Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 14, 2024, and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q.

Overview

We develop, manufacture and market a broad range of consumer household and personal care products and specialty products focused on animal and food production, chemicals and cleaners. Our well-recognized brands include ARM & HAMMER® baking soda, cat litter, laundry detergent, carpet deodorizer and other baking soda-based products; OXICLEAN® stain removers, cleaning solutions, laundry detergents and bleach alternatives; VITAFUSION® and L’IL CRITTERS® gummy dietary supplements for adults and children, respectively; BATISTE® dry shampoo; WATERPIK® water flossers and showerheads; THERABREATH® oral care products; HERO® acne treatment products; TROJAN® condoms, lubricants and vibrators; SPINBRUSH® battery-operated toothbrushes; FIRST RESPONSE® home pregnancy and ovulation test kits; NAIR® depilatories; ORAJEL® oral analgesic; XTRA® laundry detergent; and ZICAM® cold shortening and relief products. Seven of those brands are designated as "power brands" because they compete in large categories, and we believe they have the potential for significant global expansion. Those seven brands are ARM & HAMMER®; OXICLEAN®; VITAFUSION® and L’IL CRITTERS®; BATISTE®; WATERPIK®; THERABREATH®; and HERO® and represent approximately 70% of our net sales and profits.

We sell our consumer products through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar and other discount stores, pet and other specialty stores and websites and other e-commerce channels, all of which sell our products to consumers. We sell our specialty products to industrial customers, livestock producers and through distributors.

We operate in three principal segments: Consumer Domestic, Consumer International, and our Specialty Products Division (“SPD”).

Recent Developments

On October 4, 2021, members of the Organisation for Economic Co-operation and Development (“OECD”) agreed to a global minimum tax rate of 15%. On December 20, 2021, OECD published its model rules on the agreed minimum tax known as the Global Anti-Base Erosion (“GloBE”) or Pillar Two rules. The Pillar Two rules are designed to be implemented into the domestic law of each jurisdiction to ensure large multinational enterprise groups are subject to a minimum effective tax rate of 15% in each jurisdiction where they operate. January 1, 2024 marked the official effective date of the 15% global corporate minimum tax imposed by the Pillar Two rules. Based on current legislation and available guidance, we have evaluated the impact of the Pillar Two rules and determined there is no impact to the Company.

During the first quarter of 2024, we exited the MEGALAC supplement portion of our Animal Nutrition business within our SPD segment. Net sales for the six months ended June 30, 2024 and 2023 were $7.6 and $21.6, respectively.

On June 3, 2024, we acquired substantially all of the issued and outstanding shares of capital stock of Graphico, Inc. ("Graphico"), a Japan-based distributor focused on consumer goods primarily in the Japanese market (the “Graphico Acquisition”). We paid $19.9, net of cash acquired, at closing. We acquired the remaining minority shares for approximately $2.0 in July 2024. Graphico’s annual net sales for the year ended December 31, 2023 were approximately $38.0. The Graphico Acquisition was financed with cash on hand, is expected to contribute to greater expansion of our business in the Asia-Pacific (APAC) region, and is managed in the Consumer International segment.

During the second quarter of 2024, we sold our Passport food safety business, Passport Food Safety Solutions, Inc., with assets of $7.0, inclusive of intangible assets of $2.7 and corresponding goodwill of $1.0, for cash proceeds of $6.6 and $0.5 held in escrow for a gain of $0.1.

During the second quarter of 2024, we received a favorable tariff ruling from the U.S. government associated with certain products imported from China. This ruling resulted in a $26.1 reduction of Cost of goods sold during the second quarter of 2024.

Other

For additional discussion, please refer to Item 1A, Risk Factors, and Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.

Results of Operations

Consolidated results

	Three Months Ended				Change vs.		Three Months Ended
	June 30, 2024				Prior Year		June 30, 2023
Net Sales	$	1,511.2			3.9%		$	1,454.2
Gross Profit	$	712.1			11.5%		$	638.9
Gross Margin		47.1	%		320 basis points			43.9	%
Marketing Expenses	$	152.4			15.3%		$	132.2
Percent of Net Sales		10.1	%		100 basis points			9.1	%
Selling, General & Administrative Expenses	$	222.8			4.6%		$	213.1
Percent of Net Sales		14.7	%		10 basis points			14.6	%
Income from Operations	$	336.9			14.7%		$	293.6
Operating Margin		22.3	%		210 basis points			20.2	%
Net income per share - Diluted	$	0.99			11.2%		$	0.89
	Six Months Ended				Change vs.		Six Months Ended
	June 30, 2024				Prior Year		June 30, 2023
Net Sales	$	3,014.5			4.5%		$	2,884.0
Gross Profit	$	1,399.1			11.0%		$	1,260.9
Gross Margin		46.4	%		270 basis points			43.7	%
Marketing Expenses	$	304.4			19.6%		$	254.5
Percent of Net Sales		10.1	%		130 basis points			8.8	%
Selling, General & Administrative Expenses	$	452.8			7.6%		$	420.9
Percent of Net Sales		15.0	%		40 basis points			14.6	%
Income from Operations	$	641.9			9.6%		$	585.5
Operating Margin		21.3	%		100 basis points			20.3	%
Net income per share - Diluted	$	1.91			11.0%		$	1.72

Net Sales

Net sales for the quarter ended June 30, 2024 were $1,511.2, an increase of $57.0 or 3.9% as compared to the same period in 2023. Net sales for the six months ended June 30, 2024 were $3,014.5, an increase of $130.5 or 4.5% over the comparable six month period of 2023. The components of the net sales increase are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Net Sales - Consolidated	2024				2024
Product volumes sold(1)		3.5	%			3.6	%
Pricing/Product mix(2)		1.2	%			1.3	%
Foreign exchange rate fluctuations		(0.1	%)			0.1	%
Exit of product lines (net of acquisition)(3)		(0.7	%)			(0.5	%)
Net Sales increase		3.9	%			4.5	%

(1)

For both the three and six months ended June 30, 2024, the volume change reflects increased product unit sales in all three segments.

(2)

For the three months ended June 30, 2024, price/mix was favorable in the Consumer Domestic and Consumer International segments, partially offset by the SPD segment. For the six months ended June 30, 2024, price/mix was favorable in all three segments.

(3)

In the first quarter of 2024, we exited the MEGALAC supplement portion of the SPD Animal Nutrition business. In the second quarter of 2024 we acquired substantially all of Graphico and sold the Passport food safety business.

Gross Profit / Gross Margin

Our gross profit was $712.1 for the three months ended June 30, 2024, a $73.2 increase as compared to the same period in 2023. Gross margin increased 320 basis points (“bps”) in the second quarter of 2024 compared to the same period in 2023, due to a favorable tariff ruling of 180 bps, the impact of productivity programs of 120 bps, and favorable price/mix/volume of 80 bps, offset by the impact of higher manufacturing costs including labor and commodities of 50 bps and unfavorable foreign exchange of 10 bps. Gross profit was $1,399.1 for the six months ended June 30, 2024, a $138.2 increase compared to the same period in 2023. Gross margin increased 270 bps in the first six months of 2024 compared to the same period in 2023, due to the impact of productivity programs of 120 bps, favorable price/mix/volume of 110 bps, and a favorable tariff ruling of 90 bps, offset by the impact of higher manufacturing costs including labor and commodities of 40 bps and unfavorable foreign exchange of 10 bps.

Operating Expenses

Marketing expenses for the three months ended June 30, 2024 were $152.4, an increase of $20.2 or 15.3% as compared to the same period in 2023. Marketing expenses as a percentage of net sales in the second quarter of 2024 increased by 100 bps to 10.1% as compared to 9.1% in the same period in 2023 due to 130 bps on higher expense primarily from increased marketing spend to support new product introductions, offset by 30 bps of leverage on higher net sales. Marketing expenses for the six months ended June 30, 2024 were $304.4, an increase of $49.9 or 19.6% as compared to the same period in 2023. Marketing expenses as a percentage of net sales for the first six months of 2024 increased by 130 bps to 10.1% as compared to 8.8% in the same period in 2023 due to 170 bps on higher expense, primarily from increased marketing spend to support new product introductions, offset by 40 bps of leverage on higher net sales.

SG&A expenses were $222.8 in the second quarter of 2024, an increase of $9.7 or 4.6% as compared to the same period in 2023. SG&A as a percentage of net sales increased 10 bps to 14.7% in the second quarter of 2024 as compared to 14.6% in the same period in 2023. The increase is due to 60 bps on higher expenses, primarily due to growth investments in our international division, Research and Development ("R&D") and Information Technology ("IT"), and the Graphico acquisition, offset by 50 bps of leverage associated with higher sales. SG&A expenses for the first six months of 2024 were $452.8, an increase of $31.9 or 7.6% as compared to the same period in 2023. SG&A as a percentage of net sales increased 40 bps to 15.0% in the first six months of 2024 compared to 14.6% in 2023 due to 100 bps on higher expenses, primarily due to growth investments in our international division, R&D and IT, offset by 60 bps of leverage associated with higher sales.

Other income for the three and six months ended June 30, 2024 increased $2.0 and $3.7, respectively, as compared to the same periods in 2023, primarily due to higher investment income.

Interest expense for the three and six months ended June 30, 2024 decreased $4.7 and $8.5 to $23.2 and $48.2, respectively, as compared to the same periods in 2023, primarily due to lower average outstanding debt.

Income Taxes

The effective tax rate for the three months ended June 30, 2024 was 24.0%, compared to 17.9% in the same period in 2023. The effective tax rate for the six months ended June 30, 2024 was 22.1%, compared to 21.1% in the same period in 2023.

The increase in the tax rate for both periods is primarily from a lower tax benefit on reduced stock option exercises in 2024 compared to 2023.

Segment results

We operate three reportable segments: Consumer Domestic, Consumer International and SPD. These segments are determined based on differences in the nature of products and organizational structure. We also have a Corporate segment.

Segment			Products
Consumer Domestic			Household and personal care products
Consumer International			Primarily personal care products
SPD			Specialty chemical products

The Corporate segment income consists of equity in earnings of affiliates. As of June 30, 2024, we held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of Armand and ArmaKleen, totaling $3.1 and $2.0

for the three months ended June 30, 2024 and 2023, respectively, and $4.2 and $6.4 for the six months ended June 30, 2024 and 2023, respectively, are included in the Corporate segment. Certain subsidiaries that are included in the Consumer International segment manufacture and sell personal care products to the Consumer Domestic segment. These sales are eliminated from the Consumer International segment results set forth below.

Segment net sales and income before income taxes for the three and six months ended June 30, 2024 and June 30, 2023 are as follows:

	Consumer				Consumer
	Domestic				International				SPD				Corporate**(3)**				Total
Net Sales**(1)**
Second Quarter 2024	$	1,170.6			$	263.7			$	76.9			$	0.0			$	1,511.2
Second Quarter 2023		1,128.2				241.9				84.1				0.0				1,454.2
First Six Months of 2024	$	2,335.8			$	518.7			$	160.0			$	0.0			$	3,014.5
First Six Months of 2023		2,245.1				472.5				166.4				0.0				2,884.0
Income before Income Taxes**(2)**
Second Quarter 2024	$	273.2			$	32.9			$	11.3			$	3.1			$	320.5
Second Quarter 2023		230.7				27.5				9.2				2.0				269.4
First Six Months of 2024	$	512.4			$	65.9			$	22.1			$	4.2			$	604.6
First Six Months of 2023		459.4				56.4				16.0				6.4				538.2

(1)

Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table, were $7.0 and $3.4 for the three months ended June 30, 2024 and June 30, 2023, respectively, and were $12.6 and $7.0 for the six months ended June 30, 2024 and June 30, 2023, respectively.

(2)

In determining income before income taxes, interest expense, investment earnings and certain aspects of other income and expense were allocated among the segments based upon each segment’s relative income from operations.

(3)

Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen for the three and six months ended June 30, 2024 and June 30, 2023.

Product line revenues from external customers are as follows:

	Three Months Ended								Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2024				2023				2024				2023
Household Products	$	653.2			$	619.2			$	1,292.1			$	1,220.8
Personal Care Products		517.4				509.0				1,043.7				1,024.3
Total Consumer Domestic		1,170.6				1,128.2				2,335.8				2,245.1
Total Consumer International		263.7				241.9				518.7				472.5
Total SPD		76.9				84.1				160.0				166.4
Total Consolidated Net Sales	$	1,511.2			$	1,454.2			$	3,014.5			$	2,884.0

Household Products include laundry, deodorizing, and cleaning products. Personal Care Products include condoms, pregnancy kits, oral care products, skin care and hair care products, cold and remedy products, and gummy dietary supplements.

Consumer Domestic

Consumer Domestic net sales in the second quarter of 2024 were $1,170.6, an increase of $42.4 or 3.8% as compared to the same period in 2023. Consumer Domestic net sales for the six months ended June 30, 2024 were $2,335.8, an increase of $90.7 or 4.0% as compared to the same period in 2023. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - Consumer Domestic		2024				2024
Product volumes sold			3.3	%			3.3	%
Pricing/Product mix			0.5	%			0.7	%
Net Sales increase			3.8	%			4.0	%

The increase in net sales for the three months ended June 30, 2024, includes growth from THERABREATH® mouth wash, ARM & HAMMER® Cat Litter, HERO® acne treatment products, ARM & HAMMER® Liquid Detergent, and XTRA® liquid detergent, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy dietary supplements, FINISHING TOUCH FLAWLESS® Hair Removal Products and WATERPIK® Shower Heads. The increase in net sales for the six-month period ending June 30, 2024, includes growth from THERABREATH® mouth wash, HERO® acne treatment products, ARM & HAMMER® Cat Litter, XTRA® liquid detergent, ARM & HAMMER® Liquid Detergent, and BATISTE® Dry Shampoo, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, WATERPIK® Shower Heads, and FINISHING TOUCH FLAWLESS® Hair Removal Products.

Consumer Domestic income before income taxes for the second quarter of 2024 was $273.2, a $42.5 increase as compared to the second quarter of 2023. The increase is primarily due to a favorable tariff ruling of $26.1, the impact of higher sales volumes of $21.1, the benefit of productivity programs of $16.4, favorable interest and other expenses of $4.1 and favorable price/mix of $0.8, partially offset by higher marketing expenses of $15.1, higher SG&A expenses of $12.0 and higher manufacturing and distribution expenses of $2.6. For the six-month period ended June 30, 2024, income before income taxes was $512.4, a $53.0 increase as compared to the first six months of 2023. The increase is due primarily to the impact of higher sales volumes of $42.0, a favorable tariff ruling of $26.1, the benefit of productivity programs of $34.6, favorable interest and other expenses of $11.6 and favorable price/mix of $10.0, partially offset by higher marketing expenses of $39.8, higher SG&A expenses of $31.7 and higher manufacturing and distribution expenses of $1.9.

Consumer International

Consumer International net sales were $263.7 in the second quarter of 2024, an increase of $21.8 or 9.0% as compared to the same period in 2023. Consumer International net sales in the first six months of 2024 were $518.7, an increase of $46.2 or 9.8% as compared to the same period in 2023. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - Consumer International		2024				2024
Product volumes sold			4.6	%			5.1	%
Pricing/Product mix			4.7	%			4.0	%
Foreign exchange rate fluctuations			(0.4	%)			0.6	%
Acquired product line(1)			0.1	%			0.1	%
Net Sales increase			9.0	%			9.8	%

(1)

The Graphico acquisition is included in our results since June 1, 2024, the date of acquisition.

Excluding the impact of foreign exchange rates, sales growth in the second quarter ended June 30, 2024 was driven by VITAFUSION® and L’IL CRITTERS® gummy vitamins, THERABREATH® mouth wash, STERIMAR® nasal congestion relief, OXICLEAN® stain removers and ARM & HAMMER® Baking Soda in GMG, HERO® acne treatment products and WATERPIK® Flossers in Canada, ARM & HAMMER® Liquid Detergent and STERIMAR® nasal congestion relief in Mexico, and HERO® acne treatment products in Europe and Australia. The increase in net sales for the six-month period ending June 30,2024, was driven by STERIMAR® nasal congestion relief, and VITAFUSION® and L’IL CRITTERS® gummy vitamins in GMG, STERIMAR® nasal

congestion relief and ARM & HAMMER® Liquid Detergent in Mexico, HERO® acne treatment products and ANUSOL in Europe, HERO® acne treatment products and WATERPIK® Flossers in Canada, and HERO® acne treatment products in Australia.

Consumer International income before income taxes was $32.9 in the second quarter of 2024, a $5.4 increase as compared to the second quarter of 2023. The increase is due primarily to a favorable price/mix of $11.7, the impact of higher sales volumes of $4.5, and favorable interest and other expenses of $0.6, partially offset by higher marketing expenses of $5.7, higher SG&A expenses of $4.3 (including Graphico), unfavorable foreign exchange rates of $1.5 and higher manufacturing and commodity costs of $0.2. For the first six months of 2024, income before income taxes was $65.9, an $9.5 increase as compared to the same period in 2023. The increase is due primarily to a favorable price/mix of $22.0, the impact of higher sales volumes of $10.9, and favorable interest and other expenses of $0.6, partially offset by higher marketing expenses of $11.8, higher SG&A expenses of $11.2 (including Graphico), unfavorable foreign exchange rates of $0.9 and higher manufacturing and distribution expenses of $0.3.

Specialty Products (“SPD”)

SPD net sales were $76.9 in the second quarter of 2024, a decrease of $7.2 or 8.6% as compared to the same period in 2023. SPD net sales were $160.0 for the first six months of 2024, a decrease of $6.4, or 3.8% as compared to the same period in 2023. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - SPD		2024				2024
Product volumes sold			4.1	%			3.5	%
Pricing/Product mix			(0.2	%)			2.0	%
Exit of product lines (1)			(12.5	%)			(9.3	%)
Net Sales decrease			(8.6	%)			(3.8	%)

(1)

We exited the MEGALAC supplement portion of the Animal Nutrition business in the first quarter of 2024 and sold the Passport food safety business in the second quarter of 2024.

Net sales excluding product line divestitures increased in the three and six months ended June 30, 2024 primarily due to strong growth internationally for our animal nutrition segment and domestically for our specialty chemicals segment.

SPD income before income taxes was $11.3 in the second quarter of 2024, an increase of $2.1 as compared to the same period in 2023 due to lower SG&A and other costs of $1.3, favorable manufacturing costs of $0.8, and lower marketing costs of $0.4, partially offset by lower volumes of $0.3 (including the exit of MEGALAC) and unfavorable price/mix of $0.2. SPD income before income taxes was $22.1 in the first six months of 2024, an increase of $6.1 as compared to the same period in 2023 due primarily to favorable price/product mix of $3.2, lower marketing expenses of $1.5, lower SG&A and other costs of $1.4 and the impact of higher sales volumes of $0.9 (including the exit of MEGALAC), partially offset by unfavorable manufacturing costs of $0.8.

The Corporate segment includes equity in earnings of affiliates from Armand and ArmaKleen in the three and six months of 2024 and 2023. The Corporate segment income before income taxes was $3.1 in the second quarter of 2024, as compared to $2.0 in the same period in 2023. The Corporate segment income before income taxes was $4.2 for the first six months of 2024, as compared to $6.4 in the same period in 2023.

Liquidity and Capital Resources

On June 16, 2022, we entered into a credit agreement (the “Credit Agreement”) that provides for our $1,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”) that matures on June 16, 2027, unless extended. We have the ability to increase our borrowing up to an additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement. Borrowings under the Credit Agreement are available for general corporate purposes and are used to support our $1,500.0 commercial paper program.

As of June 30, 2024, we had $491.7 in cash and cash equivalents, and approximately $1,495.0 available through the Revolving Credit Facility and our commercial paper program. To preserve our liquidity, we invest cash primarily in government money market funds, prime money market funds, short-term commercial paper and short-term bank deposits.

In the first quarter of 2024, we repaid the remaining $200.0 of our Term Loan due December 22, 2024 with cash on hand.

The current economic environment presents risks that could have adverse consequences for our liquidity. See “Unfavorable economic conditions could adversely affect demand for our products” under “Risk Factors” in Item 1A of the Form 10-K. We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our customers, suppliers and other third-party relationships, implementing gross margin enhancement strategies and developing new opportunities for growth. We do not anticipate that current economic conditions will adversely affect our ability to comply with the financial covenant in the Credit Agreement. We currently are, and anticipate that we will continue to be, in compliance with the maximum leverage ratio requirement under the Credit Agreement.

On October 28, 2021, the Board authorized the Company’s share repurchase program, under which we may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration and replaced the 2017 Share Repurchase Program. The 2021 Share Repurchase Program did not modify our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under our incentive plans. There have been no stock repurchases in 2024 under the 2021 Share Repurchase Program.

As of June 30, 2024, there remains $658.9 of share repurchase availability under the 2021 Share Repurchase Program.

On January 31, 2024, the Board declared a 4% increase in the regular quarterly dividend from $0.2725 to $0.28375 per share, equivalent to an annual dividend of $1.135 per share, payable to stockholders of record as of February 15, 2024. The increase raises the annual dividend payout from $267.0 to approximately $276.0 on an annualized basis.

We anticipate that our cash from operations, together with our current borrowing capacity, will be sufficient to fund our share repurchase programs to the extent implemented by management, pay debt and interest as it comes due, pay dividends at the latest approved rate, and meet our capital expenditure program costs, which are expected to be approximately $180.0 in 2024 primarily for manufacturing capacity investments in laundry and litter to support expected future sales growth. Cash, together with our current borrowing capacity, may be used for acquisitions that would complement our existing product lines or geographic markets.

Cash Flow Analysis

	Six Months Ended
	June 30,				June 30,
	2024				2023
Net cash provided by operating activities	$	499.9			$	509.2
Net cash used in investing activities	$	(91.5	)		$	(69.2	)
Net cash used in financing activities	$	(257.4	)		$	(315.4	)

Net Cash Provided by Operating Activities – Our primary source of liquidity is the cash flow provided by operating activities, which is dependent on net income and changes in working capital. Our net cash provided by operating activities in the six months ended June 30, 2024 decreased by $9.3 to $499.9 as compared to $509.2 in the same period in 2023 as an increase in cash earnings (net income adjusted for non-cash items) was more than offset by higher working capital. The higher working capital is primarily related to higher accounts receivable balances as we reduced our accounts receivable factoring program in response to higher interest rates and the tariff refund receivable. In addition, we had higher incentive compensation payments in 2024 compared to 2023. We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended June 30, 2024 and 2023:

	As of
	June 30, 2024				June 30, 2023				Change
Days of sales outstanding in accounts receivable ("DSO")		34				28				6
Days of inventory outstanding ("DIO")		67				73				(6	)
Days of accounts payable outstanding ("DPO")		72				73				1
Cash conversion cycle		29				28				1

Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a two-period average method, increased one day from the prior year. The increase in DSO is related to a reduction in our accounts receivable factoring program in response to higher interest rates and the tariff refund receivable. The decrease in DIO is a result of the timing of inventory purchases for most of our brands and a reduction in inventory purchases related to our discretionary brands. We continue to focus on reducing our working capital requirements.

Net Cash Used in Investing Activities – Net cash used in investing activities during the first six months of 2024 was $91.5, primarily reflecting $76.6 for property, plant and equipment additions and $19.9 for the Graphico Acquisition, partially offset by $6.6 of proceeds from the sale of assets. Net cash used in investing activities during the first six months of 2023 was $69.2, primarily reflecting $63.2 for property, plant and equipment additions.

Net Cash Used in Financing Activities – Net cash used in financing activities during the first six months of 2024 was $257.4 reflecting $197.7 of net debt payments and $138.2 of cash dividend payments, partially offset by $79.5 of proceeds from stock option exercises. Net cash used in financing activities during the first six months of 2023 was $315.4 reflecting $270.6 of net debt payments and $133.0 of cash dividend payments, partially offset by $88.3 of proceeds from stock option exercises.