EDGEWELL PERSONAL CARE Co: Form 10-Q for the period ended Jun 30, 2023

(Amounts in millions, except per share data, unaudited)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the accompanying notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on November 16, 2022 (the “2022 Annual Report”). The following discussion may contain forward-looking statements that reflect our plans, estimates, and beliefs and involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed within “Forward-Looking Statements” below and in Item 1A. Risk Factors and “Forward-Looking Statements” included within our 2022 Annual Report.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Edgewell Personal Care Company or any of our businesses (the “Company”). Forward-looking statements generally can be identified by the use of words or phrases such as “believe,” “expect,” “expectation,” “anticipate,” “may,” “could,” “intend,” “estimate,” “plan,” “target,” “predict,” “likely,” “will,” “should,” “forecast,” “outlook,” “strategy,” or other similar words or phrases. These statements are not based on historical facts, but instead reflect our expectations, estimates or projections concerning future results or events, including, without limitation, the future earnings and performance of the Company or any of our businesses. Many factors outside our control could affect the realization of these estimates. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties and assumptions that are difficult to predict and could cause our actual results to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or projections will be achieved. The forward-looking statements included in this report are only made as of the date of this report, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. You should not place undue reliance on these statements.

In addition, other risks and uncertainties not presently known to us or that we presently consider immaterial could significantly affect the forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Risks and uncertainties include those detailed from time to time in our publicly filed documents, including in Item 1A. Risk Factors of Part I of our 2022 Annual Report.

Non-GAAP Financial Measures

While we report financial results in accordance with GAAP, this discussion also includes non-GAAP measures. These non-GAAP measures are referred to as “adjusted” or “organic” and exclude items such as restructuring and related costs, acquisition and integration costs, Sun Care reformulation costs, value-added tax (“VAT”) settlement costs, loss on defined benefit settlement, income from resolution of legal matters, and other costs or income. Reconciliations of non-GAAP measures are included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. We use this non-GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of ongoing operating results. Given certain significant events, including the acquisition of Billie, Inc. (“Billie”) (the “Acquisition”) on November 29, 2021, we view the use of non-GAAP measures that take into account the impact of these unique events as particularly valuable in understanding our underlying operational results and providing insights into future performance. The information can also be used to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by the types of items that are excluded. This non-GAAP information is also a component in determining management’s incentive compensation. Finally, we believe this information provides more transparency.

The following provides additional detail on our non-GAAP measures for the periods presented:

• We analyze net sales and segment profit on an organic basis to better measure the comparability of results between periods. Organic net sales and organic segment profit exclude the impact of changes in foreign currency translation and the impact of acquisitions.
• Organic net sales was unfavorably impacted in October and November of fiscal 2023 by the Billie acquisition as sales that were previously reported as third party sales to Billie are now included as inter-company sales.
• Segment profit will be impacted by fluctuations in translation and transactional foreign currency. The impact of currency was applied to segments using management’s best estimate.
• Additionally, we utilize “adjusted” non-GAAP measures including adjusted gross profit, adjusted selling general and administrative (“SG&A”), adjusted operating income, adjusted income taxes, adjusted net earnings, and adjusted diluted earnings per share internally to make operating decisions. The following items are excluded when analyzing non-GAAP measures: restructuring and related costs, acquisition and integration costs, Sun Care reformulation costs, VAT settlement costs, loss on defined benefit settlement, stock keeping unit (“SKU”) rationalization charges, income from resolution of legal matters and at times management excludes other costs and income.

All comparisons are with the same period in the prior year, unless otherwise noted.

Industry and Market Data

Unless we indicate otherwise, we base the information contained or incorporated by reference herein, concerning our industry on our general knowledge and expectations. Our market position, market share, and industry market size are estimates based on internal and external data from various industry analyses, our internal research and adjustments, and assumptions that we believe to be reasonable. We have not independently verified data from industry analyses and cannot guarantee its accuracy or completeness. In addition, we believe that industry, market size, market position and market share data within our industry provides general guidance but is inherently imprecise and has not been verified by any independent source. Further, our estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in Item 1A. Risk Factors in Part I of our 2022 Annual Report. These and other factors could cause results to differ materially from those expressed in the estimates and assumptions. You are cautioned not to place undue reliance on this data.

Retail sales for purposes of market size, market position and market share information are based on retail sales in U.S. dollars.

Trademarks and Trade Names

We own or have rights to use trademarks and trade names that we use in conjunction with the operation of our business, which appear throughout this Quarterly Report on Form 10-Q. We may also refer to brand names, trademarks, service marks and trade names of other companies and organizations, which are the property of their respective owners.

Impact of the COVID-19 Pandemic

Throughout the novel coronavirus 2019 (“COVID-19”) pandemic, we have taken and continue to take significant measures to protect our employees and businesses, while remaining in compliance with local, state and national guidelines.

To date, we have not experienced any material operational disruptions across our manufacturing or distribution facilities. However, due to the uncertainty resulting from COVID-19, the impact and timing of additional unforeseen disruptions cannot be reasonably estimated at this time.

We will continue to monitor for any future material developments regarding COVD-19, if any, and related responses of local, state and national governments and our consumers, suppliers and employees.

Significant Events

Acquisitions

On November 29, 2021, we completed the acquisition of Billie, a leading U.S. based consumer brand company that offers a broad portfolio of personal care products for women, for a purchase price of $309.4, net of cash acquired, utilizing a combination of cash on hand and by drawing on that certain U.S. revolving credit facility due 2025 between the Company and Bank of America, N.A., as administrative agent, and lenders parties thereto (the “Revolving Credit Facility”). As a result, Billie became a wholly owned subsidiary of the Company. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for further discussion.

Executive Summary

The following is a summary of key results for the third quarter and first nine months of fiscal 2023, as compared to the corresponding periods in fiscal 2022. In addition to net sales, net earnings and earnings per share (“EPS”) for the periods presented were also impacted by restructuring and related costs, acquisition and integration costs, Sun Care reformulation costs, VAT settlement costs, loss on defined benefit settlement, income from resolution of legal matters and other costs or income, as described in the table below. The impact of these items on reported net earnings and EPS are provided as a reconciliation of net earnings and EPS to adjusted net earnings and adjusted diluted EPS, both of which are non-GAAP measures.

Third Quarter of Fiscal 2023

• Net sales in the third quarter of fiscal 2023 increased $26.2, or 4.2%, as compared to the prior year quarter to $650.0 as international markets increased $22.8, or 11.0%, and North America markets increased $3.4, or 0.8%. Organic net sales increased $27.9, or 4.5%, compared to the prior year quarter, as international markets increased 8.7%, driven by strong Wet Shave, Sun Care and Grooming performance and North America markets increased 2.3% driven by Sun Care and Grooming growth. In aggregate, growth in organic net sales was driven largely by increased pricing.
• Net earnings in the third quarter of fiscal 2023 were $52.5 compared to $30.5 in the prior year quarter. On an adjusted basis, net earnings for the third quarter of fiscal 2023 were $50.8 compared to $45.8 in the prior year quarter. Adjusted net earnings increased primarily due to higher sales and improved gross profit.
• Net earnings per diluted share during the third quarter of fiscal 2023 were $1.01 compared to $0.57 in the prior year quarter. On an adjusted basis, net earnings per diluted share during the third quarter of fiscal 2023 were $0.98 compared to $0.86 in the prior year quarter.

(1) EBIT is defined as Earnings before Income taxes.

First Nine Months of Fiscal 2023

• Net sales for the first nine months of fiscal 2023 increased $82.7, or 5.1%, to $1,717.5 as international markets increased $39.6, or 4.3%, and North America markets increased $43.1, or 4.0%. Organic net sales increased $104.4, or 6.4%, compared to the prior year period, as international markets increased 9.2%, driven by strong Sun Care and Wet Shave performance and North America markets increased 4.8%, with growth in Sun Care, Men’s Grooming and Feminine Care.
• Net earnings for the first nine months of fiscal 2023 were $83.4 compared to $64.9 in the prior year period. On an adjusted basis, net earnings for the first nine months of fiscal 2023 were $95.8 compared to $96.0 in the prior year period. Adjusted net earnings declined slightly despite higher net sales, due the impact of heightened inflationary pressures and interest costs.
• Net earnings per diluted share during the first nine months of fiscal 2023 were $1.61 compared to $1.20 in the prior year period. On an adjusted basis, net earnings per diluted share during the first nine months of fiscal 2023 were $1.85 compared to $1.77 in the prior year period.

(1) EBIT is defined as Earnings before Income taxes.

Operating Results

The following table presents changes in net sales for the third quarter and first nine months of fiscal 2023, as compared to the corresponding periods in fiscal 2022, and provides a reconciliation of organic net sales to reported amounts.

Net Sales

For the third quarter of fiscal 2023, net sales were $650.0, an increase of $26.2, or 4.2%, including a $1.7, or 0.3%, unfavorable impact from currency movements. Organic net sales increased $27.9, or 4.5%, as international markets increased 8.7% driven by strong Wet Shave, Sun Care and Grooming performance and North America markets increased 2.3% driven by Sun Care and Grooming growth. In aggregate, growth in organic net sales was driven by increased pricing as volumes declined slightly in the quarter.

For the first nine months of fiscal 2023, net sales were $1,717.5, an increase of $82.7, or 5.1%, including a $12.0, or 0.7%, increase from the Acquisition and a $33.7, or 2.0%, decrease due to the unfavorable impact from currency movements. Organic net sales increased $104.4, or 6.4%, as international markets increased 9.2% driven by strong Sun Care and Wet Shave performance and North America markets increased 4.8% with growth in Sun Care and Men’s Grooming and Feminine Care.

For further discussion regarding net sales, including a summary of reported versus organic changes, see “Segment Results.”

Gross Profit

Gross profit was $279.7 during the third quarter of fiscal 2023, compared to $240.6 in the prior year quarter, an increase of $39.1 or 16.3%, including a $7.2 unfavorable impact from currency movements. Gross margin as a percent of net sales for the third quarter of fiscal 2023 was 43.0% compared to 38.6% in the prior year quarter. Contributing to the increase was the absence of a $22.5 charge within Cost of products sold in the prior year period for the write-off of inventory for certain Wet Ones SKUs and a related contract termination charge. Adjusted gross margin as a percent of net sales was 43.0% compared to 42.2% in the prior year quarter. The increase of 80-basis points is driven by productivity savings of 205-basis points and the benefit from higher pricing of 375-basis points were partially offset by gross inflationary pressures of approximately 330-basis points and negative mix.

Gross profit was $710.4 during the first nine months of fiscal 2023, compared to $660.6 in the prior year period, an increase of $49.8, or 7.5%, including a $32.1 unfavorable impact from currency movements. Gross margin as a percent of net sales for the first nine months of fiscal 2023 was 41.4% compared to 40.4% in the prior year period. Contributing to the increase was the absence of a $22.5 charge within Cost of products sold in the prior year period for the write-off of inventory for certain Wet Ones SKUs and a related contract termination charge. Adjusted gross margin was $710.6 during the first nine months of fiscal 2023, an increase of $23.2, or 3.4%, compared to $687.4 in the prior year period. The adjusted gross margin increase was driven by productivity savings, the benefits of higher pricing and promotion management, partially offset by higher commodity costs and the impact of inflation. Adjusted gross margin as a percent of net sales was 41.4% compared to 42.0% in the prior year period.

Selling, General and Administrative Expense

SG&A was $96.3, or 14.8%, of net sales in the third quarter of fiscal 2023 compared to $92.7, or 14.9%, of net sales in the prior year quarter primarily due to higher people costs and travel expenses. Adjusted SG&A as a percent of net sales was 15.7%, a decrease of 20-basis points, as the benefits of leverage and operational efficiency programs were more than offset by the impact of higher people costs and travel expense.

SG&A was $297.2, or 17.3%, of net sales in the first nine months of fiscal 2023 compared to $290.9, or 17.8%, of net sales in the prior year period primarily due to higher people costs, travel expenses and integration costs. Adjusted SG&A as a percent of net sales was 17.4%, a decrease of 20-basis points, as the benefits of operational efficiency programs and favorable impact from currency movements more than offset the impact of higher people costs and additional costs associated with the Acquisition, including amortization expense.

Advertising and Sales Promotion Expense

For the third quarter of fiscal 2023, advertising and promotion expense (“A&P”) was $80.0, a decrease of $0.9, or 1.1%, compared to $80.9 in the prior year quarter. A&P as a percent of net sales was 12.3%, as compared to 13.0% in the prior year quarter, primarily due to timing of brand investments and marketing campaigns.

For the first nine months of fiscal 2023, A&P was $188.8, a decrease of $8.2, or 4.2%, compared to $197.0 in the prior year period. A&P as a percent of net sales was 11.0%, compared to 12.1% in the prior year period. The decrease in A&P was primarily due to lower media spend and agency fees partially offset by higher investment in Wet Shave.

Research and Development Expense

Research and development expense (“R&D”) for the third quarter of fiscal 2023 was $14.8, an increase of 1.2, or 8.8%, compared to $13.6 in the prior year quarter. As a percent of net sales, R&D was 2.3% in the third quarter of fiscal 2023 compared to 2.2% in the prior year quarter. R&D for the first nine months of fiscal 2023 was $42.6, an increase of 2.5, or 6.2%, compared to $40.1 in the prior year period. As a percent of net sales, R&D was 2.5% in the first nine months of fiscal 2023 as well as 2.5% in the prior year period.

Interest Expense Associated with Debt

Interest expense associated with debt for the third quarter of fiscal 2023 was $19.2, an increase of $1.2, or 6.7%, compared to $18.0 in the prior year quarter. For the first nine months of fiscal 2023, interest expense was $59.8, an increase of 6.5, or 12.2%, compared to $53.3 in the prior year period. The increase in interest expense was the result of higher interest rates and a higher overall debt balance on the Company’s Revolving Credit Facility.

Other (income) expense, net

Other (income) expense, net was $3.8 of income in the third quarter of fiscal 2023, a decrease in income of $0.6, or 13.6%, compared to $4.4 of income in the prior year quarter. Other (income) expense, net was $0.7 of expense during the first nine months of fiscal 2023, compared to $9.5 of income during the prior year period. The first nine months of 2023 include the loss on the settlement of the Canadian Plan of $7.2.

Income Tax Provision

The effective tax rate for the three and nine months ended June 30, 2023 was 25.3% and 25.9%, respectively, compared to 16.1% and 18.5% in the prior year period. The fiscal 2023 effective tax rate reflects the unfavorable mix of earnings in higher tax rate jurisdictions. On an adjusted basis, the effective tax rate was 25.3% and 25.9% for the three and nine months ended June 30, 2023 and 19.3% and 20.0% for the three and nine months ended June 30, 2022, respectively.

Operating Model Redesign

In fiscal 2023, the Company is continuing to strengthen its operating model, simplify the organization and improve manufacturing and supply chain efficiency. As a result of these actions, we expect to incur charges of approximately $18 in fiscal 2023. We incurred $3.1 and $9.1 during the third quarter and first nine months of fiscal 2023, respectively, primarily related to employee severance and benefit costs.

Segment Results

The following tables present changes in segment net sales and segment profit for the third quarter and first nine months of fiscal 2023, compared to the corresponding periods in fiscal 2022, and provide a reconciliation of organic segment net sales and organic segment profit to reported amounts. For a reconciliation of segment profit to Earnings before income taxes, refer to Note 15 of Notes to Condensed Consolidated Financial Statements.

Our operating model includes some shared business functions across segments, including product warehousing and distribution, transaction processing functions and, in most cases, a combined sales force and management teams. We apply a fully allocated cost basis in which shared business functions are allocated between segments.

Wet Shave

Wet Shave net sales for the third quarter of fiscal 2023 decreased $2.2, or 0.7%. Organic net sales decreased $0.2, or 0.1%, as the benefit of higher pricing was offset by lower volumes. Growth in Men’s systems and Disposables was partially offset by declines in Shave Preps and Women’s Systems.

Wet Shave net sales for the first nine months of fiscal 2023 decreased $9.4, or 1.0%, as compared to the prior year period. Organic net sales increased $8.1, or 0.9%, million was primarily driven by growth in Disposables. Organic growth was partially offset by the unfavorable impact of currency movements.

Wet Shave segment profit for the third quarter of fiscal 2023 was $32.1, a decrease of $5.4, or 14.4%. Organic segment profit, increased $1.2, or 3.2%, reflecting higher gross profit and was offset by the unfavorable impact from currency of $6.6 or 17.6%.

Wet Shave segment profit for the first nine months of fiscal 2023 was $102.6, a decrease of $14.0, or 12.0%. Organic segment profit increased $7.6, or 6.5%, primarily driven by growth in International markets and was partially offset by the unfavorable impact from currency of $21.6, or 18.5%.

Sun and Skin Care

Sun and Skin Care net sales for the third quarter of fiscal 2023 increased $28.7, or 13.3%. Organic net sales increased $28.1, or 13.0%, driven by strong growth across Sun Care, Men’s Grooming and Wet One’s. Organic net sales in International markets increased 21.0%, led by strong Sun Care demand in Latin America and Europe and higher pricing, while North America organic net sales increased 11.3%, largely driven by higher pricing, as volumes were flat.

Sun and Skin Care net sales for the first nine months of fiscal 2023 increased $63.2, or 12.5%. Organic net sales increased $66.6, or 13.2%. Organic net sales increases due to favorable price and volumes for Sun Care globally and favorable price in Men’s grooming in North America.

Segment profit for the third quarter of fiscal 2023 was $61.1, an increase of $14.5, or 31.1%. Organic segment profit increased $14.7, or 31.5%, primarily driven by higher organic net sales and gross profit and lower marketing expense.

Segment profit for the first nine months of fiscal 2023 was $114.1, an increase of $21.5, or 23.2%. Organic segment profit increased $22.4, or 24.2%, driven primarily by higher sales volumes and pricing, partially offset by higher A&P expense.

Feminine Care

Feminine Care net sales for the third quarter of fiscal 2023 was $81.0, a decrease of $0.3, or 0.4%. Organic net sales were in line with prior year, reflecting lower volumes, offset by higher pricing.

Feminine Care net sales for the first nine months of fiscal 2023 was $242.0, an increase of $28.9, or 13.5%. Organic net sales increased $29.7, or 13.9%. The increase in organic net sales was primarily driven by pricing, combined with product mix and improved product availability.

Feminine Care segment profit for the third quarter of fiscal 2023 was $13.9, an increase of $5.1, or 58.0%. Organic segment profit increased $5.2, or 59.1%, primarily driven by higher gross margin.

Feminine Care segment profit for the first nine months of fiscal 2023 was $37.7 an increase of $18.6, or 97.3%. Organic segment profit increased $19.3, or 101.0%, primarily due to increased sales volumes and favorable pricing.

General Corporate and Other Expenses

For the third quarter of fiscal 2023, corporate expenses were $15.8, or 2.4%, of net sales, compared to $14.8, or 2.4%, of net sales in the prior year third quarter. For the first nine months of fiscal 2023, corporate expenses were $48.7, or 2.8%, of net sales, compared to $42.8, or 2.6%, of net sales in the prior year. For the third quarter of fiscal 2023, the increase in corporate expense was primarily due to higher people costs.

Liquidity and Capital Resources

As of June 30, 2023, a significant portion of our cash balances was located outside the U.S. Given our extensive international operations, a significant portion of our cash is denominated in foreign currencies. Refer to Note 14 of Notes to Condensed Consolidated Financial Statements for a discussion of the primary currencies to which the Company is exposed. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We generally repatriate a portion of current year earnings from select non-U.S. subsidiaries only if the economic cost of the repatriation is not considered material.

Our cash is deposited with multiple counterparties which consist of major financial institutions. We consistently monitor positions with, and credit ratings of, counterparties both internally and by using outside ratings agencies.

Our total borrowings were $1,352.7 as of June 30, 2023, including $102.7 tied to variable interest rates. Our total borrowings as of September 30, 2022 were $1,424.0. We had outstanding borrowings of $85.0 under the Revolving Credit Facility as of June 30, 2023. Taking into account outstanding letters of credit of $5.9, as of June 30, 2023, $334.1 was available under the Revolving Credit Facility. We had variable-rate international borrowings, recorded in Notes payable, of $17.7 and $19.0 as of June 30, 2023 and September 30, 2022, respectively.

On February 6, 2023, we amended our Revolving Credit Facility to transition from using the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) as LIBOR is no longer available as of June 30, 2023.

Historically, we have generated, and expect to continue to generate, favorable cash flows from operations. Our cash flows are affected by the seasonality of our Sun Care businesses, typically resulting in higher net sales and increased cash generated in the second and third quarter of each fiscal year. We believe our cash on hand, cash flows from operations and borrowing capacity under the Revolving Credit Facility will be sufficient to satisfy our future working capital requirements, interest payments, R&D activities, capital expenditures, and other financing requirements for at least the next 12 months. We will continue to monitor our cash flows, spending and liquidity needs.

To date, the COVID-19 pandemic has not had a significant impact on our liquidity or capital resources. However, the COVID-19 pandemic has led to disruption and volatility in the global capital markets which could impact our capital resources and liquidity in the future. For further information, please refer to Item 1A. Risk Factors in Part I of our 2022 Annual Report.

Short-term financing needs primarily consist of working capital requirements and interest payments on our long-term debt. Long-term financing needs will depend largely on potential growth opportunities, including acquisition activity and repayment or refinancing of our long-term debt obligations. Our long-term liquidity may be influenced by our ability to borrow additional funds, renegotiate existing debt, and raise equity under terms that are favorable to us. We may, from time-to-time, seek to repurchase shares of our common stock. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

As of June 30, 2023, we were in compliance with the provisions and covenants associated with our debt agreements.

Cash Flows

A summary of our cash flow activities is provided in the following table:

Operating Activities

Cash flow from operating activities was $168.3 during the first nine months of fiscal 2023, compared to $72.4 during the prior year period. The increase in cash flows versus the same period in the prior year was driven by favorable changes in working capital and increased earnings.

Investing Activities

Net cash used by investing activities was $31.6 during the first nine months of fiscal 2023, compared to $337.6 used during the prior year period. Capital expenditures were $31.1 during the first nine months of fiscal 2023, compared to $37.4 in the prior year period. We completed the Acquisition for $309.4, net of cash acquired, in the prior year period. Additionally, we collected $5.0 of proceeds from the sale of the Infant and Pet Care business in the prior year period.

Financing Activities

Net cash used by financing activities was $132.3 during the first nine months of fiscal 2023, compared to $21.4 in the prior year period. During the first nine months of fiscal 2023, we had net repayments of $70.0 under the Revolving Credit Facility, compared to borrowings of $121.0 in the prior year period. We repurchased $45.2 of our common stock under our 2018 Board authorization to repurchase our common stock (the “Repurchase Plan”) compared to $110.1 in the prior year period. Dividend payments totaled $23.8 in the first nine months of fiscal 2023, compared to $24.7 in the prior year period. We had financing outflows for employee equity awards held for taxes totaling $9.0 in the first nine months of fiscal 2023, compared to $10.4 in the prior year period.

Share Repurchases

During the first nine months of fiscal 2023, we repurchased 1.1 shares of our common stock for $45.2. We have 5.4 shares remaining under the Repurchase Plan as of June 30, 2023. Future share repurchases, if any, would be made in the open market, privately negotiated transactions or otherwise, in such amounts and at such times as we deem appropriate based upon prevailing market conditions, business needs and other factors.

Dividends

On November 3, 2022, the Board declared a quarterly cash dividend of $0.15 per common share for the fourth fiscal quarter of 2022. The dividend was paid on January 4, 2023 to shareholders of record as of the close of business on November 29, 2022.

On February 3, 2023, the Board declared a quarterly cash dividend of $0.15 per common share for the first fiscal quarter of 2023. The dividend was paid on April 5, 2023 to stockholders of record as of the close of business on March 8, 2023.

On May 8, 2023, the Board declared a quarterly cash dividend of $0.15 per common share for the second fiscal quarter of 2023. The dividend was paid on July 6, 2023 to stockholders of record as of the close of business on June 7, 2023.

On August 1, 2023, the Board declared a quarterly cash dividend of $0.15 per common share for the third fiscal quarter of 2023. The dividend will be payable on October 4, 2023 to shareholders of record as the close of business on September 7, 2023.

Dividends declared during the nine months ended June 30, 2023 totaled $23.9. Payments made for dividends during the nine months ended June 30, 2022 totaled $23.8.

Commitments and Contingencies

Contractual Obligations

As of June 30, 2023, we had outstanding borrowings of $85.0 under the Revolving Credit Facility. As of June 30, 2023, future minimum repayments of debt were: $85.0 in fiscal 2025, $750.0 in fiscal 2028 and $500.0 in fiscal 2029.

There have been no other material changes in our contractual obligations since the presentation in our 2022 Annual Report.

Legal Proceedings

During the three months ended June 30, 2023 the Company settled a legal matter which resulted in a gain of $4.9 related to an intellectual property claim against a third party. This was included in selling, general and administrative (“SG&A”) in the Condensed Consolidated Statements of Earnings and Comprehensive Income. The Company received payment for the intellectual property claim settlement during the three months ended June 30, 2023.

Additionally, during the three months ended June 30, 2023, the Company received a favorable court ruling regarding an international VAT matter, which the plaintiff has no ability to appeal. As the Company had previously recorded an accrual for this matter, based on its best estimate of the facts and circumstances at that time, the result of the favorable court ruling was a release of the reserve established which resulted in a gain of $2.2. This was included in SG&A in the Condensed Consolidated Statements of Earnings and Comprehensive Income.

During the three months ended June 30, 2022 the Company settled certain legal matters which resulted in a gain of $7.5 related to intellectual property claims against a third party. This was included in SG&A in the Condensed Consolidated Financial Statements. The Company received payment for the settlement subsequent to June 30, 2022.

Critical Accounting Policies

Our critical accounting policies and estimates are fully described in our 2022 Annual Report. The preparation of these financial statements requires us to make estimates and assumptions. These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. There have been no significant changes to our critical accounting policies and estimates since September 30, 2022.

(Amounts in millions)

The market risk inherent in our financial instruments and positions represents the potential loss arising from adverse changes in currency rates, commodity prices, and interest rates. At times, we enter into contractual arrangements (derivatives) to reduce these exposures. For further information on our foreign currency derivative instruments, refer to Note 14 of Notes to Condensed Consolidated Financial Statements. As of June 30, 2023, there were no open derivative or hedging instruments for future purchases of raw materials or commodities. Our exposure to interest rate risk relates primarily to our variable-rate debt instruments, which currently bear interest based on SOFR plus margin. As of June 30, 2023, our outstanding variable-rate debt included $102.7 related to our Revolving Credit Facility and international, variable-rate notes payable. Assuming a one-percent increase in the applicable interest rates, annual interest expense on these variable-rate debt instruments would increase approximately $1.0.

There have been no material changes in our assessment of market risk sensitivity since our presentation of Quantitative and Qualitative Disclosures About Market Risk in our 2022 Annual Report.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act, is recorded, processed, summarized and reported within the specified time periods, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2023. Based on that evaluation, our CEO and CFO concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are likely to materially affect, our internal control over financial reporting.