excluding current maturities$838,668 $928,348 
(1)The weighted average interest rates on borrowings outstanding under both the MBFC Loan and Credit Agreement (defined below) as of August 31, 20222023 and February 28, 20222023 were3.9% 7.1% and 1.2%6.6%, respectively.

Aggregate annual maturities of our long-term debt as of August 31, 2022 are as follows:

(in thousands)
Fiscal 2023 (balance for remainder of fiscal year)$3,125 
Fiscal 202421,057 
Fiscal 20256,250 
Fiscal 20261,142,375 
Fiscal 2027— 
Thereafter— 
Total$1,172,807 


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Capitalized Interest

During the three month period ended August 31, 2023, we incurred interest costs totaling $13.7 million, of which none was capitalized, compared to $10.1 million for the same period last year, of which we capitalized $0.9 million as part of property and equipment in connection with the construction of a new distribution facility. During the six month periods ended August 31, 2023 and August 31, 2022, we incurred interest costs totaling $10.1$28.6 million and $15.2 million, respectively, of which we capitalized $0.9 million and $1.6 million, respectively, as part of property and equipment in connection with the construction of a newpreviously mentioned distribution center. During the three and six month periods ended August 31, 2021, we incurred interest costs totaling $3.3 million and $6.3 million, respectively, of which none was capitalized.facility.

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 matures on March 13, 2025. At February 28, 2022, the Credit Agreement bore floating interest 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%$300 million accordion, which can be used for Base Rate and LIBOR borrowings, respectively.

Onterm loan commitments. In June 28, 2022, we entered into an amendment toexercised $250 million of 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$300 million accordion under the Credit Agreement and borrowed $250 million as term loans. The proceeds from the term loans and (ii) provided a notice relatingwere used to a qualified acquisition, which triggered temporary adjustments torepay revolving loans under the maximum leverage ratio as further described below.Credit Agreement. The term loans will beare payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans made, beginningwhich began 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 asand 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, borrowingsAgreement is March 13, 2025. Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR (as defined in the Credit Agreement), 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 August 31, 2022, the balance of outstanding letters of credit was $17.7 million and the amount available for revolving borrowings under our Credit Agreement was $324.3 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 August 31, 2022, these covenants effectively limited our ability to incur more than $265.2 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$625 million and $425 million of the outstanding principal balance under the revolving loans as of both August 31, 20222023 and February 28, 2022. In connection with amending our Credit Agreement, 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.2023, respectively. See Notes 11, 12, and 13 for additional information regarding our interest rate swaps.

As of August 31, 2023, the balance of outstanding letters of credit was $17.8 million and the amount available for revolving loans under the Credit Agreement was $629.2 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As of August 31, 2023, these covenants effectively limited our ability to incur more than $231.1 million of additional debt from all sources, including the Credit Agreement, or $465.8 million in the event a qualified acquisition is consummated.

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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.

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.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.

In connection with amending the Credit Agreement and the MBFC Loan to replace LIBOR with Term SOFR (as defined in the 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 August 31, 2022,2023, we were in compliance with all covenants as defined under the terms of the Credit Agreement and our other debt agreements.Agreement.

Note 11 - 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.
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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 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:2:
 Carrying Amount and Fair Value
(in thousands)August 31, 2022February 28, 2022
Assets: 
Cash equivalents (money market accounts)$455 $438 
Interest rate swaps1,809 — 
Foreign currency derivatives7,439 2,918 
Total assets$9,703 $3,356 
  
Liabilities: 
Interest rate swaps$ $2,781 
Foreign currency derivatives193 825 
Total liabilities$193 $3,606 

 Carrying Amount and Fair Value
(in thousands)August 31, 2023February 28, 2023
Assets: 
Cash equivalents (money market accounts)$469 $381 
Interest rate swaps5,322 5,746 
Foreign currency derivatives617 1,423 
Total assets$6,408 $7,550 
  
Liabilities: 
Foreign currency derivatives1,153 711 
Total liabilities$1,153 $711 

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.

We use derivatives to manage our exposure to changes in foreign currency exchange rates, which include foreign currency forward contracts 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 12 and 13 for more information on our derivatives.

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Note 12 - 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. Approximately 12% and 14% of our net sales revenue was denominated in foreign currencies during both the three and six month periods ended August 31, 2022,2023, respectively, compared to 9% and 10%, respectively,12% for both of the same periods last year. These sales were primarily denominated in Euros, British Pounds Euros, Mexican Pesos,and Canadian Dollars and Norwegian Kroner.Dollars. We make most of our inventory purchases from manufacturers in Asia 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 six month periods ended August 31, 2022,2023, we recorded foreign currency exchange rate net losses of $2.7$0.8 million and $2.5$0.4 million,
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respectively, in SG&A, compared to $0.9net losses of $2.7 million and $0.5$2.5 million, respectively, for the same periods last year.

We mitigate certain foreign currency exchange rate risk by using forward contracts and cross-currency debt swaps to protect against the foreign currency exchange rate risk inherent in our transactions denominated in foreign currencies. We do not enter into any derivatives or similar instruments for trading or other speculative purposes. 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. Foreign currency derivatives for which we have not elected hedge accounting consist of ourcertain forward contracts and cross-currency debt swaps, and any changes in the fair value of these derivatives are recorded in our condensed consolidated statements of income. These undesignated derivatives are used to hedge monetary net asset and liability positions. Cash flows from our foreign currency derivatives are classified as cash flows from operating activities in our condensed consolidated statements of cash flows, which is consistent with the classification of the cash flows from the underlying hedged item. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness.

Interest Rate Risk

Interest on our outstanding debt as of August 31, 20222023 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 $125.0a portion of our outstanding principal balance under the Credit Agreement, which totaled $846.8 million and $936.9 million as of August 31, 2023 and February 28, 2023, respectively. As of August 31, 2023 and February 28, 2023, $625.0 million and $425.0 million of the outstanding principal balance under the Credit Agreement, which totaled $1,158.0 million as of August 31, 2022.respectively, was hedged with interest rate swaps to fix the interest rate we pay. 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 consolidated statements of income. Cash flows from our interest rate swaps are classified as cash flows from operating activities in our condensed consolidated statements of cash flows, which is consistent with the classification of the cash flows from the underlying hedged item. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness.

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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)August 31, 2022(in thousands)August 31, 2023

Derivatives designated as hedging instruments

Derivatives designated as hedging instruments
Hedge
Type
Final
Settlement Date
Notional AmountPrepaid
Expenses
and Other
Current Assets
Other AssetsAccrued
Expenses
and Other
Current Liabilities
Other
Liabilities, Non- current

Derivatives designated as hedging instruments
Hedge
Type
Final
Settlement Date
Notional AmountPrepaid
Expenses
and Other
Current Assets
Other AssetsAccrued
Expenses
and Other
Current Liabilities
Other
Liabilities, Non- Current
Forward contracts - sell EuroForward contracts - sell EuroCash flow6/202320,900 $2,489 $ $ $ Forward contracts - sell EuroCash flow2/202421,500 $67 $ $165 $ 
Forward contracts - sell Canadian DollarsForward contracts - sell Canadian DollarsCash flow11/2023$39,050 1,204 149   Forward contracts - sell Canadian DollarsCash flow12/2024$25,250 370 77   
Forward contracts - sell PoundsForward contracts - sell PoundsCash flow6/2023£18,410 3,444    Forward contracts - sell PoundsCash flow2/2024£20,925   949  
Forward contracts - sell Australian DollarsCash flow12/2022A$800 18    
Forward contracts - sell Norwegian KronerForward contracts - sell Norwegian KronerCash flow6/2023kr36,180 135    Forward contracts - sell Norwegian KronerCash flow2/2024kr20,000 103    
Interest rate swapsInterest rate swapsCash flow1/2024$125,000 1,275 534   Interest rate swapsCash flow2/2026$625,000 3,582 1,740   
SubtotalSubtotal   8,565 683   Subtotal   4,122 1,817 1,114  
Derivatives not designated under hedge accountingDerivatives not designated under hedge accounting       Derivatives not designated under hedge accounting       
Forward contracts - buy EuroForward contracts - buy Euro(1)9/20224,532   74  Forward contracts - buy Euro(1)9/20232,200   33  
Forward contracts - buy PoundsForward contracts - buy Pounds(1)9/2022£2,291   119  Forward contracts - buy Pounds(1)9/2023£1,100   6  
SubtotalSubtotal     193  Subtotal     39  
Total fair valueTotal fair value$8,565 $683 $193 $ Total fair value$4,122 $1,817 $1,153 $ 

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(in thousands)(in thousands)February 28, 2022(in thousands)February 28, 2023

Derivatives designated as hedging instruments

Derivatives designated as hedging instruments
Hedge TypeFinal
Settlement Date
Notional AmountPrepaid
Expenses
and Other
Current Assets
Other AssetsAccrued
Expenses
and Other
Current Liabilities
Other
Liabilities, Non- current

Derivatives designated as hedging instruments
Hedge TypeFinal
Settlement Date
Notional AmountPrepaid
Expenses
and Other
Current Assets
Other AssetsAccrued
Expenses
and Other
Current Liabilities
Other
Liabilities Non- Current
Forward contracts - sell EuroForward contracts - sell EuroCash flow2/202317,000 $1,224 $— $— $— Forward contracts - sell EuroCash flow2/202429,310 $257 $— $— $— 
Forward contracts - sell Canadian DollarsForward contracts - sell Canadian DollarsCash flow2/2023$40,000 475 — — — Forward contracts - sell Canadian DollarsCash flow2/2024$30,000 962 11 — — 
Forward contracts - sell PoundsForward contracts - sell PoundsCash flow2/2023£24,000 1,219 — — — Forward contracts - sell PoundsCash flow1/2024£19,400 — — 711 — 
Forward contracts - sell Australian DollarsCash flow12/2022A$5,700 — — 113 — 
Forward contracts - sell Norwegian KronerForward contracts - sell Norwegian KronerCash flow2/2024kr40,000 185 — — — 
Interest rate swapsInterest rate swapsCash flow1/2024$125,000 — — 1,446 1,335 Interest rate swapsCash flow2/2026$425,000 3,941 1,805 — — 
SubtotalSubtotal   2,918 — 1,559 1,335 Subtotal   5,345 1,816 711 — 
Derivatives not designated under hedge accountingDerivatives not designated under hedge accounting       Derivatives not designated under hedge accounting       
Cross-currency debt swaps - Euro(2)4/20226,000 — — 244 — 
Cross-currency debt swaps - Pounds(2)4/2022£4,500 — — 468 — 
Forward contracts - buy EuroForward contracts - buy Euro(1)3/2023500 — — — 
Forward contracts - buy PoundsForward contracts - buy Pounds(1)3/2023£400 — — — 
SubtotalSubtotal   — — 712 — Subtotal   — — — 
Total fair valueTotal fair value   $2,918 $— $2,271 $1,335 Total fair value   $5,353 $1,816 $711 $— 

(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.

The pre-tax effects of derivative instruments designated as cash flow hedges were as follows for the periods presented:
 Three Months Ended August 31,
 Gain (Loss)
Recognized in AOCI
Gain (Loss) Reclassified
from AOCI into Income
(in thousands)20222021Location20222021
Foreign currency contracts - cash flow hedges$6,226 $5,456 Sales revenue, net$2,715 $(861)
Interest rate swaps - cash flow hedges1,423 66 Interest expense(281)(1,350)
Total$7,649 $5,522  $2,434 $(2,211)

Six Months Ended August 31, Three Months Ended August 31,
Gain (Loss)
Recognized in AOCI
Gain (Loss) Reclassified
from AOCI into Income
Gain (Loss)
Recognized in AOCI
Gain (Loss) Reclassified
from AOCI into Income
(in thousands)(in thousands)20222021Location20222021(in thousands)20232022Location20232022
Foreign currency contracts - cash flow hedgesForeign currency contracts - cash flow hedges$8,545 $2,265 Sales revenue, net$3,911 $(2,087)Foreign currency contracts - cash flow hedges$(779)$6,226 Sales revenue, net$(383)$2,715 
Interest rate swaps - cash flow hedgesInterest rate swaps - cash flow hedges3,629 (224)Interest expense(961)(2,634)Interest rate swaps - cash flow hedges5,644 1,423 Interest expense2,027 (281)
TotalTotal$12,174 $2,041  $2,950 $(4,721)Total$4,865 $7,649  $1,644 $2,434 
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 Six Months Ended August 31,
 Gain (Loss)
Recognized in AOCI
Gain (Loss) Reclassified
from AOCI into Income
(in thousands)20232022Location20232022
Foreign currency contracts - cash flow hedges$(1,246)$8,545 Sales revenue, net$(45)$3,911 
Interest rate swaps - cash flow hedges3,010 3,629 Interest expense3,434 (961)
Total$1,764 $12,174  $3,389 $2,950 

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 August 31,Six Months Ended August 31,Three Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)Location2022202120222021(in thousands)Location2023202220232022
Forward contractsForward contractsSG&A$(250)$— $(250)$— Forward contractsSG&A$(16)$(250)$(40)$(250)
Cross-currency debt swaps - principalCross-currency debt swaps - principalSG&A 469 875 340 Cross-currency debt swaps - principalSG&A —  875 
Cross-currency debt swaps - interestInterest expense —  (2)
TotalTotal $(250)$469 $625 $338 Total $(16)$(250)$(40)$625 

We expect a net gain of $8.6$3.0 million associated with foreign currency contracts and interest rate swaps currently 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 11 and 13 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 institutions with significant experience using such derivative instruments. We believe that the risk of incurring credit losses is remote.

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Note 13 - 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 28, 2021$(7,576)$(4,080)$(11,656)
Other comprehensive (loss) income before reclassification(224)2,265 2,041 
Amounts reclassified out of AOCI2,634 2,087 4,721 
Tax effects(574)(743)(1,317)
Other comprehensive income1,836 3,609 5,445 
Balance at August 31, 2021$(5,740)$(471)$(6,211)
Balance at February 28, 2022Balance at February 28, 2022$(2,126)$2,328 $202 Balance at February 28, 2022$(2,126)$2,328 $202 
Other comprehensive income before reclassificationOther comprehensive income before reclassification3,629 8,545 12,174 Other comprehensive income before reclassification3,629 8,545 12,174 
Amounts reclassified out of AOCIAmounts reclassified out of AOCI961 (3,911)(2,950)Amounts reclassified out of AOCI961 (3,911)(2,950)
Tax effectsTax effects(1,083)(1,143)(2,226)Tax effects(1,083)(1,143)(2,226)
Other comprehensive incomeOther comprehensive income3,507 3,491 6,998 Other comprehensive income3,507 3,491 6,998 
Balance at August 31, 2022Balance at August 31, 2022$1,381 $5,819 $7,200 Balance at August 31, 2022$1,381 $5,819 $7,200 
Balance at February 28, 2023Balance at February 28, 2023$4,394 $553 $4,947 
Other comprehensive income (loss) before reclassificationOther comprehensive income (loss) before reclassification3,010 (1,246)1,764 
Amounts reclassified out of AOCIAmounts reclassified out of AOCI(3,434)45 (3,389)
Tax effectsTax effects100 264 364 
Other comprehensive lossOther comprehensive loss(324)(937)(1,261)
Balance at August 31, 2023Balance at August 31, 2023$4,070 $(384)$3,686 
See Notes 10, 11 and 12 to these condensed consolidated financial statements for additional information regarding our cash flow hedges.

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Note 14 - Segment Information
We currently operate two reportable segments consisting of Home & Outdoor and Beauty & Wellness. During the fourth quarter of fiscal 2023, we made changes to the structure of our organization in connection with our global restructuring plan that resulted in our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which is referred to herein as “Beauty & Wellness.” Comparative prior period segment information in this report has been recast to conform to this change in our reportable segments. See Note 1 to these condensed consolidated financial statements for additional information.
The following tables summarize segment information for the periods presented:
Three Months Ended August 31, 2022Three Months Ended August 31, 2023
(in thousands)(in thousands)Home & OutdoorHealth & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & WellnessTotal
Sales revenue, netSales revenue, net$240,559 $180,506 $100,335 $521,400 Sales revenue, net$239,977 $251,586 $491,563 
Restructuring chargesRestructuring charges472 3,554 750 4,776 Restructuring charges1,271 2,346 3,617 
Operating income (loss)42,082 (2,610)7,474 46,946 
Operating incomeOperating income36,099 10,746 46,845 
Capital and intangible asset expendituresCapital and intangible asset expenditures32,420 2,810 1,203 36,433 Capital and intangible asset expenditures4,879 3,801 8,680 
Depreciation and amortizationDepreciation and amortization4,493 3,021 3,605 11,119 Depreciation and amortization6,606 7,285 13,891 

Three Months Ended August 31, 2021Three Months Ended August 31, 2022
(in thousands)(in thousands)Home & OutdoorHealth & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & WellnessTotal
Sales revenue, netSales revenue, net$215,218 $141,479 $118,531 $475,228 Sales revenue, net$240,559 $280,841 $521,400 
Restructuring chargesRestructuring charges369 — — 369 Restructuring charges472 4,304 4,776 
Operating incomeOperating income41,921 4,794 20,576 67,291 Operating income42,082 4,864 46,946 
Capital and intangible asset expendituresCapital and intangible asset expenditures17,050 2,232 666 19,948 Capital and intangible asset expenditures32,420 4,013 36,433 
Depreciation and amortizationDepreciation and amortization2,815 2,624 3,289 8,728 Depreciation and amortization4,493 6,626 11,119 

Six Months Ended August 31, 2022
(in thousands)Home & OutdoorHealth & WellnessBeautyTotal
Sales revenue, net$474,822 $349,447 $205,209 $1,029,478 
Restructuring charges472 3,554 752 4,778 
Operating income (loss)71,875 (8,752)17,762 80,885 
Capital and intangible asset expenditures105,151 4,439 3,045 112,635 
Depreciation and amortization8,988 5,833 6,796 21,617 
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Six Months Ended August 31, 2023
(in thousands)Home & OutdoorBeauty & WellnessTotal
Sales revenue, net$457,121 $509,114 $966,235 
Restructuring charges4,061 6,911 10,972 
Operating income58,215 29,271 87,486 
Capital and intangible asset expenditures15,839 4,718 20,557 
Depreciation and amortization11,008 13,598 24,606 

Six Months Ended August 31, 2021Six Months Ended August 31, 2022
(in thousands)(in thousands)Home & OutdoorHealth & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & WellnessTotal
Sales revenue, netSales revenue, net$408,862 $345,575 $262,014 $1,016,451 Sales revenue, net$474,822 $554,656 $1,029,478 
Restructuring chargesRestructuring charges369 — 375 Restructuring charges472 4,306 4,778 
Operating incomeOperating income69,064 16,043 47,019 132,126 Operating income71,875 9,010 80,885 
Capital and intangible asset expendituresCapital and intangible asset expenditures20,037 2,980 937 23,954 Capital and intangible asset expenditures105,151 7,484 112,635 
Depreciation and amortizationDepreciation and amortization5,363 5,350 6,728 17,441 Depreciation and amortization8,988 12,629 21,617 

The following table presents net sales revenue by geographic region, in U.S. Dollars:
Three Months Ended August 31,Six Months Ended August 31,Three Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
U.S. sales revenue, net$387,340 74.3 %$369,590 77.8 %$759,517 73.8 %$774,436 76.2 %
Domestic sales revenue, net (1)Domestic sales revenue, net (1)$388,049 78.9 %$419,905 80.5 %$747,608 77.4 %$816,651 79.3 %
International sales revenue, netInternational sales revenue, net134,060 25.7 %105,638 22.2 %269,961 26.2 %242,015 23.8 %International sales revenue, net103,514 21.1 %101,495 19.5 %218,627 22.6 %212,827 20.7 %
Total sales revenue, netTotal sales revenue, net$521,400 100.0 %$475,228 100.0 %$1,029,478 100.0 %$1,016,451 100.0 %Total sales revenue, net$491,563 100.0 %$521,400 100.0 %$966,235 100.0 %$1,029,478 100.0 %
(1)Beginning in the fourth quarter of fiscal 2023, we included net sales revenue from the U.S. and Canada as domestic net sales revenue. Previously, we reported sales revenue from Canada within international net sales revenue. We have recast the prior period domestic and international net sales revenue presented to conform with this current presentation.

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Note 15 - 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. 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 August 16, 2022, the Inflation Reduction Act (the “Act”) was enacted and signed into law in the United States. The Act is a budget reconciliation package that includes significant law changes relating to tax, climate change, energy, and health care. The tax provisions 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 the tax provisions of the Act to have a material impact to our consolidated financial statements.

For the three months ended August 31, 2022,2023, income tax expense as a percentage of income before income tax was 19.1%17.9% compared to 19.8%19.1% for the same period last year. The year-over-year decrease in the effective tax rate is primarily due to a decrease in tax expense for discrete items, partially offset by shifts in the mix of taxable income in our various tax jurisdictions. For the six months ended August 31, 2022,2023, income tax expense as a percentage of income before income tax was 18.2%16.8% compared to 14.0%18.2% for the same period last year. The year-over-year increase in the effective tax rate isyear primarily due to lower forecasted annual income before income taxes,a decrease in tax expense for discrete items, partially offset by shifts in the mix of income in our various tax jurisdictions, and an increase in tax expense for discrete items.jurisdictions.

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Note 16 - 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 awards. Anti-dilutive securities are not included in the computation of diluted earnings per share under the treasury stock method. See Note 6 to these condensed consolidated financial statements for more information regarding stock-based awards.

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The following table presents our weighted average basic and diluted shares outstanding for the periods shown:
Three Months Ended August 31,Six Months Ended August 31, Three Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Weighted average shares outstanding, basicWeighted average shares outstanding, basic23,969 24,101 23,917 24,225 Weighted average shares outstanding, basic23,918 23,969 23,984 23,917 
Incremental shares from share-based compensation arrangementsIncremental shares from share-based compensation arrangements87 246 172 267 Incremental shares from share-based compensation arrangements123 87 104 172 
Weighted average shares outstanding, dilutedWeighted average shares outstanding, diluted24,056 24,347 24,089 24,492 Weighted average shares outstanding, diluted24,041 24,056 24,088 24,089 
Anti-dilutive securitiesAnti-dilutive securities54 29 42 15 Anti-dilutive securities7 54 81 42 

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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 I, Item IA., “Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended February 28, 20222023 (“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, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.

This MD&A, including the tables under the headings “Operating Income, (Loss), 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, (loss), operating margin, net income and diluted earnings per share (“EPS”) without the impact of acquisition-related expenses, a charge for uncollectible receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed, Bath & Beyond bankruptcy”), EPA compliance costs, restructuring charges, amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial informationmeasures as set forth indefined by SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based financial 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 informationmeasures and may be calculated differently than non-GAAP financial informationmeasures disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information.financial measures. These non-GAAP financial measures are discussed further and reconciled to their applicable GAAP-based financial measures contained in this MD&A beginning on page 43.40.

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 threetwo segments consisting of Home & Outdoor and Beauty & Wellness.

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 and in Note 8 to the accompanying condensed consolidated financial statements) that resulted in our previous Health & Wellness and Beauty.

Beauty operating segments being combined into a single reportable segment, which is referred to herein as “Beauty & Wellness.” In fiscal 2015, we launched a five-year transformational strategy designedconnection with these organizational structure changes, corresponding changes were made to improve the performance ofhow our business segmentsis managed, how results are reported internally and strengthenhow our shared service capabilities. Fiscal 2019 marked the completion of Phase I ofChief Executive Officer (“CEO”), our multi-year transformation strategy, which deliveredchief operating decision maker, assesses performance across a wide range of measures.and allocates resources. We improved organic sales growth by focusing on our Leadership Brands, made strategic acquisitions, becamebelieve that these changes better align internal resources and external go to market activities in order to create a more efficient operating companyand 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. As a result of these changes, our disclosures reflect two reportable segments, Home & Outdoor and Beauty & Wellness. Comparative prior period segment information in this report has been recast to conform to this change in our reportable segments. Our external reportable segments will continue to align with strong global shared services, upgraded our organizationinternal reporting to enable users of the financial statements to better understand our performance, better assess our future net cash flows, and culture, improved inventory turns and return on invested capital, and returned capital to shareholders.make more informed judgments about the Company as a whole.

Fiscal 2020 began Phase II of our transformation, which was 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 continuing to enhance and consolidate our environmental, social and governance efforts and accelerate programs related to diversity, equity, inclusion and belonging to support our Phase II transformation.

During the second quarter of fiscal 2023, we 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 Pegasus”). Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency 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 three and six month periods ended August 31, 2023, we incurred $3.6 million and $11.0 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statement of income. We recognized $4.8 million of pre-tax restructuring costs during both the three and six month periods ended August 31, 2022 in connection with Project Pegasus. See further discussion below within “Significant Trends Impacting the Business” under “Project Pegasus” and Note 8 to the accompanying condensed consolidated financial statements.

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”).
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The Curlsmith brand and products were added to the Beauty & Wellness segment. The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment and cash acquired.

On March 30, 2022, a third-party facility that we utilized for inventory storage incurred severe damage from a weather-related incident. The inventory that was stored at this facility primarily related to our Beauty & Wellness segment. While the inventory was 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, we recorded a charge to write-off the damaged inventory totaling $34.4 million during the first quarter of fiscal 2023. 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 six months ended August 31, 2022. During the third and fourth quarters of fiscal 2023, we received proceeds totaling $46.0 million from our insurance carriers related to this incident, which were included in cash flows from operating activities in our condensed consolidated statements of cash flows. 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 statement of income.

Subsequent to the end of our second quarter of fiscal 2024, on September 28, 2023, we completed the sale of our distribution and office facilities in El Paso, Texas for a sales price of $50.6 million, less transaction costs of $1.1 million. Concurrently, we entered into an agreement to leaseback the office facilities for a period of up to 18 months substantially rent free, which we estimate to have a fair value of approximately $1.9 million. The transaction qualifies for sales recognition under the sale leaseback accounting requirements. Accordingly, we increased the sales price by the $1.9 million of prepaid rent and expect to recognize a gain on the sale of approximately $34.2 million within SG&A during the third quarter of fiscal year 2024, of which approximately $18.0 million and $16.2 million will be recognized by our Beauty & Wellness and Home & Outdoor segments, respectively. The related assets will be derecognized from the consolidated balance sheet, and at lease commencement, we will record an operating lease asset, which includes the imputed rent payments described above, and an operating lease liability. We plan to use the proceeds from the sale to repay amounts outstanding under our long-term debt agreement.

Significant Trends Impacting the Business

Project Pegasus
During the second quarter of fiscal 2023, we focused on developing Project Pegasus, a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs. Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency 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.

As part of our initiative focused on streamlining and simplifying the organization, we made further changes to the structure of our organization, during the fourth quarter of fiscal 2023, 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
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described above resulting in the reportable segment change, will reduce the size of our global workforce by approximately 10%. The majority of these role reductions were completed by March 1, 2023. 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.

During the second quarter of fiscal 2024, we announced plans to geographically consolidate the U.S. Beauty business, currently located in El Paso, Texas, and Irvine, California, and co-locate it with our Wellness business in the Boston, Massachusetts area. This geographical consolidation and relocation is the next step in our initiative to streamline and simplify the organization and it is expected to be completed during fiscal 2025. We expect these changes will enable a greater opportunity to capture synergies and enhance collaboration and innovation within the Beauty & Wellness segment.

We have updated our expectations regarding Project Pegasus charges. We now estimate lower total one-time pre-tax restructuring charges of approximately $60 million to $65 million over the duration of the plan. We now expect these charges to be completed during fiscal 2025. We previously had estimated total pre-tax restructuring charges of approximately $85 million to $95 million, which was initially expected to be substantially completed by the end of fiscal 2024. In addition, we now have the following expectations regarding Project Pegasus:Pegasus charges:
Pre-tax restructuring charges to be comprised of approximately $22 million to $25 million of severance and employee related costs, $30 million of professional fees, $5 million of contract termination costs, and $3 million to $5 million of other exit and disposal costs.
All of our operating segments and shared services will be impacted by the plan and pre-tax restructuring charges include approximately $17 million to $19 million in Home & Outdoor and $43 million to $46 million in Beauty & Wellness segments, respectively.
Pre-tax restructuring charges represent primarily cash expenditures, which are expected to be substantially paid by the end of fiscal 2025.

We continue to have the following expectations regarding Project Pegasus savings:
Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which we expect to substantially begin in fiscal 2024 and be substantially achieved by the end of fiscal 2026.
Estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.
Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower selling, general and administrative expense (“SG&A”).
Total one-time pre-tax restructuring charges of approximately $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 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.&A.

In addition, we have implemented plans to reduce inventory levels, increase inventory turns, and improve cash flow and working capital. We expect improvementscapital during the second quarter of fiscal 2023. Improvements related to these initiatives to beginbegan in the second half of fiscal 2023, and we expect improvements to continue intoduring fiscal 2024. Expectations regarding our Project Pegasus initiatives and our ability to realize targeted savings, including expectations concerning costs and savings,
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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 both the three and six month periods ended August 31, 2022,2023, we incurred $4.8$3.6 million and $11.0 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statementsstatement of income. We recognized $4.8 million of pre-tax restructuring costs during both the three and six month periods ended August 31, 2022 in connection with Project Pegasus. We made total cash restructuring payments of $15.2 million and $1.2 million during the six month periods ended August 31, 2023 and August 31, 2022, respectively,
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and had a remaining liability of $2.3 million as of August 31, 2023. See Note 8 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 to HRB Brands LLC, for $44.7 million in 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 Personal Care business. As a result of these dispositions, we no longer have any assets or liabilities classified as held for sale.

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 Beauty segment. The total purchase consideration was $149.7 million in cash, net of a preliminary closing net working capital adjustment and cash acquired. We incurred pre-tax acquisition expenses of $2.7 million during the six months ended August 31, 2022, which were recognized in SG&A within our condensed consolidated statement of income.

Water Filtration Patent Litigation
On December 29,23, 2021, we completed the acquisitionBrita LP filed a complaint against Kaz USA, Inc. and Helen of Osprey Packs, Inc. (“Osprey”), a 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 respectedTroy Limited in the outdoor industryUnited 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. 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 unrelated 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 product lineuplimited set of PUR gravity-fed water filtration systems. This action seeks injunctive relief to prevent entry of certain accused PUR products (and certain other products) into the U.S. and cessation of marketing and sales of existing inventory that includesis already in the U.S. On February 28, 2023, the ITC issued an Initial Determination in the ITC Action, tentatively ruling against Kaz USA, Inc. and the other unrelated respondents. The ITC has a wideguaranteed review process, and thus all respondents, including Kaz USA, Inc., filed a petition with the ITC for a full review of the Initial Determination. On September 19, 2023, the ITC issued its Final Determination in the Company’s favor. The ITC determined there was no violation by the Company and terminated the investigation. The Patent Litigation remains stayed for the time being, but we believe the stay will be lifted in the near future. We cannot predict the outcome of these legal proceedings, the amount or 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 toany potential loss, when the Home & Outdoor segment.

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 inventoryproceedings will be resolved, or customer acceptance of any replacement water filter. Litigation 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 represent anticipated insurance proceeds, not to exceed the amount of the associated losses, for which receipt was deemed probable. The charges for the damaged inventoryinherently unpredictable, and the expected insurance recoveries are included in costresolution or disposition of goods sold in our condensed consolidated statement of income for the six months ended August 31, 2022. Any potential future proceeds from our property insurance, above the amount of associated losses, and our business interruption insurance will be recognized when received.

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Wethese proceedings could, if adversely determined, have a credit agreement (the “Credit Agreement”) with Bankmaterial and adverse impact on our financial position and results 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. 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 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 the loan agreement) as the reference interest rate.operations. For additional information regarding the Patent Litigation and the ITC Action, see Note 109 to the accompanying condensed consolidated financial statements and below under “Credit Agreement and Other Debt Agreements.”

Significant Trends Impacting the Businessstatements.

Impact of Macroeconomic Trends
Beginning in March 2020, interest rates had remained at historically low levels, primarily due to impacts to the 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 impacts of inflation, since March 2022, theThe Federal Open Market Committee has been raising interest rates, and has stated it intends tomay continue to raise interest rates throughoutduring the remainder of 2022 and possibly intocalendar year 2023. DuringThe Federal Open Market Committee increased the benchmark interest rate by 450 basis points during fiscal year 2023. As a result, we incurred higher average interest rates during the first and second quarters of fiscal 2023, we incurred higher average interest rates2024 compared to the same periodperiods last year, and we expect this trend to continue throughoutduring the remainder of fiscal year 2023.2024. While the actual timing and extent of the future increaseschanges in interest rates remains unknown, higher long-termaverage 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 during the first and second quarters of fiscal 2024 and may continue to have an adverse impact throughoutduring the remainder of fiscal year 2023 .2024. 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 78% of our consolidated net sales revenue was from U.S. shipments during both the three month periods ended August 31, 20222023 and 2021, respectively. 2022.

For the six month periods ended August 31, 20222023 and 2021,2022, U.S. shipments were approximately 74%73% and 76%74% of our consolidated net sales revenue.revenue, respectively.

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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 reduction in consumer confidence. Additionally, the ongoing COVID-19 pandemic increases this uncertainty and may further impact the
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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 quarter of fiscal year 2023, we experienced an adverse impact on orders from retail customers as they aimed to rebalance their inventory levels due to lower consumer demand and shifts in consumer spending patterns. We experienced some improvement in replenishment orders from certain retail customers in certain product categories during the first and second quarters of fiscal 2024. 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 and changes in consumer spending patterns, and global supply chain disruptions.patterns. 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 22%27% and 26% of our total consolidated net sales revenue for the three and six month periods ended August 31, 2023, respectively, and grew approximately 17% and 12%, respectively, compared to the same periods in the prior year. For both the three and six month periods ended August 31, 2022, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 22% of our total consolidated net sales revenue, and grew approximately 8% for the three month period ended August 31, 2022 and declined approximately 0.3% for the six month period ended August 31, 2022, as compared to the same periods in the prior year.

For both the three and six month periods ended August 31, 2021, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 22% of our total consolidated net sales revenue, and declined approximately 18% and 7%, respectively, compared to the same periodsperiod in the prior year.

With the continued growth inimportance of online sales acrossin 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 result, it willhas become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, as well as to increaseincluding increasing our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers.

Continuing Impact In March 2023, we completed the construction of COVID-19
COVID-19 has continuedan additional distribution facility in Gallaway, Tennessee that became operational during the first quarter of fiscal 2024 and includes state-of-the-art automation. Additionally, we continue to spread throughout the U.S.invest in a centralized cloud-based e-commerce platform that we anticipate will enable us to leverage a common system and the world withrapidly deploy new variants and surges. The COVID-19 pandemic continues to disrupt certain partscapabilities across all of our supply 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,brands, as well as other factors, have strainedmore easily integrate new brands. We anticipate this platform will enhance the global freight network, which has resulted in higher costs, less capacity,customer experience by strengthening the digital presentation and longer lead times. Duringproduct browsing capabilities and improving the firstcheckout process, order delivery and second quarters of fiscal 2023, we were 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 spread of COVID-19, our continued ability to source and distribute our products, the impact of COVID-19 on capital and financial markets, and the related impact on consumer confidence and spending, all of which are uncertain and difficult to predict considering the continuously evolving landscape. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Global Supply Chain and Related Cost Inflation Trends
Surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, have continued to strain the global supply chain network, which has resulted in carrier-imposed capacity restrictions, carrier delays, and longer lead times. 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 to the backlog and increasing trade imbalance with
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China, many shipping containers are not being sent back 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 by several multiples compared to calendar year 2020 averages. The disruptions in the global supply chain and freight networks are also resulting in shortages of qualified drivers, which has, and may continue to limit inbound and outbound shipment capacity and increase our costs of goods sold and certain operating expenses. In addition to increasing cost trends, our third party manufacturing partners are not equipped to hold meaningful amounts of inventory 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. Demand for raw materials, components and semiconductor chips impacted by the supply chain challenges described above 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 for labor and rising hourly labor wages have created labor shortages and higher labor costs. The majority of our hourly labor is employed in our distribution centers and these factors have, and may further, increase our costs and negatively impact our ability to attract and retain qualified associates. Global supply chain disruptions and related inflationary cost trends have adversely impacted our business, financial condition, cash flows and results of operations. Continuation of current trends, or more pronounced adverse impacts may arise which could have further negative impacts to our business, results of operations and financial condition.post-order customer care.

EPA Compliance Costs
Some product lines within our HealthBeauty & 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.

During fiscal 2022, 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 HealthBeauty & 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, we voluntarily implemented a temporary stop shipment action on the impacted products as we worked with the EPA towards an expedient resolution. Our fiscal 2022 consolidated, and Health & Wellness segment’s, net sales revenue, gross profit and operating income was materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging plans. While we haveWe resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we are still in processcompleted the repackaging of repackaging our existing inventory of impacted products.
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products during fiscal 2023. Additionally, as a result of continuing dialogue with the EPA, we are executingexecuted further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration 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. 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.products, which were also completed during 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.” AThe following table provides a summary of EPA compliance costs incurred during the periods presented follows:
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Three Months Ended August 31,Six Months Ended August 31,Three Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)2022202120222021(in thousands)2023202220232022
Cost of goods soldCost of goods sold$7,103 $357 $16,558 1$13,469 2Cost of goods sold$ $7,103 $ $16,558 1
SG&ASG&A1,251 2,603 3,440 2,603 SG&A 1,251  3,440 
Total EPA compliance costsTotal EPA compliance costs$8,354 $2,960 $19,998 $16,072 Total EPA compliance costs$ $8,354 $ $19,998 
(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 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.

In addition, we have incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products sincebeginning in the second quarter of fiscal 2022 and expect to continue to incur and capitalize such costs as we continue to repackage inventory.through completion of the repackaging in the third quarter of fiscal 2023. We also expect to incur additional compliance costs, which may include incremental 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 & 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.

Although we are not aware of any fines or penalties related to this matter imposed against us by the EPA at this time, there can be no assurances that such fines or penalties will not be imposed.imposed in the future.

See Note 9 to our condensed consolidated financial statements for additional information.

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 Euro, British Pound Euro,and Canadian Dollar, Mexican Peso and Norwegian Kroner.Dollar.

For the three months ended August 31, 2022,2023, changes in foreign currency exchange rates had an unfavorable year-over-yeara favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $1.4 million, or 0.3%, compared to an unfavorable year-over-year impact of $4.2 million, or 0.9%, compared to a favorable year-over-year impact of $2.1 million, or 0.4% for the same period last year. For the six months ended August 31, 2022,2023, changes in foreign currency exchange rates had a unfavorable favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $7.7approximately $0.9 million or 0.8%, comparedor 0.1%, compared to a favorablean unfavorable year-over-year impact of $7.6$7.7 million, or 0.8% for the same period last year.

Variability of the Cough/Cold/Flu Season
Sales in several of our HealthBeauty & 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 2022-2023 cough/cold/flu season was above historical averages, primarily early in the season, as respiratory infections surged in both children and adults and COVID-19 continued to be prevalent. The 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.

averages.

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RESULTS OF OPERATIONS

The following tables providetable provides 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 August 31,% of Sales Revenue, net Three Months Ended August 31,% of Sales Revenue, net
(in thousands)(in thousands)2022 (1)(2)2021$ Change% Change20222021(in thousands)2023 (1)2022 (1)$ Change% Change20232022
Sales revenue by segment, netSales revenue by segment, net      Sales revenue by segment, net      
Home & OutdoorHome & Outdoor$240,559 $215,218 $25,341 11.8 %46.1 %45.3 %Home & Outdoor$239,977 $240,559 $(582)(0.2)%48.8 %46.1 %
Health & Wellness180,506 141,479 39,027 27.6 %34.6 %29.8 %
Beauty100,335 118,531 (18,196)(15.4)%19.3 %24.9 %
Beauty & WellnessBeauty & Wellness251,586 280,841 (29,255)(10.4)%51.2 %53.9 %
Total sales revenue, netTotal sales revenue, net521,400 475,228 46,172 9.7 %100.0 %100.0 %Total sales revenue, net491,563 521,400 (29,837)(5.7)%100.0 %100.0 %
Cost of goods soldCost of goods sold299,954 264,640 35,314 13.3 %57.5 %55.7 %Cost of goods sold261,910 299,954 (38,044)(12.7)%53.3 %57.5 %
Gross profitGross profit221,446 210,588 10,858 5.2 %42.5 %44.3 %Gross profit229,653 221,446 8,207 3.7 %46.7 %42.5 %
SG&ASG&A169,724 142,928 26,796 18.7 %32.6 %30.1 %SG&A179,191 169,724 9,467 5.6 %36.5 %32.6 %
Restructuring chargesRestructuring charges4,776 369 4,407 *0.9 %0.1 %Restructuring charges3,617 4,776 (1,159)(24.3)%0.7 %0.9 %
Operating incomeOperating income46,946 67,291 (20,345)(30.2)%9.0 %14.2 %Operating income46,845 46,946 (101)(0.2)%9.5 %9.0 %
Non-operating income, netNon-operating income, net113 31 82 * %— %Non-operating income, net148 113 35 31.0 % %— %
Interest expenseInterest expense9,166 3,307 5,859 *1.8 %0.7 %Interest expense13,654 9,166 4,488 49.0 %2.8 %1.8 %
Income before income taxIncome before income tax37,893 64,015 (26,122)(40.8)%7.3 %13.5 %Income before income tax33,339 37,893 (4,554)(12.0)%6.8 %7.3 %
Income tax expenseIncome tax expense7,221 12,700 (5,479)(43.1)%1.4 %2.7 %Income tax expense5,958 7,221 (1,263)(17.5)%1.2 %1.4 %
Net incomeNet income$30,672 $51,315 $(20,643)(40.2)%5.9 %10.8 %Net income$27,381 $30,672 $(3,291)(10.7)%5.6 %5.9 %
Six Months Ended August 31,% of Sales Revenue, netSix Months Ended August 31,% of Sales Revenue, net
(in thousands)(in thousands)2022 (1)(2)2021$ Change% Change20222021(in thousands)2023 (1)2022 (1)$ Change% Change20232022
Sales revenue by segment, netSales revenue by segment, netSales revenue by segment, net
Home & OutdoorHome & Outdoor$474,822 $408,862 $65,960 16.1 %46.1 %40.2 %Home & Outdoor$457,121 $474,822 $(17,701)(3.7)%47.3 %46.1 %
Health & Wellness349,447 345,575 3,872 1.1 %34.0 %34.0 %
Beauty205,209 262,014 (56,805)(21.7)%19.9 %25.8 %
Beauty & WellnessBeauty & Wellness509,114 554,656 (45,542)(8.2)%52.7 %53.9 %
Total sales revenue, netTotal sales revenue, net1,029,478 1,016,451 13,027 1.3 %100.0 %100.0 %Total sales revenue, net966,235 1,029,478 (63,243)(6.1)%100.0 %100.0 %
Cost of goods soldCost of goods sold596,861 585,271 11,590 2.0 %58.0 %57.6 %Cost of goods sold520,951 596,861 (75,910)(12.7)%53.9 %58.0 %
Gross profitGross profit432,617 431,180 1,437 0.3 %42.0 %42.4 %Gross profit445,284 432,617 12,667 2.9 %46.1 %42.0 %
SG&ASG&A346,954 298,679 48,275 16.2 %33.7 %29.4 %SG&A346,826 346,954 (128)— %35.9 %33.7 %
Restructuring chargesRestructuring charges4,778 375 4,403 *0.5 %— %Restructuring charges10,972 4,778 6,194 *1.1 %0.5 %
Operating incomeOperating income80,885 132,126 (51,241)(38.8)%7.9 %13.0 %Operating income87,486 80,885 6,601 8.2 %9.1 %7.9 %
Non-operating income, netNon-operating income, net180 133 47 35.3 % %— %Non-operating income, net285 180 105 58.3 % %— %
Interest expenseInterest expense13,539 6,302 7,237 *1.3 %0.6 %Interest expense27,706 13,539 14,167 *2.9 %1.3 %
Income before income taxIncome before income tax67,526 125,957 (58,431)(46.4)%6.6 %12.4 %Income before income tax60,065 67,526 (7,461)(11.0)%6.2 %6.6 %
Income tax expenseIncome tax expense12,259 17,670 (5,411)(30.6)%1.2 %1.7 %Income tax expense10,103 12,259 (2,156)(17.6)%1.0 %1.2 %
Net incomeNet income$55,267 $108,287 $(53,020)(49.0)%5.4 %10.7 %Net income$49,962 $55,267 $(5,305)(9.6)%5.2 %5.4 %

(1)The three and six month periods ended August 31, 2023 includes a full three and six months, respectively, of operating results from Curlsmith, acquired on April 22, 2022, includecompared to approximately thirteen and nineteen weeks of operating results from Curlsmith, respectively, which was acquired on April 22, 2022. For additional information see Note 4 toin the accompanying condensed consolidated financial statements.

(2)The three and six month periods ended August 31, 2022, include operating results from Osprey, which was acquired on December 29, 2021.respectively. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

* Calculation is not meaningful.
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Second Quarter Fiscal 20232024 Financial Results

Consolidated net sales revenue increased 9.7%decreased 5.7%, or $46.2$29.8 million, to $521.4$491.6 million for the three months ended August 31, 2022,2023, compared to $475.2$521.4 million for the same period last year.

Consolidated operating income decreased 30.2%0.2%, or $20.3$0.1 million, to $46.9$46.8 million for the three months ended August 31, 2022,2023, compared to $67.3$46.9 million for the same period last year. Consolidated operating margin decreased 5.2increased 0.5 percentage points to 9.0%9.5% of consolidated net sales revenue for the three months ended August 31, 2022,2023, compared to 14.2%9.0% for the same period last year.

Consolidated adjusted operating income decreased 11.2%13.8%, or $9.1$10.0 million, to $72.3$62.3 million for the three months ended August 31, 2022,2023, compared to $81.4$72.3 million for the same period last year. Consolidated adjusted operating margin decreased 3.21.2 percentage points to 13.9%12.7% of consolidated net sales revenue for the three months ended August 31, 2022,2023, compared to 17.1%13.9% for the same period last year.

Net income decreased 40.2%10.7%, or $20.6$3.3 million, to $30.7$27.4 million for the three months ended August 31, 2022,2023, compared to $51.3$30.7 million for the same period last year. Diluted EPS decreased 39.3%10.9% to $1.28$1.14 for the three months ended August 31, 2022,2023, compared to $2.11$1.28 for the same period last year.

Adjusted income decreased 15.2%23.6%, or $9.8$12.9 million, to $54.7$41.8 million for the three months ended August 31, 2022,2023, compared to $64.5$54.7 million for the same period last year. Adjusted diluted EPS decreased 14.3%23.3% to $2.27$1.74 for the three months ended August 31, 2022,2023, compared to $2.65$2.27 for the same period last year.

Year-To-Date Fiscal 20232024 Financial Results

Consolidated net sales revenue increased 1.3%decreased 6.1%, or $13.0$63.2 million, to $1,029.5$966.2 million for the six months ended August 31, 2022,2023, compared to $1,016.5$1,029.5 million for the same period last year.

Consolidated operating income decreased 38.8%increased 8.2%, or $51.2$6.6 million, to $80.9$87.5 million for the six months ended August 31, 2022,2023, compared to $132.1$80.9 million for the same period last year. Consolidated operating margin decreased 5.1increased 1.2 percentage points to 7.9%9.1% of consolidated net sales revenue for the six months ended August 31, 2022,2023, compared to 13.0%7.9% for the same period last year.

Consolidated adjusted operating income decreased 19.7%9.3%, or $34.8$13.1 million, to $141.6$128.4 million for the six months ended August 31, 2022,2023, compared to $176.3$141.6 million for the same period last year. Consolidated adjusted operating margin decreased 3.50.5 percentage points to 13.8%13.3% of consolidated net sales revenue for the six months ended August 31, 2022,2023, compared to 17.3%13.8% for the same period last year.

Net income decreased 49.0%9.6%, or $53.0$5.3 million, to $55.3$50.0 million for the six months ended August 31, 2022,2023, compared to $108.3$55.3 million for the same period last year. Diluted EPS decreased 48.2%9.6% to $2.29$2.07 for the six months ended August 31, 2022,2023, compared to $4.42$2.29 for the same period last year.

Adjusted income decreased 24.9%21.6%, or $37.4$24.4 million, to $112.988.5 million for the six months ended August 31, 2022,2023, compared to $150.3$112.9 million for the same period last year. Adjusted diluted EPS decreased 21.7% to $3.67 for the six months ended August 31, 2023, compared to $4.69 for the same period last year.

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decreased 23.6% to $4.69 for the six months ended August 31, 2022, compared to $6.14 for the same period last year.

Consolidated and Segment Net Sales Revenue

The following tables summarizetable summarizes the impact that Organic business, foreign currency and acquisitions had on our net sales revenue by segment: 
Three Months Ended August 31,Three Months Ended August 31,
(in thousands)(in thousands)Home & OutdoorHealth & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & WellnessTotal
Fiscal 2022 sales revenue, net$215,218 $141,479 $118,531 $475,228 
Fiscal 2023 sales revenue, netFiscal 2023 sales revenue, net$240,559 $280,841 $521,400 
Organic businessOrganic business(19,320)39,486 (27,393)(7,227)Organic business(1,084)(30,124)(31,208)
Impact of foreign currencyImpact of foreign currency(2,735)(459)(1,010)(4,204)Impact of foreign currency502 869 1,371 
Acquisition (1)47,396 — 10,207 57,603 
Change in sales revenue, netChange in sales revenue, net25,341 39,027 (18,196)46,172 Change in sales revenue, net(582)(29,255)(29,837)
Fiscal 2023 sales revenue, net$240,559 $180,506 $100,335 $521,400 
Fiscal 2024 sales revenue, netFiscal 2024 sales revenue, net$239,977 $251,586 $491,563 
Total net sales revenue growth (decline)Total net sales revenue growth (decline)11.8 %27.6 %(15.4)%9.7 %Total net sales revenue growth (decline)(0.2)%(10.4)%(5.7)%
Organic businessOrganic business(9.0)%27.9 %(23.1)%(1.5)%Organic business(0.5)%(10.7)%(6.0)%
Impact of foreign currencyImpact of foreign currency(1.3)%(0.3)%(0.9)%(0.9)%Impact of foreign currency0.2 %0.3 %0.3 %
Acquisition22.0 %— %8.6 %12.1 %

Six Months Ended August 31,Six Months Ended August 31,
(in thousands)(in thousands)Home & OutdoorHealth & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & WellnessTotal
Fiscal 2022 sales revenue, net$408,862 $345,575 $262,014 $1,016,451 
Fiscal 2023 sales revenue, netFiscal 2023 sales revenue, net$474,822 $554,656 $1,029,478 
Organic businessOrganic business(27,924)5,107 (68,517)(91,334)Organic business(17,835)(52,372)(70,207)
Impact of foreign currencyImpact of foreign currency(4,759)(1,235)(1,741)(7,735)Impact of foreign currency134 728 862 
Acquisition (1)Acquisition (1)98,643 — 13,453 112,096 Acquisition (1)— 6,102 6,102 
Change in sales revenue, netChange in sales revenue, net65,960 3,872 (56,805)13,027 Change in sales revenue, net(17,701)(45,542)(63,243)
Fiscal 2023 sales revenue, net$474,822 $349,447 $205,209 $1,029,478 
Fiscal 2024 sales revenue, netFiscal 2024 sales revenue, net$457,121 $509,114 $966,235 
Total net sales revenue growth (decline)Total net sales revenue growth (decline)16.1 %1.1 %(21.7)%1.3 %Total net sales revenue growth (decline)(3.7)%(8.2)%(6.1)%
Organic businessOrganic business(6.8)%1.5 %(26.2)%(9.0)%Organic business(3.8)%(9.4)%(6.8)%
Impact of foreign currencyImpact of foreign currency(1.2)%(0.4)%(0.7)%(0.8)%Impact of foreign currency— %0.1 %0.1 %
AcquisitionAcquisition24.1 %— %5.1 %11.0 %Acquisition— %1.1 %0.6 %

(1)Beauty segment'sOn April 22, 2022, we completed the acquisition of Curlsmith. Curlsmith sales fromprior to the first annual anniversary of the acquisition are reported in Acquisition for the three andBeauty & Wellness segment in the six month periodsperiod ended August 31, 2022 includes2023 and consist of approximately thirteen and nineteenseven weeks of incremental operating results from Curlsmith, respectively, which was acquired on April 22, 2022. Home & Outdoor segment's sales from acquisition for the three and six month periods ended August 31, 2022 includes operating results from Osprey, which was acquired on December 29, 2021.results. 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. On June 7, 2021, we
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completed the sale of our North America Personal Care business and on March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care business. Accordingly, sales from our Personal Care business were included in Non-Core business for all historical periods presented. As a result of these dispositions, we no longer have any results of operations from Non-Core business or any assets or liabilities classified as held for sale.

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 August 31,
(in thousands)Home & OutdoorHealth & WellnessBeautyTotal
Fiscal 2022 sales revenue, net$215,218 $141,479 $118,531 $475,228 
Core business25,341 39,027 (12,453)51,915 
Non-Core business (Personal Care)— — (5,743)(5,743)
Change in sales revenue, net25,341 39,027 (18,196)46,172 
Fiscal 2023 sales revenue, net$240,559 $180,506 $100,335 $521,400 
Total net sales revenue growth (decline)11.8 %27.6 %(15.4)%9.7 %
Core business11.8 %27.6 %(10.5)%10.9 %
Non-Core business (Personal Care)— %— %(4.8)%(1.2)%
Six Months Ended August 31,
(in thousands)Home & OutdoorHealth & WellnessBeautyTotal
Fiscal 2022 sales revenue, net$408,862 $345,575 $262,014 $1,016,451 
Core business65,960 3,872 (30,943)38,889 
Non-Core business (Personal Care)— — (25,862)(25,862)
Change in sales revenue, net65,960 3,872 (56,805)13,027 
Fiscal 2023 sales revenue, net$474,822 $349,447 $205,209 $1,029,478 
Total net sales revenue growth (decline)16.1 %1.1 %(21.7)%1.3 %
Core business16.1 %1.1 %(11.8)%3.8 %
Non-Core business (Personal Care)— %— %(9.9)%(2.5)%

Leadership Brand and Other Net Sales Revenue

The following tables summarizetable summarizes our Leadership Brand and other net sales revenue:
 Three Months Ended August 31,
(in thousands)20222021$ Change% Change
Leadership Brand sales revenue, net (1)$452,191 $393,820 $58,371 14.8 %
All other sales revenue, net69,209 81,408 (12,199)(15.0)%
Total sales revenue, net$521,400 $475,228 $46,172 9.7 %
 Six Months Ended August 31,
(in thousands)20222021$ Change% Change
Leadership Brand sales revenue, net (1)$887,349 $822,876 $64,473 7.8 %
All other sales revenue, net142,129 193,575 (51,446)(26.6)%
Total sales revenue, net$1,029,478 $1,016,451 $13,027 1.3 %

(1)The three and six months ended August 31, 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.

 Three Months Ended August 31,
(in thousands)20232022$ Change% Change
Leadership Brand sales revenue, net$429,051 $452,191 $(23,140)(5.1)%
All other sales revenue, net62,512 69,209 (6,697)(9.7)%
Total sales revenue, net$491,563 $521,400 $(29,837)(5.7)%
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 Six Months Ended August 31,
(in thousands)20232022$ Change% Change
Leadership Brand sales revenue, net$831,327 $887,349 $(56,022)(6.3)%
All other sales revenue, net134,908 142,129 (7,221)(5.1)%
Total sales revenue, net$966,235 $1,029,478 $(63,243)(6.1)%

Consolidated Net Sales Revenue

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Consolidated net sales revenue increased $46.2decreased $29.8 million, or 9.7%5.7%, to $491.6 million, compared to $521.4 million, compared to $475.2 million primarily due to the contribution from the acquisitions of Osprey of $47.4 million and Curlsmith of $10.2 million, or 12.1% to consolidated net sales revenue growth. This growth was partially offsetdriven by a decrease from Organic business of $7.2$31.2 million, or 1.5%,6.0%. The decline in Organic business was primarily due to:
lower sales of heaters, fans, and humidification products in our Beauty segment hair appliances category and home-related categories in our Home & Outdoor segment due to lowerWellness primarily driven by softer consumer demand, shifts in consumer spending patternsour SKU rationalization efforts, and reduced orders from retail customers due to higheras they rebalance trade inventory levels;in line with softer consumer demand in certain categories; and
a decline in Home & Outdoor primarily due to lower brick and mortar sales in the insulated beverage category.

These factors were partially offset by an increase in consolidated online channel sales, stronger consumer demand for travel-related products in Home & Outdoor and overall growth in Beauty and international sales.

Net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $1.4 million, or 0.3%.

Net sales revenue from our Leadership Brands was $429.1 million, compared to $452.2 million for the same period last year, representing a decrease of 5.1%.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023
Consolidated net sales revenue decreased $63.2 million, or 6.1%, to $966.2 million, compared to $1,029.5 million, primarily driven by a decrease from Organic business of $70.2 million, or 6.8%. The decline in Organic business was primarily due to:
lower sales of $5.7 millionfans, heaters, air filtration and humidification products in Non-Core businessBeauty & Wellness primarily driven by softer consumer demand, our SKU rationalization efforts, and reduced orders from retail customers as they rebalance trade inventory in line with softer consumer demand in certain categories; and
a decline in Home & Outdoor primarily due to lower home category sales in the sale of our Personal Care business.club and closeout channels and lower brick and mortar sales in the insulated beverage category.

These factors were partially offset by:
an increase in consolidated online channel sales in our Health & Wellness segment as a result of the EPA packaging compliance matter and related stop shipment actions in the comparative prior year period;reflecting improved replenishment orders from certain retail customers;
growthstronger consumer demand for travel-related products in international sales;Home & Outdoor; and
higher sales of prestige market personalhair care category salesproducts in our Beauty segment; and& Wellness.

the impact of customer price increases related
The Curlsmith acquisition contributed $6.1 million, or 0.6%, to rising freight and product costs.consolidated net sales revenue growth.

Net sales revenue was unfavorablyfavorably impacted by net foreign currency fluctuations of approximately $4.2$0.9 million, or 0.9%0.1%.

Net sales revenue from our Leadership Brands was $452.2 million, compared to $393.8 million for the same period last year, representing an increase of 14.8%.

Comparison of First Six Months of Fiscal 2023 to First Six Months of Fiscal 2022
Consolidated net sales revenue increased $13.0 million, or 1.3%, to $1,029.5 million, compared to $1,016.5 million primarily due to the contribution from the acquisitions of Osprey of $98.6 million and Curlsmith of $13.5 million, or 11.0% to consolidated net sales revenue growth. This growth was partially offset by a decrease from Organic business of $91.3 million, or 9.0%, primarily reflecting:
a net sales revenue decline of $25.9 million in Non-Core business due to the sale of our Personal Care business;
the unfavorable comparative impacts of approximately $20 million from retailers that accelerated orders into the fourth quarter of fiscal 2022 and 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;
lower sales in our Beauty segment hair appliances category and home-related categories in our Home & Outdoor segment due to lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels; and
a decrease in sales in our Health & Wellness segment thermometry and air filtration categories as a result of stronger COVID-19 driven demand for healthcare and healthy living products, in the comparative prior year period.

These factors were partially offset by:
an increase in sales in our Health & Wellness segment air filtration, humidification and water filtration categories as a result of the EPA packaging compliance matter and related stop shipment actions in the comparative prior year period and higher seasonal category sales;
growth in international sales;
higher prestige market personal care category sales in our Beauty segment; and
the impact of customer price increases related to rising freight and product costs.
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Net sales revenue was also unfavorably impacted by net foreign currency fluctuations of approximately $7.7 million, or 0.8%.
Net sales revenue from our Leadership Brands was $887.3$831.3 million, compared to $822.9$887.3 million for the same period last year, representing a increasedecrease of 7.8%6.3%.

Segment Net Sales Revenue 

Home & Outdoor

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Net sales revenue increased $25.3decreased $0.6 million, or 11.8%0.2%, to $240.6$240.0 million, compared to $215.2 million, primarily due to the contribution from the acquisition of Osprey of $47.4 million, or 22.0%, to segment net sales revenue growth. This growth$240.6 million. The decrease was partially offsetdriven by a decreasedecline from Organic business of $19.3$1.1 million, or 9.0%0.5%, primarily due to:
declinesa brick and mortar sales decline in the insulated beverage category;
lower home category sales in home-related categories primarily due to lower consumer demand driven by shifts in consumer spending patternsthe club and reduced orders from retail customers due to higher trade inventory levels;closeout channels; and
lowerreduced sales in the club channel.to Bed, Bath & Beyond as a result of their bankruptcy.

These factors were partially offset by:
growthan increase in international sales;online channel sales, primarily driven by the launch of our new travel tumbler;
stronger consumer demand for travel-related products;
higher brick and mortar home category sales in the closeout channel;due to new retailer distribution and improved replenishment orders from certain retail customers; and
an increase in closeout channel sales in the impact of customer price increases related to rising freightinsulated beverage and product costs.travel categories.

Net sales revenue was unfavorablywas favorably impacted by net foreign currency fluctuations of approximately $2.7$0.5 million, or 1.3%0.2%.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
Net sales revenue increased $66.0decreased $17.7 million, or 16.1%3.7%, to $474.8$457.1 million, compared to $408.9 million, primarily due to the contribution from the acquisition of Osprey of $98.6 million, or 24.1%, to segment net sales revenue growth. This growth$474.8 million. The decrease was partially offsetdriven by a decreasedecline from Organic business of $27.9$17.8 million, or 6.8%3.8%, primarily due to:
declines in home-relatedlower home category sales primarily due to lower consumer demand driven by shifts in consumer spending patternsthe club and reduced orders from retail customers due to higher trade inventory levels;closeout channels;
the unfavorable comparative impactsreduced sales to Bed, Bath & Beyond as a result of retailers that accelerated orders into the fourth quarter of fiscal 2022 and 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 that were shipped in the first quarter of fiscal 2022;their bankruptcy; and
lowera brick and mortar sales decline in the club channel.insulated beverage category.

These factors were partially offset by higherby:
an increase in online channel sales reflecting improved replenishment orders from certain retail customers and the launch of our new travel tumbler;
stronger consumer demand for travel-related products;
an increase in closeout channel sales in the closeout channelinsulated beverage and the impact of customer price increases relatedtravel categories; and
higher brick and mortar home category sales due to rising freightnew retailer distribution and product costs.improved replenishment orders from certain retail customers.

Net sales revenue was unfavorablyfavorably impacted by net foreign currency fluctuations of approximately $4.8$0.1 million, or 1.2%less than 0.1%.

Beauty & Wellness

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023
Net sales revenue decreased $29.3 million, or 10.4%, to $251.6 million, compared to $280.8 million. The decline was driven by a decrease from Organic business of $30.1 million, or 10.7%, primarily due to:
lower sales of heaters and fans primarily driven by softer consumer demand, our SKU rationalization efforts, and reduced orders from retail customers as they rebalance trade inventory in line with softer consumer demand in certain categories; and
a decline in humidification reflecting reduced orders from retail customers as they rebalance trade inventory levels and the comparative impact of high COVID-related incidence in the prior year period.
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Health & Wellness

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022
Net sales revenue increased $39.0 million, or 27.6%, to $180.5 million, compared to $141.5 million. The increasedecline was drivenpartially offset by a increase from Organic business of $39.5 million, or 27.9%, primarily due to:
an increase in Beauty, higher sales of air and water filtration air filtrationproducts and humidification products as a result of the EPA packaging compliance matter and related stop shipment actions in the comparative prior year period;
growth in international sales;
an increase in seasonal category sales; and
the impact of customer price increases related to rising freight and product costs.

These factors were partially offsetsales primarily driven by a decrease in thermometry and air filtration sales as a result of stronger COVID-19 driven demand for healthcare and healthy living products, in the comparative prior year period.thermometry.

Net sales revenue was unfavorablyfavorably impacted by net foreign currency fluctuations of approximately $0.5$0.9 million, or 0.3%.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 2022
Net sales revenue increased $3.9 million, or 1.1%, to $349.4 million, compared to $345.6 million. The increase was driven by a increase from Organic business of $5.1 million, or 1.5%, primarily due to:
an increase in sales of air filtration, humidification and water filtration products as a result of the EPA packaging compliance matter and related stop shipment actions in the comparative prior year period;
an increase in seasonal category sales; and
the impact of customer price increases related to rising freight and product costs.

These factors were partially offset by:
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
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 that were shipped in the first quarter of fiscal 2022.

Net sales revenue was also unfavorably impacted by net foreign currency fluctuations of approximately $1.2 million, or 0.4%.

Beauty

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022
Net sales revenue decreased $18.2$45.5 million, or 15.4%8.2%, to $100.3$509.1 million, compared to $118.5$554.7 million. The decline was driven by a decrease from Organic business of $27.4$52.4 million, or 23.1%9.4%, primarily due to:
reduced hair appliances categorylower sales of fans, heaters and air filtration products, primarily driven by lowersofter consumer demand, shifts in consumer spending patternsour SKU rationalization efforts, and reduced orders from retail customers due to higheras they rebalance trade inventory levels;in line with softer consumer demand in certain categories;
a decline in humidification reflecting reduced orders from retail customers as they rebalance trade inventory levels and the comparative impact of high COVID-related incidence in the prior year period; and
a decline in Non-Core business net sales revenue due to the sale of our Personal Care business.hair appliances.

These factors wereThe decline was partially offset by higherby:
an increase in sales of prestige market personalhair care categoryproducts;
growth in international sales primarily driven by thermometry; and the impact of customer price increases related to rising freight and
an increase in water filtration product costs.sales.

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The Curlsmith acquisition contributed $10.2$6.1 million, or 8.6%1.1%, to segment net sales revenue growth.

Net sales revenue was unfavorablyfavorably impacted by net foreign currency fluctuations of approximately $1.0$0.7 million, or 0.9%.

Comparison of First Six Months of Fiscal 2023 to First Six Months of Fiscal 2022
Net sales revenue decreased $56.8 million, or 21.7%, to $205.2 million, compared to $262.0 million. The decline was driven by a decrease from Organic business of $68.5 million, or 26.2%, primarily reflecting:
a decline in Non-Core business net sales revenue due to the sale of our Personal Care business;
the unfavorable comparative impacts of retailers that accelerated orders into the fourth quarter of fiscal 2022 and 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 that were shipped in the first quarter of fiscal 2022; and
reduced hair appliances category sales due to 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 higher prestige market personal care category sales and the impact of customer price increases related to rising freight and product costs.

The Curlsmith acquisition contributed $13.5 million, or 5.1%, to segment net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $1.7 million, or 0.7%0.1%.

Consolidated Gross Profit Margin

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Consolidated gross profit margin decreased 1.8increased 4.2 percentage points to 42.5%46.7%, compared to 44.3%42.5%. The decreaseincrease in consolidated gross profit margin was primarily due to:
the unfavorable impact of less Beauty segment sales within our consolidated net sales revenue;lower inbound freight costs;
a lessthe favorable product mix withincomparative impact of EPA compliance costs of $7.1 million incurred in the Home & Outdoor segment due to the acquisition of Osprey;prior year period;
an increasethe favorable impact of our SKU rationalization efforts in EPA compliance costs recognized in cost of goods sold in the HealthBeauty & Wellness segment of $6.7 million;Wellness;
higherlower inventory obsolescence expense; and
the net dilutive impact of inflationary costs and relateda more favorable customer price increases.mix within Home & Outdoor.

These factors were partially offset by a moreless favorable product mix within the Beauty segment.& Wellness.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
Consolidated gross profit margin decreased 0.4increased 4.1 percentage points to 42.0%46.1%, compared to 42.4%42.0%. The decreaseincrease in consolidated gross profit margin was primarily due to:
an increase inlower inbound freight costs;
the favorable comparative impact of EPA compliance costs recognized in cost of goods sold$16.6 million incurred in the Healthprior year period;
the favorable impact of our SKU rationalization efforts in Beauty & Wellness segment of $3.1 million;Wellness; and
a lessmore favorable productcustomer mix within the Home & Outdoor segment due to the acquisition of Osprey; andOutdoor.
the net dilutive impact of inflationary costs and related customer price increases.

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These factors were partially offset by:
a favorable mix of more Home & Outdoor sales within our consolidated net sales revenue;
a more favorable product mix within the Beauty segment; and
lower inventory obsolescence expense.

Consolidated SG&A

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Consolidated SG&A ratio increased 2.5 percentage 3.9 percentage points to 32.6%36.5%, compared to 30.1%32.6%. The increase in the consolidated SG&A ratio was primarily due to:
an increase in annual incentive compensation expense;
higher marketing expense;
increased distribution expense;
the unfavorable leverage impact of the overall decrease in net sales; and
an increase in outbound freight costs;
increased marketing expense;
higher salary and wage costs;
increased amortization expense;
the unfavorable comparative impact of gains recognized on the sale of property and equipment and the sale of the North America Personal Care business in the prior year period; and
higherdepreciation expense primarily due to our new distribution expense.facility.

These factors were partially offset by:
by lower outbound freight costs and the favorable leveragecomparative impact of the increase in net sales;
the favorable leverage impact of customer price increases related to inflationary costs;
reduced annual incentive compensation expense; and
a decrease in EPA compliance costs of $1.4$1.3 million incurred in the Health & Wellness segment.prior year period.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
Consolidated SG&A ratio increased 4.32.2 percentage points to 33.7%35.9%, compared to 29.4%33.7%. The increase in the consolidated SG&A ratio was primarily due to:
increased marketingdistribution expense;
higher salary and wage costs;
an increase in outbound freight costs;
higher distributionannual incentive compensation expense;
higher acquisition-related expense in connection with the Osprey and Curlsmith transactions;marketing expense;
an increase in EPA compliance costsa charge of $0.8$4.2 million inrelated to the Healthbankruptcy of Bed, Bath & Wellness segment;
increased amortization expense;Beyond; and
an increasethe unfavorable leverage impact of the overall decrease in share-based compensation expense.net sales.

These factors were partially offset by by:
lower share-based compensation expense;
the favorable leveragecomparative impact of customer price increases related to inflationaryEPA compliance costs of $3.4 million incurred in the prior year period; and reduced annual incentive compensation expense.
the favorable comparative impact of acquisition-related expense incurred in connection with the Curlsmith transaction during the prior year period.

Restructuring Charges

During both the three and six month periods ended August 31, 2022,2023, we incurred $4.8$3.6 million and $11.0 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 and were primarily comprised of severance and employee related costs.professional fees. We recognized $0.4$4.8 million of pre-tax restructuring costs during both the three and six month periods ended August 31, 2021, under2022, in connection with Project Pegasus, which primarily included severance and employee related costs. During the six month periods ended August 31, 2023 and August 31, 2022, we made total cash restructuring payments of $15.2 million and $1.2 million, respectively. We had a prior restructuring plan referred toremaining liability of $2.3 million as Project Refuel, which was completed during the fourth quarter of fiscal 2022.August 31, 2023.
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Operating Income, (Loss), Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment

In order to provide a better understanding of the impact of certain items on our operating income, (loss), the tables that follow report the comparative pre-tax impact of acquisition-related expenses, Bed, Bath & Beyond bankruptcy, EPA compliance costs, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable, on operating income (loss) 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 August 31, 2022 Three Months Ended August 31, 2023
(in thousands)(in thousands)Home &
Outdoor (1)
Health &
Wellness
Beauty (2)Total(in thousands)Home & OutdoorBeauty & Wellness (1)Total
Operating income (loss), as reported (GAAP)$42,082 17.5 %$(2,610)(1.4)%$7,474 7.4 %$46,946 9.0 %
Operating income, as reported (GAAP)Operating income, as reported (GAAP)$36,099 15.0 %$10,746 4.3 %$46,845 9.5 %
Acquisition-related expenses41  %  %(11) %30  %
EPA compliance costs  %8,354 4.6 %  %8,354 1.6 %
Restructuring chargesRestructuring charges472 0.2 %3,554 2.0 %750 0.7 %4,776 0.9 %Restructuring charges1,271 0.5 %2,346 0.9 %3,617 0.7 %
SubtotalSubtotal42,595 17.7 %9,298 5.2 %8,213 8.2 %60,106 11.5 %Subtotal37,370 15.6 %13,092 5.2 %50,462 10.3 %
Amortization of intangible assetsAmortization of intangible assets1,753 0.7 %582 0.3 %2,314 2.3 %4,649 0.9 %Amortization of intangible assets1,764 0.7 %2,830 1.1 %4,594 0.9 %
Non-cash share-based compensationNon-cash share-based compensation2,640 1.1 %2,590 1.4 %2,265 2.3 %7,495 1.4 %Non-cash share-based compensation3,287 1.4 %3,942 1.6 %7,229 1.5 %
Adjusted operating income (non-GAAP)Adjusted operating income (non-GAAP)$46,988 19.5 %$12,470 6.9 %$12,792 12.7 %$72,250 13.9 %Adjusted operating income (non-GAAP)$42,421 17.7 %$19,864 7.9 %$62,285 12.7 %

Three Months Ended August 31, 2021 Three Months Ended August 31, 2022
(in thousands)(in thousands)Home &
Outdoor
Health & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & Wellness (1)Total
Operating income, as reported (GAAP)Operating income, as reported (GAAP)$41,921 19.5 %$4,794 3.4 %$20,576 17.4 %$67,291 14.2 %Operating income, as reported (GAAP)$42,082 17.5 %$4,864 1.7 %$46,946 9.0 %
Acquisition-related expensesAcquisition-related expenses41 — %(11)— %30 — %
EPA compliance costsEPA compliance costs— — %2,960 2.1 %— — %2,960 0.6 %EPA compliance costs— — %8,354 3.0 %8,354 1.6 %
Restructuring chargesRestructuring charges369 0.2 %— — %— — %369 0.1 %Restructuring charges472 0.2 %4,304 1.5 %4,776 0.9 %
SubtotalSubtotal42,290 19.6 %7,754 5.5 %20,576 17.4 %70,620 14.9 %Subtotal42,595 17.7 %17,511 6.2 %60,106 11.5 %
Amortization of intangible assetsAmortization of intangible assets519 0.2 %570 0.4 %1,897 1.6 %2,986 0.6 %Amortization of intangible assets1,753 0.7 %2,896 1.0 %4,649 0.9 %
Non-cash share-based compensationNon-cash share-based compensation3,157 1.5 %2,632 1.9 %1,991 1.7 %7,780 1.6 %Non-cash share-based compensation2,640 1.1 %4,855 1.7 %7,495 1.4 %
Adjusted operating income (non-GAAP)Adjusted operating income (non-GAAP)$45,966 21.4 %$10,956 7.7 %$24,464 20.6 %$81,386 17.1 %Adjusted operating income (non-GAAP)$46,988 19.5 %$25,262 9.0 %$72,250 13.9 %

Six Months Ended August 31, 2022 Six Months Ended August 31, 2023
(in thousands)(in thousands)Home &
Outdoor (1)
Health &
Wellness
Beauty (2)Total(in thousands)Home & OutdoorBeauty & Wellness (1)Total
Operating income (loss), as reported (GAAP)$71,875 15.1 %$(8,752)(2.5)%$17,762 8.7 %$80,885 7.9 %
Operating income, as reported (GAAP)Operating income, as reported (GAAP)$58,215 12.7 %$29,271 5.7 %$87,486 9.1 %
Acquisition-related expenses119  %  %2,665 1.3 %2,784 0.3 %
EPA compliance costs  %19,998 5.7 %  %19,998 1.9 %
Bed, Bath & Beyond bankruptcyBed, Bath & Beyond bankruptcy3,087 0.7 %1,126 0.2 %4,213 0.4 %
Restructuring chargesRestructuring charges472 0.1 %3,554 1.0 %752 0.4 %4,778 0.5 %Restructuring charges4,061 0.9 %6,911 1.4 %10,972 1.1 %
SubtotalSubtotal72,466 15.3 %14,800 4.2 %21,179 10.3 %108,445 10.5 %Subtotal65,363 14.3 %37,308 7.3 %102,671 10.6 %
Amortization of intangible assetsAmortization of intangible assets3,499 0.7 %1,161 0.3 %4,350 2.1 %9,010 0.9 %Amortization of intangible assets3,541 0.8 %5,710 1.1 %9,251 1.0 %
Non-cash share-based compensationNon-cash share-based compensation8,638 1.8 %8,413 2.4 %7,063 3.4 %24,114 2.3 %Non-cash share-based compensation7,785 1.7 %8,741 1.7 %16,526 1.7 %
Adjusted operating income (non-GAAP)Adjusted operating income (non-GAAP)$84,603 17.8 %$24,374 7.0 %$32,592 15.9 %$141,569 13.8 %Adjusted operating income (non-GAAP)$76,689 16.8 %$51,759 10.2 %$128,448 13.3 %

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Six Months Ended August 31, 2021 Six Months Ended August 31, 2022
(in thousands)(in thousands)Home &
Outdoor
Health & WellnessBeautyTotal(in thousands)Home & OutdoorBeauty & Wellness (1)Total
Operating income, as reported (GAAP)Operating income, as reported (GAAP)$69,064 16.9 %$16,043 4.6 %$47,019 17.9 %$132,126 13.0 %Operating income, as reported (GAAP)$71,875 15.1 %$9,010 1.6 %$80,885 7.9 %
Acquisition-related expensesAcquisition-related expenses119 — %2,665 0.5 %2,784 0.3 %
EPA compliance costsEPA compliance costs— — %16,072 4.7 %— — %16,072 1.6 %EPA compliance costs— — %19,998 3.6 %19,998 1.9 %
Restructuring chargesRestructuring charges369 0.1 %— — %— %375 — %Restructuring charges472 0.1 %4,306 0.8 %4,778 0.5 %
SubtotalSubtotal69,433 17.0 %32,115 9.3 %47,025 17.9 %148,573 14.6 %Subtotal72,466 15.3 %35,979 6.5 %108,445 10.5 %
Amortization of intangible assetsAmortization of intangible assets1,037 0.3 %1,137 0.3 %3,795 1.4 %5,969 0.6 %Amortization of intangible assets3,499 0.7 %5,511 1.0 %9,010 0.9 %
Non-cash share-based compensationNon-cash share-based compensation8,708 2.1 %7,512 2.2 %5,580 2.1 %21,800 2.1 %Non-cash share-based compensation8,638 1.8 %15,476 2.8 %24,114 2.3 %
Adjusted operating income (non-GAAP)Adjusted operating income (non-GAAP)$79,178 19.4 %$40,764 11.8 %$56,400 21.5 %$176,342 17.3 %Adjusted operating income (non-GAAP)$84,603 17.8 %$56,966 10.3 %$141,569 13.8 %

(1)The three and six month periods ended August 31, 2022 include2023 includes a full three and six months, respectively, of operating results from Osprey, which wasCurlsmith, acquired on December 29, 2021. For additional information see Note 4April 22, 2022, compared to approximately thirteen and nineteen weeks of operating results in the accompanying condensed consolidated financial statements.

(2)The three and six month periods ended August 31, 2022, include approximately thirteen and nineteen weeks of operating results from Curlsmith, respectively, which was acquired on April 22, 2022.respectively. For additional information see Note 4 to the accompanying condensed consolidated financial statements.

Consolidated Operating Income

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Consolidated operating income was $46.8 million, or 9.5% of net sales revenue, compared to $46.9 million, or 9.0% of net sales revenue, compared to $67.3 million, or 14.2% of net sales revenue. The 5.20.5 percentage point decreaseincrease in consolidated operating margin was primarily due to:
an increase in outbound freight costs;
an increase inthe favorable comparative impact of EPA compliance costs of $5.4$8.4 million in the Health & Wellness segment;
restructuring charges of $4.8 million;
increased marketing expense;
the unfavorable impact of less Beauty segment sales within our consolidated net sales revenue;
a less favorable product mix within the Home & Outdoor segment due to the acquisition of Osprey;
increased amortization expense;
higher inventory obsolescence expense;
higher salary and wage costs;
the unfavorable comparative impact of gains recognized on the sale of property and equipment and the sale of the North America Personal Care businessincurred in the prior year period;
lower inbound and outbound freight costs;
a decrease in inventory obsolescence expense;
the net dilutivefavorable impact of inflationary costs and related customer price increases;our SKU rationalization efforts in Beauty & Wellness; and
higher distribution expense.a more favorable customer mix within Home & Outdoor.

These factors were partially offset by:
favorable operating leverage;
reducedan increase in annual incentive compensation expense;
a decrease in share-based compensation expense; and
a more favorable product mix within the Beauty segment.

Consolidated adjusted operating income decreased 11.2% to $72.3 million, or 13.9% of net sales revenue, compared to $81.4 million, or 17.1% of net sales revenue.

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Comparison of First Six Months of Fiscal 2023 to First Six Months of Fiscal 2022
Consolidated operating income was $80.9 million, or 7.9% of net sales revenue, compared to $132.1 million, or 13.0% of net sales revenue. The 5.1 percentage point decrease in consolidated operating margin was primarily due to:
higher marketing expense;
increased salary and wage costs;distribution expense;
unfavorable leverage impact of the overall decrease in net sales;
a less favorable product mix within the HomeBeauty & Outdoor segment due to the acquisition of Osprey;
higher distribution expense;Wellness; and
an increase in outbound freight costs;
restructuring charges of $4.8 million;
an increase in EPA compliance costs of $3.9 million in the Health & Wellness segment;
higher acquisition-relateddepreciation expense in connection with the Osprey and Curlsmith transactions;
increased amortization expense;
an increase in share-based compensation expense; and
the net dilutive impact of inflationary costs and related customer price increases;

These factors were partially offset by:
a favorable mix of more Home & Outdoor sales withinprimarily due to our consolidated net sales revenue;
reduced annual incentive compensation expense;
lower inventory obsolescence expense; and
a more favorable product mix within the Beauty segment.new distribution facility.

Consolidated adjusted operating income decreased 19.7%13.8% to $141.6$62.3 million, or 13.8%12.7% of net sales revenue, compared to $176.3$72.3 million, or 17.3%13.9% of net sales revenue.

Home & Outdoor

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022
Operating income was $42.1 million, or 17.5% of segment net sales revenue, compared to $41.9 million, or 19.5% of segment net sales revenue. The 2.0 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;
higher marketing expense;
the net dilutive impact of inflationary costs and related customer price increases; and
increased outbound freight costs.

These factors were partially offset by:
favorable operating leverage;
a decrease in distribution expense;
a more favorable channel mix;
reduced annual incentive compensation expense; and
���lower share-based compensation expense.

Adjusted operating income increased 2.2%to $47.0 million, or 19.5% of segment net sales revenue, compared to $46.0 million, or 21.4% of segment net sales revenue.

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Comparison of First Six Months of Fiscal 2023 to First Six Months of Fiscal 2022
Operating income was $71.9 million, or 15.1% of segment net sales revenue, compared to $69.1 million, or 16.9% of segment net sales revenue. The 1.8 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; and
the net dilutive impact of inflationary costs and related customer price increases.

These factors were partially offset by:
favorable operating leverage;
a decrease in distribution expense;
a more favorable channel mix;
reduced annual incentive compensation expense; and
a decrease in share-based compensation expense.

Adjusted operating income increased 6.9%to $84.6 million, or 17.8% of segment net sales revenue, compared to $79.2 million, or 19.4% of segment net sales revenue.

Health & Wellness

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022
Operating loss was $2.6 million, or (1.4)% of segment net sales revenue, compared to operating income of $4.8 million, or 3.4% of segment net sales revenue. The 4.8 percentage point decrease in segment operating margin was primarily due to:
an increase in EPA compliance costs of $5.4 million;
the unfavorable comparative impact of tariff exclusion refunds received in the prior year period;
increased outbound freight costs;
restructuring charges of $3.6 million;
higher distribution expense;
higher inventory obsolescence expense;
higher marketing expense; and
an increase in legal fees.

These factors were partially offset by:
favorable operating leverage;
reduced salary and wage costs;
decreased annual incentive compensation expense;
a more favorable product mix;
a decrease in share-based compensation expense; and
the net impact of inflationary costs and related customer price increases.

Adjusted operating income increased 13.8% to $12.5 million, or 6.9% of segment net sales revenue, compared to $11.0 million, or 7.7% of segment net sales revenue.
Comparison of First Six Months of Fiscal 2023 to First Six Months of Fiscal 2022
Operating loss was $8.8 million, or (2.5)% of segment net sales revenue, compared to operating income of $16.0 million, or 4.6% of segment net sales revenue. The 7.1 percentage point decrease in segment operating margin was primarily due to:
higher distribution expense;
the unfavorable comparative impact of tariff exclusion refunds received in the prior year period;
an increase in EPA compliance costs of $3.9 million;
restructuring charges of $3.6 million;
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higher marketing expense;
increased outbound freight costs; and
an increase in legal fees.

These factors were partially offset by:
the net impact of inflationary costs and related customer price increases;
reduced salary and wage costs; and
decreased annual incentive compensation expense.

Adjusted operating income decreased 40.2% to $24.4 million, or 7.0% of segment net sales revenue, compared to $40.8 million, or 11.8% of segment net sales revenue.

Beauty

Comparison of Second Quarter Fiscal 2023 to Second Quarter Fiscal 2022
Operating income was $7.5 million, or 7.4% of segment net sales revenue, compared to $20.6 million, or 17.4% of segment net sales revenue. The 10.0 percentage point decrease in segment operating margin was primarily due to:
unfavorable operating leverage;
increased salary and wage costs;
higher distribution expense;
an increase in marketing expense;
the unfavorable comparative impact of gains recognized on the sale of property and equipment and the sale of the North America Personal Care business in the prior year period;
increased outbound freight costs;
an increase in amortization expense;
restructuring charges of $0.8 million;
higher share-based compensation expense;
higher inventory obsolescence expense; and
the net dilutive impact of inflationary costs and related customer price increases.

These factors were partially offset by decreased annual incentive compensation expense and a more favorable product mix.

Adjusted operating income decreased 47.7% to $12.8 million, or 12.7% of segment net sales revenue, compared to $24.5 million, or 20.6% of segment net sales revenue.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
OperatingConsolidated operating income was $17.8$87.5 million, or 8.7%9.1% of segment net sales revenue, compared to $47.0$80.9 million, or 17.9%7.9% of segment net sales revenue. The 9.21.2 percentage point decreaseincrease in segmentconsolidated operating margin was primarily due to:
unfavorable operating leverage;the favorable comparative impact of EPA compliance costs of $20.0 million incurred in the prior year period;
increased salary and wagelower inbound freight costs;
an increase in marketing expense;
higher distribution expense;
higher acquisition-related expense in connection with the Curlsmith transaction;
higherreduced share-based compensation expense;
an increasethe favorable comparative impact of acquisition-related expense incurred in amortization expense;connection with the Curlsmith transaction during the prior year period;
restructuring chargesthe favorable impact of $0.8 million;our SKU rationalization efforts in Beauty & Wellness; and
the net dilutive impact of inflationary costs and relateda more favorable customer price increases.

mix within Home & Outdoor.
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These factors were partially offset by:
decreasedhigher distribution expense;
increased annual incentive compensation expense;
an increase in restructuring charges of $6.2 million;
higher marketing expense; and
a charge of $4.2 million related to the bankruptcy of Bed, Bath & Beyond.

Consolidated adjusted operating income decreased 9.3% to $128.4 million, or 13.3% of net sales revenue, compared to $141.6 million, or 13.8% of net sales revenue.

Home & Outdoor

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023
Operating income was $36.1 million, or 15.0% of segment net sales revenue, compared to $42.1 million, or 17.5% of segment net sales revenue. The 2.5 percentage point decrease in segment operating margin was primarily due to:
increased annual incentive compensation expense;
higher distribution expense;
increased marketing expense;
an increase in depreciation expense primarily due to our new distribution facility;
higher share-based compensation expense; and
an increase in restructuring charges of $0.8 million.

These factors were partially offset by:
lower inventory obsolescenceinbound freight costs;
a more favorable customer mix; and
the net favorable impact of foreign currency fluctuations.

Adjusted operating income decreased 9.7%to $42.4 million, or 17.7% of segment net sales revenue, compared to $47.0 million, or 19.5% of segment net sales revenue.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023
Operating income was $58.2 million, or 12.7% of segment net sales revenue, compared to $71.9 million, or 15.1% of segment net sales revenue. The 2.4 percentage point decrease in segment operating margin was primarily due to:
higher distribution expense;
increased annual incentive compensation expense;
increased marketing expense;
an increase in restructuring charges of $3.6 million;
a charge of $3.1 million related to the bankruptcy of Bed, Bath & Beyond;
an increase in outbound freight costs; and
unfavorable operating leverage.

These factors were partially offset by:
lower inbound freight costs;
the net favorable impact of foreign currency fluctuations; and
a more favorable customer mix.

Adjusted operating income decreased 9.4%to $76.7 million, or 16.8% of segment net sales revenue, compared to $84.6 million, or 17.8% of segment net sales revenue.

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Beauty & Wellness

Comparison of Second Quarter Fiscal 2024 to Second Quarter Fiscal 2023
Operating income was $10.7 million, or 4.3% of segment net sales revenue, compared to $4.9 million, or 1.7% of segment net sales revenue. The 2.6 percentage point increase in segment operating margin was primarily due to:
the favorable comparative impact of EPA compliance costs of $8.4 million incurred in the prior year period;
lower inbound and outbound freight costs;
reduced inventory obsolescence expense;
decreased distribution expense;
the favorable impact of our SKU rationalization efforts; and
a decrease in restructuring charges of $2.0 million.

These factors were partially offset by:
an increase in annual incentive compensation expense;
higher marketing expense;
unfavorable operating leverage; and
a less favorable product mix;mix.

Adjusted operating income decreased 42.2%21.4% to $32.6$19.9 million, or 15.9%7.9% of segment net sales revenue, compared to $56.4$25.3 million, or 21.5%9.0% of segment net sales revenue.

Comparison of First Six Months of Fiscal 2024 to First Six Months of Fiscal 2023
Operating income was $29.3 million, or 5.7% of segment net sales revenue, compared to $9.0 million, or 1.6% of segment net sales revenue. The 4.1 percentage point increase in segment operating margin was primarily due to:
the favorable comparative impact of EPA compliance costs of $20.0 million incurred in the prior year period;
lower inbound and outbound freight costs;
reduced share-based compensation expense;
decreased distribution expense;
the favorable impact of our SKU rationalization efforts; and
the favorable comparative impact of acquisition-related expense incurred in connection with the Curlsmith transaction during the prior year period.

These factors were partially offset by:
higher annual incentive compensation expense;
unfavorable operating leverage;
an increase in restructuring charges of 2.6 million; and
a charge of $1.1 million related to the bankruptcy of Bed, Bath & Beyond.

Adjusted operating income decreased 9.1% to $51.8 million, or 10.2% of segment net sales revenue, compared to $57.0 million, or 10.3% of segment net sales revenue.

Interest Expense

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Interest expense was $9.2$13.7 million, compared to $3.3$9.2 million. The increase in interest expense was primarily due to a higher average interest rate, partially offset by lower 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.

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Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
Interest expense was $13.5$27.7 million, compared to $6.3$13.5 million. The increase in interest expense was primarily due to a higher average interest rate, partially offset by lower 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.

On August 16, 2022, the Inflation Reduction Act (the “Act”) was enacted and signed into law. The Act is a budget reconciliation package that includes significant law changes relating to tax, climate change, energy, and health care. The tax provisions 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 the tax provisions of the Act to have a material impact to our consolidated financial statements.

For the three months ended August 31, 2022,2023, income tax expense as a percentage of income before income tax was 19.1%17.9% compared to 19.8%19.1% for the same period last year. The year-over-year decrease in the effective tax rate is primarily due to a decrease in tax expense for discrete items, partially offset by shifts in the mix of taxable income in our various tax jurisdictions. For the six months ended August 31, 2022,2023, income tax expense as a percentage of income before income tax was 18.2%16.8% compared to 14.0%18.2% for the same period last year. The year-over-year increase isyear primarily due to lower forecasted annual income before income taxes,a decrease in tax expense for discrete items, partially offset by shifts in the mix of income in our various tax jurisdictions, and an increase in tax expense for discrete items.jurisdictions.

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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, Bed, Bath & Beyond bankruptcy, EPA compliance costs, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable, on income and diluted EPS for the periods presented below. Adjusted income and adjusted diluted EPS 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 August 31, 2022 Three Months Ended August 31, 2023
IncomeDiluted EPS IncomeDiluted EPS
(in thousands, except per share data)(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax
As reported (GAAP)As reported (GAAP)$37,893 $7,221 $30,672 $1.58 $0.30 $1.28 As reported (GAAP)$33,339 $5,958 $27,381 $1.39 $0.25 $1.14 
Acquisition-related expenses30  30    
EPA compliance costs8,354 125 8,229 0.35 0.01 0.34 
Restructuring chargesRestructuring charges4,776 61 4,715 0.20  0.20 Restructuring charges3,617 44 3,573 0.15  0.15 
SubtotalSubtotal51,053 7,407 43,646 2.12 0.31 1.81 Subtotal36,956 6,002 30,954 1.54 0.25 1.29 
Amortization of intangible assetsAmortization of intangible assets4,649 557 4,092 0.19 0.02 0.17 Amortization of intangible assets4,594 607 3,987 0.19 0.03 0.17 
Non-cash share-based compensationNon-cash share-based compensation7,495 570 6,925 0.31 0.02 0.29 Non-cash share-based compensation7,229 385 6,844 0.30 0.02 0.28 
Adjusted (non-GAAP)Adjusted (non-GAAP)$63,197 $8,534 $54,663 $2.63 $0.35 $2.27 Adjusted (non-GAAP)$48,779 $6,994 $41,785 $2.03 $0.29 $1.74 
Weighted average shares of common stock used in computing diluted EPSWeighted average shares of common stock used in computing diluted EPS24,056 Weighted average shares of common stock used in computing diluted EPS24,041 

Three Months Ended August 31, 2021 Three Months Ended August 31, 2022
IncomeDiluted EPS IncomeDiluted EPS
(in thousands, except per share data)(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax
As reported (GAAP)As reported (GAAP)$64,015 $12,700 $51,315 $2.63 $0.52 $2.11 As reported (GAAP)$37,893 $7,221 $30,672 $1.58 $0.30 $1.28 
Acquisition-related expensesAcquisition-related expenses30 — 30 — — — 
EPA compliance costsEPA compliance costs2,960 44 2,916 0.12 — 0.12 EPA compliance costs8,354 125 8,229 0.35 0.01 0.34 
Restructuring chargesRestructuring charges369 363 0.02 — 0.01 Restructuring charges4,776 61 4,715 0.20 — 0.20 
SubtotalSubtotal67,344 12,750 54,594 2.77 0.52 2.24 Subtotal51,053 7,407 43,646 2.12 0.31 1.81 
Amortization of intangible assetsAmortization of intangible assets2,986 198 2,788 0.12 0.01 0.11 Amortization of intangible assets4,649 557 4,092 0.19 0.02 0.17 
Non-cash share-based compensationNon-cash share-based compensation7,780 712 7,068 0.32 0.03 0.29 Non-cash share-based compensation7,495 570 6,925 0.31 0.02 0.29 
Adjusted (non-GAAP)Adjusted (non-GAAP)$78,110 $13,660 $64,450 $3.21 $0.56 $2.65 Adjusted (non-GAAP)$63,197 $8,534 $54,663 $2.63 $0.35 $2.27 
Weighted average shares of common stock used in computing diluted EPSWeighted average shares of common stock used in computing diluted EPS24,347 Weighted average shares of common stock used in computing diluted EPS24,056 

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Six Months Ended August 31, 2022 Six Months Ended August 31, 2023
IncomeDiluted EPS IncomeDiluted EPS
(in thousands, except per share data)(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax
As reported (GAAP)As reported (GAAP)$67,526 $12,259 $55,267 $2.80 $0.51 $2.29 As reported (GAAP)$60,065 $10,103 $49,962 $2.49 $0.42 $2.07 
Acquisition-related expenses2,784 2 2,782 0.12  0.12 
EPA compliance costs19,998 300 19,698 0.83 0.01 0.82 
Bed, Bath & Beyond bankruptcyBed, Bath & Beyond bankruptcy4,213 53 4,160 0.17  0.17 
Restructuring chargesRestructuring charges4,778 61 4,717 0.20  0.20 Restructuring charges10,972 136 10,836 0.46 0.01 0.45 
SubtotalSubtotal95,086 12,622 82,464 3.95 0.52 3.42 Subtotal75,250 10,292 64,958 3.12 0.43 2.70 
Amortization of intangible assetsAmortization of intangible assets9,010 1,047 7,963 0.37 0.04 0.33 Amortization of intangible assets9,251 1,213 8,038 0.38 0.05 0.33 
Non-cash share-based compensationNon-cash share-based compensation24,114 1,654 22,460 1.00 0.07 0.93 Non-cash share-based compensation16,526 1,026 15,500 0.69 0.04 0.64 
Adjusted (non-GAAP)Adjusted (non-GAAP)$128,210 $15,323 $112,887 $5.32 $0.64 $4.69 Adjusted (non-GAAP)$101,027 $12,531 $88,496 $4.19 $0.52 $3.67 
Weighted average shares of common stock used in computing diluted EPSWeighted average shares of common stock used in computing diluted EPS24,089 Weighted average shares of common stock used in computing diluted EPS24,088 

Six Months Ended August 31, 2021 Six Months Ended August 31, 2022
IncomeDiluted EPS IncomeDiluted EPS
(in thousands, except per share data)(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax(in thousands, except per share data)Before TaxTaxNet of TaxBefore TaxTaxNet of Tax
As reported (GAAP)As reported (GAAP)$125,957 $17,670 $108,287 $5.14 $0.72 $4.42 As reported (GAAP)$67,526 $12,259 $55,267 $2.80 $0.51 $2.29 
Acquisition-related expensesAcquisition-related expenses2,784 2,782 0.12 — 0.12 
EPA compliance costsEPA compliance costs16,072 241 15,831 0.66 0.01 0.65 EPA compliance costs19,998 300 19,698 0.83 0.01 0.82 
Restructuring chargesRestructuring charges375 369 0.02 — 0.02 Restructuring charges4,778 61 4,717 0.20 — 0.20 
SubtotalSubtotal142,404 17,917 124,487 5.81 0.73 5.08 Subtotal95,086 12,622 82,464 3.95 0.52 3.42 
Amortization of intangible assetsAmortization of intangible assets5,969 406 5,563 0.24 0.02 0.23 Amortization of intangible assets9,010 1,047 7,963 0.37 0.04 0.33 
Non-cash share-based compensationNon-cash share-based compensation21,800 1,571 20,229 0.89 0.06 0.83 Non-cash share-based compensation24,114 1,654 22,460 1.00 0.07 0.93 
Adjusted (non-GAAP)Adjusted (non-GAAP)$170,173 $19,894 $150,279 $6.95 $0.81 $6.14 Adjusted (non-GAAP)$128,210 $15,323 $112,887 $5.32 $0.64 $4.69 
Weighted average shares of common stock used in computing diluted EPSWeighted average shares of common stock used in computing diluted EPS24,492 Weighted average shares of common stock used in computing diluted EPS24,089 

Comparison of Second Quarter Fiscal 20232024 to Second Quarter Fiscal 20222023
Net income was $30.7$27.4 million, compared to $51.3$30.7 million. Diluted EPS was $1.28,$1.14, compared to $2.11.$1.28. Diluted EPS decreased primarily due to higher interest expense and lower operating income in the Beauty segment, an operating loss in the HealthHome & Wellness segment and higher interest expense,Outdoor, partially offset by higher operating income in the HomeBeauty & Outdoor segment,Wellness and a decrease in the effective income tax rate and lower weighted average diluted shares outstanding.rate.

Adjusted income decreased $9.8$12.9 million, or 15.2%23.6%, to $54.7$41.8 million, compared to $64.5$54.7 million. Adjusted diluted EPS decreased 14.3%23.3% to $2.27,$1.74, compared to $2.65.$2.27.

Comparison of First Six Months of Fiscal 20232024 to First Six Months of Fiscal 20222023
Net Incomeincome was $55.3$50.0 million, compared to $108.3$55.3 million. Diluted EPS was $2.29,$2.07, compared to $4.42.$2.29. Diluted EPS decreased primarily due to higher interest expense, higher restructuring charges and lower operating income in the Beauty segment, an operating loss in the HealthHome & Wellness segment, higher interest expense and an increase in the effective income tax rate,Outdoor, partially offset by higher operating income in Beauty & Wellness and a decrease in the Home & Outdoor segment and lower weighted average diluted shares outstanding.effective income tax rate.

Adjusted income decreased $37.4$24.4 million, or 24.9%21.6%, to $112.9$88.5 million, compared to $150.3$112.9 million. Adjusted diluted EPS decreased 23.6%21.7% to $4.69,$3.67, compared to $6.14.$4.69.

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Liquidity and Capital Resources

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
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expenses, primarily SG&A, and working capital, predominantly for inventory purchases and the extension of credit to our retail customers. We have typically been able to 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 generated $157.7 million in cash from operations during the first six months of fiscal 2024 and had $39.7$24.2 million in cash and cash equivalents at August 31, 2022.2023. As of August 31, 2022,2023, the amount of cash and cash equivalents held by our foreign subsidiaries was $30.2$22.8 million. During the first quarter of fiscal 2023, we acquired Curlsmith for $149.7 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. 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 operating and working capital requirements, capital expenditures and interest payments on our debt. As a result of higher inventory purchases attributable to supply chain uncertainties and longer supply lead times, coupled with the impact of lower consumer demand and shifts in consumer spending patterns, we expectWe maintained elevated outstanding borrowings under the Credit Agreement during fiscal 2023 in comparisonorder to fund the acquisitions of Osprey and Curlsmith and the construction of our new distribution facility. With the completion of our new distribution facility in March 2023, we expect a more normalized level of capital expenditures in fiscal 2024. As a result of our expected decrease in cash utilized for investing activities, we plan to continue to repay amounts outstanding under our Credit Agreement. Accordingly, we generally expect a decrease in borrowings outstanding under the Credit Agreement sequentially during the remainder of fiscal 2024 compared to fiscal 2022.2023. 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.

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 requirements, general business conditions, financial conditions, any applicable contractual limitations,
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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, and Issuer Purchases of Equity Securities” in this report.

Operating Activities

Operating activities usedprovided net cash of $75.5$157.7 million for the six months ended August 31, 2022,2023, compared to net cash used of $58.3$75.5 million for the same period last year. The increase in cash usedprovided by operating activities was primarily driven by a decrease in cash earnings and an increasedecreases in cash used for inventory purchases, accounts
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receivable, annual incentive compensation payments, and income taxes partially offset by decreasesincreases in cash usedpaid primarily for inventory purchasesinterest and accounts receivable to extend credit to our retail customers.restructuring activities.

Investing Activities

Investing activities used net cash of $258.9$20.3 million during the six months ended August 31, 2022,2023, compared to net cash used of $258.9 million for the same period last year. The decrease in cash used by investing activities was primarily due to the comparative impacts of the Curlsmith acquisition during the first quarter of fiscal 2023, and a decrease in capital and intangible asset expenditures during the first and second quarters of fiscal 2024. We made investments in capital and intangible asset expenditures of $20.6 million during the six months ended August 31, 2023, compared to $112.6 million for the same period last year. The decrease in capital and intangible asset expenditures was primarily due to the completion of our new two million square foot distribution facility in March 2023 for which we incurred the bulk of capital expenditures during the prior year period. Capital and intangible asset expenditures during both periods also included expenditures for computer, software, furniture and other equipment and tools, molds, and other production equipment.

Financing Activities

Financing activities used net cash of $142.3 million during the six months ended August 31, 2023, compared to net cash provided of $24.0$340.6 million for the same period last year. The increase in cash used by investingfinancing activities wasis primarily due to the acquisitionrepayments made on our revolving loans and payments for repurchases 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 prior year period. We made investments in capital and intangible asset expenditures of $112.6 millioncommon stock during the six months ended August 31, 2022, compared2023 in comparison to $24.0net borrowings of $356.0 million forduring the same period last year. The increase in capital and intangible asset expenditures was primarily for construction expenditures inclusive of capitalized interest related to a new distribution center for our 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 provided net cash of $340.6 million during the six months ended August 31, 2022, compared to net cash provided of $21.0 million for the same period last year. The increase in cash provided by financing activities is primarily due to a net increase in proceeds from our Credit Agreement including proceeds from the term loans and a decrease in open market repurchases of common stock.

Credit Agreement and Other Debt Agreements

Credit Agreement

Our Credit AgreementWe 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. Ona $300 million accordion, which can be used for term loan commitments. In June 28, 2022, we entered into an amendment toexercised $250 million of 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$300 million accordion under the Credit Agreement and borrowed $250 million as term loans. The proceeds from the term loans and (ii) provided a notice relatingwere used to a qualified acquisition, which triggered temporary adjustments torepay revolving loans under the maximum leverage ratio as further described below.Credit Agreement. The term loans will beare payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans made, beginningwhich began 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 asand 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
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prepay the term loans, in whole or in part, at any time without premium or penalty. Following the amendment, borrowingsAgreement is March 13, 2025. Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR (as defined in the Credit Agreement), 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

The floating interest rates on our borrowings under the Credit Agreement are hedged with interest rate swaps to effectively fix interest rates on $625 million and $425 million of the notice foroutstanding principal balance under the qualified acquisition, the maximum leverage ratio is 4.00 to 1.00 throughrevolving loans as of August 31, 2023 and February 28, 2023, 3.75respectively. For additional information regarding our interest rate swaps, see Notes 11, 12, and 13 to 1.00 through May 31, 2023 and 3.50 to 1.00 thereafter.the accompanying condensed consolidated financial statements.

As of August 31, 2022,2023, the outstanding revolving loanCredit Agreement principal balance was $1,158.0$846.8 million (excluding prepaid financing fees), the balance of outstanding letters of credit was $17.7$17.8 million and the amount available for borrowings under the Credit Agreement was $324.3$629.2 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 August 31, 2022,2023, these covenants effectively limited our ability to incur more than $265.2$231.1 million of additional debt from all sources, including the Credit Agreement.

Other Debt Agreements

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 definedAgreement, or $465.8 million 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), plusevent 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 August 31, 2022, the aggregate principal balance of the MBFC Loan was $14.8 million (excluding prepaid financing fees).

All of our debtqualified acquisition is unconditionally guaranteed, on a joint and several basis, by the Company and certain of 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 debt agreements, the holders or lenders may, among other things, accelerate the maturity of any amounts outstanding under our debt agreements. The commitments of the lenders to make loans to us under the Credit Agreement are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitments under the Credit Agreement.

New Accounting Guidance

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

consummated.
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As of August 31, 2023, we were in compliance with all covenants as defined under the terms of the Credit Agreement.

Critical Accounting Policies and Estimates

The SEC defines critical accounting estimates as those made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on a company's financial condition or results of operations. For a discussion of the estimates that we consider to meet this definition and represent our more critical estimates and assumptions used in the preparation of our consolidated financial statements, see the section entitled “Critical Accounting Policies and Estimates” in our Form 10-K. Since the filing of our Form 10-K, there have been no material changes in our critical accounting policies and estimates from those disclosed therein.

Information Regarding Forward-Looking Statements

Certain statements in this report, including those in documents and our other filings with the SEC referenced herein, may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. 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 we expect or anticipate may occur in the future, including statements related to sales, 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 speakare 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 increaseincreases 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 develop and introduce a continuing stream of innovative new products to meet changing consumer preferences;
actions taken by large customers that may adversely affect our gross profit and operating results;
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
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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 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 Chief Executive OfficerCEO and a limited number of other key senior officers to
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operate our business;
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;
expectations regarding recent acquisitions (including Curlsmith and Osprey) and any future acquisitions or divestitures, including our ability to execute and realize relatedexpected synergies along with our ability to effectively integrate acquired businesses or disaggregate divested businesses;from strategic business initiatives such as acquisitions, divestitures and global restructuring plans, including Project Pegasus;
the risks of potential changes in laws and regulations, including environmental, employment and health and safety and tax laws, and the costs and complexities of compliance with such laws;
the risks associated with increased focus and expectations on climate change and other environmental, social and governance matters;
the risks associated with significant changes in or our compliance with regulations, interpretations or product certification requirements;
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;
our ability to continue to avoid classificationdependence on whether we are classified as a Controlled Foreign Corporation;“controlled foreign corporation” for U.S. federal income tax purposes which impacts the tax treatment of its non-U.S. income;
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 Vietnam or any retaliatory trade measures taken by China, Mexico or 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;
increased costs of raw materials, energy and transportation;
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, interest rates and limitations under our financing 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, 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 August 31, 2022, we would incur an increase to our annual interest expense, net of the effect of our interest rate swaps, of approximately $10.5 million.10-K. Additional information regarding our risk management activities can be found in Notes 10, 11 and 12 to the accompanying 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
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13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to provide 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 August 31, 2022.2023. 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 August 31, 2022,2023, 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) promulgated under the Exchange Act that occurred during our fiscal quarter ended August 31, 2022,2023, 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 

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 in Part 1, Item 3. “Legal Proceedings” of our Form 10-K. Since the filing of our Form 10-K, there have been no material changes in our legal proceedings from those disclosed therein.therein except as updated herein in the discussion in Note 9 to the accompanying condensed consolidated financial statements.

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 Form 10-K. 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.

We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in the event of a prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, any public health crises (including any lingering effects of new surges of COVID-19) or similar conditions.

Our business depends on the strength of the retail economies in various parts of the world, primarily in North America and to a lesser extent EMEA, Asia and Latin America. These retail economies are affected for the most part by factors such as consumer demand and the condition of the retail industry, which, in turn, are affected by general economic conditions and specific events such as natural disasters, public health crises (such as pandemics and epidemics), terrorist attacks and political unrest. Consumer spending in any geographic region is generally affected by a number of factors, including among others, local economic conditions, government actions, inflation, interest rates and credit availability, energy
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costs, commodity prices, unemployment rates, higher consumer debt levels, reductions in net worth, home foreclosures and reductions in home values, gasoline prices, and consumer confidence, all of which are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products. Measures imposed, or that may be imposed, by national, state and local authorities in response to any continued new surges of COVID-19 (or any future public health crises) may have impacts of uncertain severity and duration on domestic and foreign economies. The effectiveness of economic stabilization efforts, including government payments and loans to affected citizens and industries, is uncertain. Any sustained economic downturn in the U.S. or any of the other countries in which we conduct significant business, may cause significant readjustments in both the volume and mix of our product sales, which could materially and adversely affect our business, operating results and financial condition. We cannot reasonably estimate the duration and severity of existing macroeconomic conditions, which have had and may continue to have a material impact on our business. Additionally, current global issues may affect our business and the global economy, including the geopolitical impact of Russia’s invasion of Ukraine and any related economic or other sanctions. As a result, current financial information may not necessarily be indicative of future operating results, and our plans to address the impact of macroeconomic trends and global issues may change.


therein.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

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. 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 7 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 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 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:
PeriodTotal 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)
June 1 through June 30, 2022281 $173.28 281 $403,716 
July 1 through July 31, 2022163 157.69 163 403,690 
August 1 through August 31, 202257 129.97 57 403,683 
Total501 $163.28 501  
PeriodTotal 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)
June 1 through June 30, 2023477 $97.01 477 $399,131 
July 1 through July 31, 2023381,221 131.18 381,221 349,122 
August 1 through August 31, 2023267 125.86 267 349,088 
Total381,965 $131.14 381,965  

(1)The number of shares includes shares of common stock acquired from 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 August 31, 2022, there2023, 765 shares were no common stock open market purchases.acquired from associates at an average per share price of $108.00.
(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 7 to the accompanying condensed consolidated financial statements.



ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three month period ended August 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”



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ITEM 6.EXHIBITS
 (a)Exhibits
  
  
  
  101Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended August 31, 2022,2023, 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.
  104Cover 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:October 6, 20224, 2023  /s/ Julien R. Mininberg
 Julien R. Mininberg
   Chief Executive Officer,
  Director and Principal Executive Officer
  
Date:October 6, 20224, 2023/s/ Matthew J. OsbergBrian L. Grass
 Matthew J. OsbergBrian L. Grass
 Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

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