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; BATISTE® dry shampoo; WATERPIK® water flossers and showerheads; THERABREATH® oral care products; HERO® acne treatment products; VITAFUSION® and L’IL CRITTERS® gummy dietary supplements for adults and children, respectively; 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®; BATISTE®; WATERPIK®; THERABREATH®; HERO® and VITAFUSION® and L’IL CRITTERS®; 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 distributors.

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

Recent Developments

In October 2021, members of the Organisation for Economic Co-operation and Development (“OECD”) agreed to a global minimum tax rate of 15%. In December 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. In December 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive. January 1, 2024 marked the official effective date of the 15% global corporate minimum tax imposed by the EU's Pillar Two Directive. We are monitoring developments and evaluating the impacts of the Pillar Two rules on our tax rate. We have evaluated the impact of the Pillar Two rules based on current legislation and available guidance, and do not anticipate a material 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 three months ended September 30, 2024 and 2023 were $0.0 and $8.1, respectively. Net sales for the nine months ended September 30, 2024 and 2023 were $7.6 and $29.7, 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. Net sales for the three months ended September 30, 2024 and 2023 were $0.0 and $3.3, respectively. Net sales for the nine months ended September 30, 2024 and 2023 were $6.4 and $9.2, respectively.

During the second quarter of 2024, we received a favorable tariff ruling from the U.S. government associated with certain products imported from China, which resulted in $37.6 of cash refunds (pre tax) in the nine months ended September 30,2024. The refunds resulted in a $3.2 and $29.3 reduction of Cost of goods sold during the three and nine months ended September 30, 2024 and an increase in Interest income from interest of $4.6 during both the three and nine months ended September 30, 2024.

During the third quarter of 2024, the Company continued to experience a decline in market share and a deterioration in the financial performance for its Vitamins, Minerals and Supplements ("VMS") business, which includes the VITAFUSION and L'IL CRITTERS tradename, primarily due to significant product competition coming from new category entrants, including private label. The continued decline in profitability has caused management to reassess its long-term strategy and financial outlook of the business. The revised financial outlook reflects lower estimates of future sales growth and cash flows resulting in a triggering event in the third quarter. The triggering event requires the Company to review the carrying value of assets supporting the business resulting in impairment charges of $357.1 in the quarter ended September 30, 2024.

The Company’s 50% interest in The Armakleen Company was sold to an unrelated third party in October of 2024. The transaction is not material to the Company’s results of operations or cash flows.

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
	September 30, 2024				Prior Year		September 30, 2023
Net Sales	$	1,510.6			3.8%		$	1,455.9
Gross Profit	$	683.1			5.7%		$	646.3
Gross Margin		45.2	%		80 basis points			44.4	%
Marketing Expenses	$	185.8			10.7%		$	167.8
Percent of Net Sales		12.3	%		80 basis points			11.5	%
Selling, General & Administrative Expenses	$	231.7			4.0%		$	222.7
Percent of Net Sales		15.3	%		0 basis points			15.3	%
Tradename and other asset impairments	$	357.1			100.0%			0.0
Percent of Net Sales		23.7	%		2,370 basis points			0.0	%
(Loss) Income from Operations	$	(91.5	)		(135.8%)		$	255.8
Operating Margin		(6.1	%)		-2,370 basis points			17.6	%
Net (loss)/income per share - Diluted	$	(0.31	)		(143.7%)		$	0.71
	Nine Months Ended				Change vs.		Nine Months Ended
	September 30, 2024				Prior Year		September 30, 2023
Net Sales	$	4,525.1			4.3%		$	4,339.9
Gross Profit	$	2,082.2			9.2%		$	1,907.2
Gross Margin		46.0	%		210 basis points			43.9	%
Marketing Expenses	$	490.2			16.1%		$	422.3
Percent of Net Sales		10.8	%		110 basis points			9.7	%
Selling, General & Administrative Expenses	$	684.5			6.4%		$	643.6
Percent of Net Sales		15.1	%		30 basis points			14.8	%
Tradename and other asset impairments	$	357.1			100.0%			0.0
Percent of Net Sales		7.9	%		790 basis points			0.0	%
Income from Operations	$	550.4			(34.6%)		$	841.3
Operating Margin		12.2	%		-720 basis points			19.4	%
Net income per share - Diluted	$	1.61			(33.7%)		$	2.43

Net Sales

Net sales for the quarter ended September 30, 2024 were $1,510.6, an increase of $54.7 or 3.8% as compared to the same period in 2023. Net sales for the nine months ended September 30, 2024 were $4,525.1, an increase of $185.2 or 4.3% over the comparable nine month period of 2023. The components of the net sales increase are as follows:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
Net Sales - Consolidated		2024				2024
Product volumes sold(1)			3.1	%			3.4	%
Pricing/Product mix(2)			1.2	%			1.3	%
Foreign exchange rate fluctuations			(0.1	%)		0.0%
Exit of product lines (net of acquisition)(3)			(0.4	%)			(0.4	%)
Net Sales increase			3.8	%			4.3	%

(1)

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

(2)

For both the three and nine months ended September 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 $683.1 for the three months ended September 30, 2024, a $36.8 increase as compared to the same period in 2023. Gross margin increased 80 basis points (“bps”) in the third quarter of 2024 compared to the same period in 2023, due to the positive impact of productivity programs of 140 bps, favorable price/volume/mix of 130 bps, a favorable tariff ruling of 20 bps, and benefits from the Graphico Acquisition of 10 bps, offset by the impact of higher manufacturing costs, including labor and commodities, of 220 bps. Gross profit was $2,082.2 for the nine months ended September 30, 2024, a $175.0 increase compared to the same period in 2023. Gross margin increased 210 bps in the first nine months of 2024 compared to the same period in 2023, due to the impact of productivity programs of 130 bps, favorable price/volume/mix of 120 bps, and a favorable tariff ruling of 70 bps, offset by the impact of higher manufacturing costs including labor and higher commodities of 100 bps and unfavorable foreign exchange of 10 bps.

Operating Expenses

Marketing expenses for the three months ended September 30, 2024 were $185.8, an increase of $18.0 or 10.7% as compared to the same period in 2023. Marketing expenses as a percentage of net sales in the third quarter of 2024 increased by 80 bps to 12.3% as compared to 11.5% in the same period in 2023 due to 120 bps on higher expense primarily from increased marketing spend to support new product introductions, offset by 40 bps of leverage on higher net sales. Marketing expenses for the nine months ended September 30, 2024 were $490.2, an increase of $67.9 or 16.1% as compared to the same period in 2023. Marketing expenses as a percentage of net sales for the first nine months of 2024 increased by 110 bps to 10.8% as compared to 9.7% in the same period in 2023 due to 150 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 $231.7 in the third quarter of 2024, an increase of $9.0 or 4.0% as compared to the same period in 2023. SG&A as a percentage of net sales was 15.3% in the third quarter of 2024 and 2023. SG&A expenses were higher by 60 bps, primarily due to growth investments in our international division, Research and Development ("R&D") and Information Technology ("IT"), and the Graphico acquisition, offset by 60 bps of leverage associated with higher sales. SG&A expenses for the first nine months of 2024 were $684.5, an increase of $40.9 or 6.4% as compared to the same period in 2023. SG&A as a percentage of net sales increased 30 bps to 15.1% in the first nine months of 2024 compared to 14.8% in 2023 due to 90 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.

Nonoperating Expenses

Tradename and other asset impairment charges were $357.1 million for the three and nine months ended September 30, 2024 related to non-cash charges to adjust the carrying value of intangible assets and property, plant, and equipment related to the VMS business. The impairment was due to a continued decline in market share and a deterioration in the financial performance for the VMS business, which includes the VITAFUSION and L'IL CRITTERS tradename, primarily due to significant product competition coming from new category entrants, including private label. See Note 11, “Goodwill and Other Intangibles, Net” to the Condensed Consolidated Financial Statements included herein for additional information.

Interest income for the three and nine months ended September 30, 2024 increased $6.1 and $10.5 to $10.6 and $17.7, respectively, as compared to the same periods in 2023, due to higher interest income primarily associated with the favorable Waterpik tariff ruling and higher interest rates.

Interest expense for the three and nine months ended September 30, 2024 decreased $3.8 and $12.3 to $23.4 and $71.6, respectively, as compared to the same periods in 2023, primarily due to lower average outstanding debt.

Other income (expense), net was nominal for the three and nine months ended September 30, 2024 and 2023.

Income Taxes

The effective tax rate for the three months ended September 30, 2024 was a benefit of 25.9% as compared to an expense of 24.1% in the same period in 2023. The effective tax benefit of 25.9% for the three months ended September 30, 2024 was impacted by the non-cash VMS impairment charge. Excluding the VMS impairment charge, the effective tax rate for the three months ended September 30, 2024 was 23.8%.

The effective tax rate for the nine months ended September 30, 2024 was 21.3%, compared to 22.1% in the same period in 2023. The effective tax rate for the nine months ended September 30, 2024 was impacted by the non-cash VMS impairment charge. Excluding the VMS impairment charge, the effective tax rate for the nine months ended September 30, 2024 was 22.6% which was higher than the 2023 rate due to a lower benefit from stock option exercises.

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 September 30, 2024, we held 50% ownership interests in each of Armand and ArmaKleen, respectively. Our equity in earnings of Armand and ArmaKleen, totaling $3.0 and $1.7 for the three months ended September 30, 2024 and 2023, respectively, and $7.2 and $8.1 for the nine months ended September 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 (loss) before income taxes for the three and nine months ended September 30, 2024 and September 30, 2023 are as follows:

	Consumer				Consumer
	Domestic				International				SPD				Corporate**(3)**				Total
Net Sales**(1)**
Third Quarter 2024	$	1,170.8			$	267.7			$	72.1			$	0.0			$	1,510.6
Third Quarter 2023		1,133.1				244.4				78.4				0.0				1,455.9
First Nine Months of 2024	$	3,506.6			$	786.4			$	232.1			$	0.0			$	4,525.1
First Nine Months of 2023		3,378.2				716.9				244.8				0.0				4,339.9
(Loss) Income before Income Taxes**(2)**
Third Quarter 2024**(4)**	$	(107.1	)		$	(4.7	)		$	7.4			$	3.0			$	(101.4	)
Third Quarter 2023		203.4				22.7				6.2				1.7				234.0
First Nine Months of 2024**(4)**	$	405.3			$	61.2			$	29.5			$	7.2			$	503.2
First Nine Months of 2023		662.8				79.1				22.2				8.1				772.2

(1)

Intersegment sales from Consumer International to Consumer Domestic, which are not reflected in the table, were $7.0 and $4.7 for the three months ended September 30, 2024 and September 30, 2023, respectively, and were $19.6 and $11.7 for the nine months ended September 30, 2024 and September 30, 2023, respectively.

(2)

In determining income (loss) 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 (loss) from operations.

(3)

Corporate segment consists of equity in earnings of affiliates from Armand and ArmaKleen for the three and nine months ended September 30, 2024 and September 30, 2023. The Company’s 50% interest in Armakleen was sold to an unrelated third party in October of 2024. The transaction is not material to the Company’s results of operations or cash flows.

(4)

In the third quarter and first nine months of 2024, the results include the VMS non-cash intangible and PP&E impairment charges of $357.1 in SG&A expenses, of which $327.4 was recorded in the Consumer Domestic segment and $29.7 was recorded in the Consumer International segment.

Product line revenues from external customers are as follows:

		Three Months Ended								Nine Months Ended
		September 30,				September 30,				September 30,				September 30,
		2024				2023				2024				2023
Household Products		$	637.4			$	636.2			$	1,929.5			$	1,857.0
Personal Care Products			533.4				496.9				1,577.1				1,521.2
Total Consumer Domestic			1,170.8				1,133.1				3,506.6				3,378.2
Total Consumer International			267.7				244.4				786.4				716.9
Total SPD			72.1				78.4				232.1				244.8
Total Consolidated Net Sales		$	1,510.6			$	1,455.9			$	4,525.1			$	4,339.9

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 third quarter of 2024 were $1,170.8, an increase of $37.7 or 3.3% as compared to the same period in 2023. Consumer Domestic net sales for the nine months ended September 30, 2024 were $3,506.6, an increase of $128.4 or 3.8% as compared to the same period in 2023. The components of the net sales change are the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Net Sales - Consumer Domestic	2024				2024
Product volumes sold		2.6	%			3.1	%
Pricing/Product mix		0.7	%			0.7	%
Net Sales increase		3.3	%			3.8	%

The increase in net sales for three months ended September 30, 2024 includes growth from HERO® acne treatment products, THERABREATH® mouth wash, ZICAM® cold shortening and relief products, SPINBRUSH® battery-operated toothbrushes, ARM & HAMMER® baking soda, and ARM & HAMMER® scent boosters, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, and FINISHING TOUCH FLAWLESS® hair removal products. The increase in net sales for the nine-month period ending September 30, 2024, includes growth from THERABREATH® mouth wash, HERO® acne treatment products, ARM & HAMMER® cat litter, ARM & HAMMER® baking soda, and BATISTE® dry shampoo, partially offset by declines in VITAFUSION® and L’IL CRITTERS® gummy vitamins, FINISHING TOUCH FLAWLESS® hair removal products, and WATERPIK® Shower Heads.

Consumer Domestic loss before income taxes for the third quarter of 2024 was $(107.1), a decrease of $310.5 as compared to the third quarter of 2023. The decrease is due to the VMS non-cash intangible and PP&E impairment charges of $327.4. Excluding the non-cash impairment charges, Consumer Domestic income before income taxes increased by $16.9 and was impacted by higher sales volumes of $22.1, the benefit of productivity programs of $19.6, favorable price/mix of $10.8, and favorable interest and other expenses of $10.6 (including interest related to tariff recoveries of $4.6), partially offset by the impact of higher manufacturing and distribution expenses of $28.1, higher marketing expenses of $13.7, and higher SG&A expenses of $4.5. For the nine-month period ended September 30, 2024, income before income taxes was $405.3, a $257.5 decrease as compared to the first nine months of 2023. The decrease is due to the VMS non-cash intangible and PP&E impairment charges of $327.4. Excluding the non-cash impairment charges, Consumer Domestic income before income taxes increased $69.9 and was impacted by higher sales volumes of $64.1, the benefit of productivity programs of $54.2, favorable price/mix of $20.5, a favorable tariff ruling of $29.3 and favorable interest and other expenses of $22.2 (including interest related to tariff recoveries of $4.6), partially offset by higher marketing expenses of $53.4, higher SG&A expenses of $34.1, and higher manufacturing and distribution expenses of $33.0.

Consumer International

Consumer International net sales were $267.7 in the third quarter of 2024, an increase of $23.3 or 9.5% as compared to the same period in 2023. Consumer International net sales in the first nine months of 2024 were $786.4, an increase of $69.5 or 9.7% as compared to the same period in 2023. The components of the net sales change are the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Net Sales - Consumer International	2024				2024
Product volumes sold		5.3	%			5.1	%
Pricing/Product mix		2.8	%			3.6	%
Foreign exchange rate fluctuations		(0.5	)%			0.3	%
Acquired product line(1)		1.9	%			0.7	%
Net Sales increase		9.5	%			9.7	%

(1)

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

Excluding the impact of foreign exchange rates and the Graphico acquisition, sales growth in the third quarter ended September 30, 2024 was driven by OXICLEAN® stain removers, THERABREATH® mouth wash, ULTRAMAX® antiperspirant deodorant, and VITAFUSION® and L’IL CRITTERS® gummy vitamins, in GMG (the "Global Markets Group"), and HERO® acne treatment products in Europe, Canada and Australia. The increase in net sales for the nine-month period ending September 30, 2024, was driven

by OXICLEAN® stain removers, THERABREATH® mouth wash, ULTRAMAX® antiperspirant deodorant, and VITAFUSION® and L’IL CRITTERS® gummy vitamins, in GMG, HERO® acne treatment products in Europe, HERO® acne treatment products in Canada, and THERABREATH® mouth wash in Mexico.

Consumer International loss before income taxes was $(4.7) in the third quarter of 2024, a $27.4 decrease as compared to the third quarter of 2023 due to the VMS non-cash intangible and PP&E impairment charges of $29.7. Excluding the non-cash impairment charges, Consumer International income before income taxes increased $2.3 and was impacted by higher sales volumes of $6.5, a favorable price/mix of $4.5, lower manufacturing and commodity costs of $1.6, and favorable interest and other expenses of $1.1, offset by the impact of higher SG&A expenses of $6.0, higher marketing expenses of $4.3 and unfavorable foreign exchange rates of $1.1. For the first nine months of 2024, income before income taxes was $61.2, a $17.9 decrease as compared to the same period in 2023. The decrease is due to the VMS non-cash intangible and PP&E impairment charges of $29.7. Excluding the non-cash impairment charges, Consumer International income before income taxes increased $11.8, and was impacted by a favorable price/mix of $26.6, higher sales volumes of $17.5, favorable interest and other expenses of $1.7, and lower manufacturing and commodity costs of $1.3, partially offset by higher SG&A expenses of $17.2, higher marketing expenses of $16.1 and unfavorable foreign exchange rates of $2.0.

Specialty Products (“SPD”)

SPD net sales were $72.1 in the third quarter of 2024, a decrease of $6.3 or 8.0% as compared to the same period in 2023. SPD net sales were $232.1 for the first nine months of 2024, a decrease of $12.7, or 5.2% as compared to the same period in 2023. The components of the net sales change are the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Net Sales - SPD	2024				2024
Product volumes sold		3.6	%			3.5	%
Pricing/Product mix		3.9	%			2.6	%
Exit of product lines (1)		(15.5	)%			(11.3	)%
Net Sales decrease		(8.0	)%			(5.2	)%

(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 nine months ended September 30, 2024 primarily due to growth in our animal nutrition and specialty chemicals segments.

SPD income before income taxes was $7.4 in the third quarter of 2024, an increase of $1.2 as compared to the same period in 2023 due to a favorable price/mix of $2.6, favorable manufacturing costs of $1.0, lower SG&A and other costs of $0.5, and lower marketing costs of $0.1, offset by the impact of lower sales volumes of $3.0 due to the exit of certain product lines. SPD income before income taxes was $29.5 in the first nine months of 2024, an increase of $7.3 as compared to the same period in 2023 to favorable price/product mix of $5.9, lower marketing expenses of $1.6, lower SG&A and other costs of $1.9, and favorable manufacturing costs of $0.2, partially offset by the impact of lower sales volumes of $2.2 due to the exit of certain product lines.

Corporate

The Corporate segment includes equity in earnings of affiliates from Armand and ArmaKleen in the three and nine months of 2024 and 2023. The Corporate segment income before income taxes was $3.0 in the third quarter of 2024, as compared to $1.7 in the same period in 2023. The Corporate segment income before income taxes was $7.2 for the first nine months of 2024, as compared to $8.1 in the same period in 2023. In October 2024 the Company sold its 50% interest in Armakleen to an unrelated third party. The transaction is not material to the Company’s results of operations or cash flows.

Liquidity and Capital Resources

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.

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.

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.

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

As of September 30, 2024, we had $752.1 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.

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

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 our Annual Report on 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 interest coverage ratio requirement under the Credit Agreement.

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

	Nine Months Ended
	September 30,				September 30,
	2024				2023
Net cash provided by operating activities	$	863.9			$	795.1
Net cash used in investing activities	$	(138.1	)		$	(128.4	)
Net cash used in financing activities	$	(318.3	)		$	(363.0	)

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 nine months ended September 30, 2024 increased by $68.8 to $863.9 as compared to $795.1 in the same period in 2023 primarily due to an increase in cash earnings (net income adjusted for non-cash items). We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended September 30, 2024 and 2023:

	As of
	September 30, 2024				September 30, 2023				Change
Days of sales outstanding in accounts receivable ("DSO")		34				28				6
Days of inventory outstanding ("DIO")		70				75				(5	)
Days of accounts payable outstanding ("DPO")		75				76				1
Cash conversion cycle		29				27				2

Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a two-period average method, increased 2 days 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. 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 nine months of 2024 was $138.1, primarily reflecting $125.2 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 nine months of 2023 was $128.4, primarily reflecting $121.5 property, plant and equipment additions.

Net Cash Used in Financing Activities – Net cash used in financing activities during the first nine months of 2024 was $318.3 reflecting $200.4 of net debt payments and $207.4 of cash dividend payments, partially offset by $90.3 of proceeds from stock option exercises. Net cash used in financing activities during the first nine months of 2023 was $363.0, reflecting $199.9 of cash dividend payments and $270.6 of net debt repayments, partially offset by $107.6 of proceeds from stock option exercises.