UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~November 30, 2022~~May 31, 2023

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

For the transition period from __ to __

Commission File Number: 001-14669

HELEN OF TROY LIMITED

(Exact name of registrant as specified in its charter)


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

Clarendon House

2 Church Street

Hamilton, Bermuda

(Address of principal executive offices)

1 Helen of Troy Plaza

El Paso, Texas 79912

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

(915) 225-8000

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, $0.10 par value per share

HELE

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

As of ~~December 28, 2022,~~June 29, 2023, there were ~~23,992,278~~24,099,376 common shares, $0.10 par value per share, outstanding.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Note 1 - Basis of Presentation and Related Information	87
	Note 2 - New Accounting Pronouncements	108

	Note 3 - Acquisition of Curlsmith	9
	Note 3 4 - ~~Assets~~Accrued Expenses and Other Current Liabilities ~~Held for Sale~~	10
	~~Note 4 - Acquisitions~~	11
	Note 5 - ~~Accrued Expenses~~Share-Based Compensation Plans	11
	Note 6 - Repurchases of Common Stock	12
	Note 7 - Restructuring Plan	12
	Note 8 - Commitments and ~~Other Current Liabilities~~Contingencies	14
	Note 6 9 - ~~Share-Based Compensation Plans~~	14
	~~Note 7 - Repurchases of Common Stock~~	15
	~~Note 8 - Restructuring Plan~~Long-Term Debt	16
	Note 91 0 - ~~Commitments and Contingencies~~Fair Value	17
	Note 101 1 - ~~Long-Term Debt~~Financial Instruments and Risk Management	2018
	Note 1 2 - Accumulated Other Comprehensive Income (Loss)	21
	Note 111 3 - ~~Fair Value~~Segment Information	21
	Note 1 4 - Income Taxes	22
	Note ~~12 - Financial Instruments and Risk Management~~1	235
	~~Note 13 - Accumulated Other Comprehensive Income (Loss~~)	26
	~~Note 14 - Segment Information~~	26
	~~Note 15 - Income Taxes~~	27
	~~Note 16~~ - Earnings Per Share	2822


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2924

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5843

Item 4.	Controls and Procedures	5944

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	5944

Item 1A.	Risk Factors	5944

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6045

Item 6.	Exhibits	6146

SIGNATURES		6247

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except shares and par value)	(in thousands, except shares and par value)	November 30, 2022		February 28, 2022		(in thousands, except shares and par value)	May 31, 2023		February 28, 2023
Assets	Assets					Assets
Assets, current:	Assets, current:					Assets, current:
Cash and cash equivalents	Cash and cash equivalents	$	45,337	$	33,381	Cash and cash equivalents	$	38,869	$	29,073
Receivables - principally trade, less allowances of $2,024 and $843		505,555		457,623
Receivables - principally trade, less allowances of $4,959 and $1,678						Receivables - principally trade, less allowances of $4,959 and $1,678	349,699		377,604
Inventory	Inventory	536,793		557,992		Inventory	433,913		455,485
Prepaid expenses and other current assets	Prepaid expenses and other current assets	27,850		25,712		Prepaid expenses and other current assets	24,458		24,721
Income taxes receivable	Income taxes receivable	6,866		5,430		Income taxes receivable	9,118		5,158
Assets held for sale		—		1,942

Total assets, current	Total assets, current	1,122,401		1,082,080		Total assets, current	856,057		892,041

Property and equipment, net of accumulated depreciation of $174,353 and $161,006		335,234		205,378
Property and equipment, net of accumulated depreciation of $184,972 and $178,961						Property and equipment, net of accumulated depreciation of $184,972 and $178,961	354,195		351,793
Goodwill	Goodwill	1,063,309		948,873		Goodwill	1,066,730		1,066,479
Other intangible assets, net of accumulated amortization of $163,913 and $150,309		558,381		537,846
Other intangible assets, net of accumulated amortization of $173,232 and $168,574						Other intangible assets, net of accumulated amortization of $173,232 and $168,574	549,375		553,883
Operating lease assets	Operating lease assets	39,757		37,759		Operating lease assets	37,362		38,751
Deferred tax assets, net	Deferred tax assets, net	2,620		3,628		Deferred tax assets, net	2,757		2,781
Other assets	Other assets	7,723		7,887		Other assets	6,352		7,987
Total assets	Total assets	$	3,129,425	$	2,823,451	Total assets	$	2,872,828	$	2,913,715

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Liabilities, current:	Liabilities, current:					Liabilities, current:
Accounts payable, principally trade	Accounts payable, principally trade	$	232,460	$	308,178	Accounts payable, principally trade	$	226,191	$	190,598
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	258,430		271,675		Accrued expenses and other current liabilities	193,049		200,718
Income taxes payable	Income taxes payable	10,940		20,718		Income taxes payable	15,316		14,778
Long-term debt, current maturities	Long-term debt, current maturities	20,872		1,884		Long-term debt, current maturities	6,235		6,064
Liabilities held for sale		—		235

Total liabilities, current	Total liabilities, current	522,702		602,690		Total liabilities, current	440,791		412,158

Long-term debt, excluding current maturities	Long-term debt, excluding current maturities	1,059,588		811,332		Long-term debt, excluding current maturities	830,922		928,348
Lease liabilities, non-current	Lease liabilities, non-current	44,276		43,745		Lease liabilities, non-current	41,322		42,672
Deferred tax liabilities, net	Deferred tax liabilities, net	31,307		21,582		Deferred tax liabilities, net	30,789		28,048
Other liabilities, non-current	Other liabilities, non-current	14,479		16,763		Other liabilities, non-current	14,096		13,678
Total liabilities	Total liabilities	1,672,352		1,496,112		Total liabilities	1,357,920		1,424,904

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies

Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—		Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—
Common stock, $0.10 par. Authorized 50,000,000 shares; 23,991,063 and 23,800,305 shares issued and outstanding		2,399		2,380
Common stock, $0.10 par. Authorized 50,000,000 shares; 24,096,946 and 23,994,405 shares issued and outstanding						Common stock, $0.10 par. Authorized 50,000,000 shares; 24,096,946 and 23,994,405 shares issued and outstanding	2,410		2,399
Additional paid in capital	Additional paid in capital	322,527		303,740		Additional paid in capital	324,497		317,277
Accumulated other comprehensive income	Accumulated other comprehensive income	4,139		202		Accumulated other comprehensive income	1,232		4,947
Retained earnings	Retained earnings	1,128,008		1,021,017		Retained earnings	1,186,769		1,164,188
Total stockholders' equity	Total stockholders' equity	1,457,073		1,327,339		Total stockholders' equity	1,514,908		1,488,811
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,129,425	$	2,823,451	Total liabilities and stockholders' equity	$	2,872,828	$	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 November 30,				Nine Months Ended November 30,					Three Months Ended May 31,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		2022		2021		(in thousands, except per share data)	2023		2022
Sales revenue, net	Sales revenue, net	$	558,606	$	624,884	$	1,588,084	$	1,641,335	Sales revenue, net	$	474,672	$	508,078
Cost of goods sold	Cost of goods sold	301,930		351,051		898,791		936,322		Cost of goods sold	259,041		296,907
Gross profit	Gross profit	256,676		273,833		689,293		705,013		Gross profit	215,631		211,171

Selling, general and administrative expense (“SG&A”)	Selling, general and administrative expense (“SG&A”)	169,020		183,788		515,974		482,467		Selling, general and administrative expense (“SG&A”)	167,635		177,230

Restructuring charges	Restructuring charges	10,463		5		15,241		380		Restructuring charges	7,355		2
Operating income	Operating income	77,193		90,040		158,078		222,166		Operating income	40,641		33,939

Non-operating income, net	Non-operating income, net	5		52		185		185		Non-operating income, net	137		67
Interest expense	Interest expense	13,149		3,206		26,688		9,508		Interest expense	14,052		4,373
Income before income tax	Income before income tax	64,049		86,886		131,575		212,843		Income before income tax	26,726		29,633

Income tax expense	Income tax expense	12,223		11,203		24,482		28,873		Income tax expense	4,145		5,038
Net income	Net income	$	51,826	$	75,683	$	107,093	$	183,970	Net income	$	22,581	$	24,595

Earnings per share (“EPS”):	Earnings per share (“EPS”):									Earnings per share (“EPS”):
Basic	Basic	$	2.16	$	3.14	$	4.47	$	7.60	Basic	$	0.94	$	1.03
Diluted	Diluted	2.15		3.10		4.45		7.52		Diluted	0.94		1.02

Weighted average shares used in computing EPS:	Weighted average shares used in computing EPS:									Weighted average shares used in computing EPS:
Basic	Basic	23,991		24,129		23,942		24,193		Basic	24,049		23,865
Diluted	Diluted	24,078		24,399		24,086		24,461		Diluted	24,134		24,122

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Net income	Net income	$	51,826	$	75,683	$	107,093	$	183,970	Net income	$	22,581	$	24,595
Other comprehensive (loss) income, net of tax:	Other comprehensive (loss) income, net of tax:									Other comprehensive (loss) income, net of tax:
Cash flow hedge activity - interest rate swaps	Cash flow hedge activity - interest rate swaps	995		1,787		4,502		3,623		Cash flow hedge activity - interest rate swaps	(3,092)		2,206
Cash flow hedge activity - foreign currency contracts	Cash flow hedge activity - foreign currency contracts	(4,056)		3,358		(565)		6,967		Cash flow hedge activity - foreign currency contracts	(623)		953
Total other comprehensive (loss) income, net of tax	Total other comprehensive (loss) income, net of tax	(3,061)		5,145		3,937		10,590		Total other comprehensive (loss) income, net of tax	(3,715)		3,159
Comprehensive income	Comprehensive income	$	48,765	$	80,828	$	111,030	$	194,560	Comprehensive income	$	18,866	$	27,754

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 Stock			Additional Paid in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity			Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity
(in thousands, including shares)	(in thousands, including shares)	Shares	Par Value										(in thousands, including shares)	Shares	Par Value
Balances at February 28, 2022	Balances at February 28, 2022	23,800	$	2,380	$	303,740	$	202	$	1,021,017	$	1,327,339	Balances at February 28, 2022	23,800	$	2,380	$	303,740	$	202	$	1,021,017	$	1,327,339
Net income	Net income	—	—		—		—		24,595		24,595		Net income	—	—		—		—		24,595		24,595

Other comprehensive income, net of tax	Other comprehensive income, net of tax	—	—		—		3,159		—		3,159		Other comprehensive income, net of tax	—	—		—		3,159		—		3,159
Exercise of stock options	Exercise of stock options	8	1		658		—		—		659		Exercise of stock options	8	1		658		—		—		659
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	235	24		(24)		—		—		—		Issuance and settlement of restricted stock	235	24		(24)		—		—		—
Issuance of common stock related to stock purchase plan	Issuance of common stock related to stock purchase plan	13	1		2,274		—		—		2,275		Issuance of common stock related to stock purchase plan	13	1		2,274		—		—		2,275
Common stock repurchased and retired	Common stock repurchased and retired	(89)	(9)		(18,113)		—		(102)		(18,224)		Common stock repurchased and retired	(89)	(9)		(18,113)		—		(102)		(18,224)
Share-based compensation	Share-based compensation	—	—		16,619		—		—		16,619		Share-based compensation	—	—		16,619		—		—		16,619

Balances at May 31, 2022	Balances at May 31, 2022	23,967	$	2,397	$	305,154	$	3,361	$	1,045,510	$	1,356,422	Balances at May 31, 2022	23,967	$	2,397	$	305,154	$	3,361	$	1,045,510	$	1,356,422
Net income		—	—		—		—		30,672		30,672

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

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

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

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

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

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

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

~~See accompanying notes to condensed consolidated financial statements.~~

~~Table of Contents~~

~~HELEN OF TROY LIMITED AND SUBSIDIARIES~~

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


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

Balances at February 28, 2023													Balances at February 28, 2023	23,994	$	2,399	$	317,277	$	4,947	$	1,164,188	$	1,488,811
Net income	Net income	—	—		—		—		56,972		56,972		Net income	—	—		—		—		22,581		22,581

Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	—	—		—		(797)		—		(797)		Other comprehensive loss, net of tax	—	—		—		(3,715)		—		(3,715)
Exercise of stock options	Exercise of stock options	4	—		275		—		—		275		Exercise of stock options	5	1		211		—		—		212
Issuance and settlement of restricted stock	Issuance and settlement of restricted stock	177	18		(18)		—		—		—		Issuance and settlement of restricted stock	120	12		(12)		—		—		—
Issuance of common stock related to stock purchase plan	Issuance of common stock related to stock purchase plan	13	1		2,337		—		—		2,338		Issuance of common stock related to stock purchase plan	23	2		2,166		—		—		2,168
Common stock repurchased and retired	Common stock repurchased and retired	(502)	(50)		(16,616)		—		(93,408)		(110,074)		Common stock repurchased and retired	(45)	(4)		(4,442)		—		—		(4,446)
Share-based compensation	Share-based compensation	—	—		14,020		—		—		14,020		Share-based compensation	—	—		9,297		—		—		9,297

Balances at May 31, 2021		24,098	$	2,410	$	283,394	$	(12,453)	$	928,730	$	1,202,081
Net income		—	—		—		—		51,315		51,315
Balances at May 31, 2023													Balances at May 31, 2023	24,097	$	2,410	$	324,497	$	1,232	$	1,186,769	$	1,514,908

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

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

Balances at August 31, 2021		24,105	$	2,411	$	291,589	$	(6,211)	$	980,033	$	1,267,822
Net income		—	—		—		—		75,683		75,683

Other comprehensive income, net of tax		—	—		—		5,145		—		5,145
Exercise of stock options		11	1		664		—		—		665
Issuance and settlement of restricted stock		22	2		(2)		—		—		—
Issuance of common stock related to stock purchase plan		10	1		1,922		—		—		1,923
Common stock repurchased and retired		(12)	(1)		(2,014)		—		(814)		(2,829)
Share-based compensation		—	—		6,549		—		—		6,549

Balances at November 30, 2021		24,136	$	2,414	$	298,708	$	(1,066)	$	1,054,902	$	1,354,958

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)


		Nine Months Ended November 30,					Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Cash provided (used) by operating activities:	Cash provided (used) by operating activities:					Cash provided (used) by operating activities:
Net income	Net income	$	107,093	$	183,970	Net income	$	22,581	$	24,595

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:					Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization	Depreciation and amortization	33,330		26,082		Depreciation and amortization	10,715		10,498
Amortization of financing costs	Amortization of financing costs	792		738		Amortization of financing costs	308		253
Non-cash operating lease expense	Non-cash operating lease expense	7,558		6,910		Non-cash operating lease expense	2,338		2,543
Provision for credit losses	Provision for credit losses	1,373		292		Provision for credit losses	3,389		320
Non-cash share-based compensation	Non-cash share-based compensation	32,055		28,349		Non-cash share-based compensation	9,297		16,619

Gain on sale of Personal Care business	Gain on sale of Personal Care business	(1,336)		(513)		Gain on sale of Personal Care business	—		(1,336)

Loss (gain) on the sale or disposal of property and equipment		5		(2,274)
Gain on the sale or disposal of property and equipment						Gain on the sale or disposal of property and equipment	(246)		—

Deferred income taxes and tax credits	Deferred income taxes and tax credits	1,479		(8,721)		Deferred income taxes and tax credits	3,897		614
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:
Receivables	Receivables	(45,714)		(139,292)		Receivables	26,733		(14,639)
Inventory	Inventory	28,996		(103,821)		Inventory	21,572		(47,781)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	3,926		(6,765)		Prepaid expenses and other current assets	(1,420)		651
Other assets and liabilities, net	Other assets and liabilities, net	(1,113)		(6,110)		Other assets and liabilities, net	(656)		(823)
Accounts payable	Accounts payable	(78,128)		(30,549)		Accounts payable	36,644		10,027
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(22,945)		29,198		Accrued expenses and other current liabilities	(10,734)		(28,764)
Accrued income taxes	Accrued income taxes	(17,848)		17,452		Accrued income taxes	(3,362)		(11,205)
Net cash provided (used) by operating activities	Net cash provided (used) by operating activities	49,523		(5,054)		Net cash provided (used) by operating activities	121,056		(38,428)

Cash (used) provided by investing activities:
Cash used by investing activities:						Cash used by investing activities:
Capital and intangible asset expenditures	Capital and intangible asset expenditures	(146,194)		(41,529)		Capital and intangible asset expenditures	(11,877)		(76,202)
Net payments to acquire businesses, net of cash acquired	Net payments to acquire businesses, net of cash acquired	(146,342)		—		Net payments to acquire businesses, net of cash acquired	—		(148,111)
Proceeds from sale of Personal Care business	Proceeds from sale of Personal Care business	1,804		44,700		Proceeds from sale of Personal Care business	—		1,804
Proceeds from the sale of property and equipment	Proceeds from the sale of property and equipment	63		5,305		Proceeds from the sale of property and equipment	246		—
Net cash (used) provided by investing activities		(290,669)		8,476
Net cash used by investing activities						Net cash used by investing activities	(11,631)		(222,509)

Cash provided (used) by financing activities:
Cash (used) provided by financing activities:						Cash (used) provided by financing activities:
Proceeds from revolving loans	Proceeds from revolving loans	633,500		461,400		Proceeds from revolving loans	70,150		447,000
Repayment of revolving loans	Repayment of revolving loans	(613,000)		(356,400)		Repayment of revolving loans	(166,150)		(153,000)
Proceeds from term loans		250,000		—

Repayment of long-term debt	Repayment of long-term debt	(3,462)		(1,900)		Repayment of long-term debt	(1,563)		(1,900)
Payment of financing costs		(586)		—

Proceeds from share issuances under share-based compensation plans	Proceeds from share issuances under share-based compensation plans	5,000		5,721		Proceeds from share issuances under share-based compensation plans	2,380		2,934

Payments for repurchases of common stock	Payments for repurchases of common stock	(18,350)		(113,019)		Payments for repurchases of common stock	(4,446)		(18,224)
Net cash provided (used) by financing activities		253,102		(4,198)
Net cash (used) provided by financing activities						Net cash (used) provided by financing activities	(99,629)		276,810

Net increase (decrease) in cash and cash equivalents		11,956		(776)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	9,796		15,873
Cash and cash equivalents, beginning balance	Cash and cash equivalents, beginning balance	33,381		45,120		Cash and cash equivalents, beginning balance	29,073		33,381
Cash and cash equivalents, ending balance	Cash and cash equivalents, ending balance	$	45,337	$	44,344	Cash and cash equivalents, ending balance	$	38,869	$	49,254

Supplemental non-cash investing activity:	Supplemental non-cash investing activity:					Supplemental non-cash investing activity:
Capital expenditures included in accounts payable	Capital expenditures included in accounts payable	$	11,038	$	8,140	Capital expenditures included in accounts payable	$	2,579	$	12,812

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~November 30, 2022~~May 31, 2023

Note 1 - Basis of Presentation and Related Information

Corporate Overview

The accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of ~~November 30, 2022~~May 31, 2023 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, ~~2022~~2023 (“Form 10-K”), and our other reports on file with the Securities and Exchange Commission (the “SEC”).

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

We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. As of ~~November 30, 2022,~~May 31, 2023, we operated ~~three~~two reportable segments: Home & Outdoor ~~Health~~and Beauty & Wellness, and Beauty. Our Home & Outdoor segment provides a broad range of innovative consumer products for home activities such as food preparation, cooking, cleaning and organization, as well as products for outdoor and on the go activities such as hydration, food storage, backpacks, and travel gear. The Health & Wellness segment provides health and wellness products including healthcare devices, thermometers, water and air filtration systems, humidifiers, and fans. Our Beauty segment provides mass and prestige market beauty appliances including hair styling appliances, grooming tools, decorative hair accessories, and prestige market liquid-based hair and personal care products.

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)7) that resulted in ~~the~~our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which ~~will be~~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 to how our Chief Executive Officer (“CEO”), our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. ~~Therefore, beginning with~~As a result of these changes, our ~~fiscal 2023 Form 10-K, our future~~ disclosures ~~will~~ reflect two reportable segments, Home & Outdoor and Beauty & ~~Wellness, and we will recast the~~Wellness. Comparative prior period segment information in this report has been recast to conform to ~~the~~this change in ~~the composition of these~~our reportable segments. ~~Accordingly, our~~Our external reportable segments will continue to

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align with our internal reporting to enable users of the financial statements to better understand our performance, better assess our ~~prospects for~~ future net cash flows, and make more informed ~~judgements~~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 products for home activities include food preparation, cooking, cleaning, organization, and beverage service. Our outdoor performance range includes hydration products, backpacks, and travel gear to ease your journey and inspire your next adventure. The Beauty & Wellness segment provides consumers with a broad range of

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outstanding world-class brands for beauty and wellness. In Beauty, we deliver innovation through products such as hair styling appliances, grooming tools, and liquid-, solid-, and powder-based personal care 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 patterns. Our fiscal reporting period ends on the last day in February. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico, Vietnam and the U.S.

During the ~~fourth~~second quarter of fiscal ~~2020,~~2023, we ~~committed~~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”). See Note 7 for additional information.

On April 22, 2022, we completed the acquisition of Recipe Products Ltd., a ~~plan~~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 $147.9 million in cash, net of a final net working capital adjustment and cash acquired. The Curlsmith brand and products were added to ~~divest~~the Beauty & Wellness segment. See Note 3 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.~~

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 $147.9 million in cash, net of a final net working capital adjustment and cash acquired. See Note 4 for additional information.

On December 29, 2021, we completed the acquisition of Osprey Packs, Inc. (“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 during 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 into 2023. As a result, we incurred higher average interest rates compared to the same period last year, and we expect this trend to continue during the remainder of fiscal year 2023. While the actual timing and extent of the future increases in interest rates remains unknown, higher long-term interest rates are expected to significantly increase interest expense on our outstanding debt. High inflation and interest rates have also negatively impacted consumer disposable income, credit availability and spending, among others things, and may continue to have an adverse impact during the remainder of fiscal year 2023. Surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, have strained the global freight network, which 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.

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Principles of Consolidation

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

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

Reclassifications

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

Note 2 - New Accounting Pronouncements

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

~~Not Yet~~

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Adopted

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. ~~Early adoption is permitted, and the~~The guidance should be applied retrospectively, except for the amendment on rollforward information, which should be applied prospectively. This ASU ~~will be~~was effective for us in ~~our Form 10-Q for~~ 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 ~~are currently evaluating~~adopted this ASU during the first quarter of fiscal 2024 and the adoption did not have an impact ~~this guidance may have~~ on our consolidated financial statement disclosures.

~~Note 3 -~~In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities ~~Held~~from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to 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 ~~Sale~~

~~During~~fiscal 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 ~~fourth~~effective date. We adopted this ASU during the first quarter of fiscal ~~2020, we committed to a plan to divest certain assets within~~2024 and the adoption did not have an impact on 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 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.

consolidated financial statements.

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


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


~~Assets held for sale~~	$	~~1,942~~

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

Note 43 - ~~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 $147.9 million in cash, net of a final net working capital adjustment of $2.1 million and cash acquired. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $2.7 million during the ~~nine months ended November 30, 2022,~~first quarter of fiscal 2023, 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. ~~During the third quarter of fiscal 2023, we~~We also finalized the net working capital

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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
Inventory	7,890
Prepaid expenses and other current assets	119
Property and equipment	212
Goodwill	~~116,844~~117,108
Trade names - definite	21,000
Customer relationships - definite	12,000
Deferred tax assets, net	360
Total assets	~~162,636~~162,900
Liabilities:
Accounts payable	1,401
Accrued expenses and other current liabilities	~~2,583~~2,813
Income taxes payable	~~2,538~~2,572
Deferred tax liabilities, net	8,187
Total liabilities	~~14,709~~14,973
Net assets recorded	$	147,927

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~~first quarter of fiscal 2023 was as follows:

(in thousands, except earnings per share data) Three Months Ended November 30, 2022 Nine Months Ended
November 30, 2022 (1)
Sales revenue, net $ 13,091 $ 26,544
Net income 2,077 3,953
EPS:
Basic $ 0.09 $ 0.17
Diluted $ 0.09 $ 0.16


April 22, 2022 (acquisition date) through May 31, 2022 (in thousands, except earnings per share data)	Three Months Ended May 31, 2022 (1)
Sales revenue, net	$	3,246
Net income	439

EPS:
Basic	$	0.02
Diluted	$	0.02

(1)Represents approximately ~~thirty-two~~six weeks of operating results from Curlsmith, acquired on April 22, 2022. Net income and EPS amounts include allocations for corporate expenses, interest expense and income tax expense.

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

Three Months Ended November 30, Nine Months Ended November 30,
(in thousands, except earnings per share data) 2022 2021 2022 2021
Sales revenue, net $ 558,606 $ 635,476 $ 1,595,176 $ 1,669,919
Net income 51,826 77,586 109,006 184,846
EPS:
Basic $ 2.16 $ 3.22 $ 4.55 $ 7.64
Diluted $ 2.15 $ 3.18 $ 4.53 $ 7.56



(in thousands, except earnings per share data)	Three Months Ended May 31, 2022
Sales revenue, net	$	515,170
Net income	26,508

EPS:
Basic	$	1.11
Diluted	$	1.10

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

~~Osprey~~

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

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

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

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


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

Note 54 - Accrued Expenses and Other Current Liabilities

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


(in thousands)	(in thousands)	November 30, 2022		February 28, 2022		(in thousands)	May 31, 2023		February 28, 2023
Accrued compensation, benefits and payroll taxes	Accrued compensation, benefits and payroll taxes	$	25,679	$	55,405	Accrued compensation, benefits and payroll taxes	$	23,525	$	17,380
Accrued sales discounts and allowances	Accrued sales discounts and allowances	79,564		69,120		Accrued sales discounts and allowances	52,473		63,881
Accrued sales returns	Accrued sales returns	33,067		33,384		Accrued sales returns	29,880		28,498
Accrued advertising	Accrued advertising	52,499		55,775		Accrued advertising	32,204		36,931
Other	Other	67,621		57,991		Other	54,967		54,028
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	258,430	$	271,675	Total accrued expenses and other current liabilities	$	193,049	$	200,718

Note 65 - Share-Based Compensation Plans

As part of our compensation structure, we grant share-based compensation awards to certain employees and non-employee members of our Board of Directors during the fiscal year. These awards may be subject to attainment of certain service conditions, performance conditions and/or market conditions. During the first quarter of fiscal ~~2023,~~2024, we granted ~~36,088~~94,807 service condition awards (“Service Condition Awards”) with a weighted average grant date fair value of ~~$204.11.~~$110.85. Additionally, we granted ~~165,734~~252,522 performance-based awards during the first quarter of fiscal ~~2023,~~2024, of which ~~82,867~~126,318 contained performance conditions (“Performance Condition Awards”) and ~~82,867~~126,204 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 November 30,				Nine Months Ended November 30,					Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022

Directors stock compensation	Directors stock compensation	$	197	$	160	$	592	$	483	Directors stock compensation	$	197	$	173
Service Condition Awards	Service Condition Awards	2,211		3,117		7,488		8,353		Service Condition Awards	3,320		3,117
Performance Condition Awards	Performance Condition Awards	3,252		1,622		17,293		14,706		Performance Condition Awards	2,023		10,845
Market Condition Awards	Market Condition Awards	1,793		1,115		5,620		3,504		Market Condition Awards	3,147		1,910
Employee stock purchase plan	Employee stock purchase plan	488		535		1,062		1,303		Employee stock purchase plan	610		574
Share-based compensation expense	Share-based compensation expense	7,941		6,549		32,055		28,349		Share-based compensation expense	9,297		16,619
Less income tax benefits	Less income tax benefits	(474)		(784)		(2,128)		(2,355)		Less income tax benefits	(641)		(1,084)
Share-based compensation expense, net of income tax benefits	Share-based compensation expense, net of income tax benefits	$	7,467	$	5,765	$	29,927	$	25,994	Share-based compensation expense, net of income tax benefits	$	8,656	$	15,535

Unrecognized Share-Based Compensation Expense

As of ~~November 30, 2022,~~May 31, 2023, our total unrecognized share-based compensation for all awards was ~~$41.3~~$41.4 million, which will be recognized over a weighted average amortization period of ~~1.9~~2.1 years. The total unrecognized share-based compensation reflects an estimate of target achievement for Performance Condition Awards granted during the first quarter of fiscal ~~2023~~2024, and ~~fiscal 2022, and a weighted average~~an estimate of ~~150%~~zero percent of target achievement for Performance Condition Awards granted in fiscal ~~2021.~~2023 and fiscal 2022.

Note 76 - Repurchases 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.

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


		Three Months Ended November 30,				Nine Months Ended November 30,					Three Months Ended May 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2022		2021		2022		2021		(in thousands, except share and per share data)	2023		2022
Common stock repurchased on the open market:	Common stock repurchased on the open market:									Common stock repurchased on the open market:
Number of shares	Number of shares	—		—		—		436,842		Number of shares	—		—
Aggregate value of shares	Aggregate value of shares	$	—	$	—	$	—	$	95,484	Aggregate value of shares	$	—	$	—
Average price per share	Average price per share	$	—	$	—	$	—	$	218.58	Average price per share	$	—	$	—

Common stock received in connection with share-based compensation:	Common stock received in connection with share-based compensation:									Common stock received in connection with share-based compensation:
Number of shares	Number of shares	382		12,059		90,341		78,206		Number of shares	44,632		89,458
Aggregate value of shares	Aggregate value of shares	$	45	$	2,829	$	18,350	$	17,535	Aggregate value of shares	$	4,446	$	18,224
Average price per share	Average price per share	$	117.44	$	234.56	$	203.12	$	224.22	Average price per share	$	99.61	$	203.71

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Note 87 - 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

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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 ~~the~~our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which ~~will be~~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 to how our CEO, our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes.

As part of ~~the Project Pegasus~~our initiative focused on streamlining and simplifying the organization, we ~~are announcing plans~~made further changes to ~~further change~~ 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 the role reductions ~~are expected to be~~were completed by March 1, ~~2023. Nearly~~2023, and nearly all of the remaining role reductions are expected to be completed before the end of fiscal year 2024. We believe that these changes better focus business segment resources on brand development, consumer-centric innovation and marketing, the RMOs on sales and go to market strategies, and shared services on their respective areas of expertise while also creating a more efficient and effective organizational structure.

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

•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 isare expected to be substantially completed ~~during~~by the end of fiscal ~~2025~~2024 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.

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insignificant amount and $0.4 million, respectively, of pre-tax restructuring costs during the three and nine month periods ended November 30, 2021, under a prior restructuring plan referred to as Project Refuel, which was completed during the fourth quarter of fiscal 2022.

The following ~~tables summarize~~table summarizes restructuring charges recorded as a result of Project Pegasus for the periods presented:

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


		Nine Months Ended November 30, 2022								Total Incurred Since Inception			Three Months Ended May 31, 2023				Total Incurred Since Inception
(in thousands)	(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total				(in thousands)	Home & Outdoor		Beauty & Wellness					Total
Severance and employee related costs	Severance and employee related costs	$	898	$	2,231	$	889	$	4,018	$	4,018	Severance and employee related costs	$	484	$	408		$	892		$	10,345
Professional fees	Professional fees	4,663		2,712		1,927		9,302		9,302		Professional fees	2,269		3,357			5,626			22,375
Contract termination	Contract termination	—		1,500		—		1,500		1,500		Contract termination	—		688			688			1,223
Other	Other	1		4		416		421		421		Other	37		112			149			774
Total restructuring charges	Total restructuring charges	$	5,562	$	6,447	$	3,232	$	15,241	$	15,241	Total restructuring charges	$	2,790	$	4,565		$	7,355		$	34,717

The table below presents 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, 2022		Charges		Payments		Balance at November 30, 2022		(in thousands)	Balance at February 28, 2023		Charges		Payments		Balance at May 31, 2023
Severance and employee related costs	Severance and employee related costs	$	—	$	4,018	$	2,805	$	1,213	Severance and employee related costs	$	3,173	$	892	$	(2,316)	$	1,749
Professional fees	Professional fees	—		9,302		2,196		7,106		Professional fees	3,201		5,626		(6,026)		2,801
Contract termination	Contract termination	—		1,500		—		1,500		Contract termination	160		688		(848)		—
Other	Other	—		421		414		7		Other	34		149		(183)		—
Total	Total	$	—	$	15,241	$	5,415	$	9,826	Total	$	6,568	$	7,355	$	(9,373)	$	4,550

Note 98 - Commitments and Contingencies

Legal Matters

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 action seeks injunctive relief to prevent entry of certain accused PUR products (and certain other products) into the U.S. and ~~removal~~cessation of

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existing inventory that is already in the U.S. On January 25, 2022, the ITC instituted the investigation requested by the ITC Action. Discovery closed in the ITC Action in May 2022, and approximately half of the originally identified PUR gravity-fed water filters ~~have been~~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,~~2022. On February 28, 2023, the ITC issued an Initial Determination in the ITC Action, tentatively ruling against Kaz USA, Inc. and ~~are awaiting~~the other unrelated respondents. The ITC has a 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 prior to the ITC making any final decision in this matter. On June 28, 2023, the ITC issued a Determination to review in part the Initial Determination and requested written submissions from the parties on certain issues under review. We intend to file the requested written submissions and then will await a final ~~opinion.~~decision, which is now expected by September 19, 2023. The Patent Litigation has been stayed pending resolution of the ITC Action. WeWhile we intend to continue to vigorously pursue our claims

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and defenses in these ~~proceedings. However,~~proceedings, we have also implemented mitigation plans to help minimize the expected potential impact to the Company, its customers and consumers of a negative ITC decision. These mitigation plans include the introduction of an alternative replacement water filter that could be distributed to customers promptly following a potentially adverse ITC decision at the end of June. We cannot predict the outcome of these 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, some~~Some product lines within our ~~Health~~Beauty & 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 ~~Health~~Beauty & 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. We ~~previously~~ resumed normalized levels of shipping of the affected inventory ~~and,~~ during ~~the third quarter of~~ fiscal ~~2023,~~2022 and we completed the repackaging of our existing inventory of impacted ~~products.~~products during fiscal 2023. Additionally, as a result of continuing dialogue with the EPA, we executed further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration products, which were also completed during ~~the third quarter of~~ fiscal 2023. Although we are not aware of any fines or penalties related to this matter imposed against us by the EPA 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.” AThe following table provides a summary of EPA compliance costs incurred during the periods ~~presented follows:~~presented:

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		Three Months Ended November 30,				Nine Months Ended November 30,							Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		2022			2021			(in thousands)		2023		2022
Cost of goods sold	Cost of goods sold	$	370	$	306	$	16,928	1	$	13,775	2	Cost of goods sold		$	—	$	9,455	1
SG&A	SG&A	1,733		4,620		5,173			7,223			SG&A		—		2,189
Total EPA compliance costs	Total EPA compliance costs	$	2,103	$	4,926	$	22,101		$	20,998		Total EPA compliance costs		$	—	$	11,644

(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.

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In addition, we incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products beginning in the second quarter of fiscal 2022 through completion of the repackaging in the third quarter of fiscal 2023. We also expect to incur additional compliance costs, which may include incremental 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. Additional impacts or more pronounced adverse impacts may arise that we are not currently aware of today. Accordingly, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today. For additional information refer to Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs”.

Weather-Related Incident

On March 30, 2022, a third-party facility that we utilize for inventory storage incurred severe damage from a weather-related incident. The inventory that was stored at this facility primarily related to our ~~Health~~Beauty & 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 represented anticipated insurance proceeds, not to exceed the amount of the associated losses, for which receipt was deemed probable. The charges for the damaged inventory and the expected insurance recoveries are included in cost of goods sold in our condensed consolidated statement of income for the ~~nine~~three months ended ~~November 30,~~May 31, 2022. During the third ~~quarter~~and fourth quarters of fiscal 2023, we received proceeds ~~of $34.5~~totaling $46.0 million from our insurance carriers related to this incident, which ~~are~~were included in cash flows from operating activities in our condensed consolidated ~~statement~~statements of cash flows for the nine months ended November 30, 2022. The Company also received final confirmation from our insurance carriers during the third quarter of 2023 of an additional $11.5 million in proceeds, which was collected during December 2022.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 ~~statements~~statement of income, of which $8.2 million and $1.5 million was related to our Health & Wellness and Beauty segments, respectively. Any potential future proceeds from our business interruption insurance will be recognized when received.income.

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Note 109 - Long-Term Debt

A summary of our long-term debt follows:


(in thousands)	(in thousands)	November 30, 2022		February 28, 2022		(in thousands)	May 31, 2023		February 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 loans	Revolving loans	820,000		799,500		Revolving loans	594,000		690,000
Term loans	Term loans	248,438		—		Term loans	245,312		246,875
Total borrowings under Credit Agreement	Total borrowings under Credit Agreement	1,068,438		799,500		Total borrowings under Credit Agreement	839,312		936,875
Subtotal		1,083,245		816,207

Unamortized prepaid financing fees	Unamortized prepaid financing fees	(2,785)		(2,991)		Unamortized prepaid financing fees	(2,155)		(2,463)
Total long-term debt	Total long-term debt	1,080,460		813,216		Total long-term debt	837,157		934,412
Less: current maturities of long-term debt	Less: 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 maturities	Long-term debt, excluding current maturities	$	1,059,588	$	811,332	Long-term debt, excluding current maturities	$	830,922	$	928,348

(1)The weighted average interest rates on borrowings outstanding under the ~~MBFC Loan and~~ Credit Agreement (defined below) as of ~~November 30, 2022~~May 31, 2023 ~~were5.4%~~ and ~~5.9%, respectively, compared to 1.2% for both as of~~ February 28, ~~2022.~~2023 were 6.8% and 6.6%, respectively.

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


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

~~Total~~	$	~~1,083,245~~

Capitalized Interest

During the three ~~and nine~~ month periods ended ~~November 30,~~May 31, 2023 and 2022, we incurred interest costs totaling ~~$14.8~~$14.9 million and ~~$30.0~~$5.1 million, respectively, of which we capitalized ~~$1.7~~$0.9 million and ~~$3.3~~$0.7 million, respectively, as part of property and equipment in connection with the construction of a new distribution ~~center. During the three and nine month periods ended November 30, 2021, we incurred interest costs totaling $3.2 million and $9.5 million, respectively, of which none was capitalized.~~facility.

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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 to~~exercised $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 relating~~were used to ~~a qualified acquisition, which triggered temporary adjustments to~~repay revolving loans under the ~~maximum leverage ratio as further described below.~~Credit Agreement. The term loans ~~will be~~are payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans

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made, ~~beginning~~which 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 as~~and 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.~~

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

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

The floating interest rates on our borrowings under the Credit Agreement are hedged with interest rate swaps to effectively fix interest rates on ~~$125~~$625 million and $425 million of the outstanding principal balance under the revolving loans as of ~~both November 30, 2022~~May 31, 2023 and February 28, 2022. In connection with amending our Credit Agreement in June 2022, we updated our associated interest rate swap contracts to replace LIBOR with Term SOFR as the reference interest rate during the second quarter of fiscal 2023. In accordance with ASU 2020-04, ~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (~~ “ASU 2020-04”), we elected to apply the hedge accounting practical expedients related to changes to the critical terms of a hedging instrument, hedged item or forecasted transaction and changes in designated hedged interest rate risk. Application of these practical expedients allowed us to maintain hedge accounting for our interest rate swap contracts.2023, respectively. See Notes 10, 11, ~~12,~~ and 1312 for additional information regarding our interest rate swaps.

~~Other Debt Agreements~~

~~We have an unsecured loan agreement with~~As of May 31, 2023, the ~~Mississippi Business Finance Corporation (the “MBFC”), which~~balance of outstanding letters of credit 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$18.2 million and the ~~Net Leverage Ratio defined in the loan agreement.~~

~~On August 26, 2022, we entered into an amendment to the loan agreement~~amount available 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~~revolving loans 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.~~

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~~In connection with amending~~ the Credit Agreement ~~and the MBFC Loan to replace LIBOR with Term SOFR (as defined~~was $637.8 million. Covenants in the ~~respective agreements),~~Credit Agreement limit the amount of total indebtedness we ~~elected~~can incur. As a result of our exercise of a qualified acquisition notice under the Credit Agreement, as of May 31, 2023, these covenants effectively limited our ability to ~~apply~~incur more than $343.0 million of additional debt from all sources, including 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.Credit Agreement.

Debt Covenants

As of ~~November 30, 2022,~~May 31, 2023, we were in compliance with all covenants as defined under the terms of the Credit ~~Agreement and our other debt agreements.~~Agreement.

Note 1110 - 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					Carrying Amount and Fair Value

(in thousands)	(in thousands)	November 30, 2022		February 28, 2022		(in thousands)	May 31, 2023		February 28, 2023
Assets:	Assets:					Assets:
Cash equivalents (money market accounts)	Cash equivalents (money market accounts)	$	401	$	438	Cash equivalents (money market accounts)	$	10,745	$	381
Interest rate swaps	Interest rate swaps	3,112		—		Interest rate swaps	2,527		5,746
Foreign currency derivatives	Foreign currency derivatives	2,511		2,918		Foreign currency derivatives	1,081		1,423
Total assets	Total assets	$	6,024	$	3,356	Total assets	$	14,353	$	7,550

Liabilities:	Liabilities:					Liabilities:

Interest rate swaps	Interest rate swaps	$	—	$	2,781	Interest rate swaps	$	822	$	—
Foreign currency derivatives	Foreign currency derivatives	293		825		Foreign currency derivatives	1,177		711
Total liabilities	Total liabilities	$	293	$	3,606	Total liabilities	$	1,999	$	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.

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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 1211 and 1312 for more information on our derivatives.

Note 1211 - 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 15% and 13% of our net sales revenue was denominated in foreign currencies during the three ~~and nine~~ month periods ended ~~November 30,~~May 31, 2023 and 2022, ~~respectively, compared to 10% for both of the same periods last year.~~respectively. 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 nine~~ month periods ended ~~November 30,~~May 31, 2023 and 2022, we recorded foreign currency exchange rate net gains of ~~$1.1~~$0.4 million and ~~net losses of $1.4~~$0.2 million, respectively, in SG~~&A, compared to foreign currency exchange rate net losses of $0.3 million and $0.8 million, respectively, for the same periods last year.~~

&A. 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

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consolidated statements of income. Foreign currency derivatives for which we have not elected hedge accounting consist of our forward contracts and cross-currency debt swaps, and any changes in the fair value of 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 ~~November 30, 2022~~May 31, 2023 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 ~~$125.0~~a portion of our outstanding principal balance under the Credit Agreement, which totaled $839.3 million and $936.9 million as of May 31, 2023 and February 28, 2023, respectively. As of May 31, 2023 and February 28, 2023, $625.0 million and $425.0 million of the outstanding principal balance under the Credit Agreement, ~~which totaled $1,068.4 million as of November 30, 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

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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.

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


(in thousands)	(in thousands)	November 30, 2022												(in thousands)	May 31, 2023
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- current		Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- Current

Forward contracts - sell Euro	Forward contracts - sell Euro	Cash flow	11/2023	€	17,670	$	483	$	—	$	—	$	—	Forward contracts - sell Euro	Cash flow	2/2024	€	27,350	$	58	$	—	$	27	$	—
Forward contracts - sell Canadian Dollars	Forward contracts - sell Canadian Dollars	Cash flow	2/2024	$	40,450	1,243		—		—		24		Forward contracts - sell Canadian Dollars	Cash flow	2/2024	$	25,500	730		—		—		—
Forward contracts - sell Pounds	Forward contracts - sell Pounds	Cash flow	1/2024	£	25,225	775		—		34		145		Forward contracts - sell Pounds	Cash flow	2/2024	£	23,525	—		—		1,150		—

Forward contracts - sell Australian Dollars		Cash flow	12/2022	A$	250	7		—		—		—

Forward contracts - sell Norwegian Kroner	Forward contracts - sell Norwegian Kroner	Cash flow	10/2023	kr	40,000	—		—		35		—		Forward contracts - sell Norwegian Kroner	Cash flow	10/2023	kr	30,000	288		—		—		—
Interest rate swaps	Interest rate swaps	Cash flow	1/2024	$	125,000	2,660		452		—		—		Interest rate swaps	Cash flow	2/2026	$	625,000	2,527		—		—		822
Subtotal	Subtotal					5,168		452		69		169		Subtotal					3,603		—		1,177		822

Derivatives not designated under hedge accounting	Derivatives not designated under hedge accounting													Derivatives not designated under hedge accounting

Forward contracts - buy Euro	Forward contracts - buy Euro	(1)	12/2022	€	606	3		—		—		—		Forward contracts - buy Euro	(1)	6/2023	€	160	5		—		—		—
Forward contracts - buy Pounds		(1)	12/2022	£	2,152	—		—		55		—

Subtotal	Subtotal					3		—		55		—		Subtotal					5		—		—		—
Total fair value	Total fair value					$	5,171	$	452	$	124	$	169	Total fair value					$	3,608	$	—	$	1,177	$	822

(in thousands) February 28, 2022

Derivatives designated as hedging instruments Hedge Type Final
Settlement Date Notional Amount Prepaid
Expenses
and Other
Current Assets Other Assets Accrued
Expenses
and Other
Current Liabilities Other
Liabilities, Non- current
Forward contracts - sell Euro Cash flow 2/2023 € 17,000 $ 1,224 $ — $ — $ —
Forward contracts - sell Canadian Dollars Cash flow 2/2023 $ 40,000 475 — — —
Forward contracts - sell Pounds Cash flow 2/2023 £ 24,000 1,219 — — —
Forward contracts - sell Australian Dollars Cash flow 12/2022 A$ 5,700 — — 113 —
Interest rate swaps Cash flow 1/2024 $ 125,000 — — 1,446 1,335
Subtotal 2,918 — 1,559 1,335
Derivatives not designated under hedge accounting
Cross-currency debt swaps - Euro (2) 4/2022 € 6,000 — — 244 —
Cross-currency debt swaps - Pounds (2) 4/2022 £ 4,500 — — 468 —
Subtotal — — 712 —
Total fair value $ 2,918 $ — $ 2,271 $ 1,335

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(in thousands)	February 28, 2023
Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities Non- Current

Forward contracts - sell Euro	Cash flow	2/2024	€	29,310	$	257	$	—	$	—	$	—
Forward contracts - sell Canadian Dollars	Cash flow	2/2024	$	30,000	962		11		—		—

Forward contracts - sell Pounds	Cash flow	1/2024	£	19,400	—		—		711		—


Forward contracts - sell Norwegian Kroner	Cash flow	2/2024	kr	40,000	185		—		—		—
Interest rate swaps	Cash flow	2/2026	$	425,000	3,941		1,805		—		—
Subtotal					5,345		1,816		711		—

Derivatives not designated under hedge accounting
Forward contracts - buy Euro	(1)	3/2023	€	500	6		—		—		—
Forward contracts - buy Pounds	(1)	3/2023	£	400	2		—		—		—
Subtotal					8		—		—		—
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.

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

Three Months Ended November 30,
Gain (Loss)
Recognized in AOCI Gain (Loss) Reclassified
from AOCI into Income
(in thousands) 2022 2021 Location 2022 2021
Foreign currency contracts - cash flow hedges $ (685) $ 3,686 Sales revenue, net $ 4,484 $ (354)
Interest rate swaps - cash flow hedges 1,471 1,045 Interest expense 168 (1,300)
Total $ 786 $ 4,731 $ 4,652 $ (1,654)


		Nine Months Ended November 30,										Three Months Ended May 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)	2022		2021		Location	2022		2021		(in thousands)	2023		2022		Location	2023		2022
Foreign currency contracts - cash flow hedges	Foreign currency contracts - cash flow hedges	$	7,860	$	5,951	Sales revenue, net	$	8,395	$	(2,441)	Foreign currency contracts - cash flow hedges	$	(467)	$	2,319	Sales revenue, net	$	338	$	1,196
Interest rate swaps - cash flow hedges	Interest rate swaps - cash flow hedges	5,100		821		Interest expense	(793)		(3,934)		Interest rate swaps - cash flow hedges	(2,634)		2,206		Interest expense	1,407		(680)

Total	Total	$	12,960	$	6,772		$	7,602	$	(6,375)	Total	$	(3,101)	$	4,525		$	1,745	$	516

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


		Gain (Loss) Recognized in Income										Gain (Loss) Recognized in Income
			Three Months Ended November 30,				Nine Months Ended November 30,						Three Months Ended May 31,
(in thousands)	(in thousands)	Location	2022		2021		2022		2021		(in thousands)	Location	2023		2022
Forward contracts	Forward contracts	SG&A	$	(12)	$	—	$	(262)	$	—	Forward contracts	SG&A	$	(24)	$	—
Cross-currency debt swaps - principal	Cross-currency debt swaps - principal	SG&A	—		575		875		915		Cross-currency debt swaps - principal	SG&A	—		875
Cross-currency debt swaps - interest		Interest expense	—		(1)		—		(3)

Total	Total		$	(12)	$	574	$	613	$	912	Total		$	(24)	$	875

We expect a net gain of ~~$5.1~~$2.4 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 1110 and 1312 to these condensed consolidated financial statements for more information.

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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 1312 - 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)
Balance at February 28, 2022								Balance at February 28, 2022	$	(2,126)	$	2,328	$	202
Other comprehensive income before reclassification	Other comprehensive income before reclassification	821		5,951		6,772		Other comprehensive income before reclassification	2,206		2,319		4,525
Amounts reclassified out of AOCI	Amounts reclassified out of AOCI	3,934		2,441		6,375		Amounts reclassified out of AOCI	680		(1,196)		(516)
Tax effects	Tax effects	(1,132)		(1,425)		(2,557)		Tax effects	(680)		(170)		(850)
Other comprehensive income	Other comprehensive income	3,623		6,967		10,590		Other comprehensive income	2,206		953		3,159
Balance at November 30, 2021		$	(3,953)	$	2,887	$	(1,066)
Balance at May 31, 2022								Balance at May 31, 2022	$	80	$	3,281	$	3,361

Balance at February 28, 2022		$	(2,126)	$	2,328	$	202
Other comprehensive income before reclassification		5,100		7,860		12,960
Balance at February 28, 2023								Balance at February 28, 2023	$	4,394	$	553	$	4,947
Other comprehensive loss before reclassification								Other comprehensive loss before reclassification	(2,634)		(467)		(3,101)
Amounts reclassified out of AOCI	Amounts reclassified out of AOCI	793		(8,395)		(7,602)		Amounts reclassified out of AOCI	(1,407)		(338)		(1,745)
Tax effects	Tax effects	(1,391)		(30)		(1,421)		Tax effects	949		182		1,131
Other comprehensive income (loss)		4,502		(565)		3,937
Balance at November 30, 2022		$	2,376	$	1,763	$	4,139
Other comprehensive loss								Other comprehensive loss	(3,092)		(623)		(3,715)
Balance at May 31, 2023								Balance at May 31, 2023	$	1,302	$	(70)	$	1,232

See Notes 9, 10 11 and 1211 to these condensed consolidated financial statements for additional information regarding our cash flow hedges.

Note 1413 - Segment Information

~~As of November 30, 2022, we operated three~~We currently operate two reportable segments consisting of Home & Outdoor ~~Health~~and Beauty & ~~Wellness 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 in Note 8)~~ that resulted in ~~the~~our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which ~~will be~~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 to how our CEO, our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. Therefore, beginning with our fiscal 2023 Form 10-K, our future disclosures will reflect two reportable segments, Home & Outdoor and Beauty & Wellness, and we will recast theComparative prior period segment information in this report has been recast to conform to ~~the~~this change in ~~the composition of these~~our reportable segments. ~~Accordingly, our external reportable segments will continue~~See Note 1 to ~~align with our internal reporting to enable users of the~~these condensed consolidated financial statements ~~to better understand our performance, better assess our prospects~~ for ~~future net cash flows, and make more informed judgements about the Company as a whole.~~

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additional information.

The following tables summarize segment information for the periods presented:


		Three Months Ended November 30, 2022									Three Months Ended May 31, 2023
(in thousands)	(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total		(in thousands)	Home & Outdoor		Beauty & Wellness		Total
Sales revenue, net	Sales revenue, net	$	228,937	$	180,483	$	149,186	$	558,606	Sales revenue, net	$	217,144	$	257,528	$	474,672
Restructuring charges	Restructuring charges	5,090		2,893		2,480		10,463		Restructuring charges	2,790		4,565		7,355
Operating income	Operating income	30,847		21,257		25,089		77,193		Operating income	22,116		18,525		40,641
Capital and intangible asset expenditures	Capital and intangible asset expenditures	28,788		3,830		941		33,559		Capital and intangible asset expenditures	10,960		917		11,877
Depreciation and amortization	Depreciation and amortization	4,716		3,446		3,551		11,713		Depreciation and amortization	4,402		6,313		10,715

Three Months Ended November 30, 2021
(in thousands) Home & Outdoor Health & Wellness Beauty Total
Sales revenue, net $ 246,135 $ 203,900 $ 174,849 $ 624,884
Restructuring charges — — 5 5
Operating income 43,239 13,573 33,228 90,040
Capital and intangible asset expenditures 16,159 633 783 17,575
Depreciation and amortization 2,894 2,529 3,218 8,641
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Nine Months Ended November 30, 2022
(in thousands) Home & Outdoor Health & Wellness Beauty Total
Sales revenue, net $ 703,759 $ 529,930 $ 354,395 $ 1,588,084
Restructuring charges 5,562 6,447 3,232 15,241
Operating income 102,722 12,505 42,851 158,078
Capital and intangible asset expenditures 133,939 8,269 3,986 146,194
Depreciation and amortization 13,704 9,279 10,347 33,330


		Nine Months Ended November 30, 2021									Three Months Ended May 31, 2022
(in thousands)	(in thousands)	Home & Outdoor		Health & Wellness		Beauty		Total		(in thousands)	Home & Outdoor		Beauty & Wellness		Total
Sales revenue, net	Sales revenue, net	$	654,997	$	549,475	$	436,863	$	1,641,335	Sales revenue, net	$	234,263	$	273,815	$	508,078
Restructuring charges	Restructuring charges	369		—		11		380		Restructuring charges	—		2		2

Operating income	Operating income	112,303		29,616		80,247		222,166		Operating income	29,793		4,146		33,939
Capital and intangible asset expenditures	Capital and intangible asset expenditures	36,196		3,613		1,720		41,529		Capital and intangible asset expenditures	72,731		3,471		76,202
Depreciation and amortization	Depreciation and amortization	8,257		7,879		9,946		26,082		Depreciation and amortization	4,495		6,003		10,498

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


		Three Months Ended November 30,								Nine Months Ended November 30,									Three Months Ended May 31,
(in thousands)	(in thousands)	2022				2021				2022				2021				(in thousands)	2023				2022
U.S. sales revenue, net		$	410,832	73.5	%	$	496,666	79.5	%	$	1,170,349	73.7	%	$	1,271,102	77.4	%
Domestic sales revenue, net (1)																		Domestic sales revenue, net (1)	$	359,559	75.7	%	$	396,746	78.1	%
International sales revenue, net	International sales revenue, net	147,774		26.5	%	128,218		20.5	%	417,735		26.3	%	370,233		22.6	%	International sales revenue, net	115,113		24.3	%	111,332		21.9	%
Total sales revenue, net	Total sales revenue, net	$	558,606	100.0	%	$	624,884	100.0	%	$	1,588,084	100.0	%	$	1,641,335	100.0	%	Total sales revenue, net	$	474,672	100.0	%	$	508,078	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.

Note 1514 - Income Taxes

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

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

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

On 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 these tax provisions to have a material impact to our consolidated financial statements.

For the three months ended ~~November 30, 2022,~~May 31, 2023, income tax expense as a percentage of income before income tax was ~~19.1%~~15.5% compared to ~~12.9%~~17.0% for the same period last year. The year-over-year ~~increase~~decrease in the effective tax rate is primarily due to ~~lower forecasted annual income before income~~a decrease in tax ~~and~~expense for discrete items, partially offset by shifts in the mix of income in our various tax jurisdictions, which were partially offset by increases in tax benefits for discrete items. For the nine months ended November 30, 2022, income tax expense as a percentage of income before income tax was 18.6% compared to 13.6% for the same period last year. The year-over-year increase in the effective tax rate is primarily due to lower forecasted annual income before income taxes, shifts in the mix of income in our various tax jurisdictions, and an increase in tax expense for discrete items.jurisdictions.

Note 1615 - 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 65 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 November 30,		Nine Months Ended November 30,			Three Months Ended May 31,
(in thousands)	(in thousands)	2022	2021	2022	2021	(in thousands)	2023	2022
Weighted average shares outstanding, basic	Weighted average shares outstanding, basic	23,991	24,129	23,942	24,193	Weighted average shares outstanding, basic	24,049	23,865
Incremental shares from share-based compensation arrangements	Incremental shares from share-based compensation arrangements	87	270	144	268	Incremental shares from share-based compensation arrangements	85	257
Weighted average shares outstanding, diluted	Weighted average shares outstanding, diluted	24,078	24,399	24,086	24,461	Weighted average shares outstanding, diluted	24,134	24,122

Anti-dilutive securities	Anti-dilutive securities	53	20	45	16	Anti-dilutive securities	156	29

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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, ~~2022~~2023 (“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, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income, Diluted EPS, Adjusted Income (non-GAAP), and Adjusted Diluted EPS (non-GAAP),” reports operating income, operating margin, net income and diluted earnings per share (“EPS”) without the impact of acquisition-related expenses, a charge for uncollectible receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed, Bath & Beyond bankruptcy”), EPA compliance costs, ~~gain from insurance recoveries,~~ 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 ~~information~~measures as ~~set forth in~~defined 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 ~~information~~measures and may be calculated differently than non-GAAP financial ~~information~~measures 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 ~~46.~~36.

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 ~~three~~two segments consisting of Home & Outdoor ~~Health~~and Beauty & ~~Wellness, 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)~~below and in Note 7 to the accompanying condensed consolidated financial statements) that resulted in ~~the~~our previous Health & Wellness and Beauty operating segments being combined into a single reportable segment, which ~~will be~~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 to how our Chief Executive Officer (“CEO”), our chief operating decision maker, assesses performance and allocates resources. We believe that these changes better align internal resources and external go to market activities in order to create a more efficient and effective organizational structure. There were no changes to the products or brands included within our Home & Outdoor reportable segment as part of these organizational changes nor to the way in which our CEO assesses performance and allocates resources for the Home & Outdoor segment. ~~Therefore, beginning with~~As a result of these changes, our ~~fiscal 2023 Form 10-K, our future~~ disclosures ~~will~~ reflect two reportable segments, Home & Outdoor and Beauty & ~~Wellness, and we will recast the~~Wellness. Comparative prior period segment information in this report has been recast to conform to ~~the~~this change in ~~the composition of these~~our reportable segments. ~~Accordingly, our~~Our external reportable segments will continue to align with our internal reporting to enable users of the financial statements to better understand our performance, better assess our ~~prospects for~~ future net cash flows, and make more informed ~~judgements~~judgments about the Company as a whole.

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

Fiscal 2020 began Phase II of our transformation, which 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 month period ended May 31, 2023, we incurred $7.4 million of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statement of income. See further discussion below within “Significant Trends Impacting the Business” under “Project Pegasus” and Note 7 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”). 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.

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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.

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

•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”).~~&A.

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

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

During the three ~~and nine~~ month ~~periods~~period ended ~~November 30, 2022,~~May 31, 2023, we incurred ~~$10.5~~$7.4 million ~~and $15.2 million, respectively,~~ of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated ~~statements~~statement of income. We made total cash restructuring payments of $9.4 million during the three month period ended May 31, 2023 and had a remaining liability of $4.6 million as of May 31, 2023. See Note 87 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.

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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 Curlsmith brand and products were added to the Beauty segment. The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment and cash acquired. We incurred pre-tax acquisition expenses of $2.7 million during the nine months ended November 30, 2022, which were recognized in SG&A within our condensed consolidated statement of income.

Water Filtration Patent Litigation

On December ~~29,~~23, 2021, ~~we completed the acquisition~~Brita 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 industry~~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. 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 lineup~~limited 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 ~~includes~~is 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 ~~wide range~~guaranteed review process, and thus all respondents, including Kaz USA, Inc., filed a petition with the ITC for a full review 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 addedthe Initial Determination prior to 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~~ITC making any final decision in this facility primarily related to our Health & Wellness and Beauty segments. While the inventory is insured, some seasonal inventory and inventory designated for specific customer promotions was not accessible and subsequently determined to be damaged, and as a result, unfavorably impacted our net sales revenue during the first quarter of fiscal 2023. As a result of the damages to the inventory stored at the facility, during the first quarter of fiscal 2023, we recorded a charge to write-off the damaged inventory totaling $34.4 million, of which $29.9 million and $4.5 million related to our Health & Wellness and Beauty segments, respectively. These charges were fully offset by probable insurance recoveries of $34.4 million also recorded during the first quarter of fiscal 2023, which represented anticipated insurance proceeds, not to exceed the amount of the associated losses, for which receipt was deemed probable. The charges for the damaged inventory and the expected insurance recoveries are included in cost of goods sold in our condensed consolidated statement of income for the nine months ended November 30, 2022. During the third quarter of fiscal 2023, we received proceeds of $34.5 million from our insurance carriers related to this incident which are included in cash flows from operating activities in our condensed consolidated statement of cash flows for the nine months ended November 30, 2022. The Company also received final confirmation from our insurance carriers during the third quarter of 2023 of an additional $11.5 million in proceeds, which was collected during December 2022. As a result, during the third quarter of fiscal 2023, the Company recorded a gain of $9.7 million, net of costs incurred to dispose of the inventory, as a reduction of SG&A expense in our condensed consolidated statements of income, of which $8.2 million and $1.5 million was related to our Health & Wellness and Beauty segments, respectively. Any potential future proceeds from our business interruption insurance will be recognized when received.

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.matter. On June 28, ~~2022,~~2023, the ITC issued a Determination to review in part the Initial Determination and requested written submissions from the parties on certain issues under review. We intend to file the requested written submissions and then will await a final decision, which is now expected by September 19, 2023. The Patent Litigation has been stayed pending resolution of the ITC Action. While we ~~entered into an amendment~~intend to continue to vigorously pursue our claims and defenses in these proceedings, we have also implemented mitigation plans to help minimize the expected potential impact to the ~~Credit Agreement~~Company, its customers and consumers of a negative ITC decision. These mitigation plans include the introduction of an alternative replacement water filter that could be distributed to ~~among other things, replace LIBOR with Term SOFR (as defined in~~customers promptly following a potentially adverse ITC decision at the ~~Credit Agreement) as~~end of June. We cannot predict the ~~reference interest rate. Accordingly, we updated~~outcome of these proceedings, the amount or range of any potential loss, when the proceedings will be 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 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 Agreementfinancial position and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The Credit Agreement was subsequently amended on November 2, 2022, to, among other things, permit the Company to enter into certain supply chain financing programs, structured vendor payable programs, payable financing programs or other similar financing programs, subject to certain conditions. The amendment also provides that these permitted supply chain arrangements are excluded for purposesresults of

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determining compliance with the maximum leverage ratio. In addition, we have an unsecured loan agreement with the Mississippi Business Finance Corporation (the “MBFC”), which was entered into in connection with the issuance by MBFC of 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 108 to the accompanying condensed consolidated financial ~~statements and below under “Credit Agreement and Other Debt Agreements.”~~

~~Significant Trends Impacting the Business~~statements.

Impact of Macroeconomic Trends

Beginning in March 2020, interest rates were 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 to~~may continue to raise interest rates ~~into~~during the remainder of calendar year 2023. ~~During 2023~~The Federal Open Market Committee increased the

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benchmark interest rate by 450 basis points during fiscal year 2023. As a result, we ~~have~~ incurred higher average interest rates during the first quarter of fiscal 2024 compared to the same period last year, and we expect this trend to continue during the remainder of fiscal ~~year 2023.~~2024. While the actual timing and extent of ~~the~~ future ~~increases~~changes in interest rates remains unknown, higher ~~long-term~~average 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 quarter of fiscal 2024 and may continue to have an adverse impact during 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%~~72% and ~~79%~~73% of our consolidated net sales revenue was from U.S. shipments during the three month periods ended ~~November 30,~~May 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~For the nine month periods ended November 30, 2022 and 2021, U.S. shipments were approximately 74% and 77% of our consolidated net sales revenue.~~

Among other things, high levels of inflation and interest rates may negatively impact consumer disposable income, credit availability and spending. Consumer purchases of discretionary items, including the products that we offer, generally decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. ~~Additionally, the ongoing COVID-19 pandemic increases this uncertainty and may further impact the global supply chain, capital and financial markets and consumer confidence and spending.~~ Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers is predicated on their ability to sell to the end consumer. During ~~the second and third quarters of~~ fiscal year 2023, we experienced an adverse impact on orders from 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 quarter 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

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~~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 26% ~~and 23%~~ of our total consolidated net sales revenue for the three ~~and nine~~ month ~~periods~~period ended ~~November 30, 2022, respectively,~~May 31, 2023, and grew approximately ~~3% and 1%, respectively, as~~8% compared to the same ~~periods~~period in the prior year.

For the three ~~and nine~~ month ~~periods~~period ended ~~November 30, 2021,~~May 31, 2022, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately ~~23% and~~ 22% of our total consolidated net sales revenue, ~~respectively,~~ and ~~both~~ declined approximately 7%, compared to the same ~~periods~~period in the prior year.

With the continued ~~growth in~~importance of online sales ~~across~~in 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 ~~will~~has become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, ~~as well as to increase~~including increasing our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail ~~customers.~~

~~Continuing Impact of COVID-19~~

The COVID-19 pandemic continues to disrupt certain parts 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, as well as other factors, have strained the global freight network, which has resulted in higher costs, less capacity, and longer lead times. During fiscal 2023, we have been adversely impacted by COVID-19 related global supply chain disruptions and cost increases. The extent of COVID-19’s impact on the demand for certain of our product lines in the future will depend on continuing future developments, including any new variants and surges in the 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~~

During fiscal 2021 and 2022, surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, strained the global supply chain network, which resulted in carrier-imposed capacity restrictions, carrier delays, and longer lead times. This increased demand for Chinese imports and COVID-19 illness and protocols within China caused disruptions to global supply chains. This increased demand led to the market cost of inbound freight increasing by several multiples compared to calendar year 2020 averages. The disruptions in the global supply chain and freight networks also resulted in shortages of qualified drivers, which limited inbound and outbound shipment capacity and increased our costs of goods sold and certain operating expenses. 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. During fiscal 2023, as consumer demand has slowed in reaction to a highly inflationary economic environment, global supply chain capacity has improved and freight costs have begun to recede from their previous peaks. These global supply chain disruptions and related inflationary cost trends have adversely impacted our business, financial condition, cash flows and results

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customers. In March 2023, we completed the construction of ~~operations. Continuation~~an additional distribution facility in Gallaway, Tennessee that became operational during the first quarter of ~~adverse trends, or~~fiscal 2024 and includes state-of-the-art automation. Additionally, we continue to invest in a centralized cloud-based e-commerce platform that we anticipate will enable us to leverage a common system and rapidly deploy new capabilities across all of our brands, as well as more ~~pronounced adverse impacts may arise which could have further negative impacts to our business, results of operations~~easily integrate new brands. We anticipate this platform will enhance the customer experience by strengthening the digital presentation and ~~financial condition.~~product browsing capabilities and improving the checkout process, order delivery and post-order customer care.

EPA Compliance Costs

Some product lines within our ~~Health~~Beauty & 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.


		Three Months Ended November 30,				Nine Months Ended November 30,							Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		2022			2021			(in thousands)		2023		2022
Cost of goods sold	Cost of goods sold	$	370	$	306	$	16,928	1	$	13,775	2	Cost of goods sold		$	—	$	9,455	1
SG&A	SG&A	1,733		4,620		5,173			7,223			SG&A		—		2,189
Total EPA compliance costs	Total EPA compliance costs	$	2,103	$	4,926	$	22,101		$	20,998		Total EPA compliance costs		$	—	$	11,644

~~(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 incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products beginning in the second quarter of fiscal 2022 through completion of the repackaging in the third quarter of fiscal 2023. We also expect to incur additional compliance costs, which may include incremental 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 98 to our condensed consolidated financial statements for additional information.

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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).

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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 ~~November 30, 2022,~~May 31, 2023, changes in foreign currency exchange rates had an unfavorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately ~~$7.1~~$0.5 million, or ~~1.1%~~0.1%, compared to ~~a favorable year-over-year impact of $1.2 million, or 0.2% for the same period last year. For the nine months ended November 30, 2022, changes in foreign currency exchange rates had~~ an unfavorable year-over-year impact ~~on consolidated U.S. Dollar reported net sales revenue~~ of ~~approximately $14.8~~$3.5 million, or ~~0.9%~~0.7%, ~~compared to a favorable year-over-year impact of $8.8 million, or 0.6%~~ for the same period last year.

Variability of the Cough/Cold/Flu Season

Sales in several of our ~~Health~~Beauty & 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 provide~~table 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 November 30,								% of Sales Revenue, net					Three Months Ended May 31,								% of Sales Revenue, net
(in thousands)	(in thousands)	2022 (1)(2)		2021		$ Change		% Change		2022		2021		(in thousands)	2023 (1)		2022 (1)		$ Change		% Change		2023		2022
Sales revenue by segment, net	Sales revenue by segment, net													Sales revenue by segment, net
Home & Outdoor	Home & Outdoor	$	228,937	$	246,135	$	(17,198)	(7.0)	%	41.0	%	39.4	%	Home & Outdoor	$	217,144	$	234,263	$	(17,119)	(7.3)	%	45.7	%	46.1	%
Health & Wellness		180,483		203,900		(23,417)		(11.5)	%	32.3	%	32.6	%
Beauty		149,186		174,849		(25,663)		(14.7)	%	26.7	%	28.0	%
Beauty & Wellness														Beauty & Wellness	257,528		273,815		(16,287)		(5.9)	%	54.3	%	53.9	%

Total sales revenue, net	Total sales revenue, net	558,606		624,884		(66,278)		(10.6)	%	100.0	%	100.0	%	Total sales revenue, net	474,672		508,078		(33,406)		(6.6)	%	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	301,930		351,051		(49,121)		(14.0)	%	54.1	%	56.2	%	Cost of goods sold	259,041		296,907		(37,866)		(12.8)	%	54.6	%	58.4	%
Gross profit	Gross profit	256,676		273,833		(17,157)		(6.3)	%	45.9	%	43.8	%	Gross profit	215,631		211,171		4,460		2.1	%	45.4	%	41.6	%
SG&A	SG&A	169,020		183,788		(14,768)		(8.0)	%	30.3	%	29.4	%	SG&A	167,635		177,230		(9,595)		(5.4)	%	35.3	%	34.9	%

Restructuring charges	Restructuring charges	10,463		5		10,458		*		1.9	%	—	%	Restructuring charges	7,355		2		7,353		*		1.5	%	—	%
Operating income	Operating income	77,193		90,040		(12,847)		(14.3)	%	13.8	%	14.4	%	Operating income	40,641		33,939		6,702		19.7	%	8.6	%	6.7	%
Non-operating income, net	Non-operating income, net	5		52		(47)		(90.4)	%	—	%	—	%	Non-operating income, net	137		67		70		*		—	%	—	%
Interest expense	Interest expense	13,149		3,206		9,943		*		2.4	%	0.5	%	Interest expense	14,052		4,373		9,679		*		3.0	%	0.9	%
Income before income tax	Income before income tax	64,049		86,886		(22,837)		(26.3)	%	11.5	%	13.9	%	Income before income tax	26,726		29,633		(2,907)		(9.8)	%	5.6	%	5.8	%
Income tax expense	Income tax expense	12,223		11,203		1,020		9.1	%	2.2	%	1.8	%	Income tax expense	4,145		5,038		(893)		(17.7)	%	0.9	%	1.0	%

Net income	Net income	$	51,826	$	75,683	$	(23,857)	(31.5)	%	9.3	%	12.1	%	Net income	$	22,581	$	24,595	$	(2,014)	(8.2)	%	4.8	%	4.8	%

		Nine Months Ended November 30,								% of Sales Revenue, net
(in thousands)		2022 (1)(2)		2021		$ Change		% Change		2022		2021
Sales revenue by segment, net
Home & Outdoor		$	703,759	$	654,997	$	48,762	7.4	%	44.3	%	39.9	%
Health & Wellness		529,930		549,475		(19,545)		(3.6)	%	33.4	%	33.5	%
Beauty		354,395		436,863		(82,468)		(18.9)	%	22.3	%	26.6	%
Total sales revenue, net		1,588,084		1,641,335		(53,251)		(3.2)	%	100.0	%	100.0	%
Cost of goods sold		898,791		936,322		(37,531)		(4.0)	%	56.6	%	57.0	%
Gross profit		689,293		705,013		(15,720)		(2.2)	%	43.4	%	43.0	%
SG&A		515,974		482,467		33,507		6.9	%	32.5	%	29.4	%

Restructuring charges		15,241		380		14,861		*		1.0	%	—	%
Operating income		158,078		222,166		(64,088)		(28.8)	%	10.0	%	13.5	%
Non-operating income, net		185		185		—		—	%	—	%	—	%
Interest expense		26,688		9,508		17,180		*		1.7	%	0.6	%
Income before income tax		131,575		212,843		(81,268)		(38.2)	%	8.3	%	13.0	%
Income tax expense		24,482		28,873		(4,391)		(15.2)	%	1.5	%	1.8	%

Net income		$	107,093	$	183,970	$	(76,877)	(41.8)	%	6.7	%	11.2	%

(1)The three ~~and nine~~ month ~~periods~~period ended ~~November 30,~~May 31, 2022 ~~include~~includes approximately ~~thirteen and thirty-two~~six weeks of operating results from Curlsmith, ~~respectively, which was~~ acquired on April 22, ~~2022.~~2022, and the three month period ended May 31, 2023 includes a full quarter of operating results. For additional information see Note ~~4 to the accompanying condensed consolidated financial statements.~~

~~(2)The three and nine month periods ended November 30, 2022 include operating results from Osprey, which was acquired on December 29, 2021. For additional information see Note 4~~3 to the accompanying condensed consolidated financial statements.

* Calculation is not meaningful.

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~~Third~~First Quarter Fiscal ~~2023~~2024 Financial Results

•Consolidated net sales revenue decreased ~~10.6%~~6.6%, or ~~$66.3~~$33.4 million, to ~~$558.6~~$474.7 million for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$624.9~~$508.1 million for the same period last year.

•Consolidated operating income ~~decreased 14.3%~~increased 19.7%, or ~~$12.8~~$6.7 million, to ~~$77.2~~$40.6 million for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$90.0~~$33.9 million for the same period last year. Consolidated operating margin ~~decreased 0.6~~increased 1.9 percentage points to ~~13.8%~~8.6% of consolidated net sales revenue for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~14.4%~~6.7% for the same period last year.

•Consolidated adjusted operating income decreased ~~12.7%~~4.6%, or ~~$13.4~~$3.2 million, to ~~$92.7~~$66.2 million for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$106.1~~$69.3 million for the same period last year. Consolidated adjusted operating margin ~~decreased 0.4~~increased 0.3 percentage points to ~~16.6%~~13.9% of consolidated net sales revenue for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~17.0%~~13.6% for the same period last year.

•Net income decreased ~~31.5%~~8.2%, or ~~$23.9~~$2.0 million, to ~~$51.8~~$22.6 million for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$75.7~~$24.6 million for the same period last year. Diluted EPS decreased ~~30.6%~~7.8% to ~~$2.15~~$0.94 for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$3.10~~$1.02 for the same period last year.

•Adjusted income decreased ~~26.9%~~19.8%, or ~~$24.4~~$11.5 million, to ~~$66.3~~$46.7 million for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$90.6~~$58.2 million for the same period last year. Adjusted diluted EPS decreased ~~26.1%~~19.5% to ~~$2.75~~$1.94 for the three months ended ~~November 30, 2022,~~May 31, 2023, compared to ~~$3.72~~$2.41 for the same period last year.

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

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

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

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

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

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

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

Consolidated and Segment Net Sales Revenue

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

Three Months Ended November 30,
(in thousands) Home & Outdoor Health & Wellness Beauty Total
Fiscal 2022 sales revenue, net $ 246,135 $ 203,900 $ 174,849 $ 624,884
Organic business (57,262) (22,046) (36,242) (115,550)
Impact of foreign currency (3,191) (1,371) (2,512) (7,074)
Acquisition (1) 43,255 — 13,091 56,346
Change in sales revenue, net (17,198) (23,417) (25,663) (66,278)
Fiscal 2023 sales revenue, net $ 228,937 $ 180,483 $ 149,186 $ 558,606
Total net sales revenue growth (decline) (7.0) % (11.5) % (14.7) % (10.6) %
Organic business (23.3) % (10.8) % (20.7) % (18.5) %
Impact of foreign currency (1.3) % (0.7) % (1.4) % (1.1) %
Acquisition 17.6 % — % 7.5 % 9.0 %


		Nine Months Ended November 30,													Three Months Ended May 31,
(in thousands)	(in thousands)	Home & Outdoor			Health & Wellness			Beauty			Total			(in thousands)	Home & Outdoor			Beauty & Wellness			Total
Fiscal 2022 sales revenue, net		$	654,997		$	549,475		$	436,863		$	1,641,335
Fiscal 2023 sales revenue, net														Fiscal 2023 sales revenue, net	$	234,263		$	273,815		$	508,078
Organic business	Organic business	(85,186)			(16,939)			(104,759)			(206,884)			Organic business	(16,751)			(22,248)			(38,999)
Impact of foreign currency	Impact of foreign currency	(7,950)			(2,606)			(4,253)			(14,809)			Impact of foreign currency	(368)			(141)			(509)
Acquisition (1)	Acquisition (1)	141,898			—			26,544			168,442			Acquisition (1)	—			6,102			6,102
Change in sales revenue, net	Change in sales revenue, net	48,762			(19,545)			(82,468)			(53,251)			Change in sales revenue, net	(17,119)			(16,287)			(33,406)
Fiscal 2023 sales revenue, net		$	703,759		$	529,930		$	354,395		$	1,588,084
Fiscal 2024 sales revenue, net														Fiscal 2024 sales revenue, net	$	217,144		$	257,528		$	474,672

Total net sales revenue growth (decline)	Total net sales revenue growth (decline)	7.4		%	(3.6)		%	(18.9)		%	(3.2)		%	Total net sales revenue growth (decline)	(7.3)		%	(5.9)		%	(6.6)		%
Organic business	Organic business	(13.0)		%	(3.1)		%	(24.0)		%	(12.6)		%	Organic business	(7.2)		%	(8.1)		%	(7.7)		%
Impact of foreign currency	Impact of foreign currency	(1.2)		%	(0.5)		%	(1.0)		%	(0.9)		%	Impact of foreign currency	(0.2)		%	(0.1)		%	(0.1)		%
Acquisition	Acquisition	21.7		%	—		%	6.1		%	10.3		%	Acquisition	—		%	2.2		%	1.2		%

(1)~~Beauty segment's~~On April 22, 2022, we completed the acquisition of Curlsmith. Curlsmith sales ~~from~~prior to the first annual anniversary of the acquisition are reported in Acquisition for the Beauty & Wellness segment in the three month period ended May 31, 2023 and ~~nine month periods ended November 30, 2022 includes~~consist of approximately ~~thirteen and thirty-two~~seven 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 nine month periods ended November 30, 2022 includes operating results from Osprey, which was acquired on December 29, 2021.results. For additional information see Note 43 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

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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 November 30,
(in thousands) Home & Outdoor Health & Wellness Beauty Total
Fiscal 2022 sales revenue, net $ 246,135 $ 203,900 $ 174,849 $ 624,884
Core business (17,198) (23,417) (21,288) (61,903)
Non-Core business (Personal Care) — — (4,375) (4,375)
Change in sales revenue, net (17,198) (23,417) (25,663) (66,278)
Fiscal 2023 sales revenue, net $ 228,937 $ 180,483 $ 149,186 $ 558,606
Total net sales revenue decline (7.0) % (11.5) % (14.7) % (10.6) %
Core business (7.0) % (11.5) % (12.2) % (9.9) %
Non-Core business (Personal Care) — % — % (2.5) % (0.7) %

Nine Months Ended November 30,
(in thousands) Home & Outdoor Health & Wellness Beauty Total
Fiscal 2022 sales revenue, net $ 654,997 $ 549,475 $ 436,863 $ 1,641,335
Core business 48,762 (19,545) (52,231) (23,014)
Non-Core business (Personal Care) — — (30,237) (30,237)
Change in sales revenue, net 48,762 (19,545) (82,468) (53,251)
Fiscal 2023 sales revenue, net $ 703,759 $ 529,930 $ 354,395 $ 1,588,084
Total net sales revenue growth (decline) 7.4 % (3.6) % (18.9) % (3.2) %
Core business 7.4 % (3.6) % (12.0) % (1.4) %
Non-Core business (Personal Care) — % — % (6.9) % (1.8) %

Leadership Brand and Other Net Sales Revenue

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


		Three Months Ended November 30,									Three Months Ended May 31,
(in thousands)	(in thousands)	2022		2021		$ Change		% Change		(in thousands)	2023		2022		$ Change		% Change
Leadership Brand sales revenue, net ~~(1)~~	Leadership Brand sales revenue, net ~~(1)~~	$	451,500	$	506,982	$	(55,482)	(10.9)	%	Leadership Brand sales revenue, net ~~(1)~~	$	402,276	$	435,158	$	(32,882)	(7.6)	%
All other sales revenue, net	All other sales revenue, net	107,106		117,902		(10,796)		(9.2)	%	All other sales revenue, net	72,396		72,920		(524)		(0.7)	%
Total sales revenue, net	Total sales revenue, net	$	558,606	$	624,884	$	(66,278)	(10.6)	%	Total sales revenue, net	$	474,672	$	508,078	$	(33,406)	(6.6)	%

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

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

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Consolidated Net Sales Revenue

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Consolidated net sales revenue decreased ~~$66.3~~$33.4 million, or ~~10.6%~~6.6%, to ~~$558.6~~$474.7 million, compared to ~~$624.9 million. The decline was~~$508.1 million, primarily driven by a decrease from Organic business of ~~$115.6~~$39.0 million, or ~~18.5%,~~7.7%. The decline in Organic business was primarily due ~~to:~~

•to lower sales of seasonal fans, hair appliances, and air filtration and humidification products in ~~all segments due to lower~~Beauty & Wellness primarily driven by our SKU rationalization efforts, softer consumer demand, shifts in consumer spending patterns and reduced orders from retail customers ~~due to higher~~as they rebalance trade inventory ~~levels;~~

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

•~~a net sales revenue decline of $4.4 million in Non-Core business due to the sale of our Personal Care business.~~Home & Outdoor primarily driven by lower club channel sales.

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

•an increase in sales of ~~humidification~~thermometry and prestige market hair care products in ~~our Health~~Beauty & ~~Wellness segment.~~Wellness;

•an increase in online channel sales reflecting improved replenishment orders from certain online retail customers and stronger consumer demand for travel-related products in Home & Outdoor; and

•growth in international sales.

The ~~Osprey and~~ Curlsmith ~~acquisitions~~acquisition contributed ~~$43.3~~$6.1 million, ~~and $13.1 million, respectively,~~ or ~~9.0%~~1.2%, to consolidated net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately ~~$7.1~~$0.5 million, or ~~1.1%~~0.1%.

Net sales revenue from our Leadership Brands was ~~$451.5~~$402.3 million, compared to ~~$507.0~~$435.2 million for the same period last year, representing a decrease of ~~10.9%.~~

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

Consolidated net sales revenue decreased $53.3 million, or 3.2%, to $1,588.1 million, compared to $1,641.3 million. The decline was driven by a decrease from Organic business of $206.9 million, or 12.6%, primarily reflecting:

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

•the unfavorable comparative impacts of approximately $20 million from retailers that accelerated orders into the fourth quarter of fiscal 2022, approximately $15 million from orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of the late-February winter storm in the U.S. (“Winter Storm Uri”) that were shipped in the first quarter of fiscal 2022 and approximately $15 million of earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and

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

~~These factors were partially offset by:~~

•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 heaters and humidification product 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.~~

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

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

~~Net sales revenue from our Leadership Brands was $1,338.8 million, compared to $1,329.9 million for the same period last year, representing an increase of 0.7%~~7.6%.

Segment Net Sales Revenue

Home & Outdoor

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Net sales revenue decreased ~~$17.2~~$17.1 million, or ~~7.0%~~7.3%, to ~~$228.9~~$217.1 million, compared to ~~$246.1~~$234.3 million. The decrease was driven by a decline from Organic business of $16.8 million, or 7.2%, primarily due to lower home category sales in the club channel, reduced sales to Bed, Bath & Beyond as a result of their bankruptcy and a decline in the insulated beverage category.

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These factors were partially offset by an increase in online channel sales reflecting improved replenishment orders from certain online retail customers and stronger consumer demand for travel-related products.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $0.4 million, or 0.2%.

Beauty & Wellness

Comparison of First Quarter Fiscal 2024 to First Quarter Fiscal 2023

Net sales revenue decreased $16.3 million, or 5.9%, to $257.5 million, compared to $273.8 million. The decline was driven by a decrease from Organic business of ~~$57.3~~$22.2 million, or ~~23.3%~~8.1%, ~~primarily due to:~~

•~~declines in sales~~ primarily due to lower sales of seasonal fans, hair appliances, and air filtration and humidification products primarily driven by our SKU rationalization efforts, softer consumer demand, ~~driven by~~ shifts in consumer spending patterns and reduced orders from retail customers ~~due to higher~~as they rebalance trade inventory ~~levels;~~levels.

The decline was partially offset by:

•an increase in sales of thermometry and prestige market hair care products;

•growth in international sales; and

•the ~~unfavorable~~favorable comparative impact of ~~earlier than typical customer orders~~shipping disruption in the ~~third quarter~~same period last year caused by a weather-related incident involving one of ~~fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and~~our ancillary distribution facilities.

•~~lower sales in the club channel.~~

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

The ~~Osprey~~Curlsmith acquisition contributed ~~$43.3~~$6.1 million, or ~~17.6%~~2.2%, to segment net sales revenue growth.

Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately ~~$3.2~~$0.1 million, or ~~1.3%.~~

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

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

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

•the unfavorable comparative impacts of retailers that accelerated orders into the fourth quarter of fiscal 2022, orders that were not able to be shipped at the end of the fourth quarter of fiscal 2021 due to the impact of Winter Storm Uri that were shipped in the first quarter of fiscal 2022 and earlier than typical customer orders in the third quarter of fiscal 2022 as retailers accelerated orders to try to avoid supply chain disruptions during the prior year holiday season; and

•~~lower sales in the club channel.~~

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

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

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~~Health & Wellness~~

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

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

~~These factors were partially offset by:~~

•~~an increase in sales of humidification products;~~

•~~growth in international sales; and~~

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

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

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

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

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

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

•~~a decrease in seasonal fan sales.~~

~~These factors were partially offset by:~~

•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;

•~~higher seasonal heaters and humidification product sales; and~~

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

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

~~Beauty~~

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

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

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

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

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

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

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

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

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

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

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

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

~~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 $26.5 million, or 6.1%, to segment net sales revenue growth.~~

~~Net sales revenue was unfavorably impacted by net foreign currency fluctuations of approximately $4.3 million, or 1.0%~~0.1%.

Consolidated Gross Profit Margin

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Consolidated gross profit margin increased ~~2.1~~3.8 percentage points to ~~45.9%~~45.4%, compared to ~~43.8%~~41.6%. The increase in consolidated gross profit margin was primarily due to:

•the favorable comparative impact of EPA compliance costs of $9.5 million incurred in the prior year period;

•a more favorable product mix within Beauty & Wellness reflecting the benefits of ~~more Home & Outdoor sales within our consolidated net sales revenue;~~SKU rationalization;

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

•~~a more favorable product mix within the Beauty segment primarily due to the acquisition of Curlsmith.~~lower inbound freight costs.

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

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

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

~~These factors were partially offset by:~~

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

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

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

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

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Consolidated SG&A

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Consolidated SG&A ratio increased ~~0.9~~0.4 percentage points to ~~30.3%~~35.3%, compared to ~~29.4%~~34.9%. The increase in the consolidated SG&A ratio was primarily due to:

•a charge of $4.2 million related to the bankruptcy of Bed, Bath & Beyond;

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

•~~higher salary~~an increase in annual incentive compensation expense; and ~~wage costs;~~

•~~higher marketing expense;~~

•~~increased amortization expense;~~

•higher outbound freight ~~costs; and~~

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

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These factors were partially offset by:

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

•~~reduced annual incentive compensation expense;~~

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

•~~a decrease in~~ EPA compliance costs of ~~$2.9~~$2.2 million incurred in the ~~Health & Wellness segment;~~prior year period;

•lower share-based compensation expense; and

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

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

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

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

•~~higher distribution expense;~~

•~~increased salary and wage costs;~~

•~~higher marketing expense;~~

•~~increased amortization expense;~~

•~~an increase in outbound freight costs; and~~

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

~~These factors were partially offset by:~~

•~~reduced annual incentive compensation expense;~~

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

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

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

Restructuring Charges

During the three ~~and nine~~ month ~~periods~~period ended ~~November 30, 2022,~~May 31, 2023, we incurred ~~$10.5~~$7.4 million ~~and $15.2 million, respectively,~~ of pre-tax restructuring costs in connection with Project Pegasus, which were ~~recorded as “Restructuring charges” in the condensed consolidated statements of income and were~~ primarily comprised of professional fees, and ~~severance and employee related costs.~~made total cash restructuring payments of $9.4 million. We ~~recognized an insignificant amount and $0.4~~had a remaining liability of $4.6 million ~~respectively,~~as of pre-tax restructuring costs during the three and nine month periods ended November 30, 2021, under a prior restructuring plan referred to as Project Refuel, which was completed during the fourth quarter of fiscal 2022.May 31, 2023.

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

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


		Three Months Ended November 30, 2022																	Three Months Ended May 31, 2023
(in thousands)	(in thousands)	Home & Outdoor (1)				Health & Wellness				Beauty (2)				Total				(in thousands)	Home & Outdoor				Beauty & Wellness (1)	Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	30,847	13.5	%	$	21,257	11.8	%	$	25,089	16.8	%	$	77,193	13.8	%	Operating income, as reported (GAAP)	$	22,116	10.2	%		$	18,525	7.2	%	$	40,641	8.6	%

Acquisition-related expenses		(2)		—	%	—		—	%	2		—	%	—		—	%
EPA compliance costs		—		—	%	2,103		1.2	%	—		—	%	2,103		0.4	%
Gain from insurance recoveries		—		—	%	(8,167)		(4.5)	%	(1,509)		(1.0)	%	(9,676)		(1.7)	%

Bed, Bath & Beyond bankruptcy																		Bed, Bath & Beyond bankruptcy	3,087		1.4	%		1,126		0.4	%	4,213		0.9	%
Restructuring charges	Restructuring charges	5,090		2.2	%	2,893		1.6	%	2,480		1.7	%	10,463		1.9	%	Restructuring charges	2,790		1.3	%		4,565		1.8	%	7,355		1.5	%
Subtotal	Subtotal	35,935		15.7	%	18,086		10.0	%	26,062		17.5	%	80,083		14.3	%	Subtotal	27,993		12.9	%		24,216		9.4	%	52,209		11.0	%
Amortization of intangible assets	Amortization of intangible assets	1,756		0.8	%	582		0.3	%	2,314		1.6	%	4,652		0.8	%	Amortization of intangible assets	1,777		0.8	%		2,880		1.1	%	4,657		1.0	%
Non-cash share-based compensation	Non-cash share-based compensation	2,169		0.9	%	2,665		1.5	%	3,107		2.1	%	7,941		1.4	%	Non-cash share-based compensation	4,498		2.1	%		4,799		1.9	%	9,297		2.0	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	39,860	17.4	%	$	21,333	11.8	%	$	31,483	21.1	%	$	92,676	16.6	%	Adjusted operating income (non-GAAP)	$	34,268	15.8	%		$	31,895	12.4	%	$	66,163	13.9	%

Three Months Ended November 30, 2021
(in thousands) Home &
Outdoor Health & Wellness Beauty Total
Operating income, as reported (GAAP) $ 43,239 17.6 % $ 13,573 6.7 % $ 33,228 19.0 % $ 90,040 14.4 %
Acquisition-related expenses 1,605 0.7 % — — % — — % 1,605 0.3 %
EPA compliance costs — — % 4,926 2.4 % — — % 4,926 0.8 %
Restructuring charges — — % — — % 5 — % 5 — %
Subtotal 44,844 18.2 % 18,499 9.1 % 33,233 19.0 % 96,576 15.5 %
Amortization of intangible assets 525 0.2 % 572 0.3 % 1,897 1.1 % 2,994 0.5 %
Non-cash share-based compensation 2,339 1.0 % 2,717 1.3 % 1,493 0.9 % 6,549 1.0 %
Adjusted operating income (non-GAAP) $ 47,708 19.4 % $ 21,788 10.7 % $ 36,623 20.9 % $ 106,119 17.0 %

Nine Months Ended November 30, 2022
(in thousands) Home &
Outdoor (1) Health &
Wellness Beauty (2) Total
Operating income, as reported (GAAP) $ 102,722 14.6 % $ 12,505 2.4 % $ 42,851 12.1 % $ 158,078 10.0 %
Acquisition-related expenses 117 — % — — % 2,667 0.8 % 2,784 0.2 %
EPA compliance costs — — % 22,101 4.2 % — — % 22,101 1.4 %
Gain from insurance recoveries — — % (8,167) (1.5) % (1,509) (0.4) % (9,676) (0.6) %
Restructuring charges 5,562 0.8 % 6,447 1.2 % 3,232 0.9 % 15,241 1.0 %
Subtotal 108,401 15.4 % 32,886 6.2 % 47,241 13.3 % 188,528 11.9 %
Amortization of intangible assets 5,255 0.7 % 1,743 0.3 % 6,664 1.9 % 13,662 0.9 %
Non-cash share-based compensation 10,807 1.5 % 11,078 2.1 % 10,170 2.9 % 32,055 2.0 %
Adjusted operating income (non-GAAP) $ 124,463 17.7 % $ 45,707 8.6 % $ 64,075 18.1 % $ 234,245 14.8 %

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		Nine Months Ended November 30, 2021																	Three Months Ended May 31, 2022
(in thousands)	(in thousands)	Home & Outdoor				Health & Wellness				Beauty				Total				(in thousands)	Home & Outdoor				Beauty & Wellness (1)	Total
Operating income, as reported (GAAP)	Operating income, as reported (GAAP)	$	112,303	17.1	%	$	29,616	5.4	%	$	80,247	18.4	%	$	222,166	13.5	%	Operating income, as reported (GAAP)	$	29,793	12.7	%		$	4,146	1.5	%	$	33,939	6.7	%

Acquisition-related expenses	Acquisition-related expenses	1,605		0.2	%	—		—	%	—		—	%	1,605		0.1	%	Acquisition-related expenses	78		—	%		2,676		1.0	%	2,754		0.5	%

EPA compliance costs	EPA compliance costs	—		—	%	20,998		3.8	%	—		—	%	20,998		1.3	%	EPA compliance costs	—		—	%		11,644		4.3	%	11,644		2.3	%
Restructuring charges	Restructuring charges	369		0.1	%	—		—	%	11		—	%	380		—	%	Restructuring charges	—		—	%		2		—	%	2		—	%
Subtotal	Subtotal	114,277		17.4	%	50,614		9.2	%	80,258		18.4	%	245,149		14.9	%	Subtotal	29,871		12.8	%		18,468		6.7	%	48,339		9.5	%
Amortization of intangible assets	Amortization of intangible assets	1,562		0.2	%	1,709		0.3	%	5,692		1.3	%	8,963		0.5	%	Amortization of intangible assets	1,746		0.7	%		2,615		1.0	%	4,361		0.9	%
Non-cash share-based compensation	Non-cash share-based compensation	11,047		1.7	%	10,229		1.9	%	7,073		1.6	%	28,349		1.7	%	Non-cash share-based compensation	5,998		2.6	%		10,621		3.9	%	16,619		3.3	%
Adjusted operating income (non-GAAP)	Adjusted operating income (non-GAAP)	$	126,886	19.4	%	$	62,552	11.4	%	$	93,023	21.3	%	$	282,461	17.2	%	Adjusted operating income (non-GAAP)	$	37,615	16.1	%		$	31,704	11.6	%	$	69,319	13.6	%

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

~~(2)The three and nine month periods ended November 30, 2022 include approximately thirteen and thirty-two weeks~~May 31, 2023 includes a full quarter of operating results from Curlsmith, ~~respectively, which was~~ acquired on April 22, 2022, compared to approximately six weeks of operating results in the three month period ended May 31, 2022. For additional information see Note 43 to the accompanying condensed consolidated financial statements.

Consolidated Operating Income

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Consolidated operating income was ~~$77.2~~$40.6 million, or ~~13.8%~~8.6% of net sales revenue, compared to ~~$90.0~~$33.9 million, or ~~14.4%~~6.7% of net sales revenue. The ~~0.6~~1.9 percentage point ~~decrease~~increase in consolidated operating margin was primarily due to:

•~~unfavorable operating leverage;~~

•~~restructuring charges of $10.5 million;~~

•the ~~unfavorable~~favorable comparative 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;~~

•~~higher salary and wage costs;~~

•~~higher outbound freight costs;~~

•~~increased amortization expense; and~~

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

~~These factors were partially offset by:~~

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

•~~reduced annual incentive compensation expense;~~

•~~a decrease in~~ EPA compliance costs of ~~$2.8~~$11.6 million incurred in the ~~Health & Wellness segment;~~prior year period;

•lower share-based compensation expense;

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

•a more favorable ~~customer~~product mix within Beauty & Wellness reflecting the ~~Home & Outdoor segment; and~~benefits of SKU rationalization;

•a more favorable ~~product~~customer mix within ~~the Beauty segment primarily due to the acquisition of Curlsmith.~~Home & Outdoor; and

•

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

lower inbound freight costs.

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

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

•~~unfavorable operating leverage;~~

•~~higher distribution expense;~~

•~~increased salary and wage costs;~~

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

•~~an increase in~~ restructuring charges of ~~$14.9~~$7.4 million;

•higher ~~marketing~~inventory obsolescence expense;

•a charge of $4.2 million related to the bankruptcy of Bed, Bath & Beyond;

•increased ~~amortization~~annual incentive compensation expense;

•an increase in outbound freight costs; and

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

~~These factors were partially offset by:~~

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

•~~reduced annual incentive compensation expense;~~

•~~a gain from insurance recoveries of $9.7 million;~~

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

•~~a more favorable customer mix within the Home & Outdoor segment.~~unfavorable operating leverage.

Consolidated adjusted operating income decreased ~~17.1%~~4.6% to ~~$234.2~~$66.2 million, or ~~14.8%~~13.9% of net sales revenue, compared to ~~$282.5~~$69.3 million, or ~~17.2%~~13.6% of net sales revenue.

Home & Outdoor

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Operating income was ~~$30.8~~$22.1 million, or ~~13.5%~~10.2% of segment net sales revenue, compared to ~~$43.2~~$29.8 million, or ~~17.6% of segment net sales revenue. The 4.1 percentage point decrease in segment operating margin was primarily due to:~~

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

•~~increased salary and wage costs;~~

•~~restructuring charges of $5.1 million; and~~

•~~unfavorable operating leverage.~~

~~These factors were partially offset by:~~

•~~reduced annual incentive compensation expense;~~

•~~a decrease in distribution expense;~~

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

•~~lower inventory obsolescence expense; and~~

•~~a more favorable customer mix.~~

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

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

~~Operating income was $102.7 million, or 14.6% of segment net sales revenue, compared to $112.3 million, or 17.1%~~12.7% of segment net sales revenue. The 2.5 percentage point decrease in segment operating margin was primarily due to:

•a charge of $3.1 million related to the ~~impact~~bankruptcy of ~~the acquisition~~Bed, Bath & Beyond;

•restructuring charges of ~~Osprey, which has a lower operating margin than the rest of the Home & Outdoor segment;~~$2.8 million;

•higher distribution expense;

•increased marketing expense;

•higher inventory obsolescence expense;

•an increase in ~~distribution expense;~~

•~~higher salary and wage~~outbound freight costs; and

•~~an increase in restructuring charges of $5.2 million.~~unfavorable operating leverage.

These factors were partially offset ~~by:~~

•by lower share-based compensation expense, a more favorable customer ~~mix;~~mix and

•~~reduced annual incentive compensation expense.~~ lower inbound freight costs.

Adjusted operating income decreased ~~1.9%~~8.9% to ~~$124.5~~$34.3 million, or ~~17.7%~~15.8% of segment net sales revenue, compared to ~~$126.9~~$37.6 million, or ~~19.4%~~16.1% of segment net sales revenue.

~~Health~~Beauty & Wellness

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Operating income was ~~$21.3~~$18.5 million, or ~~11.8%~~7.2% of segment net sales revenue, compared to ~~$13.6~~$4.1 million, or ~~6.7%~~1.5% of segment net sales revenue. The ~~5.1~~5.7 percentage point increase in segment operating margin was primarily due to:

•~~a gain from insurance recoveries on damaged inventory~~the favorable comparative impact of ~~$8.2 million;~~

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

•~~lower inventory obsolescence expense;~~

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

•~~decreased annual incentive compensation expense;~~

•~~reduced salary and wage costs;~~

•~~lower outbound freight costs; and~~

•~~an increase in duty refunds received.~~

~~These factors were partially offset by:~~

•~~unfavorable operating leverage;~~

•~~restructuring charges of $2.9 million; and~~

•~~higher distribution expense.~~

~~Adjusted operating income decreased 2.1% to $21.3~~$11.6 million ~~or 11.8% of segment net sales revenue, compared to $21.8 million, or 10.7% of segment net sales revenue.~~

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

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

•~~higher distribution expense;~~

•~~unfavorable operating leverage;~~

•~~restructuring charges of $6.4 million;~~

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

•~~an increase in EPA compliance costs of $1.1 million;~~lower share-based compensation expense;

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

•lower distribution expense;

•reduced marketing expense;

•~~an increase~~a decrease in legal fees;

•~~an increase in share-based compensation expense;~~a more favorable product mix driven by our SKU rationalization efforts; and

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•~~increased outbound~~lower inbound freight costs.

These factors were partially offset by:

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

•~~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 26.9% to $45.7 million, or 8.6% of segment net sales revenue, compared to $62.6 million, or 11.4% of segment net sales revenue.~~

~~Beauty~~

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

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

•~~unfavorable operating leverage;~~

•~~increased salary and wage costs;~~obsolescence expense;

•restructuring charges of ~~$2.5~~$4.6 million;

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

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

•~~an increase in inventory obsolescence expense;~~

•~~higher distribution expense;~~

•~~increased outbound freight costs; and~~

•~~an increase in amortization expense.~~

~~These factors were partially offset by:~~

•~~decreased~~ annual incentive compensation expense;

•~~a gain from insurance recoveries on damaged inventory of $1.5 million;~~

•~~favorable foreign currency exchange rate impacts; and~~

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

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

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

Operating income was $42.9 million, or 12.1% of segment net sales revenue, compared to $80.2 million, or 18.4% of segment net sales revenue. The 6.3 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;~~

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

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

•~~restructuring charges of $3.2 million;~~

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

•~~an increase in amortization expense.~~

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~~These factors were partially offset by:~~

•~~decreased annual incentive compensation expense;~~a charge of $1.1 million related to the bankruptcy of Bed, Bath & Beyond;

•~~the gain from insurance recoveries on damaged inventory of $1.5 million;~~

•~~lower inventory obsolescence expense;~~an increase in outbound freight costs; and

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

Adjusted operating income ~~decreased 31.1%~~increased 0.6% to ~~$64.1~~$31.9 million, or ~~18.1%~~12.4% of segment net sales revenue, compared to ~~$93.0~~$31.7 million, or ~~21.3%~~11.6% of segment net sales revenue.

Interest Expense

Comparison of ~~Third~~First Quarter Fiscal ~~2023~~2024 to ~~Third~~First Quarter Fiscal ~~2022~~2023

Interest expense was ~~$13.1~~$14.1 million, compared to ~~$3.2~~$4.4 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.~~

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

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

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.

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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, ~~gain from insurance recoveries,~~ 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 November 30, 2022													Three Months Ended May 31, 2023
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	64,049	$	12,223	$	51,826	$	2.66	$	0.51	$	2.15	As reported (GAAP)	$	26,726	$	4,145	$	22,581	$	1.11	$	0.17	$	0.94

Acquisition-related expenses		—		—		—		—		—		—
EPA compliance costs		2,103		32		2,071		0.09		—		0.09
Gain from insurance recoveries		(9,676)		(121)		(9,555)		(0.40)		(0.01)		(0.40)

Bed, Bath & Beyond bankruptcy														Bed, Bath & Beyond bankruptcy	4,213		53		4,160		0.17		—		0.17
Restructuring charges	Restructuring charges	10,463		131		10,332		0.43		0.01		0.43		Restructuring charges	7,355		92		7,263		0.30		—		0.30

Subtotal	Subtotal	66,939		12,265		54,674		2.78		0.51		2.27		Subtotal	38,294		4,290		34,004		1.59		0.18		1.41
Amortization of intangible assets	Amortization of intangible assets	4,652		534		4,118		0.19		0.02		0.17		Amortization of intangible assets	4,657		606		4,051		0.19		0.03		0.17
Non-cash share-based compensation	Non-cash share-based compensation	7,941		474		7,467		0.33		0.02		0.31		Non-cash share-based compensation	9,297		641		8,656		0.39		0.03		0.36
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	79,532	$	13,273	$	66,259	$	3.30	$	0.55	$	2.75	Adjusted (non-GAAP)	$	52,248	$	5,537	$	46,711	$	2.16	$	0.23	$	1.94

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											24,078		Weighted average shares of common stock used in computing diluted EPS											24,134


		Three Months Ended November 30, 2021													Three Months Ended May 31, 2022
		Income						Diluted EPS							Income						Diluted EPS
(in thousands, except per share data)	(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax		(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	As reported (GAAP)	$	86,886	$	11,203	$	75,683	$	3.56	$	0.46	$	3.10	As reported (GAAP)	$	29,633	$	5,038	$	24,595	$	1.23	$	0.21	$	1.02

Acquisition-related expenses	Acquisition-related expenses	1,605		58		1,547		0.07		—		0.06		Acquisition-related expenses	2,754		2		2,752		0.11		—		0.11
EPA compliance costs	EPA compliance costs	4,926		74		4,852		0.20		—		0.20		EPA compliance costs	11,644		175		11,469		0.48		0.01		0.48
Restructuring charges	Restructuring charges	5		—		5		—		—		—		Restructuring charges	2		—		2		—		—		—

Subtotal	Subtotal	93,422		11,335		82,087		3.83		0.46		3.36		Subtotal	44,033		5,215		38,818		1.83		0.22		1.61
Amortization of intangible assets	Amortization of intangible assets	2,994		197		2,797		0.12		0.01		0.11		Amortization of intangible assets	4,361		490		3,871		0.18		0.02		0.16
Non-cash share-based compensation	Non-cash share-based compensation	6,549		784		5,765		0.27		0.03		0.24		Non-cash share-based compensation	16,619		1,084		15,535		0.69		0.04		0.64
Adjusted (non-GAAP)	Adjusted (non-GAAP)	$	102,965	$	12,316	$	90,649	$	4.22	$	0.50	$	3.72	Adjusted (non-GAAP)	$	65,013	$	6,789	$	58,224	$	2.70	$	0.28	$	2.41

Weighted average shares of common stock used in computing diluted EPS	Weighted average shares of common stock used in computing diluted EPS											24,399		Weighted average shares of common stock used in computing diluted EPS											24,122

Comparison of First Quarter Fiscal 2024 to First Quarter Fiscal 2023

Net income was $22.6 million, compared to $24.6 million. Diluted EPS was $0.94, compared to $1.02. Diluted EPS decreased primarily due to higher interest expense and lower operating income in Home & Outdoor, partially offset by higher operating income in Beauty & Wellness and a decrease in the effective income tax rate.

Adjusted income decreased $11.5 million, or 19.8%, to $46.7 million, compared to $58.2 million. Adjusted diluted EPS decreased 19.5% to $1.94, compared to $2.41.

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Nine Months Ended November 30, 2022
Income Diluted EPS
(in thousands, except per share data) Before Tax Tax Net of Tax Before Tax Tax Net of Tax
As reported (GAAP) $ 131,575 $ 24,482 $ 107,093 $ 5.46 $ 1.02 $ 4.45
Acquisition-related expenses 2,784 2 2,782 0.12 — 0.12
EPA compliance costs 22,101 332 21,769 0.92 0.01 0.90
Gain from insurance recoveries (9,676) (121) (9,555) (0.40) (0.01) (0.40)
Restructuring charges 15,241 192 15,049 0.63 0.01 0.62
Subtotal 162,025 24,887 137,138 6.73 1.03 5.69
Amortization of intangible assets 13,662 1,581 12,081 0.57 0.07 0.50
Non-cash share-based compensation 32,055 2,128 29,927 1.33 0.09 1.24
Adjusted (non-GAAP) $ 207,742 $ 28,596 $ 179,146 $ 8.63 $ 1.19 $ 7.44
Weighted average shares of common stock used in computing diluted EPS 24,086

Nine Months Ended November 30, 2021
Income Diluted EPS
(in thousands, except per share data) Before Tax Tax Net of Tax Before Tax Tax Net of Tax
As reported (GAAP) $ 212,843 $ 28,873 $ 183,970 $ 8.70 $ 1.18 $ 7.52
Acquisition-related expenses 1,605 58 1,547 0.07 — 0.06
EPA compliance costs 20,998 315 20,683 0.86 0.01 0.85
Restructuring charges 380 6 374 0.02 — 0.02
Subtotal 235,826 29,252 206,574 9.64 1.20 8.45
Amortization of intangible assets 8,963 603 8,360 0.37 0.02 0.34
Non-cash share-based compensation 28,349 2,355 25,994 1.16 0.10 1.06
Adjusted (non-GAAP) $ 273,138 $ 32,210 $ 240,928 $ 11.17 $ 1.32 $ 9.85
Weighted average shares of common stock used in computing diluted EPS 24,461

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

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

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

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

Net Income was $107.1 million, compared to $184.0 million. Diluted EPS was $4.45, compared to $7.52. Diluted EPS decreased primarily due to lower operating income, higher interest expense and an increase in the effective income tax rate, partially offset by lower weighted average diluted shares outstanding.

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

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 expenses, primarily

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SG&A, and working capital, predominantly for inventory purchases and the extension of credit to our retail customers. We have typically been able to 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 $121.1 million in cash from operations during the first quarter of fiscal 2024 and had ~~$45.3~~$38.9 million in cash and cash equivalents at ~~November 30, 2022.~~May 31, 2023. As of ~~November 30, 2022,~~May 31, 2023, the amount of cash and cash equivalents held by our foreign subsidiaries was ~~$34.1~~$34.6 million. During the first quarter of fiscal 2023, we acquired Curlsmith for $147.9 million in cash, net of cash acquired. The acquisition was funded with cash on hand and borrowings under our Credit Agreement. We have no existing activities involving special purpose entities or off-balance sheet financing.

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

We believe our short-term liquidity requirements will primarily consist of operating and working capital requirements, capital expenditures and interest payments on our debt. We ~~expect~~maintained elevated outstanding borrowings under the Credit Agreement during fiscal 2023 in ~~comparison to fiscal 2022 due to borrowings~~order to fund the acquisitions of Osprey and Curlsmith and the construction of our new distribution ~~center, coupled with~~facility. With the ~~impact~~completion of ~~lower consumer demand and shifts~~our new distribution facility in ~~consumer spending patterns.~~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 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

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

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Operating Activities

Operating activities provided net cash of ~~$49.5~~$121.1 million for the ~~nine~~three months ended ~~November 30, 2022,~~May 31, 2023, compared to net cash used of ~~$5.1~~$38.4 million for the same period last year. The increase in cash provided by operating activities was primarily driven by decreases in cash used for inventory purchases, ~~and~~ accounts receivable ~~to extend credit to our retail customers,~~and annual incentive compensation payments, partially offset by ~~a decrease~~increases in cash ~~earnings~~paid primarily for interest and ~~an increase in cash used for income taxes.~~restructuring activities.

Investing Activities

Investing activities used net cash of ~~$290.7~~$11.6 million during the ~~nine~~three months ended ~~November 30, 2022,~~May 31, 2023, compared to net cash used of $222.5 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 in the first quarter of fiscal 2024. We made investments in capital and intangible asset expenditures of $11.9 million during the three months ended May 31, 2023, compared to $76.2 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 $99.6 million during the three months ended May 31, 2023, compared to net cash provided of ~~$8.5~~$276.8 million for the same period last year. The increase in cash used by investing activities was primarily due to the acquisition of Curlsmith during the first quarter of fiscal 2023, an increase in capital and intangible asset expenditures and the comparative impact of proceeds received from the sale of our North America Personal Care business in the prior year period. We made investments in capital and intangible asset expenditures of $146.2 million during the nine months ended November 30, 2022, compared to $41.5 million for 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 $253.1 million during the nine months ended November 30, 2022, compared to net cash used of $4.2 million for the same period last year. The increase in cash provided by financing activities is primarily due to ana net increase in ~~net proceeds from~~repayments made on our revolving loans under the Credit ~~Agreement, including net proceeds from the term loans, and a decrease in open market repurchases of common stock.~~Agreement.

Credit Agreement ~~and Other Debt Agreements~~

~~Credit Agreement~~

~~Our 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. On~~a $300 million accordion, which can be used for term loan commitments. In June ~~28,~~ 2022, we ~~entered into an amendment to~~exercised $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 relating~~were used to ~~a qualified acquisition, which triggered temporary adjustments to~~repay revolving loans under the ~~maximum leverage ratio as further described below.~~Credit Agreement. The term loans ~~will be~~are payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans made, ~~beginning~~which 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

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~~March 13, 2025, which is the same maturity date as~~and 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~~

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 for~~outstanding principal balance under the ~~qualified acquisition, the maximum leverage ratio is 4.00 to 1.00 through February 28, 2023, 3.75 to 1.00 through~~revolving loans as of May 31, 2023 and ~~3.50~~February 28, 2023, respectively. For additional information regarding our interest rate swaps, see Notes 10, 11, and 12 to ~~1.00 thereafter.~~

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

As of ~~November 30, 2022,~~May 31, 2023, the outstanding ~~revolving loan~~Credit Agreement principal balance was ~~$1,068.4~~$839.3 million (excluding prepaid financing fees), the balance of outstanding letters of credit was $18.2 million and the amount

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available for borrowings under the Credit Agreement was ~~$411.8~~$637.8 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As a result of our exercise of the qualified acquisition notice under the Credit Agreement, as of ~~November 30, 2022,~~May 31, 2023, these covenants effectively limited our ability to incur more than ~~$262.2~~$343.0 million of additional debt from all sources, including the Credit Agreement.

~~Other Debt Agreements~~

~~On August 26, 2022,~~As of May 31, 2023, we ~~entered into an amendment to the loan agreement for the unsecured MBFC Loan to, among other things, replace LIBOR~~were in compliance with ~~Term SOFR (as~~all covenants 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)~~terms of ~~0% to 1.0% and 1.0% to 2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings.~~

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

All of our debt 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.

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~~New~~Critical Accounting ~~Guidance~~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 ~~information on recently adopted~~a discussion of the estimates that we consider to meet this definition and ~~issued accounting pronouncements, see Note 2 to~~represent our more critical estimates and assumptions used in the ~~accompanying condensed~~preparation of our consolidated financial ~~statements.~~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 ~~speak~~are only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We believe that these risks include but are not limited to the risks described or referenced in this report and that are otherwise described from time to time in our SEC reports as filed. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

Such risks are not limited to, but may include:

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

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

•the geographic concentration ~~and peak season capacity~~ of certain U.S. distribution facilities which ~~increase~~increases 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;

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

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

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

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

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~~conditions;~~

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

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

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

•~~expectations regarding our global restructuring plan initiatives and~~ our ability to execute and realize ~~targeted savings,~~expected synergies from strategic business initiatives such as acquisitions, divestitures and global restructuring plans, including ~~expectations concerning costs and savings, are based on management’s estimates available at the time and are subject to a number of assumptions that could materially impact our estimates;~~

•expectations regarding recent acquisitions (including Curlsmith and Osprey) and any future acquisitions or divestitures, including our ability to realize related synergies along with our ability to effectively integrate acquired businesses or disaggregate divested businesses;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 classification~~dependence 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 November 30, 2022, we would incur an increase to our annual interest expense, net of the effect of our interest rate swaps, of approximately $9.6 million.10-K. Additional information regarding our risk management activities can be found in Notes 9, 10 11 and 1211 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 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 ~~November 30, 2022.~~May 31, 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 ~~November 30, 2022,~~May 31, 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 ~~November 30, 2022,~~May 31, 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 8 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 and in Part II, Item 1A. “Risk Factors” of our Form 10-Q for the period ended August 31, 2022 (our “Q2 Form 10-Q”).~~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 set forth in our Q2 Form 10-Q.~~therein.

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

In August 2021, our Board of Directors authorized the repurchase of up to $500 million of our outstanding common stock. The authorization became effective August 25, 2021, for a period of three years, and replaced our former repurchase authorization. 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 76 to the accompanying condensed consolidated financial statements for additional information.

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


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
March 1 through March 31, 2023	8,723	$	110.30	8,723	$	402,660
April 1 through April 30, 2023	190	90.01		190	402,643
May 1 through May 31, 2023	35,719	97.05		35,719	399,177
Total	44,632	$	99.61	44,632

(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 November 30, 2022,~~periods presented, there were no common stock open market ~~purchases.~~repurchases.

(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 76 to the accompanying condensed consolidated financial statements.

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ITEM 6.

EXHIBITS

(a)

Exhibits

~~10.1~~10.1†

~~Fifth Amendment to Amended and Restated Credit~~Employment Agreement ~~dated November 2, 2022, by and~~ among Helen of Troy ~~Texas~~Limited, Helen of Troy Nevada Corporation ~~a Texas corporation, the Company, Bank of America, N.A., as administrative agent,~~ and ~~the other lenders party thereto~~Noel Geoffroy, dated April 25, 2023 (incorporated by reference to Exhibit 10.1 to the ~~Company’s~~Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on ~~November 4, 2022)~~April 26, 2023).

31.1*

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

31.2*

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

32**

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

101

Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended ~~November 30, 2022,~~May 31, 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.

104

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

* Filed herewith.

** Furnished herewith.

† Management contract or compensatory plan or arrangement.

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SIGNATURES

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


		HELEN OF TROY LIMITED
		(Registrant)

Date:	~~January 6,~~July 10, 2023	/s/ Julien R. Mininberg
		Julien R. Mininberg
		Chief Executive Officer, Director and Principal Executive Officer

Date:	~~January 6,~~July 10, 2023	/s/ ~~Matthew J. Osberg~~Brian L. Grass
		~~Matthew J. Osberg~~Brian L. Grass
		Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer

6247


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

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


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