HELE 10-K & 10-Q changes, risk factors and insider trading

Carefully consider the risks described below and all of the other information included in our Annual Report when deciding whether to invest in our securities or otherwise evaluating our business. If any of the risks or other events or circumstances described elsewhere in this Annual Report materialize, our business, operating results or financial condition may suffer. InAs thisa case,result, the trading price of our common stock and the value of your investment might significantly decline. The risks listed below are not the only risks that we face. Additional risks unknown to us or that we currently believe are insignificant may also affect our business.

•The occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer datadata, could have a material adverse effect on our operations and profitability.

•We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in the event of a prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, geopolitical conditions including global conflicts or wars, any public health crises or similar conditions.

•All of our products are manufactured by unaffiliated manufacturers, most of which are located in China, MexicoVietnam and VietnamMexico; therefore, we face risks of significant tariffs or other restrictions continuing to be placed on imports from China, MexicoVietnam or Vietnam, including by the new U.S. presidential administration which has promotedMexico and implemented plans to raise tariffs and pursue other trade policies intended to restrict imports. We also face risks of any retaliatory trade measures taken by China,these Mexicocountries oragainst Vietnamthe U.S adversely impacting our business.

•LegislationRegulatory enactedchanges in BermudaBermuda, and Barbados in response to the European Union’s (“EU”) review of harmful tax competition, and additional focus on compliance withincluding economic substance requirements by Bermuda and Barbados,tax governance requirements, could each adversely affect our operations.

During fiscal 2025,2026, most of our U.S. distribution, receiving and storage functions were consolidatedconcentrated intoin two distribution facilities in northern Mississippi and our new distribution facility in Gallaway, TennesseeTennessee, that became operational during the first quarter of fiscal 2024. Our three distribution facilitieswhich are in close proximity to each other. Approximately 60% of our consolidated gross sales volume shipped from facilities in this region in fiscal 2025.2026. Due to this geographical concentration, anya disruption in our distribution process inat any of these facilities, evenincluding forsevere aweather fewevents, days, could adversely affect our business, operating results and financial condition. As examples,or government mandated or suggested isolation protocols relating to a pandemic or other public health crisis, oreven severefor weathera events,few days, could limit or disrupt theour distribution process at these facilities,process, or evenpotentially causelead to the temporary closure of a facility,facility. whichAny could have a material adverse effect on our business, operating results and financial condition. These factors described above could causeresulting delays in the delivery of our products that could have a material and adverse effect on our business, operating results and financial condition.

The occurrence of cyber incidents, or failure by us or our third-party service providers to maintain cybersecurity and the integrity of confidential internal or customer datadata, could have a material adverse effect on our operations and profitability. Such incidents may also result in faulty business decisions, operational inefficiencies, damage to our reputation or our associate and business relationships, and/or subject us to costs, fines, or lawsuits.

Information systems require constant updates to their security policies, networks, software, and hardware systems to reduce the risk of unauthorized access, malicious destruction of data or information theft. In addition, attacks upon information technology systems are increasing in their frequency, level of sophistication, persistence and intensity,intensity and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. We rely on commercially available systems, software, tools, third-party service providers and monitoring to provide security for processing, transmission and storage of confidential information and data. While we have security measures in place, our systems, networks, and third-party service providers have been and will continue to be subject to ongoing threats. We and our third-party service providers have experiencedexperienced, and expect to continue to experienceexperience, actual or attempted cyber-attacks of our information systems or networks. We do not believe we have experienced any material system security breach that to date has had a material impact on our operations or financial condition. However, if any such event, whether actual or perceived, were to occur, it could have a material adverse effect on our business, operating results and financial condition. Our security measures may also be breached in the future as a result of associate error, failure to implement appropriate processes and procedures, advances in computer and software capabilities and encryption technology, new tools and discoveries, malfeasance, third-party action, including cyber-attacks, hacking, phishing attacks, malware (e.g., ransomware) or other misconduct by computer hackers or otherwise. Additionally, we may have heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements. Our workforce operates with a combination of remote work and flexible work schedules opening us up for cybersecurity threats and potential breaches as a result of increased associate usage of networks other than company-managed networks. Furthermore, due to geopolitical tensions around the world, the risk of cyber-attacks may be elevated. This could result in one or more third-parties obtaining unauthorized access to our customer or supplier data or our internal data, including personally identifiable information, intellectual property and other confidential business information. Third-parties may also attempt through phishing attacks or other forms of social engineering schemes or deceptive practices to fraudulently induce associates into disclosing sensitive information such as usernames, passwords or other information in order to gain access to customer or supplier data or our internal data, including intellectual property, financial, and other confidential business information.

Furthermore, although we limitgovern the use of generative artificial intelligence (including machine learning) (AI) technologies by our associates, our third-party manufacturers, vendors and service providers may use generative AI technologies or systems. The development, adoption and use of AI technologies are still in their early stages and are complex. The algorithms and models utilized in generative AI technologies and systems may have limitations, including biases, errors, or inability to handle certain data types or scenarios. There are also risks of system failures, disruptions or vulnerabilities that could compromise the integrity, security or privacy of the AI generated content, including the use of cyberattacks against such emerging technologies. The ineffective or inadequate AI development or deployment practices by any of our third-party manufacturers, vendors or service providers could result in unintended consequences and may intensify our cybersecurity risks.

Our operations are largely dependent on our ERP system. We continuously make adjustments to improve the effectiveness of the ERP and other peripheral information systems, including the installation of significant new subsystems. In fiscal 2026, we are planning to replacereplaced our financial consolidation, planning and reporting systemsystem. andIn fiscal 2027, we are planning to replace our supply chain planning system, as further described below.system. Our ERP system is subject to continually evolving cybersecurity and technological risks, including risks associated with cloud data storage. Any failures or disruptions in the ERP and other information systems, including a cybersecurity breach, or any complications resulting from ongoing adjustments to our systems could cause interruption or loss of data in our information or logistical systems that could materially impact our ability to procure products from our manufacturers, transport them to our distribution facilities, and store and deliver them to our customers on time and in the correct amounts. In addition, natural disasters or other extraordinary events may disrupt our information systems and other infrastructure, and our data recovery processes may not be sufficient to protect against loss.

In fiscal 2026, we replaced our financial consolidation, planning and reporting system, and we are planning to replace our financial consolidation, planning and reporting system and supply chain planning system to embrace next-level data and analytics by investing in capabilities that are expected to leverage best in class ways of working and modernized technologies that enhance efficiency, effectiveness and experience. AsIn partthe of our strategy to embrace next-level data and analytics,future, we could identify and embark upon additional projects to upgrade or replace our information systems. These projects and any potential future projects will require the investment of significant personnel and financial resources and the re-engineering of business processes. System implementations subject us to substantial costs and inherent risks associated with migrating from our legacy systems and processes. These costs and risks include, but are not limited to: significant capital and operating expenditures; diversion of associates'associates’ and management'smanagement’s attention from day-to-day business operations; disruptions to our supply chain; inability to deliver products to our customers in a timely manner; inability to process payments to manufacturers, vendors and associates accurately and in a timely manner; and possible weakened effectiveness of our internal controls over financial reporting. If we are not able to successfully design and implement new systems as planned and in a timely manner, we could incur increased costs, disruptions to our operations or other difficulties, each of which could have a material adverse effect on our business, operating results and financial condition.

A few customers account for a substantial percentage of our net sales revenue. Our financial condition and operating results could suffer if we lost all or a portion of the sales to any one of these customers. In particular, sales to our two largest customers accounted for approximately 33% of our consolidated net sales revenue in fiscal 2025.2026. While only three customers individually accounted for 10% or more of our consolidated net sales revenue in fiscal 2025,2026, sales to our top five customers in aggregate accounted for approximately 49%50% of fiscal 20252026 consolidated net sales revenue. We expect that a small group of customers will continue to account for a significant portion of our net sales revenue. Although we have long-standing relationships with our major customers, we generally do not have written agreements that require these customers to buy from us or to purchase a minimum amount of our products. A substantial decrease in sales to any of our major customers could have a material adverse effect on our financial condition and operating results. For example, we had reduced sales to Bed, Bath & Beyond during fiscal 2024 and 2025 in comparison to prior years as a result of its bankruptcy. Some of our customers'customers’ creditworthiness may be vulnerable to the impact of a prolonged economic downturn or a public health crisis. We regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate. Despite these efforts, a deterioration in the credit worthiness or bankruptcy filing of a key customer could have a material adverse effect on our business, operating results and financial condition.

All of our products are manufactured by unaffiliated companies, most of which are in Asia, principally in China.Asia. For fiscal 2025,2026, finished goods manufactured in Asia comprised approximately 79%83% of total finished goods purchased, of which 63%57% was manufactured in China. This concentration exposes us to risks associated with doing business globally, including among others: global public health crises (such as pandemics and epidemics); changing international political relations and conflicts; labor availability and cost; changes in laws, including tax laws, regulations and treaties; changes in labor laws, regulations and policies; changes in customs duties, additional tariffs and other trade barriers; changes in shipping costs; currency exchange fluctuations; local political unrest; an extended and complex transportation cycle; the impact of changing economic conditions; and the availability and cost of raw materials and merchandise. In recent years, increasing labor costs, import tariffs, regional labor dislocations driven by new government policies, local inflation, changes in ocean cargo carrier capacity and costs, the impact of energy prices on transportation, and fluctuations in the Chinese Renminbi against the U.S. Dollar have resulted in variability in our cost of goods sold. In the past, certain Chinese suppliers have closed operations due to economic conditions that pressured their profitability. Although we have multiple sourcing partners for certain products, occasionally we may be unable to source certain items on a timely basis due to changes occurring with our suppliers. We believecontinue thatto wemake canprogress sourcein sourcing certain similar products outside of China and arehave movinginitiated towardssignificant aefforts moreto diversifieddiversify our supplier base outside of China through continuously exploring the expansion of sourcing alternatives in other countries,countries makingwhere progresswe towardsexpect suchtariffs, capabilitiesoverall duringcosts bothor fiscalsourcing 2025risks andto 2024.be lower. However, the relocation of any production capacity will continue to require more time, could require substantial costs and may not be successful. The political, legallegal, trade and cultural environment in Asia is rapidly evolving, and any change that impairs our ability to obtain products from manufacturers in that region, or to obtain products at marketable rates, could have a material adverse effect on our business, operating results and financial condition. Recently imposed tariffs resulted in the pause or cancellation of direct import orders from China by certain of our key retailers, which adversely impacted our net sales revenue during fiscal 2026. Our sales were also negatively impacted by evolving dynamics in the China market, including a shift toward localized fulfillment models and heightened competition from domestic sellers benefiting from government subsidies. Any further trade-related developments between China and the U.S. could have a material adverse effect on our business, operating results and financial condition.

Any disruption to our supply chain, even for a relatively short period of time, could cause a loss of revenue, which could adversely affect our operating results. Additionally, any surges in demand and shifts in shopping patterns, as well as other factors, can strain the global supply chain network resulting in higher inbound freight costs and surges in prices for raw materials, components and semiconductor chips, which could adversely impact our operating costs. WhileRecently weimposed witnessedtariffs declineshave increased our cost of goods sold in inbound freight costs during fiscal 2024 from the higher costs we experienced as a result of the COVID-19 pandemic2026 and relatedmay globalcontinue supplyto chainunfavorably disruptions, there was minimal volatility inimpact our inboundcosts. freight costs during fiscal 2025. However, ifIf global supply chain disruptions re-emerge,or further trade-related policies or import restrictions emerge, we may experience further cost increases which could have a material adverse effect on our business, operating results and financial condition.

Retailers place great emphasis on timely delivery of our products for specific selling seasons, especially during our third fiscal quarter, and on the fulfillment of consumer demand throughout the year. We cannot control all of the various factors that might affect product delivery to retailers. Vendor production delays, difficulties encountered in shipping from overseas, customs clearance delays, and operational issues with any of the third-party logistics providers we use in certain countries are on-going risks of our business. We also rely upon third-party carriers for our product shipments from our distribution facilities to customers. In certain circumstances, we rely on the shipping arrangements our suppliers have made in the case of products shipped directly to retailers from the suppliers. Accordingly, we are subject to risks, including labor disputes, inclement weather, public health crises (such as pandemics and epidemics), natural disasters, possible acts of terrorism, port and canal backlogs and blockages, availability of shipping containers, carrier-imposed capacity restrictions, carrier delays, shortages of qualified drivers, tariffs and other trade restrictions and increased security restrictions associated with the carriers’ ability to provide delivery services to meet our shipping needs. Our third-party manufacturing partners are not equipped to hold meaningful amounts of inventory and if shipping container capacity is limited or unavailable, they could pause manufacturing, which could ultimately impact our ability to meet consumer demand on a timely basis. Further, our delivery process must often accommodate special vendor requirements to use specific carriers and delivery schedules. During the first quarter of fiscal 2025, we experienced automation system startup issues at our new distribution facility in Gallaway, Tennessee which impacted some of our Home & Outdoor segment'ssegment’s small retail customer and direct-to-consumer orders. As a result, our sales during the first quarter of fiscal 2025 were adversely impacted due to shipping disruptions, and we incurred additional costs and lost efficiency during both the first and second quarters of fiscal 2025 as we worked to remediate the issues. As a result of the remediation efforts performed, the automation system began to operate as designed during the third quarter of fiscal 2025, and we achieved targeted efficiency levels by the end of fiscal 2025. Any future similar incidents could cause us to fail to deliver products to our retailers in a timely and effective manner which could damage our reputation and brands and result in the loss of customers or reduced orders, which could have a material adverse effect on our business, operating results and financial condition.

•increases in dutiesduties, tariffs and taxation;

Some of these events have occurred, such as increases in tariffs, which adversely impacted our cost of goods sold and had cascading adverse impacts on our net sales revenue, business, results of operations and cash flows. Should any of these events occur,reoccur or occur in the future, our ability to sell or export our products or repatriate profits could be impaired, we could experience a loss of sales and profitability from our domestic or international operations, and/or we could experience a substantial impairment or loss of assets, any of which could materially and adversely affect our business, operating results and financial condition.

We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in the event of a prolonged economic downturn, including a downturn from the effects of macroeconomic conditions, geopolitical conditions including global conflicts or wars, any public health crises or similar conditions.

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

Sales in our Beauty & Wellness segment are influenced by weather conditions. Sales volumes for thermometers and humidifiers and heating appliances are higher during, and subject to the severity of, the cold weather months, while sales of fans are higher during, and subject to weather conditions in, spring and summer months. Weather conditions can also more broadly impact sales across the organization. Additionally, natural disasters (such as wildfires, hurricanes and ice storms), public health crises (such as pandemics and epidemics), or unusually severe winter weather may result in temporary unanticipated fluctuations in retail traffic and consumer demand, may impact our ability to staff our distribution facilities or could otherwise impede timely transport and delivery of products to and from our distribution facilities. Sales in our Beauty & Wellness segment are also impacted by cough, cold and flu seasonal trends, including the duration and severity of the cold and flu season. In fiscal 2026 and 2025, our Beauty & Wellness segment'ssegment’s net sales revenue was adversely impacted by an illness season below historical averages globally. These factors could have a material effect on our business, operating results and financial condition.

During fiscal 2026, we had a transition in our CEO. The loss of our current CEO or any of our key senior officers could have a material adverse effect on our business, operating results and financial condition, particularly if we are unable to hire and integrate suitable replacements on a timely basis. Further, as we continue to grow our business, we will continue to adjust our senior management team. If we are unable to attract or retain the right individuals for the team, it could hinder our ability to efficiently execute our business, and could disrupt our operations or otherwise have a material adverse effect on our business.

We continue to look for strategic business opportunities to drive long-term growth and operating efficiencies, which may include acquisitions, divestitures and/or global restructuring plans. We frequently evaluate our brand portfolio and product portfolio and may consider acquisitions that complement our business or divestitures, or exits of businesses, that we no longer believe to be an appropriate strategic fit. We have initiated, and may initiate in the future, global restructuring plans, such as Project Pegasus, to achieve strategic objectives and improve financial results. Any acquisition, divestiture or global restructuring plan, if not favorably received by consumers, shareholders, analysts, and others in the investment community, could have a material adverse effect on the price of our common stock.

If significant tariffs or other restrictions continue to be placed on imports from China, MexicoVietnam or VietnamMexico, or any retaliatory trade measures are taken by China, MexicoVietnam or Vietnam,Mexico, our business and results of operations could be materially and adversely affected.

The impact of future legislation in the U.S. or abroad, including such things as employment and health insurance laws, environmental and climate change related legislation, tax legislation, regulations or treaties is always uncertain. Global, federal and local legislative agendas from time to time contain numerous proposals dealing with environmental policy, energy policy, taxes, financial regulation, transportation policy and infrastructure policy, among others that, if enacted into law, could increase our costs of doing business. Changes in government administrations in the U.S. or abroad,abroad increase the uncertainty of future changes in legislation, enhanced regulations, and greater oversight, or more stringent interpretations, of existing policies by regulatory agencies. Changes in such laws, regulations or oversight could cause us to incur material capital or operating expenditures in the future to comply with applicable laws and regulations, increase our effective income tax rate, delay or interrupt distribution of our products, or make them more costly to produce, all of which could have a material adverse impact on our business.

For example, the Organisation for Economic Co-operation and Development (“OECD”) has introduced a framework to implement a global minimum corporate income tax of 15%, referred to as “Pillar Two.” Certain countries in which we operate have enactedenacted, Pillar Two legislation and continue to modify their rules and guidance, often to align with ongoing OECD interpretive guidance on the “Model Rules.” Meanwhile, additional countriesor are in the process of introducingenacting, domestic legislation toaligned implementwith OECD’s Pillar Two,Two even“Model as the OECD continues to modify its administrative guidance.Rules.” Pillar Two legislation effectivein effect for our fiscal 2025 and 2026 has been incorporated into our consolidated financial statements. However, thePillar extentTwo toremains whichan otherevolving regime, and as additional jurisdictions adopt these rules, existing rules are revised, or enactadministrative Pillar Two is uncertainguidance and couldenforcement increasepractices the cost and complexity of compliance, anddevelop, we expect that it could have a further materialexperience adverse affectimpacts on our global effective tax rate and an increase in fiscalthe 2026.cost and complexity of compliance.

Increased focus and expectations on sustainability are emerging trends with governmental and non-governmental organizations, consumers, shareholders, retail customers, communities, and other stakeholders. These trends have led to, among other things, increased public and private social accountability reporting requirements relating to labor practices, climate change, human trafficking and other sustainability matters and greater demands on our packaging and products. The increased focus on sustainability matters may also lead to new or more regulations and customer, shareholder and consumer demands that could require us to incur additional costs or make changes to our operations to comply with new regulations or address these demands. For example, we anticipate the reporting requirements under the EU Corporate Sustainability Reporting Directive to be effective for us in fiscal 2029. We expect that these trends will continue. If we are unable to adequately respond to, or we are not perceived as adequately responding to, existing or new requirements or demands, customers and consumers may choose to purchase products from another company or a competitor. Increased requirements and costs to comply with these requirements, such as climate change regulations and international accords may also cause disruptions in or higher costs associated with manufacturing or distributing our products. Any failure to achieve our sustainability goals or a perception of our failure to act responsibly or to effectively respond to new, or changes in, legal or regulatory requirements relating to sustainability matters could adversely affect our business, financial condition, results of operations and reputation.

We are encountering increasingly burdensome and costly requirements relating to the regulation of our company and our products. Significant new regulations, material changes to existing regulations, or greater oversight, enforcement or changes in interpretation of existing regulations, could further delay or interrupt distribution of our products in the U.S. and other countries, result in fines or penalties or cause our costs of compliance to increase. We cannot guarantee that our products will receive regulatory approval in all countries. For example, someSome of our Beauty & Wellness segment’s customers require that our hair appliances comply with various safety certifications, including UL certifications. Significant new certification requirements or changes to existing certification requirements could further delay or interrupt distribution of our products,products or make them more costly to produce.

We are not able to predict the nature of potential changes to, or enforcement ofof, laws, regulations, product certification requirements, repeals or interpretations. Nor are we able to predict the impact that any of these changes would have on our business in the future. Further, if we were found to be noncompliant with applicable laws and regulations in these or other areas, we could be subject to private rights of action and similar proceedings seeking to enforce regulatory requirements and governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, any of which could have a material adverse effect on our business, results of operations and financial condition.

Additionally, some of our product lines 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.Commission and the EU. As discussed elsewhere in this Annual Report, during fiscal 2022 and 2023, we were in discussions with the EPA regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration categories and ahumidification limited subset of humidifier productscategories within the Beauty & Wellness segment that are sold in the U.S. As a result of these packaging and labeling compliance discussions, we voluntarily implemented a temporary stop shipment action on the impacted products as we worked with the EPA towards an expedient resolution. We resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we completed the repackaging and relabeling of our existing inventory of impacted products during fiscal 2023. Additionally,We ascontinue ato resulthave of continuing dialogue with the EPA, we executed further repackaging and relabeling plans on certain additional humidifier products and certain additional air filtration products, which were also completed during fiscal 2023. Ongoingongoing settlement discussions with the EPA related to this mattermatter. may result in the impositionAs of finesFebruary or28, penalties in the future. Such potential fines or penalties cannot be reasonably estimated. Additional impacts or more pronounced adverse impacts may arise that2026, we areaccrued notan awareestimated liability of today.$4.4 million, which represents our best estimate of probable settlement costs related to this matter. As a result, our business, results of operations and financial condition could be adversely and materially impacted in ways that we are not able to predict today. For additional information refer to Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “EPA Compliance Costs” in this Annual Report.

A non-U.S. corporation, such as ours, will constitute a “controlled foreign corporation” or “CFC” for U.S. federal income tax purposes if its largest U.S. shareholders together own more than 50 percent of the stock outstanding. A U.S. shareholder is defined as any U.S. person who owns directly, indirectly, or constructively: (1) 10 percent or more of the total combined voting power of all classes of stock, or (2) 10 percent or more of the total value of shares of all classes of stock. If the IRSInternal Revenue Service or a court determined that we were a CFC at any time during the tax year, then each of our U.S. shareholders as defined above would be required to include in gross income for U.S. federal income tax purposes its pro rata share of our “subpart F income” (and the subpart F income of any of our subsidiaries determined to be a CFC) for the period during which we (and our non-U.S. subsidiaries) were deemed a CFC. In addition, any gain on the sale of our shares realized by such a shareholder may be treated as ordinary income to the extent of the shareholder’s proportionate share of our and our CFC subsidiaries’ undistributed earnings and profits accumulated during the shareholder’s holding period of the shares while we were deemed to be a CFC.

Management uses the following key financial measures, some of which are non-GAAP, as further described below: net sales revenue, organic business sales revenue, adjusted operating margin,margin and adjusted diluted EPS.earnings per share (“EPS”). Management uses these measures to evaluate historical performance on a comparable basis, predict future performance and benchmark our performance against our competitors. We believe these measures provide management and investors with important information that is useful in understanding our business results and trends.

This MD&A, including the tables under the headings “Operating (Loss) Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin (non-GAAP) by Segment” and “Net (Loss) Income, Diluted EPS,(Loss) Earnings Per Share, Adjusted Income (non-GAAP), and Adjusted Diluted EPSEarnings Per Share (non-GAAP),” reports operating (loss) income, operating margin, net (loss) income and diluted (loss) earnings per share (“EPS”) without the impact of acquisition-related expenses, asset impairment charges, a discrete tax charge to revalue existing deferred tax liabilities due to Barbados enacting domestic corporate income tax legislation (“Barbados tax reform”), acosts chargeincurred forin uncollectibleconnection receivableswith duethe departure of our former Chief Executive Officer (“CEO”) primarily related to theseverance bankruptcyand ofrecruitment Bed, Bath & Beyondcosts (“Bed,CEO Bathsuccession & Beyond bankruptcycosts”), gainsettlement oncosts salerelated ofto distributionEPA packaging and officelabeling facilities,compliance for certain products in the air filtration, water filtration and humidification categories (“EPA compliance costs”), a transitional income tax benefit resulting from the recognition of a deferred tax assetassets in connection with the reorganization of our intangible assets in fiscal 2025 and income tax expense from the recognition of valuation allowances in fiscal 2026 on the related deferred tax assets (“intangible asset reorganization”), restructuring charges, amortization of intangible assets,assets and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial measures as defined by SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based financial measures presented in our consolidated statements of (loss) income. We believe that adjusted operating income, adjusted operating margin, adjusted income,income and adjusted diluted EPSearnings per share 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 reflect the operating performance of our business and facilitate a more direct comparison of our performance to our competitors. 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,income and adjusted diluted EPSearnings per share are not prepared in accordance with GAAP, are not an alternative to GAAP financial measures and may be calculated differently than non-GAAP financial measures disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP financial measures. These non-GAAP financial measures are discussed further and reconciled to their applicable GAAP-based financial measures contained in this MD&A beginning on page 51.49.

We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. Our portfolio of brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon,Revlon and Olive & June, among others. We have built leading market positions through new product innovation, product quality and competitive pricing. As of February 28, 20252026, we operated two reportable segments: Home & Outdoor and Beauty & Wellness.

On December 16, 2024, we completed the acquisition of Olive & June, LLC (“Olive & June”), an innovative, omni-channel nail care brand. Olive & June products deliver a salon-quality experience at home and include nail polish, press-on nails, manicure and pedicure systems, grooming tools and nail care essentials. The Olive & June brand and products were added to the Beauty & Wellness segment. The total purchase consideration consists of initial cash consideration of $229.4$224.7 million, which is net of cash acquired,acquired which includedand a preliminaryfavorable net working capitalpost-closing adjustment andof is$3.9 subject to certain customary closing adjustments,million, and contingent cash consideration of up to $15.0 million subject to Olive & June'sJune’s performance during calendar years 2025, 2026, and 2027, payable annually. The acquisition of Olive & June complements and broadens our existing Beauty portfolio beyond the hair care category and advances our Elevate for Growth Strategy to deploy accretive capital that leverages our capabilities and scale to accelerate growth, further expand margins, and drive greater earnings growth and free cash flow conversion. We incurred pre-tax acquisition-related expenses of $3.0 million during fiscal 2025, which were recognized in SG&A within our consolidated statement of income.

As discussed above, duringDuring fiscal 2023, we initiated a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and effectiveness and reduce costs (referred to as “Project Pegasus”). During the fourth quarter of fiscal 2025, we completed Project Pegasus, whichbut includesstill expect to realize the targeted savings through fiscal 2027. Project Pegasus included initiatives to further optimize our brand portfolio, streamline and simplify the organization, accelerate and amplify cost of goods savings projects, enhance the efficiency of our supply chain network, optimize our indirect spending and improve our cash flow and working capital, as well as other activities. These initiatives have created operating efficiencies, as well as provided a platform to fund growth investments. During fiscal 2025 and 2024, we incurred restructuring charges in connection with Project Pegasus primarily for professional fees and severance and employee related costs, which were recorded as “Restructuring charges” in the consolidated statements of (loss) income. Restructuring charges primarily represented cash expenditures and were substantially paid by the end of fiscal 2025, with a remaining liability of $7.7 million as of February 28, 2025, which was paid during fiscal 2026. See Note 11 to the accompanying consolidated financial statements for additional information.

•Estimated cadence of the recognition of the savings will be approximately 25%25%, 35% and 35%25% in fiscal 20242024, 2025 and 2025,2026, respectively, all of which were both achieved, and approximately 25% and 15% in fiscal 2026 and 2027, respectively.2027.

On December 23, 2021, Brita LP filed a complaint against Kaz USA, inc. and Helen of Troy Limited in the U.S. District Court for the Western District of Texas (the “Patent Litigation,Litigation”), alleging patent infringement by the Company relating to its PUR gravity-fed water filtration systems. Brita LP simultaneously filed a complaint with the U.S. International Trade Commission (“ITC Action”) against Kaz USA, Inc., Helen of Troy Limited and five other unrelated companies that sell water filtration systems.systems (the “ITC Action”). The complaint in the ITC Action also alleged patent infringement by the Company with respect to a limited set of PUR gravity-fed water filtration systems. This action sought injunctive relief to prevent entry of certain accused PUR products (and certain other products) into the U.S. and cessation of marketing and sales of existing inventory that is already in the U.S. On February 28, 2023, the ITC issued an Initial Determination in the ITC Action, tentatively ruling against the Company and the other unrelated respondents. The ITC has a guaranteed review process, and thus all respondents, including the Company, filed a petition with the ITC for a full review of the Initial Determination. On September 19, 2023, the ITC issued its Final Determination in the Company'sCompany’s favor. The ITC determined there was no violation by the Company and terminated the investigation. Brita LP issubsequently appealingappealed the ITC'sITC’s decision to the Federal Circuit (“CAFC Appeal”) and filed its Notice of Appeal on October 24, 2023. The Company intervened in the CAFC Appeal,Appeal but as of the filing date of this Form 10-K,and oral argument has not been scheduled. The Patent Litigation remains stayed for the time being. We cannot predict the outcome of these legal proceedings, the amount or range of any potential loss, when the proceedings will be resolved, or customer acceptance of any replacement water filter. Litigation is inherently unpredictable, and the resolution or disposition of these proceedings could, if adversely determined, have a material and adverse impactoccurred on ourAugust financial5, position and results of operations. For additional information regarding the Patent Litigation and the ITC Action, see Item 3., “Legal Proceedings” and Note 12 to the accompanying consolidated financial statements.2025.

Some of our product lines 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.Commission and the EU.

During fiscal 2022 and 2023, we were in discussions with the EPA regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration categories and ahumidification limited subset of humidifier productscategories within the Beauty & Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging and labeling compliance discussions, we voluntarily implemented a temporary stop shipment action on the impacted products as we worked with the EPA towards an expedient resolution. We resumed normalized levels of shipping of the affected inventory during fiscal 2022 and we completed the repackaging and relabeling of our existing inventory of impacted products during fiscal 2023. Additionally,We ascontinue ato resulthave ofongoing continuingsettlement dialoguediscussions with the EPA,EPA related to this matter. As of February 28, 2026, we executedaccrued furtheran repackagingestimated liability of $4.4 million, which represents our best estimate of probable settlement costs related to this matter. See Note 12 to the accompanying consolidated financial statements for additional information and relabelingItem plans1A., “Risk Factors” in this Annual Report for additional information on certainour additionalrelated humidifiermaterial products and certain additional air filtration products, which were also completed during fiscal 2023.risks.

This MD&A, including the tables under the headings “Operating Income (Loss), Operating Margin, Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income (Loss), Diluted Earnings (Loss) Per Share, Adjusted Income (non-GAAP) and Adjusted Diluted Earnings Per Share (non-GAAP),” reports operating income (loss), operating margin, net income (loss) and diluted earnings (loss) per share without the impact of asset impairment charges, costs incurred in connection with the departure of our former Chief Executive Officer (“CEO”) primarily related to severance and recruitment costs (“CEO succession costs”), settlement costs and legal fees related to lawsuits involving products sold by the North America personal care business divested on June 7, 2021, for which we tendered indemnification and are discussed further below (referred to as “divestiture litigation costs”), gain on the sale of our distribution facility in Southaven, Mississippi during the first quarter of fiscal 2027 (“gain on sale of distribution facility”), income tax expense from the recognition of valuation allowances in fiscal 2026 on deferred tax assets related to our intangible asset reorganization in fiscal 2025 (“intangible asset reorganization”), restructuring charges, amortization of intangible assetsassets, and non-cash share-based compensation for the periods presented, as applicable. These measures may be considered non-GAAP financial measures as defined by SEC Regulation G, Rule 100. The tables reconcile these measures to their corresponding GAAP-based financial measures presented in our condensed consolidated statements of income (loss). We believe that adjusted operating income, adjusted operating margin, adjusted income and adjusted diluted earnings per share 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 reflect the operating performance of our business and facilitate a more direct comparison of our performance to our competitors. 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 earnings per share are not prepared in accordance with GAAP, are not an alternative to GAAP financial measures and may be calculated differently than non-GAAP financial measures disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP financial measures. These non-GAAP financial measures are discussed further and reconciled to their applicable GAAP-based financial measures contained in this MD&A beginning on page 33.38.

We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of brands. Our portfolio of brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon and Olive & June, among others. We have built leading market positions through new product innovation, product quality and competitive pricing. As of MayAugust 31, 2026, we operated two reportable segments: Home & Outdoor and Beauty & Wellness.

We did not record any asset impairment charges during the first quartersix months of fiscal 2027. During the first quarterand second quarters of fiscal 2026, we concluded a goodwill impairment triggering event had occurred due to a sustained decline in our stock price, and performed quantitative impairment testing on our goodwill and certain intangible assets. As a result of such testing, we recorded pre-tax asset impairment charges as follows:

(1)Asset impairment charges recognized for our Home & Outdoor segment included charges for our Hydro Flask and Osprey businesses of $120.8$44.7 million and $98.3$40.8 million, respectively.respectively, for the three months ended August 31, 2025 and $165.5 million and $139.1 million, respectively, for the six months ended August 31, 2025.

(2)Asset impairment charges recognized for our Beauty & Wellness segment included charges for our Drybar, Curlsmith, Health & WellnessWellness, Drybar, Curlsmith and Revlon businesses of $103.7$160.9 million, $36.2$47.8 million, $35.8$28.4 million and $19.6$3.9 million, respectively.respectively, for the three months ended August 31, 2025 and $196.6 million, $151.4 million, $64.6 million and $23.5 million, respectively, for the six months ended August 31, 2025.

Under the International Emergency Economic Powers Act (“IEEPA”), the U.S. presidential administration began implementing fentanyl-related IEEPA tariffs (“Fentanyl IEEPA Tariff”) and additional tariffs (“Reciprocal IEEPA Tariff”) during calendar year 2025. As of April 9, 2025, the U.S. had imposed (i) an aggregate additional 145% tariff on imports from China, consisting of a 20% Fentanyl IEEPA Tariff and 125% Reciprocal IEEPA Tariff and (ii) a global 10% Reciprocal IEEPA Tariff on imports from other countries including Mexico, Vietnam and other U.S. trading partners. The Reciprocal IEEPA Tariff on imports from China was subsequently lowered to 10% effective May 12, 2025, resulting in an aggregate additional 30% tariff. On July 31, 2025, the U.S. president signed an executive order imposing new IEEPA tariffs on a number of U.S. trading partners which became effective on August 7, 2025, including a 25% Fentanyl IEEPA Tariff on imports from Mexico and a 20% and 19% Reciprocal IEEPA Tariff on imports from Vietnam and Thailand, respectively. Effective November 10, 2025, the 10% Reciprocal IEEPA Tariff on imports from China, which was set to expire, was extended to remain in effect through November 10, 2026, and the Fentanyl IEEPA Tariff was reduced from 20% to 10%, reducing the aggregate additional tariff from 30% to 20%. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed by the U.S. president under IEEPA were unconstitutional, and the U.S. president subsequently imposed a temporary global 10% Section 122 tariff under the Trade Act of 1974 (“Section 122 Tariff”) effective February 24, 2026 through July 24, 2026. As a result, the previous aggregate additional tariff on imports from China, Vietnam, Mexico and Thailand of 20%, 20%, 25% and 19%, respectively, were replaced by the 10% Section 122 Tariff. OnIn May 7, 2026, the U.S. Court of International Trade (“CIT”) found the Section 122 Tariff unlawful in certain cases; however, the Section 122 Tariff will remainremained in place through its expiration on July 24, 2026 for the Company and most importers while the casecases proceedsproceeded through the appeals process. Our imports manufactured in Mexico arewere not impacted by the IEEPA tariffs or Section 122 Tariff since they qualifyqualified for duty-free preference under the United States-Mexico-Canada Agreement.Agreement Further, we benefit from certain exclusions from tariffs as a result of (the COVID-19 pandemic, which were recently extended to November 9, 2026.“USMCA”).

In March 2025, the U.S. president also implemented changes under Section 232 of the Trade Expansion Act of 1962 (“Section 232 Tariffs”) which resulted in additional sectoral tariffs to aluminum and steel of 25%. On June 4, 2025, the Section 232 Tariffs related to aluminum and steel were increased to 50%, and effective August 1, 2025, expanded to include copper products and components. Section 232 Tariffs were previously imposed based solely on a metal content-based calculation. Effective April 6, 2026, Section 232 Tariffs were expanded to apply to the entire customs value of covered products with tiered rates based on metal content and origin. Currently, our products are not subject to the Section 232 Tariffs on copper products and components. Our products are currently subject to (i) athe Section 232 TariffTariffs on aluminum and steel products of 25%, which primarily impacts certain products within our Home and Wellness businesses and/or (ii) the Section 122 Tariff while it remains in place through July 24, 2026 and/or (iii) tariffs under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). The U.S. presidential administration is considering additional Section 301 Tariffs as a remedy for unfair trade practices; however, no new Section 301 Tariffs have been published since the review process is ongoing.businesses.

We are continuingcontinue to assess our incremental tariff cost exposure in light of continuing changes to global tariff policies and the full extent of our potential mitigation plans, as well as the associated timing to implement such plans and realize the anticipated benefits. To mitigate our risk of ongoing exposure to tariffs, we havecontinue initiatedto significantpursue effortsopportunities to diversify our production capabilities outside of China into regions where we expect tariffs or overall costs to be lower and to source the same product in more than one region, to the extent it is possible and not cost-prohibitive. In addition to the uncertainty from evolving global tariff policies, we expect unfavorable cascading impacts on inflation, consumer confidence, employment and overall macroeconomic conditions, all of which may adversely impact our sales, results of operations and cash flows.

The Federal Open Market Committee lowered the benchmark interest rate by 50 basis points and 25 basis points during the third and fourth quarters of fiscal 2026, respectively, resulting in lower average interest rates incurred during the first threesix months of fiscal 2027 compared to the same period last year. The Federal Open Market Committee raised the benchmark interest rate by 25 basis points subsequent to the second quarter of fiscal 2027. As of MayAugust 31, 2026 and February 28, 2026, $425$300 million and $325 million of the outstanding principal balance under the Credit Agreement (as defined below), respectively, was hedged with interest rate swaps to fix the interest rate we pay. The weighted average interest rates on borrowings outstanding under the Credit Agreement inclusive of the impact of our interest rate swaps as of MayAugust 31, 2026 and February 28, 2026 were 5.6%5.5% and 5.7%, respectively. The weighted average interest rate on borrowings hedged with interest rate swaps was 3.3% as of both MayAugust 31, 2026 and February 28, 2026. AsThe of May 31, 2026 and February 28, 2026, thecomparable Term SOFR interest ratesrate (as defined in the Credit Agreement) werewas 3.6%3.7% as of both August 31, 2026 and 3.7%,February respectively.28, 2026. While the actual timing and extent of additional future changes in interest rates remains unknown, lowerhigher average interest rates would reduceincrease interest expense on our outstanding variable rate debt not subject to the interest rate swaps. The financial markets, the global economy and global supply chain may also be adversely affected by the current or anticipated impact of military conflicts or other geopolitical events, as well as recent U.S. tariff policies, that are continuing to evolve and the corresponding impacts on global trade. Most recently, the outcome of the ongoing Israel-United States and Iran conflict is highly unpredictable and could lead to significant market and other disruptions, including significant volatility in the commodity prices and supply of energy resources and supply chain interruptions. High inflation has also negatively impacted consumer disposable income, credit availability and spending, among others, which have adversely impacted our business, financial condition, cash flows and results of operations during fiscal 2026 and the first quartersix months of fiscal 2027 and may continue to have an adverse impact during the remainder of fiscal 2027. Evolving global tariff policies, military conflicts or geopolitical events (such as the Israel-United States and Iran conflict) could adversely impact inflation and interest rates which could further negatively impact consumer disposable income, credit availability and spending. See further discussion below under “Consumer Spending and Changes in Shopping Preferences.” We expect continued uncertainty in our business and the global economy due to pressure from inflation, tariffs, consumer confidence and the Israel-United States and Iran conflict, any of which may adversely impact our results.

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 72% and 69% of our consolidated net sales revenue was from U.S. shipments during both the three months ended MayAugust 31, 2026 and 2025. For the six months ended August 31, 2026 and 2025, U.S. shipments were approximately 72% and 71% of our consolidated net sales revenue, respectively.

Among other things, high levels of inflation, interest rates, military conflicts or other geopolitical events, and tariffs may negatively impact consumer disposable income, credit availability and spending. Consumer purchases of discretionary items, including some of the products that we offer, generally decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence. Dynamic changes in consumer spending and shopping patterns are also having an impact on retailer inventory levels. Our ability to sell to retailers is predicated on their ability to sell to the end consumer. During fiscal 2026 and the first quarterhalf of fiscal 2027, we experienced continued competition within our Beauty & Wellness segment and in the insulated beverageware category. In addition, during fiscal 2026, we experienced lower replenishment orders in line with softer consumer demand and discretionary spending and continued competition, which adversely impacted our sales, results of operations and cash flows. During the first quarterhalf of fiscal 2027, this trend continued in our Beauty business. If orders from our retail customers continue to be adversely impacted, our sales, results of operations and cash flows may continue to be adversely impacted. We expect continued uncertainty in our business and the global economy due to inflation, evolving global tariff policies, continued competition and changes in consumer spending patterns. Accordingly, our liquidity and financial results could be impacted in ways that we are not able to predict today.

Our concentration of sales reflects the continued evolution of consumer shopping preferences. Our net sales to pure-play online retailers and retail customers fulfilling end-consumer online orders, as well as our own online sales directly to consumers (collectively “online channel net sales”) comprised approximately 28%25% and 26% of our total consolidated net sales revenue for the three and six months ended MayAugust 31, 2026, respectively, and grew approximately 29%4% and 16% compared to the same periodperiods inlast theyear, prior year.respectively. For both the three and six months ended MayAugust 31, 2025, our online channel net sales comprised approximately 23%24% of our total consolidated net sales revenue,revenue and declined approximately 18%22% and 20% compared to the same periodperiods inlast theyear, prior year.respectively.

During fiscal 2022 and 2023, we were in discussions with the U.S. Environmental Protection Agency (“the EPA”) regarding the compliance of packaging and labeling claims on certain of our products in the air and water filtration and humidification categories within the Beauty & Wellness segment that are sold in the U.S. The EPA did not raise any product quality, safety or performance issues. As a result of these packaging and labeling compliance discussions, we completed the repackaging and relabeling of impacted products during fiscal 2023. WeOn continueAugust to25, have2026, ongoingwe entered into a final administrative settlement discussions with the EPA related to this matter.matter As of February 28, 2026, we accrued an estimated liability offor $4.4 million, which representswill ourbe bestpaid estimatein the third quarter of probablefiscal settlement2027. costsAs relateda toresult, thisthe matter.estimated liability we recognized during fiscal 2026 of $4.4 million remained outstanding as of August 31, 2026. See Note 8 to the accompanying condensed consolidated financial statements for additional information.

InOn fiscalJune 2022,7, 2021, we completed the sale of our North America personal care business to HRB Brands LLC (“HRB Brands”). After the sale, we were named as a defendant in multiple lawsuits related to the use of personal care products previously containing talcum powder, primarily Brut deodorant and Ammens powder sold by our wholly-owned subsidiary, Idelle Labs, Ltd. We tendered indemnification of these cases to HRB Brands, which assumed control of the defense of the claims. After many years, during the fourth quarter of fiscal 2026, HRB Brands asserted that it was contesting the indemnification of these cases and tendered the indemnification back to us. Consequently, in order to protect the Company and its rights and defenses, we began to defend these cases. The Company maintains its position that HRB Brands is obligated to defend and indemnify the Company against these claims and plans to vigorously contest HRB Brands’ position. With respect to the talcum powder cases, we believe we have substantial defenses to the claims. The ultimate outcome of enforcing our indemnification claims against HRB Brands and the litigation relating to the talcum cases is inherently uncertain, and we cannot predict its resolution. During the firstthree quarterand ofsix fiscalmonths 2027,ended August 31, 2026, we paidaccrued approximately $1.0$4.0 million in settlements of these cases and accrued$5.3 anmillion, additional $1.3 millionrespectively, for potential settlements and legal fees.fees and paid approximately $1.4 million during fiscal 2027 related to these cases. As of MayAugust 31, 2026, we had an estimated liability of approximately $1.8$5.4 million. We cannot estimate the amount or range of amounts by which the liability may exceed the accrual established because of (i) the inherent difficulty in projecting the number of claims that have not yet been asserted or the time period in which future claims may be asserted, (ii) the complaints nearly always assert claims against multiple defendants where the damages alleged are typically not attributed to individual defendants so that a defendant’s share of liability may turn on the law of joint and several liability, which can vary by state, and (iii) the many factors, developments and inherent uncertainties involved with litigation that could affect the Company’s estimate of the liability. For additional information, see Note 8 to the accompanying condensed consolidated financial statements.

For the three months ended MayAugust 31, 2026, changes in foreign currency exchange rates had a favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $2.9$0.1 million, or 0.8%,less than 0.1%, compared to a favorable year-over-year impact of $0.2 million, or less than 0.1%, for the same period last year. For the six months ended August 31, 2026, changes in foreign currency exchange rates had a favorable year-over-year impact on consolidated U.S. Dollar reported net sales revenue of approximately $3.0 million, or 0.4%, compared to an unfavorable year-over-year impact of $1.0$0.8 million, or 0.2%,0.1%, for the same period last year.

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

FirstSecond Quarter Fiscal 2027 Financial Results

•Consolidated net sales revenue increased 8.2%,$9.1 million, or $30.5 million,2.1%, to $402.1$440.9 million for the three months ended MayAugust 31, 2026, compared to $371.7$431.8 million for the same period last year.

•Consolidated operating income was $60.3$22.9 million for the three months ended MayAugust 31, 2026, which includes a gain of $54.9 million from the sale of a distribution facility, compared to consolidated operating loss of $407.0$315.7 million for the same period last year. Consolidated operating loss for the three months ended MayAugust 31, 2025 included pre-tax asset impairment charges of $414.4$326.4 million. Consolidated operating margin increased to 15.0%5.2% of consolidated net sales revenue for the three months ended MayAugust 31, 2026, compared to (109.573.1)% for the same period last year.

•Consolidated adjusted operating income wasincreased $16.1$11.0 million, or 40.9%, to $37.9 million for both the three months ended MayAugust 31, 20262026, andcompared 2025.to $26.9 million for the same period last year. Consolidated adjusted operating margin decreasedincreased 0.32.4 percentage points to 4.0%8.6% of consolidated net sales revenue for the three months ended MayAugust 31, 2026, compared to 4.3%6.2% for the same period last year.

•Net income was $35.8$4.6 million for the three months ended MayAugust 31, 2026, compared to net loss of $450.7$308.6 million for the same period last year. Diluted earnings per share was $1.51$0.19 for the three months ended MayAugust 31, 2026, compared to diluted loss per share of $19.65$13.44 for the same period last year.

•Adjusted income decreased 58.3%, orincreased $5.5 million, or 40.3%, to $4.0$19.0 million for the three months ended MayAugust 31, 2026, compared to $9.5$13.5 million for the same period last year. Adjusted diluted earnings per share decreasedincreased 58.5%33.9% to $0.17$0.79 for the three months ended MayAugust 31, 2026, compared to $0.41$0.59 for the same period last year.

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

In the above table,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.

Consolidated net sales revenue was favorably impacted by net foreign currency fluctuations of approximately $2.9$0.1 million, or 0.8%.less than 0.1%.

Net sales revenue increased $16.9$19.2 million, or 9.5%,9.2%, to $194.9$227.9 million, compared to $178.0$208.7 million. The increase reflects growth across all brands and was primarily driven by:

•incremental sales from new product launches; and