HELEN OF TROY LTD (HELE) FY 2022 MD&A

Item 7. 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 the other sections of this Annual Report, including Item 1., “Business” and Item 8., “Financial Statements and Supplementary Data.” 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 Item 1A.,“Risk Factors,” and in the section entitled “Information Regarding Forward-Looking Statements,” following this MD&A, and in Item 7A., “Quantitative and Qualitative Disclosures About Market Risk.” 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 asset impairment charges, acquisition-related expenses, EPA compliance costs, restructuring charges, tax reform, amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based measures presented in our consolidated statements of income. We believe that adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges and benefits on applicable income, margin and earnings per share measures. We also believe that these non-GAAP measures facilitate a more direct comparison of our performance to our competitors. We further believe that including the excluded charges and benefits would not accurately reflect the underlying performance of our operations for the period in which the charges and benefits are incurred, even though such charges and benefits may be incurred and reflected in our GAAP financial results in the near future. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS are not prepared in accordance with GAAP, are not an alternative to GAAP financial information and may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information. These non-GAAP measures are discussed further and reconciled to their applicable GAAP-based measures contained in this MD&A beginning on page 50.

We also refer to a number of other key financial measures, some of which are non-GAAP. Management primarily uses these measures to evaluate historical performance on a comparable basis, predict future performance and benchmark our performance against our competitors. Management also uses certain of these financial measures to calculate and monitor our compliance with the covenants in our Credit Agreement and determine amounts available for borrowings. We believe these measures provide management and investors with important information that is useful in understanding our business results, trends and the covenants in our Credit Agreement. The following represents our key financial measures:

•Accounts receivable turnover: Twelve-month trailing net sales revenue divided by the average of the current and prior four fiscal quarters’ ending accounts receivable balances. This result is divided by 365 days to express turnover in terms of average days outstanding.

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•Core business sales: Net sales revenue associated with strategic business that we expect to be an ongoing part of our operations.

•Current ratio: Current assets divided by current liabilities at the end of a reporting period, expressed as a ratio.

•EBITDA: Earnings before interest, taxes, depreciation and amortization expense.

•Ending debt to ending equity ratio: Total interest bearing short- and long-term debt divided by stockholders’ equity at the end of a reporting period, expressed as a ratio.

•Gross profit margin: Gross profit divided by the related net sales revenue expressed as a percentage.

•Inventory turnover: Trailing twelve month cost of goods sold divided by the average of the current and prior four fiscal quarters’ ending inventory balances to express turnover in terms of the number of times per year.

•Leadership Brand sales revenue, net: Net sales revenue from brands which 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.

•Leverage ratio: Total current and long-term debt plus outstanding letters of credit, divided by EBITDA plus non-cash charges and certain allowed addbacks, less certain non-cash income, plus the pro forma effect of acquisitions and certain pro forma run-rate cost savings for acquisitions and dispositions, as defined in our Credit Agreement.

•Non-Core business sales: Net sales revenue associated with business or net assets (including net assets held for sale) that we expect to divest within a year of its designation as Non-Core.

•Online channel net sales: Direct to consumer online net sales, net sales to retail customers fulfilling end-consumer online orders and net sales to pure-play online retailers.

•Operating margin: Operating income for the Company or a business segment divided by the related net sales revenue for the Company or a business segment.

•Organic business sales: Net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand was acquired, excluding the impact that foreign currency remeasurement had on reported net sales revenue.

•Return on average equity: Trailing twelve month net income divided by the average of the current and prior four fiscal quarters’ ending stockholders’ equity.

•SG&A ratio: Total selling, general and administrative expense (“SG&A”) divided by net sales revenue.

•Working capital: Current assets less current liabilities.

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Overview

We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. We have built leading market positions through new product innovation, product quality and competitive pricing. We currently operate in three segments consisting of Home & Outdoor, Health & Wellness and Beauty. In the fourth quarter of fiscal 2022, we changed the names of two of our segments to align with the growth in certain product offerings and brands within our portfolio. Our previously named “Housewares” segment was changed to “Home & Outdoor,” and our previously named “Health & Home” segment was changed to “Health & Wellness.” There were no changes to the products or brands included within our reportable segments as part of these name changes. The Osprey brand and products were added to the Home & Outdoor segment upon the completion of the acquisition of Osprey discussed further below.

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 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 ESG efforts and accelerate programs related to DE&I to support our Phase II transformation.

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 Personal Care business. 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. Subsequent to our fiscal 2022 year end, on March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care businesses to HRB Brands LLC, for $1.8 million in cash. 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. Accordingly, we continued to classify the identified net assets of the Latin America and Caribbean Personal Care businesses as held for sale in our fiscal 2022 consolidated balance sheet. See Note 4 to the accompanying consolidated financial statements for additional information.

Subsequent to our fiscal 2022 year end, 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, net of cash acquired, was $150.0 million in cash, subject to certain customary closing adjustments. The acquisition was funded with cash on hand and borrowings from our existing revolving credit facility.

On December 29, 2021, we completed the acquisition of Osprey, a longtime U.S. leader in technical and everyday packs, for $410.9 million in cash, net of a preliminary closing 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,

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trail running, commuting, and school, as well as rugged adventure travel packs, wheeled luggage, and travel accessories.

On December 22, 2020, we entered into an amended and extended Trademark License Agreement with Revlon to license Revlon’s trademark for hair care appliances and tools (the “Revlon License”). The Revlon License grants us an exclusive, global, fully paid-up license to use the licensed trademark to manufacture, sell and distribute licensed merchandise in accordance with the terms of the agreement. The Revlon License has an initial term of 40 years, which will automatically renew at the end of the initial term for three consecutive additional 20-year periods unless we give notice of non-renewal. The Revlon License amends and restates the existing Revlon trademark licensing agreements entirely, and eliminates ongoing royalties we have historically paid and recognized as expense within SG&A in accordance with such agreements. In exchange for this exclusive global license, we paid a one-time, up-front license fee of $72.5 million, which was recorded as an intangible asset at cost and is being amortized on a straight-line basis over a useful life of 40 years, representing the initial term. As a result of the Revlon License, we are no longer obligated to pay royalties to Revlon, and thus have not recognized royalty expense after December 22, 2020, the effective date of the Revlon License.

On January 23, 2020, we completed the acquisition of Drybar Products, for approximately $255.9 million in cash. Drybar is an innovative, trend-setting prestige hair care and styling brand in the multibillion-dollar beauty industry.

In fiscal 2018, we announced a restructuring plan (referred to as “Project Refuel”) intended to enhance performance primarily in the Beauty and former Nutritional Supplements segments. Project Refuel includes charges for a reduction-in-force and the elimination of certain contracts. During the first quarter of fiscal 2019, we expanded Project Refuel to include the realignment and streamlining of our supply chain structure. During fiscal 2022, we incurred $0.4 million of pre-tax restructuring costs related to Project Refuel. During the fourth quarter of fiscal 2022, we completed the plan, which resulted in total restructuring charges of $9.6 million and total annualized profit improvements of approximately $12.5 million over the duration of the plan. See Note 12 to the accompanying consolidated financial statements for additional information.

Subsequent to our fiscal 2022 year end, on March 30, 2022, a third-party facility that we utilize for inventory storage incurred severe damage from a weather-related incident. The inventory stored at this facility primarily relates to our Health & Wellness and Beauty segments. While the inventory is insured, some seasonal inventory and inventory designated for specific customer promotions is currently not accessible, and as a result, may unfavorably impact our net sales revenue in the first half of fiscal 2023. We are working with local officials and our insurance provider to understand the extent of the damage, however the building must be assessed and made structurally sound before we will have access to the inventory and be able to fully assess damages. The potential financial impact of this weather-related incident remains ongoing and could have a material adverse effect on our operating results and financial condition.

Significant Trends Impacting the Business

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) to be a pandemic. COVID-19 has spread throughout the U.S. and the world. COVID-19 is impacting consumer shopping patterns and demand for goods in certain product categories. Additionally, COVID-19 has disrupted certain parts of our supply chain, which in certain cases, limited our ability to fulfill demand and may limit our ability to fulfill demand in the future. Surges in demand and shifts in shopping patterns related to COVID-19, as well as other factors, have strained the global freight network, which is resulting in higher costs, less capacity, and longer lead times.

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During fiscal 2021, the COVID-19 related impact on our business included the effect of temporary closures of certain customer stores or limited hours of operation and materially lower store traffic which shifted consumer shopping preferences from brick and mortar to more online purchases. In addition, we saw high demand for healthcare products as well as cooking, storage and related product lines as consumers spent more time at home. We also experienced disruptions to our supply chain due to shifting consumer purchasing patterns, limited capacity of shipping containers, and COVID-19 related work stoppages in the global supply chain. During the first quarter of fiscal 2021, we implemented a number of temporary precautionary cost reduction measures, many of which we reversed during the second quarter of fiscal 2021, including restoration of all wages, salaries and director compensation to pre-COVID-19 levels. In addition, during the third quarter of fiscal 2021, we reinstituted merit increases, promotions and new associate hiring. In the third and fourth quarters of fiscal 2021, we continued to increase the amount of our investments including marketing, new product development and capital expenditures to continue progressing our Phase II transformation plan and longer-term opportunities to further grow our business.

During fiscal 2022, we were adversely impacted by COVID-19 related global supply chain disruptions and cost increases. We also saw recovery of our product lines and brands that were unfavorably impacted in fiscal 2021 as a result of the pandemic. Additionally, as customers have been able to return to more brick and mortar shopping, our mix of online sales has been negatively impacted compared to fiscal 2021.

Impacts could arise in the future as this situation continues to evolve, and additional impacts or more pronounced adverse impacts may arise that we are not currently aware of today. The extent of COVID-19’s impact on the demand for certain of our product lines in the future will depend on future developments, including the continued 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.

For additional information on our related material risks, see Item 1A., “Risk Factors.”

Global Supply Chain and Related Cost Inflation Trends

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

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

EPA Compliance Costs

Some product lines within our Health & Wellness segment are subject to product identification, labeling and claim requirements, which are monitored and enforced by regulatory agencies, such as 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 & 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. The EPA approved modest changes to our labeling claims on packaging of the air and water filtration impacted products, which we implemented, and subsequently resumed shipping during fiscal 2022. Our fiscal 2022 consolidated, and Health & Wellness segment’s, net sales revenue, gross profit, SG&A, and operating income was materially and adversely impacted by the stop shipment actions and the time needed to execute repackaging plans after changes were approved by the EPA. While we have resumed normalized levels of shipping of the affected inventory, we are still in process of repackaging our existing inventory of impacted products. Additionally, as a result of continuing dialogue with the EPA, we are executing further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration products. If we are not able to execute our repackaging plans on schedule to meet demand, our net sales revenue, gross profit and operating income could continue to be materially and adversely impacted. In addition, our net sales revenue could be materially and adversely impacted by customer returns, an increase in sales discounts and allowances and by the potential impact of distribution losses at certain retailers.

During fiscal 2022, we recorded a $13.1 million charge to cost of goods sold to write-off the obsolete packaging for the affected products in our inventory on-hand and in-transit as of the end of the first quarter of fiscal 2022. During fiscal 2022, we incurred additional compliance costs of $19.3 million, comprised of $14.6 million of incremental warehouse storage costs and legal fees, which were recognized in SG&A, and $4.7 million of storage, obsolete packaging and other charges from vendors, which were recognized in cost of goods sold. These charges are referred to throughout this Annual Report as “EPA compliance costs.” In addition, during fiscal 2022, we incurred and capitalized into inventory costs to repackage a portion of our existing inventory of the affected products and expect to continue to incur and capitalize such costs as we continue to repackage inventory. We also expect to incur additional compliance costs, which may include incremental freight, warehouse storage costs, charges from vendors, and legal fees, among other things. Such potential incremental EPA compliance costs will be expensed as incurred and could materially and adversely impact our consolidated and 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.

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

See Note 13 to the accompanying consolidated financial statements for additional information and Item 1A., “Risk Factors” in this Annual Report for additional information on our related material risks.

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Potential Impact of Tariffs

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

Potential Impact of Brexit

The transitional exit of the U.K. from E.U. membership (commonly referred to as “Brexit”) could cause disruptions to and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and associates, which could have an adverse effect on our business, financial results and operations. The U.K. and the E.U. signed an EU-UK Trade and Cooperation Agreement (the “TCA”), which became provisionally applicable on January 1, 2021 and was formally approved by the European Parliament on May 1, 2021. The ultimate effects of Brexit will depend, in part, on how the terms of the TCA take effect in practice and on any other agreements the U.K. may make with the EU. Recent effects include changes in customs regulations, shortages of truck drivers in the U.K., and administrative burdens placed on transportation companies, which have lead to challenges and delays in moving inventory across U.K./EU borders, and higher importation, freight and distribution costs. If such trends continue, we may experience further cost increases. The TCA and any future trade negotiations could potentially disrupt the markets we serve and the tax jurisdictions in which we operate, adversely change tax benefits or liabilities in these or other jurisdictions, and cause us to lose customers, suppliers, and associates. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate.

Potential Impact of LIBOR Transition

LIBOR, which is the interest rate benchmark used as a reference rate on our variable rate debt and related interest rate swaps, began being phased out at the beginning of calendar year 2022, with the one-month LIBOR, which we utilize as a reference rate, scheduled to cease immediately after June 30, 2023. A reference rate based on the SOFR, and other alternative benchmark rates, are replacing LIBOR. We intend to amend our variable rate debt agreements and related interest rate swaps, to replace LIBOR with an agreed upon replacement index, such as Bloomberg’s Short-Term Bank Yield Index (“BSBY”) or similar index, prior to the one-month LIBOR ceasing, which could result in higher interest rates and adversely affect our interest expense. For additional information, refer to Item 1A., “Risk Factors” and Item 7A., “Quantitative and Qualitative Disclosures About Market Risk” in this Annual Report.

Potential Impact of Macroeconomic Trends

Since March 2020, interest rates have remained at historically low levels, primarily due to impacts to the U.S economy caused by COVID-19. More recently, higher consumer demand, lower interest rates, global supply chain disruption, and other factors have contributed to rapidly accelerating economic inflation. To offset the impacts of inflation, the Federal Open Market Committee ("FOMC") has been, and intends to continue, raising interest rates throughout the remainder of 2022 and possibly into 2023. While the actual timing and extent of the future increases in interest rates remains unknown, higher long-term interest rates may have a material adverse impact to us as a higher cost of capital could significantly increase our interest expense on outstanding long-term debt. High inflation and interest rates also have the potential

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to negatively impact consumer spending, which may adversely impact our business, financial condition, cash flows and results of operations.

Foreign Currency Exchange Rate Fluctuations

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

Changes in foreign currency exchange rates had a favorable impact on consolidated U.S. Dollar reported net sales revenue of approximately $6.8 million, or 0.3% for fiscal 2022 and an unfavorable impact of approximately $0.4 million, or less than 0.1% for fiscal 2021 and $7.0 million, or 0.4% for fiscal 2020.

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 78% of our consolidated net sales revenue in fiscal 2022 was from U.S. shipments compared to 79% of consolidated net sales revenue in both fiscal 2021 and 2020.

Our concentration of sales reflects the evolution of consumer shopping preferences to online or multichannel shopping experiences. For fiscal 2022, 2021 and 2020, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 24%, 26% and 24%, respectively, of our total consolidated net sales revenue and decreased approximately 1.3% in fiscal 2022 and grew approximately 32% and 34% in fiscal 2021 and 2020, respectively, over the prior fiscal year periods.

With the continued growth in online sales across the retail landscape, many brick and mortar retailers are aggressively looking for ways to improve their customer delivery capabilities to be able to meet customer expectations. As a result, it will 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 our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers.

Variability of the Cough/Cold/Flu Season

Sales in several of our Health & 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 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. The 2019-2020 cough/cold/flu season was in line with historical averages for such season.

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Results of Operations

This section provides an analysis of our results of operations for fiscal year 2022 as compared to fiscal year 2021 including descriptions of material changes. Refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 2021 Annual Report on Form 10-K, filed with the SEC on April 29, 2021, for an analysis of the fiscal year 2021 results of operations as compared to fiscal year 2020, which such section is hereby incorporated by reference. Additionally, as previously noted, in the fourth quarter of fiscal 2022, we changed the names of two of our segments to align with the growth in certain product offerings and brands within our portfolio. Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations,” in our 2021 Annual Report on Form 10-K references the previously named “Housewares” segment which has been changed to “Home & Outdoor,” and our previously named “Health & Home” segment which has been changed to “Health & Wellness.” There were no changes to the products or brands included within our reportable segments as part of these name changes.

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.

(1)Fiscal 2022 includes approximately nine weeks of operating results from Osprey, acquired on December 29, 2021. For additional information see Note 7 to the accompanying consolidated financial statements.

(2)Fiscal 2020 includes approximately five weeks of operating results from Drybar Products, acquired on January 23, 2020, and fiscal 2022 and 2021 include a full year of operating results. For additional information see Note 7 to the accompanying consolidated financial statements

*    Calculation is not meaningful.

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Fiscal 2022 Financial Results

•Consolidated net sales revenue increased 5.9%, or $124.6 million, to $2,223.4 million compared to $2,098.8 million for the same period last year.

•Consolidated operating income decreased 3.2%, or $8.9 million, to $272.6 million, compared to $281.5 million for the same period last year. Consolidated operating margin decreased 1.1 percentage points to 12.3%, compared to 13.4% for the same period last year. Consolidated operating income for fiscal 2022 includes pre-tax restructuring charges of $0.4 million related to Project Refuel, pre-tax acquisition-related expenses of $2.4 million, and pre-tax EPA compliance costs of $32.4 million. Consolidated operating income for fiscal 2021 included pre-tax asset impairment charges of $8.5 million and pre-tax restructuring charges of $0.4 million related to Project Refuel.

•Consolidated adjusted operating income increased 6.2%, or $20.7 million, to $355.1 million, compared to $334.4 million for the same period last year. Consolidated adjusted operating margin increased 0.1 percentage points to 16.0% of consolidated net sales revenue, compared to 15.9% for the same period last year.

•Net income decreased 11.9%, or $30.2 million, to $223.8 million, compared to $253.9 million for the same period last year. Diluted EPS decreased 9.0% to $9.17, compared to $10.08 for the same period last year.

•Adjusted income increased 2.8% to $301.8 million, compared to $293.7 million for the same period last year. Adjusted diluted EPS increased 6.1% to $12.36, compared to $11.65 for the same period last year.

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Fiscal 2021 Financial Results

•Consolidated net sales revenue increased 22.9%, or $391.4 million, to $2,098.8 million in fiscal 2021, compared to $1,707.4 million in fiscal 2020.

•Consolidated operating income increased 57.9%, or $103.2 million, to $281.5 million in fiscal 2021, compared to $178.3 million in fiscal 2020. Consolidated operating margin increased 3.0 percentage points to 13.4% in fiscal 2021, compared to 10.4% in fiscal 2020. Consolidated operating income for fiscal 2021 included pre-tax asset impairment charges of $8.5 million and pre-tax restructuring charges of $0.4 million related to Project Refuel. Consolidated operating income for fiscal 2020 included pre-tax asset impairment charges of $41.0 million, pre-tax restructuring charges of $3.3 million related to Project Refuel, and pre-tax acquisition-related expenses of $2.5 million.

•Consolidated adjusted operating income increased 24.2%, or $65.1 million, to $334.4 million in fiscal 2021, compared to $269.3 million in fiscal 2020. Consolidated adjusted operating margin increased 0.1 percentage point to 15.9% of consolidated net sales revenue in fiscal 2021, compared to 15.8% in fiscal 2020.

•Net income increased 66.7%, or $101.6 million, to $253.9 million in fiscal 2021, compared to $152.3 million in fiscal 2020. Diluted EPS increased 67.4% to $10.08 in fiscal 2021, compared to $6.02 in fiscal 2020.

•Adjusted income increased 24.7% to $293.7 million in fiscal 2021, compared to $235.6 million in fiscal 2020. Adjusted diluted EPS increased 25.3% to $11.65 in fiscal 2021, compared to $9.30 in fiscal 2020.

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Consolidated and Segment Net Sales Revenue

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

(1)On December 29, 2021, we completed the acquisition of Osprey. Osprey sales are reported in Acquisition in fiscal 2022 and consist of approximately nine weeks of operating results. For additional information see Note 7 to the accompanying consolidated financial statements.

(2)On January 23, 2020, we completed the acquisition of Drybar Products. Drybar Products sales prior to the first annual anniversary of the acquisition are reported in Acquisition in fiscal 2021 and consist of approximately 47 weeks of incremental operating results. For additional information see Note 7 to the accompanying consolidated financial statements.

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

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

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our Personal Care business are included in Non-Core business for all periods presented. On June 7, 2021, we completed the sale of our North America Personal Care business. Sales from our Latin America and Caribbean Personal Care businesses continue to be included in Non-Core business for all periods presented as the related net assets continue to be classified as held for sale. Subsequent to our fiscal 2022 year end, on March 25, 2022, we completed the sale of the Latin America and Caribbean Personal Care businesses.

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

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Leadership Brand and Other Net Sales Revenue

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

(1)Fiscal 2022 includes approximately nine weeks of operating results from Osprey, acquired on December 29, 2021. For additional information see Note 7 to the accompanying consolidated financial statements.

(2)Fiscal 2022 and 2021 include a full year of operating results from Drybar Products, acquired on January 23, 2020, compared to approximately five weeks of operating results in fiscal 2020. For additional information see Note 7 to the accompanying consolidated financial statements.

Consolidated Net Sales Revenue

Comparison of Fiscal 2022 to 2021

Consolidated net sales revenue increased $124.6 million, or 5.9%, to $2,223.4 million, compared to $2,098.8 million. Growth was driven by an increase from Organic business of $93.4 million, or 4.4%, primarily due to:

•higher brick and mortar and online channel sales in our Beauty and Home & Outdoor segments primarily reflecting strong consumer demand and the favorable comparative impact of COVID-19 related store closures, reduced store traffic and a soft back-to-school season in the prior year;

•higher sales in the club and closeout channels;

•growth in consolidated international sales; and

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

These factors were partially offset by:

•a decrease in sales in our Health & Wellness segment as a result of the EPA packaging compliance matter and related stop shipment actions and stronger COVID-19 driven demand for healthcare and healthy living products, primarily in thermometry and air filtration, in the comparative prior year; and

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

The Osprey acquisition also contributed $24.4 million, or 1.2%, to consolidated net sales revenue growth. Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $6.8 million, or 0.3%.

Net sales revenue from our Leadership Brands was $1,810.2 million, compared to $1,706.5 million, representing growth of 6.1%.

Segment Net Sales Revenue

Home & Outdoor

Comparison of Fiscal 2022 to 2021

Net sales revenue increased $138.5 million, or 19.0%, to $865.8 million, compared to $727.4 million. Growth was driven by an increase from Organic business of $113.5 million, or 15.6%, primarily due to:

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•higher brick and mortar and online channel sales driven by strong consumer demand and the favorable comparative impact of COVID-19 related store closures, reduced store traffic and a soft back-to-school season in the prior year;

•higher sales in the club and closeout channels;

•growth in international sales; and

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

Net sales revenue growth also benefited from approximately nine weeks of net sales revenue of $24.4 million, or 3.4%, from the Osprey acquisition. Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $0.6 million, or 0.1%.

Health & Wellness

Comparison of Fiscal 2022 to 2021

Net sales revenue decreased $113.1 million, or 12.7%, to $777.1 million, compared to $890.2 million. The decrease was primarily driven by a decrease from Organic business of $116.7 million, or 13.1%, primarily due to:

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

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

•the unfavorable impact on sales of air filtration products driven by greater wildfire activity on the west coast of the U.S. in the comparative prior year.

These factors were partially offset by an increase in sales of fans as some customers accelerated seasonal orders, and the impact of customer price increases related to rising freight and product costs.

Net sales revenue was also favorably impacted by net foreign currency fluctuations of approximately $3.6 million, or 0.4%.

Beauty

Comparison of Fiscal 2022 to 2021

Net sales revenue increased $99.2 million, or 20.6%, to $580.4 million, compared to $481.3 million. The increase was driven by an increase from Organic business of $96.6 million, or 20.1%, primarily due to:

•higher brick and mortar and online channel sales driven by strong consumer demand and the favorable comparative impact of COVID-19 related store closures and reduced store traffic in the prior year;

•new product introductions;

•expanded distribution primarily in the club channel;

•increased closeout channel sales; and

•higher international sales.

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

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

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Consolidated Gross Profit Margin

Comparison of Fiscal 2022 to 2021

Consolidated gross profit margin decreased 1.3 percentage points to 42.9%, compared to 44.2%. The decrease in consolidated gross profit margin was primarily due to:

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

•EPA compliance costs recognized in cost of goods sold in the Health & Wellness segment of $17.8 million; and

•a less favorable channel mix within the Home & Outdoor segment.

These factors were partially offset by a more favorable product mix within the Beauty and Home & Outdoor segments and a favorable mix of more Beauty and Home & Outdoor sales within our consolidated net sales revenue.

Consolidated SG&A

Comparison of Fiscal 2022 to 2021

Consolidated SG&A ratio increased 0.2 percentage points to 30.6%, compared to 30.4%. The increase in the consolidated SG&A ratio was primarily due to:

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

•EPA compliance costs of $14.6 million in the Health & Wellness segment as a result of the EPA packaging compliance matter and related stop shipment actions;

•higher share-based compensation expense; and

•increased distribution expense.

These factors were partially offset by:

•a decrease in marketing expense;

•lower royalty expense;

•reduced amortization expense; and

•the favorable leverage impact of net sales growth.

Asset Impairment Charges

Fiscal 2022

We did not record any asset impairment charges.

Fiscal 2021

As a result of our quarterly impairment evaluation of long-lived assets held for sale, we recorded an asset impairment charge of $8.5 million ($7.4 million after tax) to reduce the goodwill of our Personal Care business during the fourth quarter of fiscal 2021.

Restructuring Charges

Fiscal 2022

We incurred $0.4 million of pre-tax restructuring costs related to employee severance and termination benefits under Project Refuel. During fiscal 2022, we made total cash restructuring payments of $0.5 million.

Fiscal 2021

We incurred $0.4 million of pre-tax restructuring costs related to employee severance and termination benefits and contract termination costs under Project Refuel. During fiscal 2021, we made total cash restructuring payments of $1.1 million and had a remaining liability of $0.1 million as of February 28, 2021.

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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 asset impairment charges, acquisition-related expenses, EPA compliance costs, 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 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(1)Fiscal 2022 includes approximately nine weeks of operating results from Osprey, acquired on December 29, 2021. For additional information see Note 7 to the accompanying consolidated financial statements.

(2)Fiscal 2022 and 2021 include a full year of operating results from Drybar Products, acquired on January 23, 2020, compared to approximately five weeks of operating results in fiscal 2020. For additional information see Note 7 to the accompanying consolidated financial statements.

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Consolidated Operating Income

Comparison of Fiscal 2022 to 2021

Consolidated operating income was $272.6 million, or 12.3% of net sales revenue, compared to $281.5 million, or 13.4% of net sales revenue. Fiscal 2022 includes pre-tax acquisition-related expenses of $2.4 million, pre-tax EPA compliance costs of $32.4 million, and pre-tax restructuring charges of $0.4 million, compared to pre-tax asset impairment charges of $8.5 million and pre-tax restructuring charges of $0.4 million in fiscal 2021. The effect of these items unfavorably impacted the year-over-year comparison of consolidated operating margin by a combined 1.2 percentage points. The remaining 0.1 percentage point increase in consolidated operating margin was primarily driven by:

•a favorable product mix within the Beauty and Home & Outdoor segment and a favorable mix of more Beauty and Home & Outdoor sales within our consolidated net sales revenue;

•a decrease in marketing expense;

•lower royalty expense; and

•reduced amortization expense.

These factors were partially offset by:

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

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

•higher share-based compensation expense;

•increased distribution expense; and

•a less favorable channel mix within the Home & Outdoor segment.

Consolidated adjusted operating income increased 6.2% to $355.1 million, or 16.0% of net sales revenue, compared to $334.4 million, or 15.9% of net sales revenue.

Home & Outdoor

Comparison of Fiscal 2022 to 2021

Operating income was $134.9 million, or 15.6% of segment net sales revenue, compared to $122.5 million, or 16.8% of segment net sales revenue. The 1.2 percentage point decrease in segment operating margin was primarily due to:

•a less favorable channel mix;

•an increase in marketing expense;

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

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

•higher share-based compensation expense.

These factors were partially offset by favorable operating leverage and a more favorable product mix.

Adjusted operating income increased 14.3% to $154.4 million, or 17.8% of segment net sales revenue, compared to $135.1 million, or 18.6% of segment net sales revenue.

Health & Wellness

Comparison of Fiscal 2022 to 2021

Operating income was $39.2 million, or 5.0% of segment net sales revenue, compared to $94.1 million, or 10.6% of segment net sales revenue. The 5.6 percentage point decrease in segment operating margin is primarily due to:

•unfavorable operating leverage;

•EPA compliance costs of $32.4 million;

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

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•higher personnel expense;

•increased inventory obsolescence expense;

•increased distribution expense; and

•higher share-based compensation expense.

These factors were partially offset by:

•a decrease in marketing expense;

•lower inbound air freight expense;

•the favorable comparative impact of tariff exclusion refunds received in fiscal 2022;

•lower royalty expense;

•reduced amortization expense; and

•decreased annual incentive compensation expense.

Adjusted operating income decreased 23.3% to $85.9 million, or 11.0% of segment net sales revenue, compared to $111.9 million, or 12.6% of segment net sales revenue.

Beauty

Comparison of Fiscal 2022 to 2021

Operating income was $98.4 million, or 17.0% of segment net sales revenue, compared to $64.9 million, or 13.5% of segment net sales revenue. Operating income in fiscal 2021 included $8.5 million of pre-tax asset impairment charges. The effect of this item favorably impacted the year-over-year comparison of segment operating margin by 1.8 percentage points. The remaining 1.7 percentage point increase in segment operating margin was primarily due to:

•favorable operating leverage;

•a more favorable product mix;

•lower inventory obsolescence expense;

•a decrease in outbound freight costs; and

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

These factors were partially offset by:

•increased marketing expense;

•higher shared-based compensation expense; and

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

Adjusted operating income increased 31.4% to $114.8 million, or 19.8% of segment net sales revenue, compared to $87.4 million, or 18.2% of segment net sales revenue.

Interest Expense

Comparison of Fiscal 2022 to 2021

Interest expense was $12.8 million, compared to $12.6 million. The increase in interest expense was primarily due to higher average levels of debt outstanding, including borrowings to fund the acquisition of Osprey, partially offset by lower average interest rates compared to the prior 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

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proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective tax rate.

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

Upon the enactment of the Tax Act in fiscal 2018, there was a net operating loss on our balance sheet, which was measured using the U.S. statutory tax rate in effect prior to enactment. As a result of the Tax Act, we were required to record a one-time charge of $17.9 million in fiscal 2018, which included a charge of $9.4 million to remeasure the net operating loss at the reduced rate at which it was expected to reverse in the future. The CARES Act effectively reversed the impact of the Tax Act on our net operating loss, resulting in a corresponding tax benefit of $9.4 million recorded in the first quarter of fiscal 2021. Fiscal 2022 income tax expense as a percentage of income before income tax was 13.9% compared to income tax expense of 5.7% for fiscal 2021, primarily due to the mix of income in our various tax jurisdictions and the benefit of the CARES Act in fiscal 2021, partially offset by the favorable comparative impact of increases in liabilities related to uncertain tax positions in the prior year.

Our Macau subsidiary generates income from the sale of the goods that it has sourced and procured. This subsidiary is responsible for the sourcing and procurement of a large portion of the products that we sell. We previously had an indefinite tax holiday in Macau conditioned on the subsidiary meeting certain employment and investment thresholds. The Macau Offshore Law and its supplementary regulations that grant tax incentives to approved offshore institutions was abolished on January 1, 2021. Existing approved offshore institutions such as ours continued to operate under the offshore regime until the end of the calendar year 2020. Beginning in calendar year 2021, our Macau subsidiary transitioned to onshore status and became subject to a statutory corporate income tax of approximately 12%. Because our Macau subsidiary is not directly or indirectly owned by a U.S. parent, there is no U.S. tax liability associated with the income generated in Macau.

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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 asset impairment charges, acquisition-related expenses, EPA compliance costs, restructuring charges, tax reform, amortization of intangible assets, and non‐cash share‐based compensation, as applicable, on income and diluted EPS for the periods presented below. For additional information regarding management’s decision to present this non-GAAP financial information, see the introduction to this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Comparison of Fiscal 2022 to 2021

Net Income was $223.8 million compared to $253.9 million. Diluted EPS was $9.17 compared to $10.08. Diluted EPS decreased primarily due to lower operating income in the Health & Wellness segment and a higher effective income tax rate primarily due to the tax reform benefit recognized in the prior year, partially offset by higher operating income in the Beauty and Home & Outdoor segments and lower weighted average diluted shares outstanding.

Adjusted income increased $8.1 million, or 2.8%, to $301.8 million compared to $293.7 million. Adjusted diluted EPS increased 6.1% to $12.36 compared to $11.65.

Financial Condition, Liquidity and Capital Resources

Selected measures of our liquidity and capital resources for fiscal 2022 and 2021 are shown below:

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

We principally rely on our cash flow from operations and borrowings under our Credit Agreement (as defined below) to finance our operations, capital and intangible asset expenditures, acquisitions and share repurchases. Historically, our principal uses of cash to fund our operations have included operating expenses, primarily 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 $140.8 million in cash from operations during fiscal 2022 and had $33.4 million in cash and cash equivalents at February 28, 2022. As of February 28, 2022, the amount of cash and cash equivalents held by our foreign subsidiaries was $25.5 million. Capital and intangible asset expenditures in fiscal 2022 of $78.0 million included the purchase of land and initial construction expenditures related to a new two million square foot distribution center for our Home & Outdoor segment. During fiscal 2022 we acquired Osprey for $410.9 million in cash, net of cash acquired. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We have no existing activities involving special purpose entities or off-balance sheet financing.

Subsequent to our fiscal 2022 year end, we completed the acquisition of Curlsmith, which was funded with cash on hand and a $150.0 million borrowing under our existing revolving credit facility. For additional information, see Note 21 to the accompanying consolidated financial statements.

In addition to the $150.0 million of cash used for our acquisition of Curlsmith, our anticipated remaining material cash requirements in fiscal 2023 include the following:

•operating expenses, primarily SG&A and working capital predominately for inventory purchases and to carry normal levels of accounts receivable on our balance sheet;

•repayment of a current maturity of long term debt of $1.9 million;

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•estimated interest payments of approximately $12.1 million based on outstanding debt obligations, weighted average interest rates and interest rate swaps in effect at February 28, 2022;

•minimum operating lease payments under existing obligations of approximately $8.3 million;

•minimum royalty payments under existing license agreements of approximately $7.4 million; and

•capital and intangible asset expenditures between approximately $180 million to $205 million to support ongoing operations and future infrastructure needs, including construction and equipment expenditures related to a new 2 million square foot distribution center that we expect to be operational by the end of fiscal 2023.

Our anticipated material cash requirements beyond fiscal 2023 include the following:

•operating expenses, primarily SG&A and working capital predominately for inventory purchases and to carry normal levels of accounts receivable on our balance sheet;

•outstanding long-term debt obligations maturing between fiscal 2024 and fiscal 2026, in an aggregate principal value of approximately $814.3 million, with $799.5 million of that amount maturing in fiscal 2026 (refer to Note 14 for additional information);

•estimated interest payments of approximately $10.8 million, $10.0 million and $0.4 million in fiscal 2024, fiscal 2025, and fiscal 2026, respectively, based on outstanding debt obligations, weighted average interest rates and interest rate swaps in effect at February 28, 2022 (refer to Note 14 for additional information);

•minimum operating lease payments of approximately $56.8 million over the term of our existing operating lease arrangements (refer to Note 3 for additional information);

•minimum royalty payments of approximately $22.8 million over the term of the existing license agreements (refer to Note 13 for additional information); and

•capital and intangible asset expenditures to support ongoing operations and future infrastructure needs.

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

We continue to evaluate acquisition opportunities on a regular basis. We may finance acquisition activity with available cash, the issuance of shares of common stock, additional debt, or other sources of financing, depending upon the size and nature of any such transaction and the status of the capital markets at the time of such acquisition.

We may also elect to repurchase additional shares of common stock under our Board of Directors' authorization, subject to limitations contained in our debt agreements and based upon our assessment of a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, 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 Item 5., “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities” in this Annual Report.

Operating Activities

Comparison of Fiscal 2022 to 2021

Operating activities provided net cash of $140.8 million compared to $314.1 million. The decrease was primarily driven by a decrease in cash earnings and increases in cash used primarily for inventory purchases, customer incentives, annual incentive compensation payments, and accounts receivable to extend credit to our retail customers, partially offset by an increase in accrued income taxes.

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Investing Activities

Investing activities used cash of $438.9 million and $98.7 million in fiscal 2022 and 2021, respectively.

Highlights from Fiscal 2022

•We paid $410.9 million, net of cash acquired, to acquire Osprey and made investments in capital and intangible asset expenditures of $78.0 million, of which $55.8 million was for land and initial construction expenditures related to a new 2 million square foot distribution center for our Home & Outdoor segment. In addition, capital and intangible asset expenditures of $22.2 million were made primarily for tools, molds, and other production equipment and computer, software, furniture and other equipment. These uses of cash for investing activities were partially offset by proceeds from the sale of our North America Personal Care business and property and equipment of $44.7 million and $5.3 million, respectively.

Highlights from Fiscal 2021

•We made investments in capital and intangible asset expenditures of $98.7 million, primarily for the extension of the Revlon License and use of the trademark royalty-free for the next 100 years, for which we paid a one-time, up-front license fee of $72.5 million. In addition, capital expenditures of $26.2 million were made for molds, production and distribution equipment, information technology equipment, and software.

Financing Activities

Financing activities provided cash of $286.4 million in fiscal 2022 and used cash of $194.8 million in fiscal 2021.

Highlights from Fiscal 2022

•we had draws of $998.2 million under our Credit Agreement;

•we repaid $527.7 million drawn under our Credit Agreement;

•we repaid $1.9 million of long-term debt;

•we repurchased and retired 854,959 shares of common stock at an average price of $220.13 per share for a total purchase price of $188.2 million through a combination of open market purchases and the settlement of certain stock awards.

Highlights from Fiscal 2021

•we had draws of $937.4 million under our Credit Agreement;

•we repaid $928.4 million drawn under our Credit Agreement;

•we repaid $1.9 million of long-term debt;

•we paid $3.8 million of financing costs in connection with the amendment of our Credit Agreement; and

•we repurchased and retired 1,030,023 shares of common stock at an average price of $197.37 per share for a total purchase price of $203.3 million through a combination of open market purchases and the settlement of certain stock awards.

Credit Agreement and Other Debt Agreements

Credit Agreement

We have an amended 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. Borrowings accrue interest under one of two alternative

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methods (based upon a Base Rate or LIBOR) as described in the Credit Agreement. With each borrowing against our credit line, we can elect the interest rate method based on our funding needs at the time. We also incur loan commitment and letter of credit fees under the Credit Agreement.

The Credit Agreement includes a $300 million accordion, which can be used for term loan commitments. The accordion permits the Company to request to increase its borrowing capacity, not to exceed the $300 million commitment in the aggregate, provided certain conditions are met, including lender approval. Any increase to term loan commitments and revolving loan commitments must be made on terms identical to the revolving loans under the Credit Agreement and must have a maturity date of no earlier than March 13, 2025. Borrowings under the Credit Agreement bear interest at either the Base Rate or 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%, respectively, for Base Rate and LIBOR borrowings. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis. We are able to repay amounts borrowed at any time without penalty.

As of February 28, 2022, the outstanding revolving loan principal balance was $799.5 million (excluding prepaid financing fees) and the balance of outstanding letters of credit was $32.7 million. The weighted average interest rate on borrowings outstanding under the Credit Agreement was 1.2% at February 28, 2022. As of February 28, 2022, the amount available for borrowings under the Credit Agreement was $417.8 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As of February 28, 2022, these covenants did not limit our ability to incur $417.8 million of additional debt under the Credit Agreement.

Subsequent to our fiscal 2022 year end, we borrowed $150.0 million under our Credit Agreement in connection with the acquisition of Curlsmith. The proceeds of the borrowing and cash on hand were used to pay all of the cash consideration payable for the acquisition, including amounts for cash acquired. After giving effect to the borrowing on April 20, 2022, the remaining amount available for borrowings under our Credit Agreement was $192.8 million. As of April 20, 2022, covenants in the Credit Agreement did not limit our ability to incur $192.8 million of additional debt under the Credit Agreement. For additional information on the acquisition, see Note 21 to the accompanying consolidated financial statements.

For information on the potential impact of the transition from LIBOR, see the section entitled “Significant Trends Impacting the Business” to this Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Other Debt Agreements

As of February 28, 2022, we have an aggregate principal balance of $16.7 million (excluding prepaid financing fees) under an unsecured loan agreement (the “MBFC Loan”) 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 “Bonds”). The borrowings were used to fund construction of our Olive Branch, Mississippi distribution facility. Since March 2018, the MBFC Loan can be called by the holder at any time. The loan can be prepaid without penalty. The remaining loan principal balance is payable as follows: $1.9 million on March 1, 2022 and $14.8 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

On May 14, 2020, Helen of Troy Limited and certain of its subsidiaries entered into the Sixth Amendment to Guaranty Agreement (the “Amended Guaranty”) in favor of Bank of America, N.A. The Amended Guaranty amends the Guaranty Agreement (as amended, the “Guaranty Agreement”), dated March 1, 2013, made by the Company and certain of its subsidiaries in favor of Bank of America, N.A. and other lenders. Certain of the representations and warranties, and covenants in the Guaranty Agreement were

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amended by the Amended Guaranty to include or modify certain baskets, exceptions and other customary provisions.

The Bonds were issued under a Trust Indenture, dated as of March 1, 2013 (as supplemented, the “Indenture”), by and between MBFC and U.S. Bank National Association, as trustee (the “Trustee”). On May 14, 2020, MBFC and U.S. Bank National Association, as Trustee, entered into the Fifth Supplemental Trust Indenture, effective May 14, 2020 (the “Fifth Supplemental Indenture”), with the consent of Kaz USA, Inc. (“Kaz USA”) and Bank of America, N.A., the purchaser of the Bonds. As amended by the Fifth Supplemental Indenture, the Bonds and the related loans to Kaz USA will bear interest at a Base Rate or LIBOR plus a margin based on the Net Leverage Ratio (as defined in the Fifth Supplemental Indenture). The Fifth Supplemental Indenture amended the pricing grid for the LIBOR and Base Rate margins.

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, defined in the table below. Our debt agreements 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.

As of February 28, 2022, we were in compliance with all covenants as defined under the terms of the Credit Agreement and our other debt agreements.

The table below provides the formulas currently in effect for certain key financial covenants as defined under our debt agreements:

Key Definitions:

(1)Computed using totals for the latest reported four consecutive fiscal quarters.

(2)Computed using the ending debt balances plus outstanding letters of credit as of the latest reported fiscal quarter.

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(3)In the event a qualified acquisition is consummated, the maximum leverage ratio is 4.25 to 1.00 for the first fiscal quarter after the qualified acquisition and then steps down until the maximum leverage ratio is 3.75 to 1.00 at the end of the fifth fiscal quarter after the qualified acquisition is consummated.

(4)As defined in the Credit Agreement and Guaranty Agreement.

Critical Accounting Policies and Estimates

The SEC defines critical accounting estimates as those made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on a company's financial condition or results of operations. We consider the following estimates to meet this definition and represent our more critical estimates and assumptions used in the preparation of our consolidated financial statements.

Income Taxes

We must make certain estimates and judgments in determining our provision for income tax expense. The provision for income tax expense is calculated on reported income before income taxes based on current tax law and includes, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Tax laws may require items to be included in the determination of taxable income at different times from when the items are reflected in the financial statements. Deferred tax balances reflect the effects of temporary differences between the financial statement carrying amounts of assets and liabilities and their tax bases, as well as from net operating losses and tax credit carryforwards, and are stated at enacted tax rates in effect for the year taxes are expected to be paid or recovered.

Deferred tax assets represent tax benefits for tax deductions or credits available in future years and require certain estimates and assumptions to determine whether it is more likely than not that all or a portion of the benefit will not be realized. The recoverability of these future tax deductions and credits is determined by assessing the adequacy of future expected taxable income from all sources, including the future reversal of existing taxable temporary differences, taxable income in carryback years, estimated future taxable income and available tax planning strategies. In projecting future taxable income, we begin with historical results and incorporate assumptions including future operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgement and are consistent with the plans and estimates we are using to manage our underlying business. Should a change in facts or circumstances, such as changes in our business plans, economic conditions or future tax legislation, lead to a change in judgment about the ultimate recoverability of a deferred tax asset, we record or adjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with a corresponding increase or decrease in income tax expense. Additionally, if future taxable income varies from projected taxable income, we may be required to adjust our valuation allowance in future years.

In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application of complex tax regulations.  We recognize liabilities for uncertain tax positions based on the two-step process prescribed within GAAP. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon examination by the tax authority based upon its technical merits assuming the tax authority has full knowledge of all relevant information. To be recognized in the financial statements, the tax position must meet this more-likely-than-not threshold. For positions meeting this recognition threshold, the second step requires us to estimate and measure the tax benefit as the largest amount that has greater than a 50 percent likelihood of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity. For tax positions that do not meet the threshold requirement, we

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record liabilities for unrecognized tax benefits as a tax expense or benefit in the period recognized or reversed and disclose as a separate liability in our financial statements, including related accrued interest and penalties. A change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period in which the change occurs.

Revenue Recognition

We measure revenue as the amount of consideration for which we expect to be entitled, in exchange for transferring goods. We allow for sales returns for defects in material and workmanship for periods ranging from two to five years, which are accounted for as variable consideration. We recognize an accrual for sales returns to reduce sales to reflect our best estimate of future customer returns, determined principally based on historical experience and specific allowances for known pending returns. If the historical data we use to estimate sales returns does not approximate future returns, additional accruals may be required resulting in a reduction to net sales revenue.

Certain customers may receive cash incentives such as customer discounts (including volume or trade discounts), advertising discounts and other customer-related programs, which are also accounted for as variable consideration. In some cases, we apply judgment, such as contractual rates and historical payment trends, when estimating variable consideration. Most of our variable consideration is classified as a reduction to net sales. In instances when we purchase a distinct good or service from our customer and fair value can be reasonably estimated, these amounts are expensed in our consolidated statements of income in SG&A. Estimating variable consideration entails a significant amount of subjectivity and uncertainty.

Valuation of Inventory

We record inventory on our balance sheet at the lower of average cost or net realizable value. We write down a portion of our inventory to net realizable value based on the historical sales trends of products and estimates about future demand and market conditions, among other factors. We regularly review our inventory for slow-moving items and for items that we are unable to sell at prices above their original cost. When we identify such an item, we use net realizable value as the basis for recording such inventory and base our estimates on expected future selling prices less expected disposal costs. These estimates entail a significant amount of inherent subjectivity and uncertainty. As a result, these estimates could vary significantly from the amounts that we may ultimately realize upon the sale of inventories if future economic conditions, product demand, product discontinuances, competitive conditions or other factors differ from our estimates and expectations. Additionally, changes in consumer demand, retailer inventory management strategies, transportation lead times, supplier capacity and raw material availability could make our inventory management and reserves more difficult to estimate.

Goodwill and Indefinite-Lived Intangibles and Related Impairment Testing

A significant portion of our non-current assets consists of goodwill and intangible assets recorded as a result of past acquisitions. Accounting for business combinations requires the use of estimates and assumptions in determining the fair value of assets acquired and liabilities assumed in order to properly allocate the purchase price. Goodwill is recorded as the difference, if any, between the aggregate consideration paid and the fair value of the net tangible and intangible assets received in the acquisition of a business. The estimates of the fair value of the assets acquired and liabilities assumed are based upon assumptions believed to be reasonable using established valuation techniques that consider a number of factors, and when appropriate, valuations performed by independent third-party appraisers.

We review goodwill and indefinite-lived intangible assets for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We consider whether circumstances or conditions exist which suggest that the carrying value of our goodwill and indefinite-lived intangible assets might be impaired. If such circumstances or conditions exist, we perform a qualitative assessment to determine whether it is more likely than not that the assets are impaired. We evaluate goodwill at the reporting unit level (operating segment or one level

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below an operating segment). If the results of the qualitative assessment indicate that it is more likely than not that the assets are impaired, further steps are required in order to determine whether the carrying value of each reporting unit and indefinite-lived intangible assets exceeds its fair market value. An impairment charge is recognized to the extent the goodwill or indefinite-lived intangible asset recorded exceeds the reporting unit’s or asset's fair value. We perform our annual impairment testing for goodwill and indefinite-lived assets as of the beginning of the fourth quarter of our fiscal year.

Our impairment test methodology primarily uses estimated future discounted cash flow models (“DCF Models”). The DCF Models use a number of assumptions including expected future cash flows from the assets, volatility, risk free rate, and the expected life of the assets, the determination of which require significant judgments from management. In determining the assumptions to be used, we consider the existing rates on Treasury Bills, yield spreads on assets with comparable expected lives, historical volatility of our common stock and that of comparable companies, and general economic and industry trends, among other considerations. When stock market or other conditions warrant, we expand our traditional impairment test methodology to give weight to other methods that provide additional observable market information in order to better reflect the current risk level being incorporated into market prices and in order to corroborate the fair values of each of our reporting units. Management will place increased reliance on these additional methods in conjunction with its DCF Models in the event that the total market capitalization of its stock drops below its consolidated stockholders’ equity balance for a sustained period.

Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fair value estimates, evaluating the most likely impact of a range of possible external conditions, considering the resulting operating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use, and selecting and weighting appropriate comparable market level inputs. For both goodwill and indefinite-lived intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the continued execution of key initiatives related to revenue growth and profitability. The rates used in our projections are management’s estimate of the most likely results over time, given a wide range of potential outcomes. The assumptions and estimates used in our impairment testing involve significant elements of subjective judgment and analysis by our management. While we believe that the assumptions we use are reasonable at the time made, changes in business conditions or other unanticipated events and circumstances may occur that cause actual results to differ materially from projected results and this could potentially require future adjustments to our asset valuations.

Impairment of Long-Lived Assets

We review intangible assets with definite lives and long-lived assets held and used if a triggering event occurs during the reporting period. If such circumstances or conditions exist, further steps are required in order to determine whether the carrying value of each of the individual assets exceeds its fair market value. If our analysis indicates that an individual asset’s carrying value does exceed its fair market value, the next step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value. We evaluate long-lived assets held for sale quarterly to determine if fair value less cost to sell has changed during the reporting period. This analysis entails a significant amount of judgment and subjectivity. See Note 4 to the accompanying consolidated financial statements for additional information on our assets held for sale impairment analysis.

Economic Useful Lives of Intangible Assets

We amortize intangible assets, such as licenses, trademarks, customer lists and distribution rights over their economic useful lives, unless those assets' economic useful lives are indefinite. If an intangible asset’s economic useful life is deemed indefinite, that asset is not amortized. When we acquire an intangible asset, we consider factors such as the asset's history, our plans for that asset and the market for products associated with the asset. We consider these same factors when reviewing the economic useful lives of our previously acquired intangible assets as well. We review the economic useful lives of

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our intangible assets at least annually. The determination of the economic useful life of an intangible asset requires a significant amount of judgment and entails significant subjectivity and uncertainty.  We complete our analysis of the remaining useful economic lives of our intangible assets during the fourth quarter of each fiscal year or when a triggering event occurs.

Share-Based Compensation

We grant share-based compensation awards to non-employee directors and certain associates under our equity plans. We measure the cost of services received in exchange for equity awards, which include grants of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance stock awards (“PSAs”), and performance stock units (“PSUs”), based on the fair value of the awards on the grant date. These awards may be subject to attainment of certain service conditions, performance conditions and/or market conditions.

We grant PSAs and PSUs to certain officers and associates, which cliff vest after three years and are contingent upon meeting one or more defined operational performance metrics over the three year performance period (“Performance Condition Awards”). The quantity of shares ultimately awarded can range from 0% to 200% of “Target”, as defined in the award agreement as 100%, based on the level of achievement against the defined operational performance metrics. We recognize compensation expense for Performance Condition Awards over the requisite service period to the extent performance conditions are considered probable. Estimating the number of shares of Performance Condition Awards that are probable of vesting requires judgment, including assumptions about future operating performance. While the assumptions used to estimate the probability of achievement against the defined operational performance metrics are management's best estimates, such estimates involve inherent uncertainties. The extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment to share-based compensation expense in the period estimates are revised.

The critical accounting estimates described above supplement the description of our accounting policies disclosed in Note 1 to the accompanying consolidated financial statements. Note 1 describes several other policies that are important to the preparation of our consolidated financial statements, but do not meet the SEC's definition of critical accounting estimates.

New Accounting Guidance

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

Information Regarding Forward-Looking Statements

Certain written and oral statements in this Annual Report may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this Annual Report, in other filings with the SEC, in press releases, and in certain other oral and written presentations. Generally, the words “anticipates”, “believes”, “expects”, “plans”, “may”, “will”, “would”, “should”, “seeks”, “estimates”, “project”, “predict”, “potential”, “currently”, “continue”, “intends”, “outlook”, “forecasts”, “could”, and other similar words identify forward-looking statements. All statements that address operating results, events or developments that may occur in the future, including statements related to sales, 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 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 in this Annual Report under Item 1A., “Risk Factors” and that are otherwise described from time to time in our SEC reports as filed. We

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undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.