Consolidated Net Sales Decline of 6.6%
GAAP Diluted EPS of $0.94; Adjusted Diluted EPS of $1.94
GAAP Operating Margin Expansion of 190 Basis Points Cash
Flow from Operations of $121.1 Million, Increase of $159.5
Million Free Cash Flow(1)(2) of $109.2 Million, Increase of
$223.8 Million
Fiscal 2024 Outlook: Maintains
Consolidated Net Sales of $1.965-$2.015 Billion GAAP Diluted
EPS of $3.81-$4.67; Maintains Adjusted Diluted EPS of
$8.50-$9.00 Maintains Adjusted EBITDA(1) Growth of 3.2%-6.3%
and Free Cash Flow(1)(2) of $250-$270 Million Maintains Net
Leverage Ratio(1)(3) Reduction to Between 2.0X and 1.85X by the End
of Year Project Pegasus on Track to Deliver $20M Fiscal 2024
Savings Target
Helen of Troy Limited (NASDAQ: HELE), designer,
developer, and worldwide marketer of branded consumer home,
outdoor, beauty, and wellness products, today reported results for
the three-month period ended May 31, 2023.
During the fourth quarter of fiscal 2023, the Company made
changes to the structure of the organization as part of its global
restructuring plan, Project Pegasus. As a result of these changes,
the disclosures included herein reflect two reportable segments,
Home & Outdoor and Beauty & Wellness. The previous Health
& Wellness and Beauty operating segments have been combined
into a single reportable segment, which is referred to herein as
“Beauty & Wellness.” Comparative prior period segment
information has been recast to conform to this change in reportable
segments.
Executive Summary – First Quarter of
Fiscal 2024 Compared to Fiscal 2023
- Consolidated net sales revenue of $474.7 million, a decrease of
6.6%
- Gross profit margin improvement of 380 basis points to 45.4%
compared to 41.6%
- Operating margin of 8.6% compared to 6.7%
- Adjusted operating margin of 13.9% compared to 13.6%
- GAAP diluted EPS of $0.94 compared to $1.02
- Non-GAAP adjusted diluted EPS of $1.94 compared to $2.41
- Net cash provided by operating activities of $121.1 million
compared to net cash used by operating activities of $38.4
million
- Non-GAAP adjusted EBITDA margin of 15.2% compared to 14.9%
Julien R. Mininberg, Chief Executive Officer, stated: “I am
pleased to report that first quarter financial performance exceeded
our expectations despite continued pressure on certain categories
from lower consumer demand and shifting buying patterns. Several
Leadership Brands outperformed and also grew market share in the
United States. International sales also outperformed during the
quarter as our strategic choice to Double Down on International
continues to pay off.
As expected, we significantly improved our gross profit margin
and expanded adjusted operating margin during the quarter. We also
delivered outstanding free cash flow as we further reduced
inventory and improved working capital. In line with our stated
objective, we used our strong cash flow to reduce our debt, putting
us in a better position to deploy additional capital sooner.
Pegasus remains on track and its structural changes are working
across our Regional Market Organizations, Business Segments, and
Shared Services. I am very pleased with how well our organization
is executing, not only on Pegasus, but also across the many other
initiatives underway to drive results this fiscal year and over the
long term.”
Mr. Mininberg continued: “Today we are reiterating our outlook
for the full fiscal year on sales, adjusted EPS, margin expansion,
free cash flow, Pegasus savings, and year end net leverage ratio.
We continue to expect adjusted EPS growth in the second half of
fiscal 2024. Our outlook continues to include continued pressure on
several of our categories as consumers continue to adjust their
spending in an environment of inflation and interest rates that are
expected to remain higher. Our retail partners now have more
normalized inventory levels and are increasingly matching their
orders to consumer demand after significant adjustments affecting
nearly all consumer discretionary categories over the past year.
Our focus remains on delivering consistent business results, using
our strong cash flow to reinvest back into our business, and
reengage our value-creation flywheel for sustained longer-term
growth.”
Three Months Ended May
31,
(in thousands) (unaudited)
Home & Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
234,263
$
273,815
$
508,078
Organic business (4)
(16,751
)
(22,248
)
(38,999
)
Impact of foreign currency
(368
)
(141
)
(509
)
Acquisition (5)
—
6,102
6,102
Change in sales revenue, net
(17,119
)
(16,287
)
(33,406
)
Fiscal 2024 sales revenue, net
$
217,144
$
257,528
$
474,672
Total net sales revenue growth
(decline)
(7.3
)%
(5.9
)%
(6.6
)%
Organic business
(7.2
)%
(8.1
)%
(7.7
)%
Impact of foreign currency
(0.2
)%
(0.1
)%
(0.1
)%
Acquisition
—
%
2.2
%
1.2
%
Operating margin (GAAP)
Fiscal 2024
10.2
%
7.2
%
8.6
%
Fiscal 2023
12.7
%
1.5
%
6.7
%
Adjusted operating margin (non-GAAP)
(1)
Fiscal 2024
15.8
%
12.4
%
13.9
%
Fiscal 2023
16.1
%
11.6
%
13.6
%
Three Months Ended May
31,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2023
2022
FY24/FY23
Consolidated net sales revenue
$
474,672
$
508,078
(6.6
)%
6.0
%
Net income
22,581
24,595
(8.2
)%
(13.7
)%
Adjusted EBITDA (non-GAAP) (1)
72,358
75,523
(4.2
)%
3.4
%
Net cash provided (used) by operating
activities
121,056
(38,428
)
*
66.7
%
Diluted EPS
$
0.94
$
1.02
(7.8
)%
(12.6
)%
Adjusted Diluted EPS (non-GAAP) (1)
1.94
2.41
(19.5
)%
(1.5
)%
* Calculation is not meaningful.
Consolidated Results - First Quarter
Fiscal 2024 Compared to First Quarter Fiscal 2023
- Consolidated net sales revenue decreased $33.4 million, or
6.6%, to $474.7 million, compared to $508.1 million, primarily
driven by a decrease from Organic business of $39.0 million, or
7.7%. The decline in Organic business was primarily due to lower
sales in seasonal fan, hair appliance, air filtration,
humidification, insulated beverage, and houseware categories. The
decreases were primarily driven by SKU rationalization efforts,
softer consumer demand, shifts in consumer spending patterns, a
decrease in club channel programs, reduced orders from retail
customers as they rebalance trade inventory levels, and the impact
of the Bed, Bath and Beyond bankruptcy. These factors were
partially offset by an increase in sales of thermometry and
prestige market hair care products, an increase in online channel
sales reflecting improved retailer replenishment orders, stronger
consumer demand for travel-related products, and growth in
international sales. The Organic business decline was partially
offset by the contribution from the acquisition of Curlsmith of
$6.1 million, or 1.2% to consolidated net sales revenue.
- Consolidated gross profit margin increased 380 basis points to
45.4%, compared to 41.6%. The increase was primarily due to the
favorable comparative impact of EPA compliance costs of $9.5
million incurred in the prior year period, a more favorable product
mix within Beauty & Wellness reflecting the benefits of SKU
rationalization, a more favorable customer mix within Home &
Outdoor, and lower inbound freight costs. These factors were
partially offset by higher inventory obsolescence expense.
- Consolidated selling, general and administrative expense
(“SG&A”) ratio increased 40 basis points to 35.3%, compared to
34.9%. The increase in the consolidated SG&A ratio was
primarily due to a charge of $4.2 million related to the bankruptcy
of Bed, Bath & Beyond(7), the unfavorable leverage impact of
the overall decrease in net sales, an increase in annual incentive
compensation expense, and higher outbound freight costs. These
factors were partially offset by the favorable comparative impacts
of EPA compliance costs of $2.2 million and acquisition-related
expense from the Curlsmith transaction incurred in the prior year
period and lower share-based compensation expense.
- Consolidated operating income was $40.6 million, or 8.6% of net
sales revenue, compared to $33.9 million, or 6.7% of net sales
revenue. The 190 basis point increase in consolidated operating
margin was primarily due to the favorable comparative impact of EPA
compliance costs of $11.6 million incurred in the prior year
period, lower share-based compensation expense, the favorable
comparative impact of acquisition-related expense incurred in the
prior year period, a more favorable product mix within Beauty &
Wellness reflecting the benefits of SKU rationalization, a more
favorable customer mix within Home & Outdoor, and lower inbound
freight costs. These factors were partially offset by restructuring
charges of $7.4 million, higher inventory obsolescence expense, a
charge of $4.2 million related to the bankruptcy of Bed, Bath &
Beyond(7), increased annual incentive compensation expense, an
increase in outbound freight costs, and unfavorable operating
leverage.
- Interest expense was $14.1 million, compared to $4.4 million.
The increase in interest expense was primarily due to a higher
average interest rate, partially offset by lower average levels of
debt outstanding compared to the same period last year.
- Income tax expense as a percentage of income before income tax
was 15.5% compared to 17.0%, primarily due to a decrease in tax
expense for discrete items, partially offset by shifts in the mix
of income in various tax jurisdictions.
- Net income was $22.6 million, compared to $24.6 million.
Diluted EPS was $0.94, compared to $1.02. Diluted EPS decreased
primarily due to higher interest expense and lower operating income
in Home & Outdoor, partially offset by higher operating income
in Beauty & Wellness and a decrease in the effective income tax
rate.
- Non-GAAP adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) decreased 4.2% to $72.4 million
compared to $75.5 million. Non-GAAP adjusted EBITDA margin improved
to 15.2% compared to 14.9%.
On an adjusted basis (non-GAAP) for the first quarters of fiscal
2024 and 2023, excluding acquisition-related expenses, Bed, Bath
& Beyond bankruptcy(7), EPA compliance costs, restructuring
charges, amortization of intangible assets, and non-cash
share-based compensation, as applicable:
- Adjusted operating income decreased $3.2 million, or 4.6%, to
$66.2 million, or 13.9% of net sales revenue, compared to $69.3
million, or 13.6% of net sales revenue. The 30 basis point increase
in adjusted operating margin was primarily driven by a more
favorable product mix within Beauty & Wellness reflecting the
benefits of SKU rationalization, a more favorable customer mix
within Home & Outdoor, and lower inbound freight costs. These
factors were partially offset by higher inventory obsolescence
expense, increased annual incentive compensation expense, an
increase in outbound freight costs, and unfavorable operating
leverage.
- Adjusted income decreased $11.5 million, or 19.8%, to $46.7
million, compared to $58.2 million. Adjusted diluted EPS decreased
19.5% to $1.94 compared to $2.41. The decrease in adjusted diluted
EPS was primarily due to higher interest expense and lower adjusted
operating income in Home & Outdoor.
Segment Results - First Quarter Fiscal
2024 Compared to First Quarter Fiscal 2023
Home & Outdoor net sales revenue decreased $17.1 million, or
7.3%, to $217.1 million, compared to $234.3 million. The decrease
was driven by a decline from Organic business of $16.8 million, or
7.2%, primarily due to a decline in the insulated beverage category
and lower houseware sales due to a reduction in club channel
programs and the impact of the Bed, Bath & Beyond bankruptcy.
These factors were partially offset by an increase in online
channel sales reflecting improved retailer replenishment orders and
stronger consumer demand for travel-related products in the outdoor
category.
Home & Outdoor operating income was $22.1 million, or 10.2%
of segment net sales revenue, compared to $29.8 million, or 12.7%
of segment net sales revenue. The 250 basis point decrease in
segment operating margin was primarily due to a charge of $3.1
million related to the bankruptcy of Bed, Bath & Beyond(7),
restructuring charges of $2.8 million, higher distribution expense,
increased marketing expense, higher inventory obsolescence expense,
an increase in outbound freight costs, and unfavorable operating
leverage. These factors were partially offset by lower share-based
compensation expense, a more favorable customer mix, and lower
inbound freight costs. Adjusted operating income decreased 8.9% to
$34.3 million, or 15.8% of segment net sales revenue, compared to
$37.6 million, or 16.1% of segment net sales revenue.
Beauty & Wellness net sales revenue decreased $16.3 million,
or 5.9%, to $257.5 million, compared to $273.8 million. The decline
was driven by a decrease from Organic business of $22.2 million, or
8.1%, primarily due to lower sales of seasonal fans, hair
appliances, and air filtration and humidification products
primarily driven by SKU rationalization efforts, softer consumer
demand, shifts in consumer spending patterns and reduced orders
from retail customers as they rebalance trade inventory levels in
line with softer consumer spending. The decline was partially
offset by an increase in sales of thermometry and prestige market
hair care products, growth in international sales, and the
favorable comparative impact of shipping disruption in the same
period last year caused by a weather-related incident involving an
ancillary distribution facility. The Organic business decline was
partially offset by the contribution of $6.1 million from the
acquisition of Curlsmith.
Beauty & Wellness operating income was $18.5 million, or
7.2% of segment net sales revenue, compared to $4.1 million, or
1.5% of segment net sales revenue. The 570 basis point increase in
segment operating margin was primarily due to the favorable
comparative impact of EPA compliance costs of $11.6 million
incurred in the prior year period, lower share-based compensation
expense, the favorable comparative impact of acquisition-related
expense incurred in the prior year period, a more favorable product
mix driven by SKU rationalization efforts, lower distribution
expense, reduced marketing expense, a decrease in legal fees, and
lower inbound freight costs. These factors were partially offset by
higher inventory obsolescence expense, restructuring charges of
$4.6 million, higher annual incentive compensation expense, a
charge of $1.1 million related to the bankruptcy of Bed, Bath &
Beyond(7), an increase in outbound freight costs, and unfavorable
operating leverage. Adjusted operating income increased 0.6% to
$31.9 million, or 12.4% of segment net sales revenue, compared to
$31.7 million, or 11.6% of segment net sales revenue.
Balance Sheet and Cash Flow - First
Quarter Fiscal 2024 Compared to First Quarter Fiscal
2023
- Cash and cash equivalents totaled $38.9 million, compared to
$49.3 million.
- Accounts receivable turnover was 67.5 days, compared to 67.6
days.
- Inventory was $433.9 million, compared to $613.6 million.
- Total short- and long-term debt was $837.2 million, compared to
$1,105.6 million as a result of strong cash flow in the fourth
quarter of fiscal 2023 and the first quarter of fiscal 2024.
- Net cash provided by operating activities for the first three
months of the fiscal year was $121.1 million, compared to net cash
used by operating activities of $38.4 million for the same period
last year.
- Free cash flow(1)(2) was $109.2 million, compared to free cash
flow of $(114.6) million for the same period last year, which
include $7.1 million and $70.2 million of capital expenditures for
the new distribution facility, respectively.
Restructuring Plan
The Company previously announced a global restructuring plan
intended to expand operating margins through initiatives designed
to improve efficiency and reduce costs (collectively referred to as
“Project Pegasus”). Project Pegasus includes multiple workstreams
to further optimize the Company's brand portfolio, streamline and
simplify the organization, accelerate cost of goods savings
projects, enhance the efficiency of its supply chain network,
optimize its indirect spending, and improve its cash flow and
working capital, as well as other activities. The Company
anticipates these initiatives will create operating efficiencies,
as well as provide a platform to fund future growth
investments.
The Company continues to have the following expectations
regarding Project Pegasus:
- Targeted annualized pre-tax operating profit improvements of
approximately $75 million to $85 million, which the Company expects
to substantially begin in fiscal 2024 and be substantially achieved
by the end of fiscal 2026.
- Estimated cadence of the recognition of the savings will be
approximately 25% in fiscal 2024, approximately 50% in fiscal 2025
and approximately 25% in fiscal 2026.
- Total profit improvements to be realized approximately 60%
through reduced cost of goods sold and 40% through lower
SG&A.
- Total one-time pre-tax restructuring charges of approximately
$85 million to $95 million over the duration of the plan, which are
expected to be substantially completed by the end of fiscal 2024
and will primarily be comprised of severance and employee related
costs, professional fees, contract termination costs, and other
exit and disposal costs.
- All of the Company's operating segments and shared services
will be impacted by the plan.
Fiscal 2024 Annual
Outlook
The Company continues to expect consolidated net sales revenue
in the range of $1.965 billion to $2.015 billion, which implies a
decline of 5.2% to 2.8%. This continues to include a year-over-year
decline of $35 million, or 1.7%, from the removal of Bed, Bath
& Beyond revenue from the outlook, and a similar sized
reduction from the Pegasus SKU rationalization initiative. The
Company's sales outlook reflects what it believes will be a
continued slower economy and uncertainty in spending patterns,
especially for some discretionary categories. The Company has seen
some reduction of trade inventory on a sequential basis as many key
retailers have lowered their inventory on hand and expects that
sell-in will more closely match sell-through in fiscal 2024.
The Company’s fiscal year net sales outlook reflects the
following expectations by segment:
- Home & Outdoor net sales decline of 1.7% to growth of 1.0%;
and
- Beauty & Wellness net sales decline of 8.0% to 5.8%.
The Company expects GAAP diluted EPS of $3.81 to $4.67 and
non-GAAP adjusted diluted EPS in the range of $8.50 to $9.00, which
implies an adjusted diluted EPS decline of 10.1% to 4.8%. This
continues to reflect additional year-over-year expense from the
restoration of annual incentive compensation expense to target
levels, as well as higher interest and depreciation expense,
totaling approximately $1.79, net of tax.
The Company expects consolidated adjusted EBITDA of $338 million
to $348 million, which implies growth of 3.2% to 6.3%. Free cash
flow is expected to be $250 million to $270 million. The Company's
net leverage ratio(1)(3), as defined in its credit agreement, is
expected to end fiscal 2024 at 2.0x to 1.85x.
In terms of the quarterly cadence of sales and adjusted diluted
EPS, the Company continues to expect the majority of its net sales
growth to be concentrated in the third quarter of fiscal 2024 and
adjusted diluted EPS growth to be concentrated in the third and
fourth quarters of fiscal 2024. The Company expects a decline in
net sales of approximately 8% to 6% in the second quarter of fiscal
2024. The Company also expects to realize the benefits of debt
deleveraging and lower inbound freight and product costs more fully
in the second half of the year. Accordingly, the Company expects a
decline in adjusted diluted EPS of approximately 20% to 30% in the
first half of fiscal 2024, with near offsetting growth in the
second half of the year.
The Company’s consolidated net sales and EPS outlook also
reflects the following assumptions:
- the severity of the cough/cold/flu season will be in line with
pre-COVID historical averages;
- June 2023 foreign currency exchange rates will remain constant
for the remainder of the fiscal year;
- expected interest expense in the range of $55 million to $57
million based on the current assumption the Federal Open Market
Committee will increase interest rates by a cumulative 100 basis
points during calendar year 2023;
- a reported GAAP effective tax rate range of 21.0% to 19.0% for
the full fiscal year 2024 and an adjusted effective tax rate range
of 13.5% to 12.5%; and
- an estimated weighted average diluted shares outstanding of
24.2 million.
The likelihood, timing and potential impact of a significant or
prolonged recession, any fiscal 2024 acquisitions and divestitures,
future asset impairment charges, future foreign currency
fluctuations, additional interest rate increases, or share
repurchases are unknown and cannot be reasonably estimated;
therefore, they are not included in the Company’s outlook.
Conference Call and
Webcast
The Company will conduct a teleconference in conjunction with
today’s earnings release. The teleconference begins at 9:00 a.m.
Eastern Time today, Monday, July 10, 2023. Institutional investors
and analysts interested in participating in the call are invited to
dial (877) 407-3982 approximately ten minutes prior to the start of
the call. The conference call will also be webcast live on the
Events & Presentations page at:
http://investor.helenoftroy.com/. A telephone replay of this call
will be available at 12:00 p.m. Eastern Time on July 10, 2023,
until 11:59 p.m. Eastern Time on July 24, 2023, and can be accessed
by dialing (844) 512-2921 and entering replay pin number 13739490.
A replay of the webcast will remain available on the website for
one year.
Non-GAAP Financial
Measures
The Company reports and discusses its operating results using
financial measures consistent with accounting principles generally
accepted in the United States of America (“GAAP”). To supplement
its presentation, the Company discloses certain financial measures
that may be considered non-GAAP such as Adjusted Operating Income,
Adjusted Operating Margin, Adjusted Effective Tax Rate, Adjusted
Income, Adjusted Diluted Earnings per Share (“EPS”), EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Net
Leverage Ratio, which are presented in accompanying tables to this
press release along with a reconciliation of these financial
measures to their corresponding GAAP-based financial measures
presented in the Company’s condensed consolidated statements of
income and cash flows. For additional information see Note 1 to the
accompanying tables to this press release.
About Helen of Troy
Limited
Helen of Troy Limited (NASDAQ: HELE) is a leading global
consumer products company offering creative products and solutions
for its customers through a diversified portfolio of
well-recognized and widely-trusted brands, including OXO, Hydro
Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.
The Company sometimes refers to these brands as its Leadership
Brands. All trademarks herein belong to Helen of Troy Limited (or
its subsidiaries) and/or are used under license from their
respective licensors.
For more information about Helen of Troy, please visit
http://investor.helenoftroy.com
Forward-Looking Statements
Certain written and oral statements made by the Company and
subsidiaries of the Company may constitute “forward-looking
statements” as defined under the Private Securities Litigation
Reform Act of 1995. This includes statements made in this press
release, in other filings with the SEC, and in certain other oral
and written presentations. Generally, the words “anticipates”,
“believes”, “expects”, “plans”, “may”, “will”, “might”, “would”,
“should”, “seeks”, “estimates”, “project”, “predict”, “potential”,
“currently”, “continue”, “intends”, “outlook”, “forecasts”,
“targets”, “could”, and other similar words identify
forward-looking statements. All statements that address operating
results, events or developments that the Company expects or
anticipates may occur in the future, including statements related
to sales, expenses, EPS results, and statements expressing general
expectations about future operating results, are forward-looking
statements and are based upon its current expectations and various
assumptions. The Company believes there is a reasonable basis for
these expectations and assumptions, but there can be no assurance
that the Company will realize these expectations or that these
assumptions will prove correct. Forward-looking statements are only
as of the date they are made and are subject to risks that could
cause them to differ materially from actual results. Accordingly,
the Company cautions readers not to place undue reliance on
forward-looking statements. The forward-looking statements
contained in this press release should be read in conjunction with,
and are subject to and qualified by, the risks described in the
Company’s Form 10-K for the year ended February 28, 2023, and in
the Company's other filings with the SEC. Investors are urged to
refer to the risk factors referred to above for a description of
these risks. Such risks include, among others, the occurrence of
cyber incidents or failure by the Company or its third-party
service providers to maintain cybersecurity and the integrity of
confidential internal or customer data, a cybersecurity breach,
obsolescence or interruptions in the operation of the Company’s
central global Enterprise Resource Planning systems and other
peripheral information systems, the geographic concentration of
certain United States (“U.S.”) distribution facilities which
increases its risk to disruptions that could affect the Company’s
ability to deliver products in a timely manner, the Company’s
ability to develop and introduce a continuing stream of innovative
new products to meet changing consumer preferences, actions taken
by large customers that may adversely affect the Company’s gross
profit and operating results, the Company’s dependence on sales to
several large customers and the risks associated with any loss of,
or substantial decline in, sales to top customers, the Company’s
dependence on third-party manufacturers, most of which are located
in Asia, and any inability to obtain products from such
manufacturers, the Company's ability to deliver products to its
customers in a timely manner and according to their fulfillment
standards, the risks associated with trade barriers, exchange
controls, expropriations, and other risks associated with domestic
and foreign operations including uncertainty and business
interruptions resulting from political changes and actions in the
U.S. and abroad, such as the current conflict between Russia and
Ukraine, and volatility in the global credit and financial markets
and economy, the Company's dependence on the strength of retail
economies and vulnerabilities to any prolonged economic downturn,
including a downturn from the effects of macroeconomic conditions,
any public health crises or similar conditions, risks associated
with the use of licensed trademarks from or to third parties, risks
associated with weather conditions, the duration and severity of
the cold and flu season and other related factors, the Company’s
reliance on its Chief Executive Officer and a limited number of
other key senior officers to operate its business, the Company's
ability to execute and realize expected synergies from strategic
business initiatives such as acquisitions, divestitures and global
restructuring plans, including Project Pegasus, the risks of
potential changes in laws and regulations, including environmental,
employment and health and safety and tax laws, and the costs and
complexities of compliance with such laws, the risks associated
with increased focus and expectations on climate change and other
environmental, social and governance matters, the risks associated
with significant changes in or the Company's compliance with
regulations, interpretations or product certification requirements,
the risks associated with global legal developments regarding
privacy and data security that could result in changes to its
business practices, penalties, increased cost of operations, or
otherwise harm the business, the Company’s dependence on whether it
is classified as a “controlled foreign corporation” for U.S.
federal income tax purposes which impacts the tax treatment of its
non-U.S. income, the risks associated with legislation enacted in
Bermuda and Barbados in response to the European Union’s review of
harmful tax competition, the risks associated with accounting for
tax positions and the resolution of tax disputes, the risks of
significant tariffs or other restrictions being placed on imports
from China, Mexico or Vietnam or any retaliatory trade measures
taken by China, Mexico or Vietnam, the risks associated with
product recalls, product liability and other claims against the
Company, and associated financial risks including but not limited
to, significant impairment of the Company's goodwill,
indefinite-lived and definite-lived intangible assets or other
long-lived assets, increased costs of raw materials, energy and
transportation, the risks to the Company's liquidity or cost of
capital which may be materially adversely affected by constraints
or changes in the capital and credit markets, interest rates and
limitations under its financing arrangements, risks associated with
foreign currency exchange rate fluctuations, and projections of
product demand, sales and net income, which are highly subjective
in nature, and from which future sales and net income could vary in
a material amount. The Company undertakes no obligation to publicly
update or revise any forward-looking statements as a result of new
information, future events or otherwise.
HELEN OF
TROY LIMITED AND SUBSIDIARIES
Condensed Consolidated
Statements of Income (5)
(Unaudited) (in thousands,
except per share data)
Three Months Ended May
31,
2023
2022
Sales revenue, net
$
474,672
100.0
%
$
508,078
100.0
%
Cost of goods sold
259,041
54.6
%
296,907
58.4
%
Gross profit
215,631
45.4
%
211,171
41.6
%
Selling, general and administrative
expense (“SG&A”)
167,635
35.3
%
177,230
34.9
%
Restructuring charges
7,355
1.5
%
2
—
%
Operating income
40,641
8.6
%
33,939
6.7
%
Non-operating income, net
137
—
%
67
—
%
Interest expense
14,052
3.0
%
4,373
0.9
%
Income before income tax
26,726
5.6
%
29,633
5.8
%
Income tax expense
4,145
0.9
%
5,038
1.0
%
Net income
$
22,581
4.8
%
$
24,595
4.8
%
Diluted earnings per share (“EPS”)
$
0.94
$
1.02
Weighted average shares of common stock
used in computing diluted EPS
24,134
24,122
Consolidated and Segment Net
Sales Revenue
(Unaudited) (in
thousands)
Three Months Ended May
31,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
234,263
$
273,815
$
508,078
Organic business (4)
(16,751
)
(22,248
)
(38,999
)
Impact of foreign currency
(368
)
(141
)
(509
)
Acquisition (5)
—
6,102
6,102
Change in sales revenue, net
(17,119
)
(16,287
)
(33,406
)
Fiscal 2024 sales revenue, net
$
217,144
$
257,528
$
474,672
Total net sales revenue growth
(decline)
(7.3
)%
(5.9
)%
(6.6
)%
Organic business
(7.2
)%
(8.1
)%
(7.7
)%
Impact of foreign currency
(0.2
)%
(0.1
)%
(0.1
)%
Acquisition
—
%
2.2
%
1.2
%
Consolidated Net Sales by
Geographic Region (6)
(Unaudited) (in
thousands)
Three Months Ended May
31,
2023
2022
Domestic sales revenue, net
$
359,559
75.7
%
$
396,746
78.1
%
International sales revenue, net
115,113
24.3
%
111,332
21.9
%
Total sales revenue, net
$
474,672
100.0
%
$
508,078
100.0
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Operating Income and Operating Margin to
Adjusted Operating Income and Adjusted Operating Margin (Non-GAAP)
(1)
(Unaudited) (in
thousands)
Three Months Ended May 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
22,116
10.2
%
$
18,525
7.2
%
$
40,641
8.6
%
Bed, Bath & Beyond bankruptcy (7)
3,087
1.4
%
1,126
0.4
%
4,213
0.9
%
Restructuring charges
2,790
1.3
%
4,565
1.8
%
7,355
1.5
%
Subtotal
27,993
12.9
%
24,216
9.4
%
52,209
11.0
%
Amortization of intangible assets
1,777
0.8
%
2,880
1.1
%
4,657
1.0
%
Non-cash share-based compensation
4,498
2.1
%
4,799
1.9
%
9,297
2.0
%
Adjusted operating income (non-GAAP)
$
34,268
15.8
%
$
31,895
12.4
%
$
66,163
13.9
%
Three Months Ended May 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
29,793
12.7
%
$
4,146
1.5
%
$
33,939
6.7
%
Acquisition-related expenses
78
—
%
2,676
1.0
%
2,754
0.5
%
EPA compliance costs (8)
—
—
%
11,644
4.3
%
11,644
2.3
%
Restructuring charges
—
—
%
2
—
%
2
—
%
Subtotal
29,871
12.8
%
18,468
6.7
%
48,339
9.5
%
Amortization of intangible assets
1,746
0.7
%
2,615
1.0
%
4,361
0.9
%
Non-cash share-based compensation
5,998
2.6
%
10,621
3.9
%
16,619
3.3
%
Adjusted operating income (non-GAAP)
$
37,615
16.1
%
$
31,704
11.6
%
$
69,319
13.6
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Income to EBITDA
(Earnings Before Interest,
Taxes, Depreciation and Amortization), Adjusted EBITDA and Adjusted
EBITDA Margin (Non-GAAP) (1)
(Unaudited) (in
thousands)
Three Months Ended May 31,
2023
Net income, as reported (GAAP)
$
22,581
4.8
%
Interest expense
14,052
3.0
%
Income tax expense
4,145
0.9
%
Depreciation and amortization
10,715
2.3
%
EBITDA (non-GAAP)
51,493
10.8
%
Add: Bed, Bath & Beyond bankruptcy
4,213
0.9
%
Restructuring charges
7,355
1.5
%
Non-cash share-based compensation
9,297
2.0
%
Adjusted EBITDA (non-GAAP)
$
72,358
15.2
%
Three Months Ended May 31,
2022
Net income, as reported (GAAP)
$
24,595
4.8
%
Interest expense
4,373
0.9
%
Income tax expense
5,038
1.0
%
Depreciation and amortization
10,498
2.1
%
EBITDA (non-GAAP)
44,504
8.8
%
Add: Acquisition-related expenses
2,754
0.5
%
EPA compliance costs
11,644
2.3
%
Restructuring charges
2
—
%
Non-cash share-based compensation
16,619
3.3
%
Adjusted EBITDA (non-GAAP)
$
75,523
14.9
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Operating Income to EBITDA
(Earnings Before Interest,
Taxes, Depreciation and Amortization), Adjusted EBITDA and Adjusted
EBITDA Margin (Non-GAAP) (1)
(Unaudited) (in
thousands)
Three Months Ended May 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
22,116
10.2
%
$
18,525
7.2
%
$
40,641
8.6
%
Depreciation and amortization
4,402
2.0
%
6,313
2.5
%
10,715
2.3
%
Non-operating income, net
—
—
%
137
0.1
%
137
—
%
EBITDA (non-GAAP)
26,518
12.2
%
24,975
9.7
%
51,493
10.8
%
Add: Bed, Bath & Beyond bankruptcy
3,087
1.4
%
1,126
0.4
%
4,213
0.9
%
Restructuring charges
2,790
1.3
%
4,565
1.8
%
7,355
1.5
%
Non-cash share-based compensation
4,498
2.1
%
4,799
1.9
%
9,297
2.0
%
Adjusted EBITDA (non-GAAP)
$
36,893
17.0
%
$
35,465
13.8
%
$
72,358
15.2
%
Three Months Ended May 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
29,793
12.7
%
$
4,146
1.5
%
$
33,939
6.7
%
Depreciation and amortization
4,495
1.9
%
6,003
2.2
%
10,498
2.1
%
Non-operating income, net
—
—
%
67
—
%
67
—
%
EBITDA (non-GAAP)
34,288
14.6
%
10,216
3.7
%
44,504
8.8
%
Add: Acquisition-related expenses
78
—
%
2,676
1.0
%
2,754
0.5
%
EPA compliance costs
—
—
%
11,644
4.3
%
11,644
2.3
%
Restructuring charges
—
—
%
2
—
%
2
—
%
Non-cash share-based compensation
5,998
2.6
%
10,621
3.9
%
16,619
3.3
%
Adjusted EBITDA (non-GAAP)
$
40,364
17.2
%
$
35,159
12.8
%
$
75,523
14.9
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Income and Diluted EPS to
Adjusted Income and Adjusted
Diluted EPS (Non-GAAP) (1)
(Unaudited) (in thousands,
except per share data)
Three Months Ended May 31,
2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
26,726
$
4,145
$
22,581
$
1.11
$
0.17
$
0.94
Bed, Bath & Beyond bankruptcy
4,213
53
4,160
0.17
—
0.17
Restructuring charges
7,355
92
7,263
0.30
—
0.30
Subtotal
38,294
4,290
34,004
1.59
0.18
1.41
Amortization of intangible assets
4,657
606
4,051
0.19
0.03
0.17
Non-cash share-based compensation
9,297
641
8,656
0.39
0.03
0.36
Adjusted (non-GAAP)
$
52,248
$
5,537
$
46,711
$
2.16
$
0.23
$
1.94
Weighted average shares of common stock
used in computing diluted EPS
24,134
Three Months Ended May 31,
2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
29,633
$
5,038
$
24,595
$
1.23
$
0.21
$
1.02
Acquisition-related expenses
2,754
2
2,752
0.11
—
0.11
EPA compliance costs
11,644
175
11,469
0.48
0.01
0.48
Restructuring charges
2
—
2
—
—
—
Subtotal
44,033
5,215
38,818
1.83
0.22
1.61
Amortization of intangible assets
4,361
490
3,871
0.18
0.02
0.16
Non-cash share-based compensation
16,619
1,084
15,535
0.69
0.04
0.64
Adjusted (non-GAAP)
$
65,013
$
6,789
$
58,224
$
2.70
$
0.28
$
2.41
Weighted average shares of common stock
used in computing diluted EPS
24,122
Selected Consolidated Balance
Sheet, Liquidity and Cash Flow Information
(Unaudited) (in
thousands)
May 31,
2023
2022
Balance Sheet:
Cash and cash equivalents
$
38,869
$
49,254
Receivables, net
349,699
475,904
Inventory
433,913
613,625
Total assets, current
856,057
1,176,499
Total assets
2,872,828
3,144,254
Total liabilities, current
440,791
603,335
Total long-term liabilities
917,129
1,184,497
Total debt
837,157
1,105,569
Stockholders' equity
1,514,908
1,356,422
Three Months Ended May
31,
2023
2022
Accounts receivable turnover (days)
(9)
67.5
67.6
Inventory turnover (times) (9)
2.1
2.1
Working capital
$
415,266
$
573,164
Current ratio
1.9:1
1.9:1
Ending debt to ending equity ratio
55.3
%
81.5
%
Return on average equity (9)
9.8
%
14.7
%
Three Months Ended May
31,
2023
2022
Cash Flow:
Depreciation and amortization
$
10,715
$
10,498
Net cash provided (used) by operating
activities
121,056
(38,428
)
Capital and intangible asset
expenditures
11,877
76,202
Net debt (repayments) proceeds
(97,563
)
292,100
Payments for repurchases of common
stock
4,446
18,224
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Cash Provided (Used) by Operating
Activities to Free Cash Flow (Non-GAAP) (1) (2)
(Unaudited) (in
thousands)
Three Months Ended May
31,
2023
2022
Net cash provided (used) by operating
activities (GAAP)
$
121,056
$
(38,428
)
Less: Capital and intangible asset
expenditures
(11,877
)
(76,202
)
Free cash flow (non-GAAP)
$
109,179
$
(114,630
)
Fiscal 2024 Outlook for Net
Sales Revenue
(Unaudited) (in
thousands)
Fiscal 2023
Outlook Fiscal 2024
Net sales revenue
$
2,072,667
$
1,965,000
—
$
2,015,000
Net sales revenue decline
(5.2
)%
—
(2.8
)%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2024 Outlook for GAAP Operating Income
to EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization)
and Adjusted EBITDA (Non-GAAP)
(1) (Unaudited) (in thousands)
Three Months Ended May 31,
2023
Outlook for the Balance
of the Fiscal Year (Nine Months)
Outlook Fiscal 2024
Operating income, as reported (GAAP)
$
40,641
$
131,646
—
$
156,396
$
172,287
—
$
197,037
Depreciation and amortization
10,715
53,071
—
46,975
63,786
—
57,690
Non-operating income, net
137
1,088
—
838
1,225
—
975
EBITDA (non-GAAP)
51,493
185,805
—
204,209
237,298
—
255,702
Add: Bed, Bath & Beyond bankruptcy
4,213
—
—
—
4,213
—
4,213
Restructuring charges
7,355
60,496
—
52,614
67,851
—
59,969
Non-cash share-based compensation
9,297
19,341
—
18,819
28,638
—
28,116
Adjusted EBITDA (non-GAAP)
$
72,358
$
265,642
—
$
275,642
$
338,000
—
$
348,000
Reconciliation of Non-GAAP
Financial Measures - Fiscal 2024 Outlook for GAAP Diluted EPS to
Adjusted Diluted EPS (Non-GAAP) (1) (Unaudited)
Three Months Ended May 31,
2023
Outlook for the Balance
of the Fiscal Year (Nine Months)
Outlook Fiscal 2024
Diluted EPS, as reported (GAAP)
$
0.94
$
2.87
—
$
3.73
$
3.81
—
$
4.67
Bed, Bath & Beyond bankruptcy, net of
tax
0.17
—
—
—
0.17
—
0.17
Restructuring charges, net of tax
0.30
2.45
—
2.13
2.75
—
2.43
Subtotal
1.41
5.32
—
5.86
6.73
—
7.27
Amortization of intangible assets, net of
tax
0.17
0.50
—
0.48
0.67
—
0.65
Non-cash share-based compensation, net of
tax
0.36
0.74
—
0.72
1.10
—
1.08
Adjusted diluted EPS (non-GAAP)
$
1.94
$
6.56
—
$
7.06
$
8.50
—
$
9.00
Reconciliation of Non-GAAP
Financial Measures - Fiscal 2024 Outlook for GAAP Effective Tax
Rate to Adjusted Effective Tax Rate (Non-GAAP) (1)
(Unaudited)
Three Months Ended May 31,
2023
Outlook for the Balance
of the Fiscal Year (Nine Months)
Outlook Fiscal 2024
Effective tax rate, as reported (GAAP)
15.5
%
22.7
%
—
19.8
%
21.0
%
—
19.0
%
Bed, Bath & Beyond bankruptcy
(1.6
)%
—
%
—
—
%
(0.4
)%
—
(0.4
)%
Restructuring charges
(2.7
)%
(7.6
)%
—
(6.1
)%
(6.3
)%
—
(5.3
)%
Subtotal
11.2
%
15.1
%
—
13.7
%
14.3
%
—
13.3
%
Amortization of intangible assets
(0.2
)%
(0.3
)%
—
(0.3
)%
(0.3
)%
—
(0.3
)%
Non-cash share-based compensation
(0.4
)%
(0.5
)%
—
(0.4
)%
(0.5
)%
—
(0.5
)%
Adjusted effective tax rate (non-GAAP)
10.6
%
14.3
%
—
13.0
%
13.5
%
—
12.5
%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2024 Outlook for GAAP Net Cash Provided
by Operating Activities to Free Cash Flow (Non-GAAP) (1)
(2)
(Unaudited) (in
thousands)
Three Months Ended May 31,
2023
Outlook for the Balance
of the Fiscal Year (Nine Months)
Outlook Fiscal 2024
Net cash provided by operating activities
(GAAP)
$
121,056
$
178,944
—
$
193,944
$
300,000
—
$
315,000
Less: Capital and intangible asset
expenditures
(11,877
)
(38,123
)
—
(33,123
)
(50,000
)
—
(45,000
)
Free cash flow (non-GAAP)
$
109,179
$
140,821
—
$
160,821
$
250,000
—
$
270,000
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1)
This press release contains non-GAAP
financial measures. Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Effective Tax Rate, Adjusted Income, Adjusted
Diluted EPS, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free
Cash Flow and Net Leverage Ratio (“Non-GAAP Financial Measures”)
that are discussed in the accompanying press release or in the
preceding tables may be considered non-GAAP financial measures as
defined by SEC Regulation G, Rule 100. Accordingly, the Company is
providing the preceding tables that reconcile these measures to
their corresponding GAAP-based financial measures. The Company is
unable to present a quantitative reconciliation of forward-looking
expected net leverage ratio to its most directly comparable
forward-looking GAAP financial measure because such information is
not available, and management cannot reliably predict all of the
necessary components of such GAAP financial measure without
unreasonable effort or expense. In addition, the Company believes
such reconciliation would imply a degree of precision that would be
confusing or misleading to investors. The Company believes that
these Non-GAAP Financial Measures provide useful information to
management and investors regarding financial and business trends
relating to its financial condition and results of operations. The
Company believes that these Non-GAAP Financial Measures, in
combination with the Company’s financial results calculated in
accordance with GAAP, provide investors with additional perspective
regarding the impact of certain charges and benefits on applicable
income, margin and earnings per share measures. The Company also
believes that these Non-GAAP Financial Measures facilitate a more
direct comparison of the Company’s performance with its
competitors. The Company further believes that including the
excluded charges and benefits would not accurately reflect the
underlying performance of the Company’s operations for the period
in which the charges and benefits are incurred, even though such
charges and benefits may be incurred and reflected in the Company’s
GAAP financial results in the near future. The material limitation
associated with the use of the Non-GAAP Financial Measures is that
the Non-GAAP Financial Measures do not reflect the full economic
impact of the Company’s activities. These Non-GAAP Financial
Measures are not prepared in accordance with GAAP, are not an
alternative to GAAP financial measures, and may be calculated
differently than non-GAAP financial measures disclosed by other
companies. Accordingly, undue reliance should not be placed on
non-GAAP financial measures.
(2)
Free cash flow represents net cash
provided (used) by operating activities less capital and intangible
asset expenditures.
(3)
Net leverage ratio represents total
current and long-term debt plus outstanding letters of credit, net
of unrestricted cash and cash equivalents, divided by EBITDA plus
non-cash charges and certain allowed addbacks, less certain
non-cash income, plus the pro forma effect of acquisitions and
certain pro forma run-rate cost savings for acquisitions and
dispositions, as defined in the Company's credit agreement.
(4)
Organic business refers to net sales
revenue associated with product lines or brands after the first
twelve months from the date the product line or brand is acquired,
excluding the impact that foreign currency remeasurement had on
reported net sales revenue. Net sales revenue from internally
developed brands or product lines is considered Organic business
activity.
(5)
On April 22, 2022, the Company completed
the acquisition of Curlsmith. As such, the three months ended May
31, 2022 includes approximately six weeks of operating results from
Curlsmith and the three months ended May 31, 2023 includes a full
quarter of operating results. Curlsmith sales prior to the first
annual anniversary of the acquisition are reported in Acquisition.
Sales from Curlsmith subsequent to the first annual anniversary of
the acquisition are reported in Organic business.
(6)
Beginning in the fourth quarter of fiscal
2023, the Company included net sales revenue from the U.S. and
Canada as domestic net sales revenue. Previously, the Company
reported sales revenue from Canada within international net sales
revenue. The Company has recast all prior period domestic and
international net sales revenue presented to conform with this
current presentation.
(7)
Represents a charge for uncollectible
receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed,
Bath & Beyond bankruptcy”).
(8)
Charges incurred in conjunction with EPA
packaging compliance for certain products in the air filtration,
water filtration and humidification categories within the Beauty
& Wellness segment.
(9)
Accounts receivable turnover, inventory
turnover and return on average equity computations use 12 month
trailing net sales revenue, cost of goods sold or net income
components as required by the particular measure. The current and
four prior quarters' ending balances of trade accounts receivable,
inventory and equity are used for the purposes of computing the
average balance component as required by the particular
measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230710245899/en/
Investor Contact: Helen of Troy Limited Anne Rakunas,
Director, External Communications (915) 225-4841 ICR, Inc.
Allison Malkin, Partner (203) 682-8200
Helen of Troy (NASDAQ:HELE)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Helen of Troy (NASDAQ:HELE)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024