Consolidated Net Sales Decline of 5.7%
GAAP Diluted EPS of $1.14; Adjusted Diluted EPS of $1.74
GAAP Operating Margin Expansion of 50 Basis Points Cash
Flow from Operations of $36.7 Million, Increase of $73.7
Million Free Cash Flow(1)(2) of $28.0 Million, Increase of
$101.5 Million Company Reaches Agreement with Brian Grass to
Remain CFO
Fiscal 2024
Outlook: Maintains Consolidated Net Sales of
$1.965-$2.015 Billion Increases GAAP Diluted EPS to
$6.36-$7.03; 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 August 31, 2023.
Executive Summary – Second Quarter of
Fiscal 2024 Compared to Fiscal 2023
- Consolidated net sales revenue of $491.6 million, a decrease of
5.7%
- Gross profit margin improvement of 420 basis points to 46.7%
compared to 42.5%
- Operating margin of 9.5% compared to 9.0%
- Non-GAAP adjusted operating margin of 12.7% compared to
13.9%
- GAAP diluted EPS of $1.14 compared to $1.28
- Non-GAAP adjusted diluted EPS of $1.74 compared to $2.27
- Net cash provided by operating activities of $36.7 million
compared to net cash used by operating activities of $37.0
million
- Non-GAAP adjusted EBITDA margin of 14.6% compared to 15.1%
- Repurchased 381,200 shares of common stock in the open market
during the quarter for $50 million
Julien R. Mininberg, Chief Executive Officer, stated: “During
the quarter we delivered net sales and adjusted EPS at the high end
of our expectations. I’m pleased with the consistency of our
results as we work toward returning to growth. During the quarter
we achieved our revenue expectations for the majority of our
Leadership Brands and international performance was particularly
strong. We continued to support important new product launches,
significantly increased gross margin, and returned value to
shareholders through share repurchase. Our initiatives to
streamline our inventory and improve free cash flow continue to
deliver big results, with inventory down over $200 million in the
first half of this fiscal year versus the same period last year,
and free cash flow improvement of $325 million during that same
comparison period. All workstreams of our Pegasus restructuring
initiatives are making good progress and we remain on track to
deliver our financial goals.”
Mr. Mininberg concluded: “Looking ahead, I am pleased to be in a
position to reiterate our full year outlook for this fiscal year.
Our year-to-date results not only demonstrate strong execution
across our entire organization, they also demonstrate resiliency as
we navigate the continued challenging macro consumer environment.
On the organization side, I am pleased to announce that the Company
and Brian Grass have reached an agreement for Brian to remain the
CFO on an ongoing basis. We also look forward to introducing our
next strategic plan at our Investor Day on October 17th.”
Three Months Ended August
31,
(in thousands) (unaudited)
Home & Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
240,559
$
280,841
$
521,400
Organic business (4)
(1,084
)
(30,124
)
(31,208
)
Impact of foreign currency
502
869
1,371
Change in sales revenue, net
(582
)
(29,255
)
(29,837
)
Fiscal 2024 sales revenue, net
$
239,977
$
251,586
$
491,563
Total net sales revenue growth
(decline)
(0.2
)%
(10.4
)%
(5.7
)%
Organic business
(0.5
)%
(10.7
)%
(6.0
)%
Impact of foreign currency
0.2
%
0.3
%
0.3
%
Operating margin (GAAP)
Fiscal 2024
15.0
%
4.3
%
9.5
%
Fiscal 2023
17.5
%
1.7
%
9.0
%
Adjusted operating margin (non-GAAP)
(1)
Fiscal 2024
17.7
%
7.9
%
12.7
%
Fiscal 2023
19.5
%
9.0
%
13.9
%
Three Months Ended August
31,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2023
2022
FY24/FY23
Consolidated net sales revenue
$
491,563
$
521,400
(5.7)%
4.4
%
Net income
27,381
30,672
(10.7)%
(12.2
)%
Adjusted EBITDA (non-GAAP) (1)
71,730
78,833
(9.0)%
0.7
%
Net cash provided (used) by operating
activities
36,676
(37,024
)
*
12.9
%
Diluted EPS
$
1.14
$
1.28
(10.9)%
(11.2
)%
Adjusted Diluted EPS (non-GAAP) (1)
1.74
2.27
(23.3)%
(6.1
)%
Six Months Ended August
31,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2023
2022
FY24/FY23
Consolidated net sales revenue
$
966,235
$
1,029,478
(6.1)%
5.2
%
Net income
49,962
55,267
(9.6)%
(12.9
)%
Adjusted EBITDA (non-GAAP) (1)
144,088
154,356
(6.7)%
2.0
%
Net cash provided (used) by operating
activities
157,732
(75,452
)
*
42.5
%
Diluted EPS
$
2.07
$
2.29
(9.6)%
(11.9
)%
Adjusted Diluted EPS (non-GAAP) (1)
3.67
4.69
(21.7)%
(3.9
)%
* Calculation is not meaningful.
Consolidated Results - Second Quarter
Fiscal 2024 Compared to Second Quarter Fiscal 2023
- Consolidated net sales revenue decreased $29.8 million, or
5.7%, to $491.6 million, compared to $521.4 million, primarily
driven by a decrease from Organic business of $31.2 million, or
6.0%. The decline in Organic business was primarily due to lower
sales of heaters, fans, and humidification products in Beauty &
Wellness primarily driven by softer consumer demand, our SKU
rationalization efforts, and reduced orders from retail customers
as they rebalance trade inventory in line with softer consumer
demand in certain categories. Net sales revenue was also impacted
by a decline in Home & Outdoor primarily due to lower brick and
mortar sales in the insulated beverage category. These factors were
partially offset by an increase in consolidated online channel
sales, stronger consumer demand for travel-related products in Home
& Outdoor and overall growth in Beauty and International.
- Consolidated gross profit margin increased 420 basis points to
46.7%, compared to 42.5%. The increase in consolidated gross profit
margin was primarily due to lower inbound freight costs, the
favorable comparative impact of EPA compliance costs of $7.1
million incurred in the prior year period, the favorable impact of
SKU rationalization efforts, lower inventory obsolescence expense,
and a more favorable customer mix within Home & Outdoor. These
factors were partially offset by a less favorable product mix
within Beauty & Wellness.
- Consolidated selling, general and administrative expense
(“SG&A”) ratio increased 390 basis points to 36.5%, compared to
32.6%. The increase in the consolidated SG&A ratio was
primarily due to an increase in annual incentive compensation
expense, higher marketing expense, increased distribution and
depreciation expense primarily due to the opening of the Company's
new Tennessee distribution facility, and the unfavorable leverage
impact of the overall decrease in net sales. These factors were
partially offset by lower outbound freight costs and the favorable
comparative impacts of EPA compliance costs of $1.3 million
incurred in the prior year period.
- Consolidated operating income was $46.8 million, or 9.5% of net
sales revenue, compared to $46.9 million, or 9.0% of net sales
revenue. The 50 basis point increase in consolidated operating
margin was primarily due to the favorable comparative impact of EPA
compliance costs of $8.4 million incurred in the prior year period,
lower inbound and outbound freight costs, a decrease in inventory
obsolescence expense, the favorable impact of SKU rationalization
efforts, and a more favorable customer mix within Home &
Outdoor. These factors were partially offset by an increase in
annual incentive compensation expense, higher marketing expense,
increased distribution and depreciation expense primarily due to
the opening of a new distribution facility, unfavorable operating
leverage, and a less favorable product mix within Beauty &
Wellness.
- Interest expense was $13.7 million, compared to $9.2 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 17.9% compared to 19.1%, 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 $27.4 million, compared to $30.7 million.
Diluted EPS was $1.14, compared to $1.28. 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 9.0% to $71.7 million
compared to $78.8 million. Non-GAAP adjusted EBITDA margin
decreased to 14.6% compared to 15.1%.
On an adjusted basis (non-GAAP) for the second quarters of
fiscal 2024 and 2023, excluding acquisition-related expenses, EPA
compliance costs, restructuring charges, amortization of intangible
assets, and non-cash share-based compensation, as applicable:
- Adjusted operating income decreased $10.0 million, or 13.8%, to
$62.3 million, or 12.7% of net sales revenue, compared to $72.3
million, or 13.9% of net sales revenue. The 120 basis point
decrease in adjusted operating margin was primarily driven by an
increase in annual incentive compensation expense, higher marketing
expense, increased distribution and depreciation expense primarily
due to the opening of a new distribution facility, unfavorable
operating leverage, and a less favorable product mix within Beauty
& Wellness. These factors were partially offset by lower
inbound and outbound freight costs, a decrease in inventory
obsolescence expense, the favorable impact of SKU rationalization
efforts, and a more favorable customer mix within Home &
Outdoor.
- Adjusted income decreased $12.9 million, or 23.6%, to $41.8
million, compared to $54.7 million. Adjusted diluted EPS decreased
23.3% to $1.74 compared to $2.27. The decrease in adjusted diluted
EPS was primarily due to higher interest expense and lower adjusted
operating income.
Segment Results - Second Quarter Fiscal
2024 Compared to Second Quarter Fiscal 2023
Home & Outdoor net sales revenue decreased $0.6 million, or
0.2%, to $240.0 million, compared to $240.6 million. The decrease
was driven by a decline from Organic business of $1.1 million, or
0.5%, primarily due to a brick and mortar sales decline in the
insulated beverage category, lower home category sales in the club
and closeout channels, and a decline due to the impact of the Bed,
Bath & Beyond bankruptcy. These factors were partially offset
by an increase in online channel sales, primarily driven by the
launch of the new Hydro Flask travel tumbler, stronger consumer
demand for travel-related products, higher brick and mortar home
category sales due to new retailer distribution and improved
replenishment orders, and an increase in closeout channel sales in
the insulated beverage and travel categories.
Home & Outdoor operating income was $36.1 million, or 15.0%
of segment net sales revenue, compared to $42.1 million, or 17.5%
of segment net sales revenue. The 250 basis point decrease in
segment operating margin was primarily due to increased annual
incentive compensation expense, higher distribution and
depreciation expense primarily due to the opening of a new
distribution facility, increased marketing expense, and higher
share-based compensation expense. These factors were partially
offset by lower inbound freight costs and a more favorable customer
mix. Adjusted operating income decreased 9.7% to $42.4 million, or
17.7% of segment net sales revenue, compared to $47.0 million, or
19.5% of segment net sales revenue.
Beauty & Wellness net sales revenue decreased $29.3 million,
or 10.4%, to $251.6 million, compared to $280.8 million. The
decline was driven by a decrease from Organic business of $30.1
million, or 10.7%, primarily due to lower sales of heaters, fans
and humidification products driven by softer consumer demand, SKU
rationalization efforts, reduced orders from retail customers as
they rebalance trade inventory in line with softer consumer demand
in certain categories, and the comparative impact of high
COVID-related incidence in the prior year period. The decline was
partially offset by an increase in Beauty, higher sales of air and
water filtration products and growth in international sales
primarily driven by thermometry.
Beauty & Wellness operating income was $10.7 million, or
4.3% of segment net sales revenue, compared to $4.9 million, or
1.7% of segment net sales revenue. The 260 basis point increase in
segment operating margin was primarily due to the favorable
comparative impact of EPA compliance costs of $8.4 million in the
prior year period, lower inbound and outbound freight costs,
reduced inventory obsolescence expense, decreased distribution
expense, the favorable impact of SKU rationalization efforts, and a
decrease in restructuring charges of $2.0 million. These factors
were partially offset by an increase in annual incentive
compensation expense, higher marketing expense, unfavorable
operating leverage, and a less favorable product mix. Adjusted
operating income decreased 21.4% to $19.9 million, or 7.9% of
segment net sales revenue, compared to $25.3 million, or 9.0% of
segment net sales revenue.
Balance Sheet and Cash Flow - Second
Quarter Fiscal 2024 Compared to Second Quarter Fiscal
2023
- Cash and cash equivalents totaled $24.2 million, compared to
$39.7 million.
- Accounts receivable turnover was 67.9 days, compared to 67.3
days.
- Inventory was $435.7 million, compared to $643.2 million.
- Total short- and long-term debt was $844.9 million, compared to
$1,169.7 million as a result of strong cash flow in the fourth
quarter of fiscal 2023 and the first half of fiscal 2024.
- Net cash provided by operating activities for the first six
months of the fiscal year was $157.7 million, compared to net cash
used by operating activities of $75.5 million for the same period
last year.
- Free cash flow(1)(2) for the first six months of the fiscal
year was $137.2 million, compared to free cash flow of $(188.1)
million for the same period last year, which includes $10.2 million
and $100.5 million of capital expenditures for a new distribution
facility, respectively.
Pegasus 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.
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.
During the second quarter of fiscal 2024, the Company announced
plans to geographically consolidate the U.S. Beauty business,
currently located in El Paso, Texas, and Irvine, California, and
co-locate it with its Wellness business in the Boston,
Massachusetts area. This geographical consolidation and relocation
is the next step in the Company's initiative to streamline and
simplify the organization and it is expected to be completed during
fiscal 2025. The Company expects these changes will enable a
greater opportunity to capture synergies and enhance collaboration
and innovation within the Beauty & Wellness segment.
The Company has updated its expectations regarding Project
Pegasus charges. The Company now estimates lower total one-time
pre-tax restructuring charges of approximately $60 million to $65
million over the duration of the plan. The Company now expects
these charges to be completed during fiscal 2025. The Company
previously had estimated total pre-tax restructuring charges of
approximately $85 million to $95 million, which was initially
expected to be substantially completed by the end of fiscal 2024.
In addition, the Company now has the following expectations
regarding Project Pegasus charges:
- Pre-tax restructuring charges to be comprised of approximately
$22 million to $25 million of severance and employee related costs,
$30 million of professional fees, $5 million of contract
termination costs, and $3 million to $5 million of other exit and
disposal costs.
- All of the Company's operating segments and shared services
will be impacted by the plan and pre-tax restructuring charges
include approximately $17 million to $19 million in Home &
Outdoor and $43 million to $46 million in Beauty &
Wellness.
- Pre-tax restructuring charges represent primarily cash
expenditures, which are expected to be substantially paid by the
end of fiscal 2025.
The Company continues to have the following expectations
regarding Project Pegasus savings:
- 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.
Subsequent Event
Subsequent to the end of the second quarter of fiscal 2024, on
September 28, 2023, the Company completed the sale of its
distribution and office facilities in El Paso, Texas for a sales
price of $50.6 million, less transaction costs of $1.1 million.
Concurrently, the Company entered into an agreement to leaseback
the office facilities for a period of up to 18 months substantially
rent free, which the Company estimates to have a fair value of
approximately $1.9 million. The transaction qualifies for sales
recognition under the sale leaseback accounting requirements.
Accordingly, the Company increased the sales price by the $1.9
million of prepaid rent and expects to recognize a gain on the sale
of approximately $34.2 million within SG&A during the third
quarter of fiscal year 2024, of which approximately $18.0 million
and $16.2 million will be recognized by the Beauty & Wellness
and Home & Outdoor segments, respectively. The Company plans to
use the proceeds from the sale to repay amounts outstanding under
its long-term debt agreement.
Executive Leadership
Announcement
The Company also announced today an agreement with Brian L.
Grass to remain Chief Financial Officer (“CFO”), effective as of
September 23, 2023. Mr. Grass has been serving as interim CFO since
April 28, 2023. Mr. Grass previously served as the Company’s CFO
from 2014 to 2022 and as Assistant CFO from 2006 to 2014. Prior to
joining the Company, Mr. Grass spent seven years in public
accounting at KPMG LLP and six years in various financial
leadership roles at Tenet Healthcare Corporation.
Noel Geoffroy, Chief Operating Officer, stated: “I am delighted
to welcome Brian back to Helen of Troy’s leadership team on a more
permanent basis. We conducted a national search, and I concluded
Brian is the ideal choice to partner with me now and when I assume
the CEO position next fiscal year. He is a strategic business
leader, a collaborative thought partner, and a proven public
company CFO with an extraordinary record of delivering results and
creating value throughout his career. We believe his
results-oriented mindset and deep company experience will help us
deliver for all our stakeholders as we enter our next phase as a
strong, growth-oriented company.”
Brian Grass, Chief Financial Officer, stated: “I am grateful for
the opportunity to come out of retirement to partner with Noel in
my role as CFO as we enter our next era. I’m looking forward to
working alongside Julien, Noel and the rest of the leadership team
as we look to finish Fiscal 2024 strong and launch our next
multi-year strategic plan. I remain excited about the opportunities
that Pegasus provides to drive further performance improvement and
look forward to sharing our longer-term strategic initiatives and
financial objectives at our upcoming Investor Day.”
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 further pressure and uncertainty on
consumer spending levels and patterns, especially for some
discretionary categories. As expected, the Company continues to see
retailers align their inventory purchases to match their current
expectations of consumer spending. The Company has seen some
reduction of trade inventory on a sequential basis as many key
retailers have lowered their inventory on hand and continues to
expect 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 $6.36 to $7.03 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 $1.77, 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, the Company now
expects the majority of its net sales growth to be concentrated in
the fourth quarter of fiscal 2024 and expects a decline in net
sales of approximately 4% to 2% in the third quarter of fiscal 2024
reflecting the expectation of more cautious retail ordering
patterns in the short term. The Company continues to expect 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 growth in adjusted diluted EPS in
the range of 1.5% to 12% in the second half of fiscal 2024, with
growth highly concentrated in the fourth quarter. The Company now
expects adjusted diluted EPS to be roughly flat in the third
quarter reflecting the expectation of more cautious retail ordering
patterns in the short term, a timing shift in the realization of
some cost of goods sold savings still in inventory to the fourth
quarter and an expected increase in growth investment in the third
quarter.
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;
- September 2023 foreign currency exchange rates will remain
constant for the remainder of the fiscal year;
- expected interest expense in the range of $53.5 million to
$55.5 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 20.0% to 18.0% for
the full fiscal year 2024 and an adjusted effective tax rate range
of 14.5% to 13.5%; and
- an estimated weighted average diluted shares outstanding of
24.0 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, Wednesday, October 4, 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 October 4, 2023,
until 11:59 p.m. Eastern Time on October 18, 2023, and can be
accessed by dialing (844) 512-2921 and entering replay pin number
13741202. A replay of the webcast will remain available on the
website for one year.
Company to Host Investor Day at Nasdaq
Marketsite on October 17, 2023
The Company will host an Investor Day at the Nasdaq Marketsite
in New York City, Times Square on October 17, 2023, from 10:30am to
2:30pm Eastern Time. The Investor Day will include presentations
from the Company’s leadership team including a discussion of its
long-term strategic plan followed by a product showcase and
Q&A. The event will be webcast live at the Events &
Presentations page of the Company’s investor relations website at:
http://investor.helenoftroy.com. A replay of the presentation will
become available shortly after the conclusion of the investor
day.
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 August
31,
2023
2022
Sales revenue, net
$
491,563
100.0
%
$
521,400
100.0
%
Cost of goods sold
261,910
53.3
%
299,954
57.5
%
Gross profit
229,653
46.7
%
221,446
42.5
%
Selling, general and administrative
expense (“SG&A”)
179,191
36.5
%
169,724
32.6
%
Restructuring charges
3,617
0.7
%
4,776
0.9
%
Operating income
46,845
9.5
%
46,946
9.0
%
Non-operating income, net
148
—
%
113
—
%
Interest expense
13,654
2.8
%
9,166
1.8
%
Income before income tax
33,339
6.8
%
37,893
7.3
%
Income tax expense
5,958
1.2
%
7,221
1.4
%
Net income
$
27,381
5.6
%
$
30,672
5.9
%
Diluted earnings per share (“EPS”)
$
1.14
$
1.28
Weighted average shares of common stock
used in computing diluted EPS
24,041
24,056
Six Months Ended August
31,
2023
2022
Sales revenue, net
$
966,235
100.0
%
$
1,029,478
100.0
%
Cost of goods sold
520,951
53.9
%
596,861
58.0
%
Gross profit
445,284
46.1
%
432,617
42.0
%
SG&A
346,826
35.9
%
346,954
33.7
%
Restructuring charges
10,972
1.1
%
4,778
0.5
%
Operating income
87,486
9.1
%
80,885
7.9
%
Non-operating income, net
285
—
%
180
—
%
Interest expense
27,706
2.9
%
13,539
1.3
%
Income before income tax
60,065
6.2
%
67,526
6.6
%
Income tax expense
10,103
1.0
%
12,259
1.2
%
Net income
$
49,962
5.2
%
$
55,267
5.4
%
Diluted EPS
$
2.07
$
2.29
Weighted average shares of common stock
used in computing diluted EPS
24,088
24,089
Consolidated and Segment Net
Sales Revenue
(Unaudited) (in
thousands)
Three Months Ended August
31,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
240,559
$
280,841
$
521,400
Organic business (4)
(1,084
)
(30,124
)
(31,208
)
Impact of foreign currency
502
869
1,371
Change in sales revenue, net
(582
)
(29,255
)
(29,837
)
Fiscal 2024 sales revenue, net
$
239,977
$
251,586
$
491,563
Total net sales revenue growth
(decline)
(0.2
)%
(10.4
)%
(5.7
)%
Organic business
(0.5
)%
(10.7
)%
(6.0
)%
Impact of foreign currency
0.2
%
0.3
%
0.3
%
Six Months Ended August
31,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
474,822
$
554,656
$
1,029,478
Organic business (4)
(17,835
)
(52,372
)
(70,207
)
Impact of foreign currency
134
728
862
Acquisition (5)
—
6,102
6,102
Change in sales revenue, net
(17,701
)
(45,542
)
(63,243
)
Fiscal 2024 sales revenue, net
$
457,121
$
509,114
$
966,235
Total net sales revenue growth
(decline)
(3.7
)%
(8.2
)%
(6.1
)%
Organic business
(3.8
)%
(9.4
)%
(6.8
)%
Impact of foreign currency
—
%
0.1
%
0.1
%
Acquisition
—
%
1.1
%
0.6
%
Consolidated Net Sales by
Geographic Region (6)
(Unaudited) (in
thousands)
Three Months Ended August
31,
2023
2022
Domestic sales revenue, net
$
388,049
78.9
%
$
419,905
80.5
%
International sales revenue, net
103,514
21.1
%
101,495
19.5
%
Total sales revenue, net
$
491,563
100.0
%
$
521,400
100.0
%
Six Months Ended August
31,
2023
2022
Domestic sales revenue, net
$
747,608
77.4
%
$
816,651
79.3
%
International sales revenue, net
218,627
22.6
%
212,827
20.7
%
Total sales revenue, net
$
966,235
100.0
%
$
1,029,478
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 August 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
36,099
15.0
%
$
10,746
4.3
%
$
46,845
9.5
%
Restructuring charges
1,271
0.5
%
2,346
0.9
%
3,617
0.7
%
Subtotal
37,370
15.6
%
13,092
5.2
%
50,462
10.3
%
Amortization of intangible assets
1,764
0.7
%
2,830
1.1
%
4,594
0.9
%
Non-cash share-based compensation
3,287
1.4
%
3,942
1.6
%
7,229
1.5
%
Adjusted operating income (non-GAAP)
$
42,421
17.7
%
$
19,864
7.9
%
$
62,285
12.7
%
Three Months Ended August 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
42,082
17.5
%
$
4,864
1.7
%
$
46,946
9.0
%
Acquisition-related expenses
41
—
%
(11
)
—
%
30
—
%
EPA compliance costs (7)
—
—
%
8,354
3.0
%
8,354
1.6
%
Restructuring charges
472
0.2
%
4,304
1.5
%
4,776
0.9
%
Subtotal
42,595
17.7
%
17,511
6.2
%
60,106
11.5
%
Amortization of intangible assets
1,753
0.7
%
2,896
1.0
%
4,649
0.9
%
Non-cash share-based compensation
2,640
1.1
%
4,855
1.7
%
7,495
1.4
%
Adjusted operating income (non-GAAP)
$
46,988
19.5
%
$
25,262
9.0
%
$
72,250
13.9
%
Six Months Ended August 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
58,215
12.7
%
$
29,271
5.7
%
$
87,486
9.1
%
Bed, Bath & Beyond bankruptcy (8)
3,087
0.7
%
1,126
0.2
%
4,213
0.4
%
Restructuring charges
4,061
0.9
%
6,911
1.4
%
10,972
1.1
%
Subtotal
65,363
14.3
%
37,308
7.3
%
102,671
10.6
%
Amortization of intangible assets
3,541
0.8
%
5,710
1.1
%
9,251
1.0
%
Non-cash share-based compensation
7,785
1.7
%
8,741
1.7
%
16,526
1.7
%
Adjusted operating income (non-GAAP)
$
76,689
16.8
%
$
51,759
10.2
%
$
128,448
13.3
%
Six Months Ended August 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
71,875
15.1
%
$
9,010
1.6
%
$
80,885
7.9
%
Acquisition-related expenses
119
—
%
2,665
0.5
%
2,784
0.3
%
EPA compliance costs (7)
—
—
%
19,998
3.6
%
19,998
1.9
%
Restructuring charges
472
0.1
%
4,306
0.8
%
4,778
0.5
%
Subtotal
72,466
15.3
%
35,979
6.5
%
108,445
10.5
%
Amortization of intangible assets
3,499
0.7
%
5,511
1.0
%
9,010
0.9
%
Non-cash share-based compensation
8,638
1.8
%
15,476
2.8
%
24,114
2.3
%
Adjusted operating income (non-GAAP)
$
84,603
17.8
%
$
56,966
10.3
%
$
141,569
13.8
%
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 August
31,
2023
2022
Net income, as reported (GAAP)
$
27,381
5.6
%
$
30,672
5.9
%
Interest expense
13,654
2.8
%
9,166
1.8
%
Income tax expense
5,958
1.2
%
7,221
1.4
%
Depreciation and amortization
13,891
2.8
%
11,119
2.1
%
EBITDA (non-GAAP)
60,884
12.4
%
58,178
11.2
%
Add: Acquisition-related expenses
—
—
%
30
—
%
EPA compliance costs
—
—
%
8,354
1.6
%
Restructuring charges
3,617
0.7
%
4,776
0.9
%
Non-cash share-based compensation
7,229
1.5
%
7,495
1.4
%
Adjusted EBITDA (non-GAAP)
$
71,730
14.6
%
$
78,833
15.1
%
Six Months Ended August
31,
2023
2022
Net income, as reported (GAAP)
$
49,962
5.2
%
$
55,267
5.4
%
Interest expense
27,706
2.9
%
13,539
1.3
%
Income tax expense
10,103
1.0
%
12,259
1.2
%
Depreciation and amortization
24,606
2.5
%
21,617
2.1
%
EBITDA (non-GAAP)
112,377
11.6
%
102,682
10.0
%
Add: Acquisition-related expenses
—
—
%
2,784
0.3
%
Bed, Bath & Beyond bankruptcy
4,213
0.4
%
—
—
%
EPA compliance costs
—
—
%
19,998
1.9
%
Restructuring charges
10,972
1.1
%
4,778
0.5
%
Non-cash share-based compensation
16,526
1.7
%
24,114
2.3
%
Adjusted EBITDA (non-GAAP)
$
144,088
14.9
%
$
154,356
15.0
%
Quarterly Period Ended
Twelve Months Ended
August 31, 2023
November
February
May
August
Net income, as reported (GAAP)
$
51,826
$
36,180
$
22,581
$
27,381
$
137,968
Interest expense
13,149
14,063
14,052
13,654
54,918
Income tax expense
12,223
3,534
4,145
5,958
25,860
Depreciation and amortization
11,713
11,353
10,715
13,891
47,672
EBITDA (non-GAAP)
88,911
65,130
51,493
60,884
266,418
Add: Bed, Bath & Beyond bankruptcy
—
—
4,213
—
4,213
EPA compliance costs
2,103
1,472
—
—
3,575
Gain from insurance recoveries
(9,676
)
—
—
—
(9,676
)
Restructuring charges
10,463
12,121
7,355
3,617
33,556
Non-cash share-based compensation
7,941
(5,302
)
9,297
7,229
19,165
Adjusted EBITDA (non-GAAP)
$
99,742
$
73,421
$
72,358
$
71,730
$
317,251
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 August 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
36,099
15.0
%
$
10,746
4.3
%
$
46,845
9.5
%
Depreciation and amortization
6,606
2.8
%
7,285
2.9
%
13,891
2.8
%
Non-operating income, net
—
—
%
148
0.1
%
148
—
%
EBITDA (non-GAAP)
42,705
17.8
%
18,179
7.2
%
60,884
12.4
%
Add: Restructuring charges
1,271
0.5
%
2,346
0.9
%
3,617
0.7
%
Non-cash share-based compensation
3,287
1.4
%
3,942
1.6
%
7,229
1.5
%
Adjusted EBITDA (non-GAAP)
$
47,263
19.7
%
$
24,467
9.7
%
$
71,730
14.6
%
Three Months Ended August 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
42,082
17.5
%
$
4,864
1.7
%
$
46,946
9.0
%
Depreciation and amortization
4,493
1.9
%
6,626
2.4
%
11,119
2.1
%
Non-operating income, net
—
—
%
113
—
%
113
—
%
EBITDA (non-GAAP)
46,575
19.4
%
11,603
4.1
%
58,178
11.2
%
Add: Acquisition-related expenses
41
—
%
(11
)
—
%
30
—
%
EPA compliance costs
—
—
%
8,354
3.0
%
8,354
1.6
%
Restructuring charges
472
0.2
%
4,304
1.5
%
4,776
0.9
%
Non-cash share-based compensation
2,640
1.1
%
4,855
1.7
%
7,495
1.4
%
Adjusted EBITDA (non-GAAP)
$
49,728
20.7
%
$
29,105
10.4
%
$
78,833
15.1
%
Six Months Ended August 31,
2023
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
58,215
12.7
%
$
29,271
5.7
%
$
87,486
9.1
%
Depreciation and amortization
11,008
2.4
%
13,598
2.7
%
24,606
2.5
%
Non-operating income, net
—
—
%
285
0.1
%
285
—
%
EBITDA (non-GAAP)
69,223
15.1
%
43,154
8.5
%
112,377
11.6
%
Add: Bed, Bath & Beyond bankruptcy
3,087
0.7
%
1,126
0.2
%
4,213
0.4
%
Restructuring charges
4,061
0.9
%
6,911
1.4
%
10,972
1.1
%
Non-cash share-based compensation
7,785
1.7
%
8,741
1.7
%
16,526
1.7
%
Adjusted EBITDA (non-GAAP)
$
84,156
18.4
%
$
59,932
11.8
%
$
144,088
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)
Six Months Ended August 31,
2022
Home &
Outdoor
Beauty & Wellness
(5)
Total
Operating income, as reported (GAAP)
$
71,875
15.1
%
$
9,010
1.6
%
$
80,885
7.9
%
Depreciation and amortization
8,988
1.9
%
12,629
2.3
%
21,617
2.1
%
Non-operating income, net
—
—
%
180
—
%
180
—
%
EBITDA (non-GAAP)
80,863
17.0
%
21,819
3.9
%
102,682
10.0
%
Add: Acquisition-related expenses
119
—
%
2,665
0.5
%
2,784
0.3
%
EPA compliance costs
—
—
%
19,998
3.6
%
19,998
1.9
%
Restructuring charges
472
0.1
%
4,306
0.8
%
4,778
0.5
%
Non-cash share-based compensation
8,638
1.8
%
15,476
2.8
%
24,114
2.3
%
Adjusted EBITDA (non-GAAP)
$
90,092
19.0
%
$
64,264
11.6
%
$
154,356
15.0
%
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 August 31,
2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
33,339
$
5,958
$
27,381
$
1.39
$
0.25
$
1.14
Restructuring charges
3,617
44
3,573
0.15
—
0.15
Subtotal
36,956
6,002
30,954
1.54
0.25
1.29
Amortization of intangible assets
4,594
607
3,987
0.19
0.03
0.17
Non-cash share-based compensation
7,229
385
6,844
0.30
0.02
0.28
Adjusted (non-GAAP)
$
48,779
$
6,994
$
41,785
$
2.03
$
0.29
$
1.74
Weighted average shares of common stock
used in computing diluted EPS
24,041
Three Months Ended August 31,
2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
37,893
$
7,221
$
30,672
$
1.58
$
0.30
$
1.28
Acquisition-related expenses
30
—
30
—
—
—
EPA compliance costs
8,354
125
8,229
0.35
0.01
0.34
Restructuring charges
4,776
61
4,715
0.20
—
0.20
Subtotal
51,053
7,407
43,646
2.12
0.31
1.81
Amortization of intangible assets
4,649
557
4,092
0.19
0.02
0.17
Non-cash share-based compensation
7,495
570
6,925
0.31
0.02
0.29
Adjusted (non-GAAP)
$
63,197
$
8,534
$
54,663
$
2.63
$
0.35
$
2.27
Weighted average shares of common stock
used in computing diluted EPS
24,056
Six Months Ended August 31,
2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$ 60,065
$ 10,103
$ 49,962
$ 2.49
$ 0.42
$ 2.07
Bed, Bath & Beyond bankruptcy
4,213
53
4,160
0.17
—
0.17
Restructuring charges
10,972
136
10,836
0.46
0.01
0.45
Subtotal
75,250
10,292
64,958
3.12
0.43
2.70
Amortization of intangible assets
9,251
1,213
8,038
0.38
0.05
0.33
Non-cash share-based compensation
16,526
1,026
15,500
0.69
0.04
0.64
Adjusted (non-GAAP)
$ 101,027
$ 12,531
$ 88,496
$ 4.19
$ 0.52
$ 3.67
Weighted average shares of common stock
used in computing diluted EPS
24,088
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)
Six Months Ended August 31,
2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
67,526
$
12,259
$
55,267
$
2.80
$
0.51
$
2.29
Acquisition-related expenses
2,784
2
2,782
0.12
—
0.12
EPA compliance costs
19,998
300
19,698
0.83
0.01
0.82
Restructuring charges
4,778
61
4,717
0.20
—
0.20
Subtotal
95,086
12,622
82,464
3.95
0.52
3.42
Amortization of intangible assets
9,010
1,047
7,963
0.37
0.04
0.33
Non-cash share-based compensation
24,114
1,654
22,460
1.00
0.07
0.93
Adjusted (non-GAAP)
$
128,210
$
15,323
$
112,887
$
5.32
$
0.64
$
4.69
Weighted average shares of common stock
used in computing diluted EPS
24,089
Selected Consolidated Balance
Sheet, Liquidity and Cash Flow Information
(Unaudited) (in
thousands)
August 31,
2023
2022
Balance Sheet:
Cash and cash equivalents
$
24,214
$
39,650
Receivables, net
387,498
507,261
Inventory
435,681
643,192
Total assets, current
888,692
1,237,816
Assets held for sale
17,179
—
Total assets
2,901,660
3,225,208
Total liabilities, current
472,395
583,111
Total long-term liabilities
927,382
1,243,751
Total debt
844,903
1,169,742
Stockholders' equity
1,501,883
1,398,346
Six Months Ended August
31,
2023
2022
Accounts receivable turnover (days)
(9)
67.9
67.3
Inventory turnover (times) (9)
2.2
2.1
Working capital
$
416,297
$
654,705
Current ratio
1.9:1
2.1:1
Ending debt to ending equity ratio
56.3
%
83.7
%
Return on average equity (9)
9.4
%
12.7
%
Six Months Ended August
31,
2023
2022
Cash Flow:
Depreciation and amortization
$
24,606
$
21,617
Net cash provided (used) by operating
activities
157,732
(75,452
)
Capital and intangible asset
expenditures
20,557
112,635
Net debt (repayments) proceeds
(90,125
)
356,014
Payments for repurchases of common
stock
54,535
18,305
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)
Six Months Ended August
31,
2023
2022
Net cash provided (used) by operating
activities (GAAP)
$
157,732
$
(75,452
)
Less: Capital and intangible asset
expenditures
(20,557
)
(112,635
)
Free cash flow (non-GAAP)
$
137,175
$
(188,087
)
Reconciliation of Non-GAAP
Financial Measures – Net Leverage Ratio (Non-GAAP) (1) (3)
(Unaudited) (in
thousands)
Quarterly Period Ended
Twelve Months Ended August 31,
2023
November
February
May
August
Adjusted EBITDA (non-GAAP) (10)
$
99,742
$
73,421
$
72,358
$
71,730
$
317,251
Bed, Bath & Beyond bankruptcy (8)
—
—
(4,213
)
—
(4,213
)
Adjusted EBITDA per the credit
agreement
$
99,742
$
73,421
$
68,145
$
71,730
$
313,038
Total borrowings under the credit
agreement, as reported (GAAP)
$
846,750
Add: Outstanding letters of credit
17,815
Less: Unrestricted cash and cash
equivalents
(24,214
)
Net debt
$
840,351
Net leverage ratio (non-GAAP) (3)
2.68
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)
Six Months Ended August 31,
2023
Outlook for the Balance
of the Fiscal Year (Six Months)
Outlook Fiscal 2024
Operating income, as reported (GAAP)
$
87,486
$
158,542
—
$
178,313
$
246,028
—
$
265,799
Depreciation and amortization
24,606
37,332
—
31,332
61,938
—
55,938
Non-operating income, net
285
940
—
690
1,225
—
975
EBITDA (non-GAAP)
112,377
196,814
—
210,335
309,191
—
322,712
Add: Bed, Bath & Beyond bankruptcy
4,213
—
—
—
4,213
—
4,213
Gain on sale of distribution and office
facilities
—
(34,190
)
—
(34,190
)
(34,190
)
—
(34,190
)
Restructuring charges
10,972
13,937
—
11,137
24,909
—
22,109
Non-cash share-based compensation
16,526
17,351
—
16,630
33,877
—
33,156
Adjusted EBITDA (non-GAAP)
$
144,088
$
193,912
—
$
203,912
$
338,000
—
$
348,000
Reconciliation of Non-GAAP
Financial Measures - Fiscal 2024 Outlook for GAAP Diluted
EPS to Adjusted Diluted EPS
(Non-GAAP) and GAAP Effective Tax Rate to Adjusted
Effective
Tax Rate (Non-GAAP) (1)
(Unaudited)
Six Months Ended August 31,
2023
Outlook for the Balance
of the Fiscal Year (Six Months)
Outlook Fiscal
2024
Tax Rate Outlook Fiscal
2024
Diluted EPS, as reported (GAAP)
$
2.07
$
4.29
—
$
4.96
$
6.36
—
$
7.03
20.0
%
—
18.0
%
Bed, Bath & Beyond bankruptcy
0.17
—
—
—
0.17
—
0.17
Gain on sale of distribution and office
facilities
—
(1.42
)
—
(1.42
)
(1.42
)
—
(1.42
)
Restructuring charges
0.46
0.58
—
0.46
1.04
—
0.92
Amortization of intangible assets
0.38
0.41
—
0.38
0.79
—
0.76
Non-cash share-based compensation
0.69
0.72
—
0.69
1.41
—
1.38
Income tax effect of adjustments
(0.10
)
0.25
—
0.26
0.15
—
0.16
(5.5
)%
—
(4.5
)%
Adjusted diluted EPS (non-GAAP)
$
3.67
$
4.83
—
$
5.33
$
8.50
—
$
9.00
14.5
%
—
13.5
%
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)
Six Months Ended August 31,
2023
Outlook for the Balance
of the Fiscal Year (Six Months)
Outlook Fiscal 2024
Net cash provided by operating activities
(GAAP)
$
157,732
$
142,268
—
$
157,268
$
300,000
—
$
315,000
Less: Capital and intangible asset
expenditures
(20,557
)
(29,443
)
—
(24,443
)
(50,000
)
—
(45,000
)
Free cash flow (non-GAAP)
$
137,175
$
112,825
—
$
132,825
$
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 is calculated as (a)
total borrowings under the Company’s credit agreement plus
outstanding letters of credit, net of unrestricted cash and cash
equivalents at the end of the current period, divided by (b)
Adjusted EBITDA per the Company's credit agreement (calculated as
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 applicable for the trailing twelve months ended as
of the current period).
(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 and six months
ended August 31, 2023 include a full three and six months,
respectively, of operating results from Curlsmith, compared to
approximately thirteen and nineteen weeks of operating results in
the three and six months ended August 31, 2022, respectively.
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)
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.
(8)
Represents a charge for uncollectible
receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed,
Bath & Beyond bankruptcy”).
(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.
(10)
See reconciliation of Adjusted EBITDA to
the most directly comparable GAAP-based financial measure (net
income) in the accompanying tables to this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231004063972/en/
Investors: Helen of Troy Limited Anne Rakunas, Director,
External Communications (915) 225-4841
ICR, Inc. Allison Malkin, Partner (203) 682-8200
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