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, 2024, which was filed with the SEC on February 13, 2025, 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 nutrition, chemicals and commercial products. 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

Global Economic Conditions and Trade Policies

We continue to experience increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty primarily due to rapid changes in U.S. trade policies including recent sweeping tariff increases, as well as retaliatory tariffs by foreign countries. Additionally, U.S. consumers are increasingly worried about persistent inflation and looming tariffs, leading them to cut back on discretionary spending. We believe that retailers are lowering their consumer-packaged goods inventories and making targeted decisions to build inventory of certain products in advance of additional tariffs. We will continue to evaluate these evolving developments and have begun to take action to mitigate their impact on our business, including taking strategic actions for certain business lines (see Strategic Business Decisions), shifting production and relocating manufacturing operations, finding alternative sources of supply, most notably ceasing the import of substantially all Waterpik flossers and other products from China into the U.S., potential price increases, adjusting inventories, lobbying and seeking exemptions with respect to tariffs. While the tariff situation remains fluid, we are focused on managing through these challenges. From a gross risk perspective, we are currently projecting twelve-month run-rate gross tariff costs of approximately $60.0. Over the next 12 months, we believe our tariff cost exposure can be reduced through additional supply chain efforts and surgical pricing.

Strategic Business Decisions

On May 1, 2025, we announced that we will be exiting the Flawless, Spinbrush and Waterpik showerhead businesses, which we intend to complete by early 2026. These businesses generated approximately $170.0 of annual Net Sales in 2024. We recorded a pre-tax charge of $51.0 in the second quarter of 2025 as a direct result of these actions, of which $30.4 was recorded in Cost of sales and $20.6 was recorded in SG&A. The charge was primarily recorded in the Consumer Domestic segment and was comprised of non-cash charges related to impairments of intangible and fixed assets, as well as inventory reserves.

On August 1, 2025, we announced that we are performing a strategic review of our vitamin business. This review includes potential actions to streamline our supply chain to strengthen the core business, joint venture or other partnership opportunities, and divestiture options. We expect to reach a conclusion from this review by the end of 2025.

Accelerated Share Repurchase

In May 2025, the Company entered into an accelerated share repurchase ("ASR") contract with a commercial bank to purchase Common Stock. The Company paid $300.0 to the bank, inclusive of fees, and received an initial delivery of shares equal to $270.0, or 2.8 million shares at an average share price of $95.97. The 2.8 million shares were purchased under the evergreen share repurchase program. The Company used cash on hand to fund the initial purchase price. The remaining shares to be delivered by the bank will be determined by the average price per share paid by the bank during the purchase period and is expected to end in August of 2025.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” and commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing. We are currently evaluating the impact of the provisions of the OBBBA on our financial position, results of operations and cash flows.

Touchland Acquisition

On July 16, 2025, we completed the acquisition of Touchland Holding Corp ("Touchland"), the developer of TOUCHLAND® hand sanitizer products (the "Touchland Acquisition"). The purchase price for the Touchland Acquisition was $700.0, subject to customary adjustments for cash and working capital acquired at closing, and is inclusive of rights granted to Touchland’s founder to receive shares of our common stock valued at $50.0, with 50% of such shares required to be issued following vesting at each of the first and second year anniversaries of the closing. The value of common stock received by Touchland's founder will be recognized as a compensation expense over the two-year vesting period. Payment of a $5.0 portion of the purchase price was deferred related to certain indemnification obligations provided by Touchland’s equityholders, which amount, to the extent not used in satisfaction of such indemnity obligations, is payable three years from the closing. Contingent upon the achievement of certain 2025 net sales thresholds, the Touchland Acquisition may require payment of additional earnout consideration up to a maximum of $180.0 in cash in the second quarter of 2026. We expect the majority of the purchase price to be allocated to the trade name.

New Credit Agreement

On July 17, 2025, the Company entered into a Credit Agreement (the “Credit Agreement”). The Credit Agreement replaced the Company’s prior $1,500.0 unsecured revolving credit facility that was entered into on June 16, 2022. The aggregate commitments of the lenders under the Credit Agreement, as of the effective date, are $2,000.0, with an option to increase such commitments to $2,750.0 pursuant to the terms therein. The revolving credit facility matures on July 17, 2030, unless extended. Terms for the Credit Agreement are substantially the same as the terms for the credit facility entered into on June 16, 2022.

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, 2025				Prior Year		June 30, 2024
Net Sales	$	1,506.3			-0.3%		$	1,511.2
Gross Profit	$	647.0			-9.1%		$	712.1
Gross Margin		43.0	%		-410 basis points			47.1	%
Marketing Expenses	$	157.1			3.1%		$	152.4
Percent of Net Sales		10.4	%		30 basis points			10.1	%
Selling, General & Administrative Expenses	$	228.2			2.4%		$	222.8
Percent of Net Sales		15.1	%		40 basis points			14.7	%
Income from Operations	$	261.7			-22.3%		$	336.9
Operating Margin		17.5	%		-480 basis points			22.3	%
Net income per share - Diluted	$	0.78			-21.2%		$	0.99
	Six Months Ended				Change vs.		Six Months Ended
	June 30, 2025				Prior Year		June 30, 2024
Net Sales	$	2,973.4			-1.4%		$	3,014.5
Gross Profit	$	1,306.6			-6.6%		$	1,399.1
Gross Margin		43.9	%		-250 basis points			46.4	%
Marketing Expenses	$	293.7			-3.5%		$	304.4
Percent of Net Sales		9.9	%		-20 basis points			10.1	%
Selling, General & Administrative Expenses	$	455.9			0.7%		$	452.8
Percent of Net Sales		15.3	%		30 basis points			15.0	%
Income from Operations	$	557.0			-13.2%		$	641.9
Operating Margin		18.7	%		-260 basis points			21.3	%
Net income per share - Diluted	$	1.66			-13.1%		$	1.91

Net Sales

Net sales for the quarter ended June 30, 2025 were $1,506.3, a decrease of $4.9 or 0.3% as compared to the same period in 2024. Net sales for the six months ended June 30, 2025 were $2,973.4, a decrease of $41.1 or 1.4% over the comparable six month period of 2024. The components of the net sales decrease are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Net Sales - Consolidated	2025				2025
Product volumes sold(1)		0.8	%			(0.3	%)
Pricing/Product mix(2)		(0.7	%)			(0.3	%)
Foreign exchange rate fluctuations		0.0	%			(0.3	%)
Exit of product lines (net of acquisition)(3)		(0.4	%)			(0.5	%)
Net Sales decrease		(0.3	%)			(1.4	%)

(1)

For the three months ended June 30, 2025, the volume change reflects increased product unit sales in the Consumer International and Consumer Domestic segments, partially offset by decreased product unit sales in the SPD segment. For the six months ended June 30, 2025, the volume change reflects decreased product unit sales in the Consumer Domestic and SPD segments, partially offset by increased product unit sales in the Consumer International segment.

(2)

For the three months ended June 30, 2025, price/mix was unfavorable in the Consumer Domestic segment, partially offset by the SPD and Consumer International segments. For the six months ended June 30, 2025, price/mix was unfavorable in the Consumer Domestic segment, partially offset by the SPD segment.

(3)

In the second quarter of 2025, we announced that we are exiting the Flawless, Spinbrush, and Waterpik showerheads businesses. 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 $647.0 for the three months ended June 30, 2025, a $65.1 decrease as compared to the same period in 2024. Gross margin decreased 410 basis points (“bps”) in the second quarter of 2025 compared to the same period in 2024. The decline in gross margin was due primarily to costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of 200 bps and tariff refunds in the prior year of 180 bps. Excluding these items, gross margin decreased by 30 bps due to the impact of higher manufacturing costs of 130 bps (including labor, commodities and tariffs), unfavorable price/mix/volume of 40 bps, and an unfavorable recall impact of 30 bps, partially offset by the impact of productivity programs of 160 bps, and benefits from the Graphico Acquisition of 10 bps.

Gross profit was $1,306.6 for the six months ended June 30, 2025, a $92.5 decrease compared to the same period in 2024. Gross margin decreased 250 bps in the first six months of 2025 compared to the same period in 2024. The decline in gross margin was due primarily to costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of 100 bps and tariff refunds in the prior year of 90 bps. Excluding these items, gross margin decreased by 60 bps due to the impact of higher manufacturing costs of 180 bps (including labor, commodities and tariffs), unfavorable price/mix/volume of 20 bps, an unfavorable recall impact of 20 bps, and unfavorable foreign exchange of 10 bps, partially offset by the impact of productivity programs of 160 bps, and benefits from the Graphico Acquisition of 10 bps.

Operating Expenses

Marketing expenses for the three months ended June 30, 2025 were $157.1, an increase of $4.7 or 3.1% as compared to the same period in 2024. Marketing expenses as a percentage of net sales in the second quarter of 2025 increased by 30 bps to 10.4% compared to 10.1% in the same period in 2024 due to 30 bps on higher expense primarily due to marketing program timing. Marketing expenses for the six months ended June 30, 2025 were $293.7, a decrease of $10.7 or 3.5% as compared to the same period in 2024. Marketing expenses as a percentage of net sales for the first six months of 2025 decreased by 20 bps to 9.9% as compared to 10.1% in the same period in 2024 due to 40 bps on lower expense, primarily due to marketing program timing.

SG&A expenses were $228.2 in the second quarter of 2025, an increase of $5.4 or 2.4% as compared to the same period in 2024. SG&A as a percentage of net sales increased 40 bps to 15.1% in the second quarter of 2025 as compared to 14.7% in the same period in 2024. The increase is due to 40 bps on higher expenses, primarily due to non-cash asset impairment costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $20.6. SG&A expenses for the first six months of 2025 were $455.9, an increase of $3.1 or 0.7% as compared to the same period in 2024. SG&A as a percentage of net sales increased 30 bps to 15.3% in the first six months of 2025 compared to 15.0% in 2024. The increase is primarily due to non-cash asset impairment costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $20.6.

Non**operating Expenses

Interest income for the three and six months ended June 30, 2025 increased $5.4 and $11.3 to $9.2 and $18.5, respectively, as compared to the same period in 2024 due to higher interest income primarily associated with higher cash balances.

Interest expense for the three months ended June 30, 2025 increased $0.3 to $23.5, as compared to the same period in 2024. Interest expense for the six months ended June 30, 2025 decreased $1.4 to $46.8 as compared to the same period in 2024.

Other income (expense) was nominal for the three and six months ended June 30, 2025 and 2024.

Income Taxes

The effective tax rate for the three months ended June 30, 2025 was 23.8%, compared to 24.0% in the same period in 2024. The effective tax rate for the six months ended June 30, 2025 was 22.8%, compared to 22.1% in the same period in 2024.

The increase in the tax rate for the six months ended June 30, 2025 is primarily from a lower tax benefit on reduced stock option exercises in 2025 compared to 2024. We are still evaluating the impact the changes to the tax provisions implemented by the OBBBA will have on our financial position, results of operations, and cash flows.

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.

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

Segment net sales and income from operations for the three and six months ended June 30, 2025 and June 30, 2024 are as follows:

	Consumer				Consumer
	Domestic				International				SPD				Total
Net Sales
Second Quarter 2025	$	1,154.1			$	277.6			$	74.6			$	1,506.3
Second Quarter 2024		1,170.6				263.7				76.9				1,511.2
First Six Months of 2025	$	2,283.9			$	539.5			$	150.0			$	2,973.4
First Six Months of 2024		2,335.8				518.7				160.0				3,014.5
Income from Operations
Second Quarter 2025	$	217.4			$	32.4			$	11.9			$	261.7
Second Quarter 2024		289.8				34.9				12.2				336.9
First Six Months of 2025	$	462.2			$	70.1			$	24.7			$	557.0
First Six Months of 2024		547.4				70.8				23.7				641.9

Product line revenues from external customers are as follows:

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2025				2024				2025				2024
Household Products		$	650.0			$	653.2			$	1,264.9			$	1,292.1
Personal Care Products			504.1				517.4				1,019.0				1,043.7
Total Consumer Domestic			1,154.1				1,170.6				2,283.9				2,335.8
Total Consumer International			277.6				263.7				539.5				518.7
Total SPD			74.6				76.9				150.0				160.0
Total Consolidated Net Sales		$	1,506.3			$	1,511.2			$	2,973.4			$	3,014.5

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 2025 were $1,154.1, a decrease of $16.5 or 1.4% as compared to the same period in 2024. Consumer Domestic net sales for the six months ended June 30, 2025 were $2,283.9, a decrease of $51.9 or 2.2% as compared to the same period in 2024. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - Consumer Domestic		2025				2025
Product volumes sold			0.1	%			(1.5	%)
Pricing/Product mix			(1.1	%)			(0.6	%)
Exit of product lines (1)			(0.4	%)			(0.1	%)
Net Sales decrease			(1.4	)%			(2.2	)%

(1)

In the second quarter of 2025, we announced that we are exiting the Flawless, Spinbrush, and Waterpik showerheads businesses.

The decrease in net sales for the three months ended June 30, 2025, includes declines from VITAFUSION® gummy dietary supplements, and OXICLEAN® Stain Fighters, partially offset by growth from HERO® acne treatment products and ARM & HAMMER® Liquid Detergent and Cat Litter. The decrease in net sales for the six-month period ending June 30, 2025, includes declines from VITAFUSION® gummy dietary supplements, OXICLEAN® Stain Fighters and FIRST RESPONSE® home pregnancy and ovulation test kits, partially offset by growth from THERABREATH® mouth wash and HERO® acne treatment products.

Consumer Domestic income from operations for the second quarter of 2025 was $217.4, a $72.3 decrease as compared to the second quarter of 2024. The decrease is primarily due to costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $47.2, higher manufacturing and distribution expenses of $46.8 (including tariffs), unfavorable price/mix of $15.4, the impact of lower sales volumes of $1.4, and higher marketing expenses of $0.3, partially offset by the benefit of productivity programs of $22.7 and lower SG&A expenses of $17.7. For the six-month period ended June 30, 2025, income from operations was $462.2, an $85.2 decrease as compared to the first six months of 2024. The decrease is primarily due to higher manufacturing and distribution expenses of $72.0 (including tariffs), costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $47.2, the impact of lower sales volumes of $23.6, and unfavorable price/mix of $18.8, partially offset by the benefit of productivity programs of $43.3, lower SG&A expenses of $21.5, and lower marketing expenses of $13.8.

Consumer International

Consumer International net sales were $277.6 in the second quarter of 2025, an increase of $13.9 or 5.3% as compared to the same period in 2024. Consumer International net sales in the first six months of 2025 were $539.5, an increase of $20.8 or 4.0% as compared to the same period in 2024. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - Consumer International		2025				2025
Product volumes sold			4.7	%			5.3	%
Pricing/Product mix			0.1	%		0.0%
Foreign exchange rate fluctuations			0.1	%			(2.1	%)
Acquired product line, net of divestitures(1)			0.4	%			0.8	%
Net Sales increase			5.3	%			4.0	%

(1)

The Graphico acquisition is included in our results since June 1, 2024, the date of acquisition, partially offset by the impact of announcing the exit of the Flawless, Spinbrush, and Waterpik showerheads businesses.

Excluding the impact of foreign exchange rates, sales growth in the second quarter ended June 30, 2025 was driven by HERO® acne treatment products in Europe, Canada and Australia, THERABREATH® mouth wash in Canada and the Global Markets Group ("GMG"), FEMFRESH and ULTRAMAX in GMG, and ARM & HAMMER® Liquid Detergent in GMG. The increase in net sales for the six-month period ending June 30, 2025, was driven HERO® acne treatment products in Canada, Europe, GMG and Australia, THERABREATH® mouth wash in GMG and Canada, FEMFRESH in GMG and ARM & HAMMER® Cat Litter in GMG.

Consumer International income from operations was $32.4 in the second quarter of 2025, a $2.5 decrease as compared to the second quarter of 2024. The decrease is due primarily to higher marketing expenses of $3.9, costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $3.8, and higher SG&A expenses of $3.1, partially offset by the impact of higher sales volumes of $4.5, favorable price/mix of $3.9, and lower manufacturing and distribution expenses of $0.2 (including tariffs). For the first six months of 2025, income from operations was $70.1, a $0.7 decrease as compared to the same period in 2024. The decrease is due primarily to unfavorable foreign exchange rates of $7.8, higher SG&A expenses of $6.4, costs associated with exiting the Flawless, Spinbrush, and Waterpik showerheads businesses of $3.8, higher manufacturing and distribution expenses of $2.6 (including tariffs), and higher marketing expenses of $2.3, partially offset by the impact of higher sales volumes of $11.8 and a favorable price/mix of $10.7.

Specialty Products (“SPD”)

SPD net sales were $74.6 in the second quarter of 2025, a decrease of $2.3 or 3.0% as compared to the same period in 2024. SPD net sales were $150.0 for the first six months of 2025, a decrease of $10.0, or 6.3% as compared to the same period in 2024. The components of the net sales change are the following:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Net Sales - SPD		2025				2025
Product volumes sold			(2.7	%)			(1.2	%)
Pricing/Product mix			2.8	%			2.8	%
Foreign exchange fluctuations			0.0	%			0.5	%
Exit of product lines (1)			(3.1	%)			(8.4	%)
Net Sales decrease			(3.0	%)			(6.3	%)

(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, 2025 primarily due to growth in our sodium bicarbonate business.

SPD income from operations was $11.9 in the second quarter of 2025, a decrease of $0.3 as compared to the same period in 2024 due to lower volumes of $1.9, unfavorable manufacturing costs of $1.1, and higher marketing costs of $0.3, partially offset by favorable price/mix of $2.2 and lower SG&A expenses of $1.2. SPD income from operations was $24.7 in the first six months of 2025, an increase of $1.0 as compared to the same period in 2024 due primarily to favorable price/product mix of $4.3 and lower SG&A expenses of $3.5 mainly from divestitures, partially offset by the impact of lower sales volumes of $3.9, unfavorable manufacturing costs of $2.3, and higher marketing expenses of $0.6.

Equity in Earnings of Affiliates

Equity in earnings of affiliates represents the results of Armand in the three and six months of 2025 and 2024 and ArmaKleen in the first three and six months of 2024. In October 2024, the Company sold its 50% interest in ArmaKleen to our joint venture partner.

Liquidity and Capital Resources

On July 17, 2025, the Company entered into a Credit Agreement (the “Credit Agreement”). The Credit Agreement replaced the Company’s prior $1,500.0 unsecured revolving credit facility that was entered into on June 16, 2022. The aggregate commitments of the lenders under the Credit Agreement, as of the effective date, are $2,000.0, with an option to increase such commitments to $2,750.0 pursuant to the terms therein. The revolving credit facility matures on July 17, 2030, unless extended. 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, 2025, we had $923.2 in cash and cash equivalents, and approximately $1,494.0 available through our previous 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.

The current economic environment presents risks that could have adverse consequences for our liquidity. See “Our operating results have been, and could be in the future, adversely affected by natural disasters, public health crises, political crises, or other catastrophic events, or unfavorable worldwide, regional and local economic and financial market conditions” 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 because 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.

We have $658.9 of share repurchase availability under the 2021 Share Repurchase Program as of June 30, 2025.

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.

In May 2025, we entered into an accelerated share repurchase ("ASR") contract with a commercial bank to purchase Common Stock. The Company paid $300.0 to the bank, inclusive of fees, and received an initial delivery of shares equal to $270.0, or 2.8 million shares at an average price of $95.97. The 2.8 million shares were purchased under the evergreen share repurchase program. The Company used cash on hand to fund the initial purchase price. The remaining shares to be delivered by the bank will be determined by the average price per share paid by the bank during the purchase period and is expected to end in August of 2025.

On January 29, 2025, the Board declared a 4% increase in the regular quarterly dividend from $0.28375 to $0.295 per share, equivalent to an annual dividend of $1.18 per share payable to stockholders of record as of February 14, 2025. The increase raises the annual dividend payout from $277.0 to approximately $287.0 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 $130.0 in 2025 including manufacturing capacity investments for THERABREATH® and Sterimar and an enterprise resource planning (ERP) project. 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,
	2025				2024
Net cash provided by operating activities	$	416.5			$	499.9
Net cash used in investing activities	$	(39.6	)		$	(91.5	)
Net cash used in financing activities	$	(426.8	)		$	(257.4	)

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, 2025 decreased by $83.4 to $416.5 as compared to $499.9 in the same period in 2024 due to an increase in working capital and a decrease in cash earnings (net income adjusted for non-cash items). The increase in working capital is primarily related to lower accounts payable and accrued expense balances mainly due to the timing of marketing spend and inventory purchases partially offset by higher cash collections. The timing of inventory purchases as well as lower accounts receivable balances are mainly due to lower sales in our consumer domestic business. 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, 2025 and 2024:

	Quarter ended as of
	June 30, 2025				June 30, 2024				Change
Days of sales outstanding in accounts receivable ("DSO")		36				34				2
Days of inventory outstanding ("DIO")		68				67				1
Days of accounts payable outstanding ("DPO")		74				72				(2	)
Cash conversion cycle		30				29				1

Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a quarter-to-quarter two-period average method, decreased one day from the prior year. The increase in DPO is primarily from higher average accounts payable balances from extending payment terms with some vendors. 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 2025 was $39.6, primarily reflecting $39.0 for property, plant and equipment additions. 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 Financing Activities – Net cash used in financing activities during the first six months of 2025 was $426.8, reflecting $300.0 of share repurchases, $145.0 of cash dividend payments and $5.9 related to the payment of a business acquisition liability, partially offset by $26.6 of proceeds from stock option exercises. 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.