HELEN OF TROY LTD

Previous wording

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 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 29, 2024 (“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.

Current wording

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 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 29, 2024 (“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. References to “fiscal” in connection with a numeric year number denotes our fiscal year ending on the last day of February, during the year number listed.

Previous wording

During fiscal 2023, we initiated a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and effectiveness and reduce costs (referred to as “Project Pegasus”). Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate and amplify 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 periods ended May 31, 2024 and 2023, we incurred $1.8 million and $7.4 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were recorded as “Restructuring charges” in the condensed consolidated statements of income. See further discussion below within “Significant Trends Impacting the Business” under “Project Pegasus” and Note 6 to the accompanying condensed consolidated financial statements.

Current wording

During fiscal 2023, we initiated a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and effectiveness and reduce costs (referred to as “Project Pegasus”). Project Pegasus includes initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate and amplify cost of goods savings projects, enhance the efficiency of our supply chain network, optimize our indirect spending and improve our cash flow and working capital, as well as other activities. We anticipate these initiatives will create operating efficiencies, as well as provide a platform to fund future growth investments. During the three and six month periods ended August 31, 2024, we incurred $1.5 million and $3.4 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. We recognized $3.6 million and $11.0 million of pre-tax restructuring costs during the three and six month periods ended August 31, 2023, respectively, in connection with Project Pegasus. See further discussion below within “Significant Trends Impacting the Business” under “Project Pegasus” and Note 6 to the accompanying condensed consolidated financial statements.

Previous wording

Fiscal 2024 concluded Phase II of our transformation strategy, which produced net sales and organic net sales growth and gross profit margin expansion. We expanded our portfolio of leading brands and international footprint with the acquisitions of Drybar, Osprey and Curlsmith. We completed the divestiture of our personal care business and extended our Revlon trademark license for a period of up to 100 years. We strategically and effectively deployed capital to construct our new distribution facility in Gallaway, Tennessee, repurchased shares of our common stock, and repaid amounts outstanding under our long-term debt agreement. We began publishing an annual environmental, social and governance (“ESG”) Report, which summarizes our ESG strategy and performance, providing further transparency into our ESG efforts. During Phase II, we also initiated Project Pegasus, which included 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 United States of America (“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.

Current wording

Fiscal 2024 concluded Phase II of our transformation strategy, which produced net sales growth and gross profit margin expansion. We expanded our portfolio of leading brands and international footprint with the acquisitions of Drybar, Osprey and Curlsmith. We completed the divestiture of our personal care business and extended our Revlon trademark license for a period of up to 100 years. We strategically and effectively deployed capital to construct our new distribution facility in Gallaway, Tennessee, repurchased shares of our common stock, and repaid amounts outstanding under our long-term debt agreement. We began publishing an annual environmental, social and governance (“ESG”) Report, which summarizes our ESG strategy and performance, providing further transparency into our ESG efforts. During Phase II, we also initiated Project Pegasus, which included 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 United States of America (“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.

Previous wording

Fiscal 2025 begins our Elevate for Growth Strategy, which provides our strategic roadmap through fiscal 2030. The long-term objectives of Elevate for Growth include continued organic sales growth, further margin expansion, and accretive capital deployment through strategic acquisitions, share repurchases and capital structure management. The Elevate for Growth Strategy includes an enhanced portfolio management strategy to invest in our brands and grow internationally based upon defined criteria with an emphasis on brand building, new product introductions and expanded distribution. We are continuing to execute our initiatives under Project Pegasus, which we expect to generate incremental fuel to invest in our brand portfolio and new capabilities. We intend to further leverage our operational scale and assets, including our new state-of-the-art distribution center, improved go-to-market structure with our North America RMO, and our expanded shared services capabilities. We also plan to complete the geographic consolidation of our Beauty & Wellness businesses, create a centralized marketing organization that embraces next-level data analytics and consumer insight capabilities, and further integrate our supply chain and finance functions within our shared services. Additionally, we are committed to fostering a winning culture and continuing our ESG and diversity, equity, inclusion and belonging (“DEI&B”) efforts to support our Elevate for Growth Strategy.

Current wording

Fiscal 2025 begins our Elevate for Growth Strategy, which provides our strategic roadmap through fiscal 2030. The long-term objectives of Elevate for Growth include continued organic sales growth, further margin expansion, and accretive capital deployment through strategic acquisitions, share repurchases and capital structure management. The Elevate for Growth Strategy includes an enhanced portfolio management strategy to invest in our brands and grow internationally based upon defined criteria with an emphasis on brand building, new product introductions and expanded distribution. We are continuing to execute our initiatives under Project Pegasus, which we expect to generate incremental fuel to invest in our brand portfolio and new capabilities. We intend to further leverage our operational scale and assets, including our new state-of-the-art distribution center, improved go-to-market structure with our North America RMO, and our expanded shared services capabilities. We also plan to complete the geographic consolidation of our Beauty & Wellness businesses, create a centralized marketing organization that embraces next-level data analytics and consumer insight capabilities, and further integrate our supply chain and finance functions within our shared services. Additionally, we are committed to fostering a winning culture and continuing our sustainability and inclusion efforts to support our Elevate for Growth Strategy.

Previous wording

In addition, we implemented plans to reduce inventory levels, increase inventory turns, and improve cash flow and working capital during fiscal 2023. Improvements related to these initiatives began in the second half of fiscal 2023, and continued during fiscal 2024, enabling us to repay amounts outstanding under our long-term debt agreement and reduce our interest expense during fiscal 2024. During the first quarter of fiscal 2024, our gross margin was favorably impacted by our SKU rationalization efforts in Beauty & Wellness. In addition, during the first quarter of fiscal 2025, our gross margin and operating margins were favorably impacted by lower commodity and product costs driven by our cost of goods savings projects. 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.

Current wording

In addition, we implemented plans to reduce inventory levels, increase inventory turns, and improve cash flow and working capital during fiscal 2023. Improvements related to these initiatives began in the second half of fiscal 2023, and continued during fiscal 2024, enabling us to repay amounts outstanding under our long-term debt agreement and reduce our interest expense during fiscal 2024. During the first and second quarters of fiscal 2024, our gross margin and operating margins were favorably impacted by our SKU rationalization efforts in Beauty & Wellness. In addition, during the first and second quarters of fiscal 2025, our gross margin and operating margins were favorably impacted by lower commodity and product costs driven by our cost of goods savings projects. 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.

Previous wording

During the three month periods ended May 31, 2024 and 2023, we incurred $1.8 million and $7.4 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. We made total cash restructuring payments of $3.0 million and $9.4 million during the three month periods ended May 31, 2024 and 2023, respectively, and had a remaining liability of $3.6 million as of May 31, 2024. See Note 6 to the accompanying condensed consolidated financial statements for additional information.

Current wording

During the three and six month periods ended August 31, 2024, we incurred $1.5 million and $3.4 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. We recognized $3.6 million and $11.0 million of pre-tax restructuring costs during the three and six month periods ended August 31, 2023, respectively, in connection with Project Pegasus. We made total cash restructuring payments of $5.6 million and $15.2 million during the six month periods ended August 31, 2024 and 2023, respectively, and had a remaining liability of $2.5 million as of August 31, 2024. See Note 6 to the accompanying condensed consolidated financial statements for additional information.

Previous wording

The Federal Open Market Committee increased the benchmark interest rate by 50 basis points and 25 basis points during the first and second quarters of fiscal 2024, respectively. As a result, we incurred higher average interest rates during the first quarter of fiscal 2025 compared to the same period last year. The Federal Open Market Committee has indicated that it may lower interest rates in fiscal 2025. While the actual timing and extent of future changes in interest rates remains unknown, lower average interest rates would reduce interest expense on our outstanding variable rate debt. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflicts 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 fiscal 2024 and the first quarter of fiscal 2025 and may continue to have an adverse impact during the remainder of fiscal year 2025. 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 and consumer confidence, any of which may adversely impact our results.

Current wording

The Federal Open Market Committee increased the benchmark interest rate by 50 basis points and 25 basis points during the first and second quarters of fiscal 2024, respectively. As a result, we incurred higher average interest rates during the first and second quarters of fiscal 2025 compared to the same periods last year. The Federal Open Market Committee lowered the benchmark interest rate by 50 basis points subsequent to the second quarter of fiscal 2025. While the actual timing and extent of additional future changes in interest rates remains unknown, lower average interest rates would reduce interest expense on our outstanding variable rate debt. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflicts 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 fiscal 2024 and the first and second quarters of fiscal 2025 and may continue to have an adverse impact during the remainder of fiscal 2025. 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 and consumer confidence, any of which may adversely impact our results.

Previous wording

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 67% and 72% of our consolidated net sales revenue was from U.S. shipments during the three month periods ended May 31, 2024 and 2023, respectively.

Current wording

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 73% and 74% of our consolidated net sales revenue was from U.S. shipments during the three month periods ended August 31, 2024 and 2023, respectively. For the six month periods ended August 31, 2024 and 2023, U.S. shipments were approximately 70% and 73% of our consolidated net sales revenue, respectively.

Previous wording

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. 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 fiscal year 2024, we experienced some improvement in replenishment orders from certain retail customers in certain product categories relative to fiscal 2023. However, during the first quarter of fiscal 2025, we experienced reduced replenishment orders from retail customers in line with softer consumer demand and discretionary spending, which adversely impacted our sales, results of operations and cash flows. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation and changes in consumer spending patterns. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Current wording

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. 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 fiscal 2024, we experienced some improvement in replenishment orders from certain retail customers in certain product categories relative to fiscal 2023. However, during the first and second quarters of fiscal 2025, we experienced reduced replenishment orders from retail customers in line with softer consumer demand and discretionary spending, which adversely impacted our sales, results of operations and cash flows. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation and changes in consumer spending patterns. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Previous wording

Our concentration of sales reflects the continued evolution of consumer shopping preferences. Our net sales to pure-play online retailers and retail customers fulfilling end-consumer online orders, as well as our own online sales directly to consumers (collectively “online channel net sales”) comprised approximately 25% of our total consolidated net sales revenue for the three month period ended May 31, 2024, and declined approximately 14% compared to the same period in the prior year. For the three month period ended May 31, 2023, our online channel net sales comprised approximately 26% of our total consolidated net sales revenue, and grew approximately 8% as compared to the same period in the prior year.

Current wording

Our concentration of sales reflects the continued evolution of consumer shopping preferences. Our net sales to pure-play online retailers and retail customers fulfilling end-consumer online orders, as well as our own online sales directly to consumers (collectively “online channel net sales”) comprised approximately 29% and 27% of our total consolidated net sales revenue for the three and six month periods ended August 31, 2024, respectively. Our online channel net sales grew approximately 1% for the three month period ended August 31, 2024 and declined approximately 6% for the six month period ended August 31, 2024 compared to the same periods in the prior year. For the three and six month periods ended August 31, 2023, our online channel net sales comprised approximately 27% and 26% of our total consolidated net sales revenue, respectively, and grew approximately 17% and 12%, respectively, compared to the same periods in the prior year.

Previous wording

With the continued importance of online sales 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 has become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, including increasing our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers. In March 2023, we completed the construction of an additional distribution facility in Gallaway, Tennessee that became operational during the first quarter of fiscal 2024 and includes state-of-the-art automation suited to fulfill direct-to-consumer and online channel orders. During the first quarter of fiscal 2025, we experienced automation system startup issues at the Tennessee distribution facility which impacted some of our Home & Outdoor segment's small retail customer and direct-to-consumer orders. As a result, our sales were adversely impacted due to shipping disruptions, and we incurred additional costs and lost efficiency as we worked to remediate the issues. We expect the shipping disruption to continue through the second quarter of fiscal 2025. Additionally, we have invested in a centralized cloud-based e-commerce platform, which some of our brands are currently utilizing. The centralized cloud-based e-commerce platform will enable us to leverage a common system and rapidly deploy new capabilities across all of our brands, as well as more easily integrate new brands. We believe this platform enhances the customer experience by strengthening the digital presentation and product browsing capabilities and improving the checkout process, order delivery and post-order customer care.

Current wording

With the continued importance of online sales 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 has become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, including increasing our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers. To meet these needs, we completed the construction of an additional distribution facility in Gallaway, Tennessee that became partially operational during the first quarter of fiscal 2024. During the first quarter of fiscal 2025, we experienced automation system startup issues at the facility which impacted some of our Home & Outdoor segment's small retail customer and direct-to-consumer orders. As a result, our sales during the first quarter of fiscal 2025 were adversely impacted due to shipping disruptions, and we incurred additional costs and lost efficiency during both the first and second quarters of fiscal 2025 as we worked to remediate the issues. During the second quarter of fiscal 2025, the remediation efforts for the automation system were substantially completed, and we believe the impact on sales was minimal during the quarter.

Previous wording

During fiscal 2022 and 2023, we were in discussions with the U.S. Environmental Protection Agency (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 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. We resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we completed the repackaging and relabeling of our existing inventory of impacted 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 fiscal 2023. Ongoing settlement discussions with the EPA related to this matter may result in the imposition of fines or penalties in the future. Such potential fines or penalties cannot be estimated. See Note 7 to our condensed consolidated financial statements for additional information.

Current wording

During fiscal 2022 and 2023, we were in discussions with the U.S. Environmental Protection Agency (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 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. We resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we completed the repackaging and relabeling of our existing inventory of impacted 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 fiscal 2023. Ongoing settlement discussions with the EPA related to this matter may result in the imposition of fines or penalties in the future. Such potential fines or penalties cannot be estimated. See Note 7 to the accompanying condensed consolidated financial statements for additional information.

Previous wording

For the three months ended May 31, 2024, changes in foreign currency exchange rates had a favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $0.4 million, or 0.1%, compared to an unfavorable year-over-year impact of $0.5 million, or 0.1%, for the same period last year.

Current wording

For the three months ended August 31, 2024, changes in foreign currency exchange rates had an unfavorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $0.5 million, or 0.1%, compared to a favorable year-over-year impact of $1.4 million, or 0.3%, for the same period last year. For the six months ended August 31, 2024, changes in foreign currency exchange rates hadan unfavorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately$0.2 million, or less than 0.1%, compared to a favorable year-over-year impact of $0.9 million, or 0.1% for the same period last year.

Previous wording

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

Current wording

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

Previous wording

First Quarter Fiscal 2025 Financial Results

Current wording

Second Quarter Fiscal 2025 Financial Results

Previous wording

•Consolidated operating income decreased 24.3%, or $9.9 million, to $30.8 million for the three months ended May 31, 2024, compared to $40.6 million for the same period last year. Consolidated operating margin decreased 1.2 percentage points to 7.4% of consolidated net sales revenue for the three months ended May 31, 2024, compared to 8.6% for the same period last year.

Current wording

•Consolidated operating income decreased 25.0%, or $21.9 million, to $65.6 million for the six months ended August 31, 2024, compared to $87.5 million for the same period last year. Consolidated operating margin decreased 1.7 percentage points to 7.4% of consolidated net sales revenue for the six months ended August 31, 2024, compared to 9.1% for the same period last year.

Previous wording

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

Current wording

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

Previous wording

•a decline in sales of hair appliances, prestige hair care products and humidifiers in Beauty & Wellness primarily driven by softer consumer demand, shifts in consumer spending, increased competition in hair appliances and prestige hair care products, and reduced orders from retail customers; and

Current wording

•a decline in sales of hair appliances, prestige hair care products, humidifiers, and air purifiers in Beauty & Wellness primarily driven by softer consumer demand, shifts in consumer spending, reduced orders from retail customers and increased competition in hair appliances, prestige hair care products and air purification; and

Previous wording

•a decline in Home & Outdoor primarily due to lower replenishment orders from retail customers, softer consumer demand, shifts in consumer spending, a slowdown in the technical and everyday lifestyle pack categories, increased competition in the insulated beverageware category, and the impact of the shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders.

Current wording

•a decline in Home & Outdoor primarily due to lower replenishment orders from retail customers, softer consumer demand, increased competition in the insulated beverageware category, continued softness in technical packs and related accessories, and the impact of the shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders during the first quarter of fiscal 2025.

Previous wording

These factors were partially offset by international growth and higher sales of fans in Beauty & Wellness.

Current wording

These factors were partially offset by international growth and higher sales of fans and thermometers in Beauty & Wellness.

Previous wording

•an increase in international sales primarily driven by expanded retailer distribution in the insulated beverageware category.

Current wording

•expanded retailer distribution in the home category.

Previous wording

•the impact of the shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders.

Current wording

•the impact of the shipping disruption at our Tennessee distribution facility due to automation startup issues affecting some of the segment's small retail customer and direct-to-consumer orders during the first quarter of fiscal 2025.

Previous wording

•incremental sales from the launch of the travel tumbler in the second quarter of fiscal 2024; and

Current wording

•incremental sales from the launch of the travel tumbler in the second quarter of fiscal 2024.

Previous wording

These factors were partially offset by an increase in fan sales.

Current wording

These factors were partially offset by an increase in fan and thermometer sales.

Previous wording

•a decline in sales of hair appliances and prestige hair care products primarily due to softer consumer demand, shifts in consumer spending, increased competition and shipping disruption from Curlsmith system integration challenges;

Current wording

•a decline in sales of hair appliances and prestige hair care products primarily due to softer consumer demand, shipping disruption from Curlsmith system integration challenges, and increased competition;

Previous wording

•lower sales of humidifiers, primarily driven by reduced replenishment orders from retail customers due to a softer 2023/2024 illness season;

Current wording

•lower sales of humidifiers and air purifiers, primarily driven by reduced replenishment orders from retail customers due a decline in consumer demand, a softer 2023/2024 illness season and increased competition in air purification; and

Previous wording

Consolidated gross profit margin increased 3.3 percentage points to 48.7%, compared to 45.4%. The increase in consolidated gross profit margin was primarily due to:

Current wording

Consolidated gross profit margin increased 0.9 percentage points to 47.0%, compared to 46.1%. The increase in consolidated gross profit margin was primarily due to lower commodity and product costs, partly driven by Project Pegasus initiatives and favorable inventory obsolescence expense year-over-year.

Previous wording

Consolidated SG&A ratio increased 5.6 percentage points to 40.9%, compared to 35.3%. The increase in the consolidated SG&A ratio was primarily due to:

Current wording

Consolidated SG&A ratio increased 1.4 percentage points to 37.9%, compared to 36.5%. The increase in the consolidated SG&A ratio was primarily due to:

Previous wording

During the three month periods ended May 31, 2024 and 2023, we incurred $1.8 million and $7.4 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were primarily comprised of severance and employee related costs and professional fees, and made total cash restructuring payments of $3.0 million and $9.4 million, respectively. We had a remaining liability of $3.6 million as of May 31, 2024.

Current wording

During the three and six month periods ended August 31, 2024, we incurred $1.5 million and $3.4 million, respectively, of pre-tax restructuring costs in connection with Project Pegasus, which were primarily comprised of severance and employee related costs and professional fees. We recognized $3.6 million and $11.0 million of pre-tax restructuring costs during the three and six month periods ended August 31, 2023, respectively, in connection with Project Pegasus, which primarily included professional fees. During the six month periods ended August 31, 2024 and August 31, 2023, we made total cash restructuring payments of $5.6 million and $15.2 million, respectively. We had a remaining liability of $2.5 million as of August 31, 2024.

Previous wording

Operating income was $15.9 million, or 8.0% of segment net sales revenue, compared to $22.1 million, or 10.2% of segment net sales revenue. The 2.2 percentage point decrease in segment operating margin was primarily due to:

Current wording

Consolidated operating income was $34.9 million, or 7.3% of net sales revenue, compared to $46.8 million, or 9.5% of net sales revenue. The 2.2 percentage point decrease in consolidated operating margin was primarily due to:

Previous wording

Consolidated operating income was $30.8 million, or 7.4% of net sales revenue, compared to $40.6 million, or 8.6% of net sales revenue. The 1.2 percentage point decrease in consolidated operating margin was primarily due to:

Current wording

Consolidated operating income was $65.6 million, or 7.4% of net sales revenue, compared to $87.5 million, or 9.1% of net sales revenue. The 1.7 percentage point decrease in consolidated operating margin was primarily due to:

Previous wording

•a less favorable product mix within the segments and a less favorable customer mix within Home & Outdoor; and

Current wording

•a less favorable product mix within the segments and a less favorable customer mix within Home & Outdoor;

Previous wording

Adjusted operating income decreased 31.4% to $21.9 million, or 10.0% of segment net sales revenue, compared to $31.9 million, or 12.4% of segment net sales revenue.

Current wording

Consolidated adjusted operating income decreased 30.4% to $89.4 million, or 10.0% of net sales revenue, compared to $128.4 million, or 13.3% of net sales revenue.

Previous wording

•favorable inventory obsolescence expense year-over-year; and

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•unfavorable inventory obsolescence expense year-over-year; and

Previous wording

•a decrease in restructuring charges of $5.5 million.

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•a decrease in restructuring charges of $4.5 million; and

Previous wording

Interest expense was $12.5 million, compared to $14.1 million. The decrease in interest expense was primarily due to lower average borrowings outstanding, partially offset by a higher average effective interest rate compared to the same period last year.

Current wording

Interest expense was $13.2 million, compared to $13.7 million. The decrease in interest expense was primarily due to lower average borrowings outstanding, partially offset by a higher average effective interest rate compared to the same period last year.

Previous wording

In response to Pillar Two, on May 24, 2024, Barbados enacted a domestic corporate income tax rate of 9%, effective beginning with our fiscal year 2025. As a result, we incorporated this corporate income tax into our estimated annual effective tax rate increasing our income tax provision during the first quarter of fiscal 2025. In addition, we revalued our existing deferred tax liabilities subject to the Barbados legislation, which resulted in a discrete tax charge of $6.0 million during the first quarter of fiscal 2025. Additionally, Barbados enacted a domestic minimum top-up tax (“DMTT”) of 15% which applies to Barbados businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective beginning with our fiscal year 2026. We will continue to monitor and evaluate impacts as further regulatory guidance becomes available.

Current wording

In response to Pillar Two, on May 24, 2024, Barbados enacted a domestic corporate income tax rate of 9%, effective beginning with our fiscal year 2025. As a result, we incorporated this corporate income tax into our estimated annual effective tax rate increasing our income tax provision beginning in the first quarter of fiscal 2025. In addition, we revalued our existing deferred tax liabilities subject to the Barbados legislation, which resulted in a discrete tax charge of $6.0 million during the first quarter of fiscal 2025. Additionally, Barbados enacted a domestic minimum top-up tax (“DMTT”) of 15% which applies to Barbados businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective beginning with our fiscal year 2026. We will continue to monitor and evaluate impacts as further regulatory guidance becomes available.

Previous wording

For the three months ended May 31, 2024, income tax expense as a percentage of income before income tax was 66.1% compared to 15.5% for the same period last year. The year-over-year increase in the effective tax rate is primarily due to the Barbados tax legislation enacted during the first quarter of fiscal 2025, which resulted in a discrete tax charge of $6.0 million to revalue deferred tax liabilities and an increase in our income tax expense due to the change to our estimated annual effective tax rate arising from the legislation, partially offset by shifts in the mix of income in our various tax jurisdictions.

Current wording

For the three months ended August 31, 2024, income tax expense as a percentage of income before income tax was 22.0% compared to 17.9% for the same period last year. The year-over-year increase in the effective tax rate is primarily due to the Barbados tax legislation enacted during the first quarter of fiscal 2025, which resulted in an increase in our income tax expense due to the change to our estimated annual effective tax rate arising from the legislation, shifts in the mix of income in our various tax jurisdictions, and an increase in tax expense for discrete items. For the six months ended August 31, 2024, income tax expense as a percentage of income before income tax was 42.1% compared to 16.8% for the same period last year primarily due to the Barbados tax legislation described above, including a discrete tax charge of $6.0 million during the first quarter of fiscal 2025 to revalue deferred tax liabilities.

Previous wording

Net income was $6.2 million, compared to $22.6 million. Diluted EPS was $0.26, compared to $0.94. Diluted EPS decreased primarily due to lower operating income and an increase in the effective income tax rate, partially offset by a decrease in interest expense.

Current wording

Net income was $17.0 million, compared to $27.4 million. Diluted EPS was $0.74, compared to $1.14. Diluted EPS decreased primarily due to lower operating income and an increase in the effective income tax rate, partially offset by lower weighted average diluted shares outstanding and a decrease in interest expense.

Previous wording

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 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 $25.3 million in cash from operations during the first quarter of fiscal 2025 and had $16.1 million in cash and cash equivalents at May 31, 2024, substantially all of which was held by our foreign subsidiaries. We have no existing activities involving special purpose entities or off-balance sheet financing.

Current wording

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 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 $69.9 million in cash from operations during the first six months of fiscal 2025 and had $20.1 million in cash and cash equivalents at August 31, 2024. As of August 31, 2024, the amount of cash and cash equivalents held by our foreign subsidiaries was $14.3 million. We have no existing activities involving special purpose entities or off-balance sheet financing.