Helen of Troy Limited Reports Fourth Quarter Fiscal 2023 Results

Consolidated Net Sales Decline of 16.7%; Core Net Sales Decline of 16.2%

GAAP Diluted EPS of $1.50; Adjusted Diluted EPS of $2.01

GAAP Operating Margin Expansion of 240 Basis Points

Adjusted EBITDA Margin Expansion of 170 Basis Points

Cash Flow from Operations of $158.7 Million, Growth of 8.8%; Free Cash Flow of $130.0 Million^(7)(17)

Initiates Fiscal 2024 Outlook:

Consolidated Net Sales of $1.965-$2.015 Billion

GAAP Diluted EPS of $3.98-$4.84; Adjusted Diluted EPS of $8.50-$9.00

Adjusted EBITDA Growth of 3.2%-6.3%; Free Cash Flow of $250-$270 Million

Further Net Leverage Ratio Reduction to Between 2.0X and 1.85X by the End of Fiscal 2024^(7)(18)

Project Pegasus on Track to Deliver $20M Fiscal 2024 Savings Target

Helen of Troy Limited (NASDAQ:HELE), designer, developer, and worldwide marketer of branded consumer home, outdoor, beauty, and wellness products, today reported results for the three-month period ended February 28, 2023 and provided its outlook for Fiscal 2024.

During the fourth quarter of fiscal 2023, the Company made changes to the structure of the organization as part of its global restructuring plan, Project Pegasus. As a result of these changes, the disclosures included herein reflect two reportable segments, Home & Outdoor and Beauty & Wellness. The previous Health & Wellness and Beauty operating segments are being combined into a single reportable segment, which is referred to herein as "Beauty & Wellness." The Company believes that these changes better align internal resources and external go to market activities to create a more efficient and effective organizational structure. There were no changes to the products or brands included within the Home & Outdoor reportable segment as part of these organizational changes. Comparative prior period segment information has been recast to conform to this change in reportable segments and is included in the accompanying tables beginning on page 31 and titled "Supplemental Recast Segment Financial Information".

Executive Summary – Fourth Quarter of Fiscal 2023 Compared to Fiscal 2022, Fiscal 2021 and Fiscal 2020 Pre-COVID Base

• Consolidated net sales revenue of $484.6 million, a decrease of 16.7% from fiscal 2022, a decrease of 4.9% from fiscal 2021, and an increase of 9.5% from fiscal 2020
• Core business net sales decrease of 16.2% from fiscal 2022, a decrease of 1.8% from fiscal 2021, and an increase of 14.9% from fiscal 2020
• Operating margin of 11.1%, compared to 8.7% for the same period last year
• Adjusted operating margin of 13.8%, compared to 12.5% for the same period last year
• GAAP diluted EPS of $1.50, compared to $1.64 for the same period last year, $0.90 for fiscal 2021, and $(0.13) for fiscal 2020
• Non-GAAP Core adjusted diluted EPS of $2.01, a decrease of 19.9% from fiscal 2022, an increase of 41.5% from fiscal 2021, and an increase of 16.2% from fiscal 2020
• Non-GAAP adjusted diluted EPS of $2.01, a decrease of 19.9% from fiscal 2022, an increase of 28.0% from fiscal 2021, and an increase of 6.9% from fiscal 2020
• Net cash provided by operating activities of $158.7 million, an 8.8% increase compared to $145.9 million for the same period last year
• Adjusted EBITDA margin of 15.2%, compared to 13.5% for the same period last year

Executive Summary - Fiscal 2023 Compared to Fiscal 2022, Fiscal 2021 and Fiscal 2020 Pre-COVID Base

• Consolidated net sales revenue of $2.07 billion, a decrease of 6.8% from fiscal 2022, a decrease of 1.2% from fiscal 2021, and an increase of 21.4% from fiscal 2020
• Core business net sales decline of 5.3% from fiscal 2022, an increase of 2.6% from fiscal 2021, and an increase of 28.3% from fiscal 2020
• GAAP diluted EPS of $5.95, compared to $9.17 for the same period last year, $10.08 for fiscal 2021, and $6.02 for fiscal 2020
• Non-GAAP Core adjusted diluted EPS of $9.45, a decrease of 22.4% from fiscal 2022, a decrease of 14.3% from fiscal 2021, and an increase of 8.4% from fiscal 2020
• Non-GAAP adjusted diluted EPS of $9.45, a decrease of 23.5% from fiscal 2022, a decrease of 18.9% from fiscal 2021, and an increase of 1.6% from fiscal 2020
• Net cash provided by operating activities of $208.2 million, a 47.9% increase compared to $140.8 million for the same period last year
• Adjusted EBITDA margin of 15.8% compared to 17.0% for the same period last year

Julien R. Mininberg, Chief Executive Officer, stated: "I am pleased to report that our fourth quarter financial performance, including our sales and adjusted EPS, was better than expected in what has been one of the most unpredictable and challenging years in memory. We expanded our adjusted operating margin and generated strong free cash flow. We used that cash flow and faster-than-expected progress on the inventory reduction initiative to accelerate our debt pay down in the quarter. Our ending inventory is now below fiscal year 2021 despite recent retailer inventory corrections and our Osprey and Curlsmith acquisitions. Operationally, we also made significant progress. We began shipping from our new state-of-the-art Tennessee distribution facility, which has already been instrumental in consolidating several ancillary facilities and is a key part of our multi-year plan to optimize our distribution footprint and efficiency. With Fiscal 2023 marking the fourth year of Phase II, our Core net sales grew at a 9.1% CAGR, well ahead of the target set at the Phase II starting point in fiscal year 2019, and Core adjusted EPS grew at a 6.8% CAGR despite the many challenges to profitability in our industry and the macro environment."

Mr. Mininberg continued: "Looking at fiscal year 2024, the outlook we are providing today reflects our expectation that we will deliver operational earnings growth, strong free cash flow, expand gross and adjusted operating margins, and deliver adjusted EPS growth in the back half of the fiscal year. Our sales outlook reflects our expectation that the economy, consumers, and several of our categories will continue to experience macro financial pressure. We expect operating margin expansion from lower cost of goods sold and savings from capturing lower freight costs. We also expect Fiscal 2024 gross margins to expand, driven primarily by the early benefits of SKU rationalization under Pegasus, and a more favorable sales mix from growing Hydro Flask, Vicks inhalants, and prestige beauty brands. We are pleased with the progress of the Pegasus workstreams and we remain on track to achieve our savings targets."

Mr. Mininberg concluded: "As detailed in our separate announcement today regarding CEO succession, after what will be 10 years as Helen of Troy's CEO and 34 years in the consumer products industry, I intend to retire upon the conclusion of my employment agreement on February 29, 2024. The board has unanimously appointed our COO, Noel Geoffroy, to become CEO effective March 1, 2024. Noel brings outstanding experience, fresh eyes and a winning attitude that have already fueled significant contributions. I believe the Company will be in excellent hands under her leadership and I look forward to working with her to deliver fiscal 2024 and a smooth transition."

During the fourth quarter of fiscal 2020, the Company committed to a plan to divest certain assets within its Beauty & Wellness segment's mass channel personal care business ("Personal Care"). On June 7, 2021, the Company completed the sale of its North America Personal Care business and on March 25, 2022, the Company completed the sale of the Latin America and Caribbean Personal Care business. The Company defines Core business as strategic business that it expects to be an ongoing part of its operations, and Non-Core business as business or net assets (including net assets held for sale) that it expects to divest within a year of its designation as Non-Core. Accordingly, sales from the Personal Care business were included in Non-Core business for all historical periods presented. As a result of these dispositions, the Company no longer has any results of operations from Non-Core business or any assets or liabilities classified as held for sale.

Consolidated Results - Fourth Quarter Fiscal 2023 Compared to Fourth Quarter Fiscal 2022

• Consolidated net sales revenue decreased $97.4 million, or 16.7% to $484.6 million compared to $582.0 million. The decline was driven by a decrease from Organic business of $115.1 million, or 19.8%. The Organic business decrease was primarily due to lower consumer demand, shifts in consumer spending patterns, reduced orders from retail customers due to higher trade inventory levels, the unfavorable comparative impact of approximately $20 million of accelerated retailer orders in the fourth quarter of fiscal 2022, and a decline of $3.9 million in Non-Core business due to the sale of the Personal Care business. These factors were partially offset by an increase in sales of prestige liquid hair care products, an increase in organic net sales revenue from Osprey, and the impact of customer price increases related to rising freight and product costs. The Organic business decline was partially offset by the inorganic contribution from the acquisitions of Osprey Packs, Inc. ("Osprey") of $10.8 million and Recipe Products Ltd. ("Curlsmith") of $9.0 million, or 3.4% to consolidated net sales revenue.
• Consolidated gross profit margin increased 0.7 percentage points to 43.3%, compared to 42.6%. The increase was primarily due to a favorable mix of more Home & Outdoor sales within consolidated net sales revenue, the favorable impact of the acquisition of Curlsmith, and the favorable comparative impact of EPA compliance costs of $4.0 million recognized during the prior year period. These factors were partially offset by a less favorable product mix, a less favorable channel mix within the Home & Outdoor segment, a less favorable product mix within the wellness categories of the Beauty & Wellness segment and higher inventory obsolescence expense.
• Consolidated selling, general and administrative expense ("SG&A") ratio decreased 4.2 percentage points to 29.8%, compared to 34.0%. The decrease was primarily due to lower annual incentive compensation expense, reduced share-based compensation expense, a decrease in EPA compliance costs of $5.9 million, lower outbound freight costs, the favorable leverage impact of customer price increases related to inflationary costs, and a decrease in marketing expense. These factors were partially offset by the unfavorable leverage impact of the decrease in net sales.
• Consolidated operating income was $53.7 million, or 11.1% of net sales revenue, compared to $50.4 million, or 8.7% of net sales revenue. The increase in consolidated operating margin was primarily due to a decrease in annual incentive compensation expense, reduced share-based compensation expense, a decrease in EPA compliance costs of $9.9 million, lower outbound freight costs, the favorable leverage impact of customer price increases related to inflationary costs, a decrease in marketing expense, a favorable mix of more Home & Outdoor sales within consolidated net sales revenue, and the favorable impact of the acquisition of Curlsmith. These factors were partially offset by the unfavorable leverage impact of the decrease in net sales, restructuring charges of $12.1 million, a less favorable product and channel mix within the Home & Outdoor segment, a less favorable product mix within the wellness categories of the Beauty & Wellness segment and higher inventory obsolescence expense.
• Interest expense was $14.1 million, compared to $3.3 million. The increase in interest expense was primarily due to higher average levels of debt outstanding, including borrowings to fund the acquisition of Curlsmith and construction of a new distribution facility in Tennessee, and higher average interest rates compared to the prior year.
• Income tax expense as a percentage of income before tax was 8.9%, compared to 15.6%, primarily due to shifts in the mix of income in various tax jurisdictions and changes in estimated income used to calculate the estimated annual effective tax rate.
• Net Income was $36.2 million, compared to $39.8 million. Diluted EPS was $1.50 compared to $1.64. The decrease in diluted EPS was primarily due to higher interest expense, which was partially offset by higher operating income, a decrease in the effective income tax rate and lower weighted average diluted shares outstanding.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decreased 6.6% to $73.4 million compared to $78.7 million. Adjusted EBITDA margin improved to 15.2% compared to 13.5% in the same period last year.

On an adjusted basis for the fourth quarters of fiscal 2023 and 2022, excluding acquisition-related expenses, EPA compliance costs, restructuring charges, amortization of intangible assets, and non-cash share-based compensation, as applicable:

• Adjusted operating income decreased $6.0 million, or 8.2%, to $66.7 million, or 13.8% of net sales revenue, compared to $72.6 million, or 12.5% of net sales revenue. The 1.3 percentage point increase in adjusted operating margin was primarily driven by a decrease in annual incentive compensation expense, lower outbound freight costs, the favorable leverage impact of customer price increases related to inflationary costs, a decrease in marketing expense, a favorable mix of more Home & Outdoor sales within consolidated net sales revenue, and the favorable impact of the acquisition of Curlsmith. These factors were partially offset by the unfavorable operating leverage impact of the decrease in net sales, a less favorable product and channel mix within the Home & Outdoor segment, a less favorable product mix within the wellness categories of the Beauty & Wellness segment, and increased inventory obsolescence expense.
• Adjusted income decreased $12.3 million, or 20.2%, to $48.5 million, compared to $60.8 million. Adjusted diluted EPS decreased 19.9% to $2.01, compared to $2.51. The decrease in adjusted diluted EPS was primarily due to lower adjusted operating income and higher interest expense. These factors were partially offset by a decrease in the effective income tax rate and lower weighted average diluted shares outstanding.

Segment Results - Fourth Quarter Fiscal 2023 Compared to Fourth Quarter Fiscal 2022

Home & Outdoor net sales revenue increased $1.1 million, or 0.5%, to $211.9 million, compared to $210.8 million, primarily due to the contribution from the acquisition of Osprey of $10.8 million, or 5.1% to segment net sales revenue growth. This growth was partially offset by a decrease from Organic business of $8.4 million, or 4.0%. The Organic business decrease was primarily driven by lower consumer demand, shifts in consumer spending patterns, reduced orders from retail customers due to higher trade inventory levels, and the unfavorable comparative impact of accelerated retailer orders in the fourth quarter of fiscal 2022. These factors were partially offset by an increase in organic net sales revenue from Osprey, the impact of customer price increases related to rising freight and product costs, and higher sales in the closeout channel.

Home & Outdoor operating income increased 38.5% to $31.3 million, or 14.8% of segment net sales revenue, compared to $22.6 million, or 10.7% of segment net sales revenue. The 4.1 percentage point increase was primarily due to lower inventory obsolescence expense, lower share-based compensation expense, the favorable comparative impact of acquisition-related expense incurred in the prior year, and the net impact of inflationary costs and related customer price increases. These factors were partially offset by the impact of the acquisition of Osprey, which has a lower operating margin than the rest of the Home & Outdoor segment, unfavorable organic operating leverage, restructuring charges of $3.1 million, a less favorable channel mix, and an increase in marketing expense. Adjusted operating income increased 31.3% to $36.2 million, or 17.1% of segment net sales revenue, compared to $27.5 million, or 13.1% of segment net sales revenue.

Beauty & Wellness net sales revenue decreased $98.5 million, or 26.5%, to $272.7 million, compared to $371.2 million. The decline was driven by a decrease from Organic business of $106.7 million, or 28.7%, primarily due to lower sales of hair appliance, thermometry, air filtration, humidification, and seasonal products, primarily driven by lower consumer demand, shifts in consumer spending patterns, reduced orders from retail customers due to higher trade inventory levels, and a decline from Non-Core business of $3.9 million due to the sale of the Personal Care business. These factors were partially offset by an increase in prestige market personal and hair care category sales and the impact of customer price increases related to rising freight and product costs.

Beauty & Wellness operating income was $22.4 million, or 8.2% of segment net sales revenue, compared to $27.8 million, or 7.5% of segment net sales revenue. The 0.7 percentage point increase in segment operating margin was primarily due to a decrease in EPA compliance costs of $9.9 million, decreased annual incentive compensation expense, a decrease in share-based compensation, the favorable impact of the acquisition of Curlsmith, lower marketing expense, and reduced outbound freight costs. These factors were partially offset by unfavorable operating leverage, a less favorable product mix within the wellness categories, restructuring charges of $9.0 million, and higher inventory obsolescence expense. Adjusted operating income decreased to $30.5 million, or 11.2% of segment net sales revenue, compared to $45.1 million, or 12.1% of segment net sales revenue.

Balance Sheet and Cash Flow Highlights - Fiscal 2023 Compared to Fiscal 2022

• Cash and cash equivalents totaled $29.1 million, compared to $33.4 million.
• Accounts receivable turnover for fiscal 2023 was 69.4 days, compared to 66.0 days.
• Inventory was $455.5 million, compared to $558.0 million. Inventory turnover was 2.1 times, compared to 2.3 times.
• Total short- and long-term debt was $934.4 million, compared to $813.2 million, primarily due to the acquisition of Curlsmith and investments in construction of the new distribution facility.
• Net cash provided by operating activities for fiscal 2023 was $208.2 million, compared to $140.8 million.
• Free cash flow for fiscal 2023 was $33.4 million^(7)(17), which includes $147 million of capital expenditures for the new distribution facility.

Restructuring Plan

The Company previously announced a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs (collectively referred to as "Project Pegasus"). Project Pegasus includes multiple workstreams to further optimize the Company's brand portfolio, streamline and simplify the organization, accelerate cost of goods savings projects, enhance the efficiency of its supply chain network, optimize its indirect spending, and improve its cash flow and working capital, as well as other activities. The Company anticipates these initiatives will create operating efficiencies, as well as provide a platform to fund future growth investments.

As part of the Pegasus workstream focused on streamlining and simplifying the organization, in January 2023, the Company announced three major changes to the structure of its organization. The first change results in combining the Beauty and Health & Wellness businesses into a single reportable segment that will be referred to and reported as "Beauty & Wellness." The second is the creation of a North America Regional Market Organization (RMO) responsible for sales and go to market strategies for all categories and channels in the United States and Canada. The third is further centralization of certain functions under shared services, especially in Operations and Finance to better support the business segments and RMOs. The new structure will reduce the size of the global workforce by approximately 10%. The majority of the role reductions were completed by March 1st, 2023. Nearly all of the remaining role reductions are expected to be completed before the end of fiscal year 2024. The Company believes that these changes better focus business segment resources on brand development, consumer-centric innovation and marketing, the RMOs on sales and go to market strategies, and shared services on their respective areas of expertise while also creating a more efficient and effective organizational structure.

Consistent with the third quarter of fiscal 2023, the Company continues to have the following expectations regarding Project Pegasus:

• Targeted annualized pre-tax operating profit improvements of approximately $75 million to $85 million, which the Company expects to substantially begin in fiscal 2024 and be substantially achieved by the end of fiscal 2026.
• Estimated cadence of the recognition of the savings will be approximately 25% in fiscal 2024, approximately 50% in fiscal 2025 and approximately 25% in fiscal 2026.
• Total profit improvements to be realized approximately 60% through reduced cost of goods sold and 40% through lower SG&A.
• Total one-time pre-tax restructuring charges of approximately $85 million to $95 million, over the duration of the plan, which are expected to be substantially completed by the end of fiscal 2024 and will primarily be comprised of severance and employee related costs, professional fees, contract termination costs, and other exit and disposal costs.
• All of the Company's operating segments and shared services will be impacted by the plan.

Fiscal 2024 Annual Outlook

The Company expects consolidated net sales revenue in the range of $1.965 billion to $2.015 billion, which implies a decline of 5.2% to 2.8%. This includes a year-over-year decline of $35 million, or 1.7%, from the removal of Bed, Bath & Beyond revenue from our outlook, and a similar sized reduction from our Pegasus SKU rationalization initiative. The Company's sales outlook reflects what it believes will be a continued slower economy and uncertainty in spending patterns, especially for discretionary categories. It also reflects the Company's belief that consumers seek to prioritize value in the current environment of inflation and higher interest rates. The Company has seen some reduction of trade inventory on a sequential basis as many key retailers have lowered their inventory on hand and expects that sell-in will more closely match sell-through in fiscal 2024.

The Company's fiscal year net sales outlook reflects the following expectations by segment:

• Home & Outdoor net sales decline of 1.7% to growth of 1.0%; and
• Beauty & Wellness net sales decline of 8.0% to 5.8%.

The Company expects consolidated GAAP diluted EPS of $3.98 to $4.84 and non-GAAP adjusted diluted EPS in the range of $8.50 to $9.00, which implies an adjusted diluted EPS decline of 10.1% to 4.8%. This reflects additional year-over-year expense from the restoration of annual incentive compensation expense to target levels, as well as higher interest and depreciation expense, totaling approximately $1.79, net of tax.

The Company expects consolidated adjusted EBITDA of $338 million to $348 million, which implies growth of 3.2% to 6.3%. Free cash flow is expected to be $250 million to $270 million. The Company's net leverage ratio, as defined in our Credit Agreement, is expected to end fiscal 2024 at 2.0x to 1.85x^(7)(18).

In terms of the quarterly cadence of sales and adjusted diluted EPS, the Company expects the majority of its net sales growth to be concentrated in the third quarter of fiscal 2024 and adjusted diluted EPS growth to be concentrated in the third and fourth quarters of fiscal 2024. The Company expects declines in net sales of approximately 9%-7% and 7%-5% in the first and second quarters of fiscal 2024, respectively. The Company also expects to realize the benefits of debt deleveraging and lower inbound freight and product costs more fully in the second half of the year. Accordingly, the Company expects a decline in adjusted diluted EPS of approximately 20% to 30% in the first half of fiscal 2024, with near offsetting growth in the second half of the year.

The Company's consolidated net sales and EPS outlook also reflects the following assumptions:

• the severity of the cough/cold/flu season will be in line with pre-COVID historical averages;
• April 2023 foreign currency exchange rates will remain constant for the remainder of the fiscal year;
• expected interest expense in the range of $55 million to $57 million based on the current assumption the Federal Open Market Committee will increase interest rates by 100 basis points during calendar year 2023;
• a reported GAAP effective tax rate range of 19.0% to 21.0% for the full fiscal year 2024 and an adjusted effective tax rate range of 13.1% to 13.2%; and
• an estimated weighted average diluted shares outstanding of 24.3 million.

The likelihood, timing and potential impact of a significant or prolonged recession, any fiscal 2024 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, additional interest rate increases, or share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company's outlook.

Conference Call and Webcast

The Company will conduct a teleconference tomorrow to discuss today's earnings release. The teleconference begins at 9:00 a.m. Eastern Time, Thursday, April 27, 2023. Institutional investors and analysts interested in participating in the call are invited to dial (877) 407-3982 approximately ten minutes prior to the start of the call. The conference call will also be webcast live on the Events & Presentations page at: http://investor.helenoftroy.com/. A telephone replay of this call will be available at 12:00 p.m. Eastern Time on April 27, 2023, until 11:59 p.m. Eastern Time on May 11, 2023 and can be accessed by dialing (844) 512-2921 and entering replay pin number 13737077. A replay of the webcast will remain available on the website for one year.

Non-GAAP Financial Measures

The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States of America ("GAAP"). To supplement its presentation, the Company discloses certain financial measures that may be considered non-GAAP such as Adjusted Operating Income, Adjusted Operating Margin, Adjusted Effective Tax Rate, Adjusted Income, Adjusted Diluted Earnings per Share ("EPS"), Core and Non-Core Adjusted Diluted EPS, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Net Leverage Ratio, which are presented in accompanying tables to this press release along with a reconciliation of these financial measures to their corresponding GAAP-based measures presented in the Company's consolidated statements of income and cash flows. For additional information see Note 7 to the accompanying tables to this press release.

About Helen of Troy Limited

Helen of Troy Limited (NASDAQ:HELE) is a leading global consumer products company offering creative products and solutions for its customers through a diversified portfolio of well-recognized and widely-trusted brands, including OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar. The Company sometimes refers to these brands as its Leadership Brands. All trademarks herein belong to Helen of Troy Limited (or its subsidiaries) and/or are used under license from their respective licensors.

For more information about Helen of Troy, please visit http://investor.helenoftroy.com.

Forward-Looking Statements

Certain written and oral statements made by the Company and subsidiaries of the Company may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this press release, in other filings with the SEC, and in certain other oral and written presentations. Generally, the words "anticipates", "believes", "expects", "plans", "may", "will", "might", "would", "should", "seeks", "estimates", "project", "predict", "potential", "currently", "continue", "intends", "outlook", "forecasts", "targets", "could", and other similar words identify forward-looking statements. All statements that address operating results, events or developments that the Company expects or anticipates may occur in the future, including statements related to sales, expenses, EPS results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon its current expectations and various assumptions. The Company believes there is a reasonable basis for these expectations and assumptions, but there can be no assurance that the Company will realize these expectations or that these assumptions will prove correct. Forward-looking statements are only as of the date they are made and are subject to risks that could cause them to differ materially from actual results. Accordingly, the Company cautions readers not to place undue reliance on forward-looking statements. The forward-looking statements contained in this press release should be read in conjunction with, and are subject to and qualified by, the risks described in the Company's Form 10-K for the year ended February 28, 2023, and in the Company's other filings with the SEC. Investors are urged to refer to the risk factors referred to above for a description of these risks. Such risks include, among others, the occurrence of cyber incidents or failure by the Company or its third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer data, a cybersecurity breach, obsolescence or interruptions in the operation of the Company's central global Enterprise Resource Planning systems and other peripheral information systems, the geographic concentration of certain United States ("U.S.") distribution facilities which increase its risk to disruptions that could affect the Company's ability to deliver products in a timely manner, the Company's ability to develop and introduce a continuing stream of innovative new products to meet changing consumer preferences, actions taken by large customers that may adversely affect the Company's gross profit and operating results, the Company's dependence on sales to several large customers and the risks associated with any loss of, or substantial decline in, sales to top customers, the Company's dependence on third-party manufacturers, most of which are located in Asia, and any inability to obtain products from such manufacturers, the Company's ability to deliver products to its customers in a timely manner and according to their fulfillment standards, the risks associated with trade barriers, exchange controls, expropriations, and other risks associated with domestic and foreign operations including uncertainty and business interruptions resulting from political changes and actions in the U.S. and abroad, such as the current conflict between Russia and Ukraine, and volatility in the global credit and financial markets and economy, the Company's dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, any public health crises or similar conditions, risks associated with the use of licensed trademarks from or to third parties, risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors, the Company's reliance on its Chief Executive Officer and a limited number of other key senior officers to operate its business, the Company's ability to execute and realize expected synergies from strategic business initiatives such as acquisitions, divestitures and global restructuring plans, including Project Pegasus, the risks of potential changes in laws and regulations, including environmental, employment and health and safety and tax laws, and the costs and complexities of compliance with such laws, the risks associated with increased focus and expectations on climate change and other environmental, social and governance matters, the risks associated with significant changes in or the Company's compliance with regulations, interpretations or product certification requirements, the risks associated with global legal developments regarding privacy and data security that could result in changes to its business practices, penalties, increased cost of operations, or otherwise harm the business, the Company's dependence on whether it is classified as a "controlled foreign corporation" for U.S. federal income tax purposes which impacts the tax treatment of its non-U.S. income, the risks associated with legislation enacted in Bermuda and Barbados in response to the European Union's review of harmful tax competition, the risks associated with accounting for tax positions and the resolution of tax disputes, the risks of significant tariffs or other restrictions being placed on imports from China, Mexico or Vietnam or any retaliatory trade measures taken by China, Mexico or Vietnam, the risks associated with product recalls, product liability and other claims against the Company, and associated financial risks including but not limited to, significant impairment of the Company's goodwill, indefinite-lived and definite-lived intangible assets or other long-lived assets, increased costs of raw materials, energy and transportation, the risks to the Company's liquidity or cost of capital which may be materially adversely affected by constraints or changes in the capital and credit markets, interest rates and limitations under its financing arrangements, risks associated with foreign currency exchange rate fluctuations, and projections of product demand, sales and net income, which are highly subjective in nature, and from which future sales and net income could vary in a material amount. The Company undertakes no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.