Consolidated Net Sales Growth of 1.0%
GAAP Diluted EPS Growth of 19.3% to $1.79; Adjusted Diluted EPS
Growth of 21.9% to $2.45 GAAP Operating Margin Expansion of
240 Basis Points Adjusted EBITDA Margin Expansion of 410
Basis Points; Growth of 28.4% to $94.3 million
Initiates Fiscal 2025
Outlook: Consolidated Net Sales of $1.965-$2.025
Billion GAAP Diluted EPS of $6.68-$7.45; Adjusted Diluted
EPS of $8.70-$9.20 Adjusted EBITDA of $324-$331 Million;
Free Cash Flow(1)(2) of $255-$275 Million Further Net
Leverage Ratio(1)(3) Reduction to Between 1.25X and 1.00X by the
End of Fiscal 2025
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 February 29, 2024 and provided its
outlook for Fiscal 2025.
Executive Summary – Fourth Quarter of
Fiscal 2024 Compared to Fiscal 2023
- Consolidated net sales revenue of $489.2 million, an increase
of 1.0%
- Gross profit margin improvement of 570 basis points to 49.0%
compared to 43.3%
- Operating margin improvement of 240 basis points to 13.5%
compared to 11.1%
- Non-GAAP adjusted operating margin improvement of 320 basis
points to 17.0% compared to 13.8%
- GAAP diluted EPS of $1.79 compared to $1.50
- Non-GAAP adjusted diluted EPS of $2.45 compared to $2.01
- Net cash provided by operating activities of $73.6 million
compared to $158.7 million
- Non-GAAP adjusted EBITDA margin improvement of 410 basis points
to 19.3% compared to 15.2%
Executive Summary - Fiscal 2024
Compared to Fiscal 2023
- Consolidated net sales revenue of $2.005 billion, a decrease of
3.3%
- Gross profit margin improvement of 390 basis points to 47.3%
compared to 43.4%
- Operating margin improvement of 280 basis points to 13.0%
compared to 10.2%
- Non-GAAP adjusted operating margin of 15.0% compared to
14.5%
- GAAP diluted EPS of $7.03 compared to $5.95
- Non-GAAP adjusted diluted EPS of $8.91 compared to $9.45
- Net cash provided by operating activities of $306.1 million
compared to $208.2 million
- Non-GAAP adjusted EBITDA margin of 16.8% compared to 15.8%
Noel M. Geoffroy, Chief Executive Officer, stated: “We ended the
year on a positive note, reporting fourth quarter results that
exceeded our expectations while making critical progress toward our
long-term growth and efficiency goals. The fourth quarter was
highlighted by net sales and adjusted EPS ahead of our outlook,
expanded gross profit and adjusted EBITDA margins, and strong cash
flow generation that further strengthened our durable balance
sheet. We are pleased to achieve these results despite an
environment where consumers focused their more limited
discretionary spending on experiences and services over products. I
am proud of how our associates have embraced our new organizational
model as a true global operating company designed to enable greater
focus and centralized expertise.”
Ms. Geoffroy continued: “Looking ahead to fiscal 2025, we have
many reasons to be excited as we begin our Elevate for Growth era,
even as we navigate what we anticipate will be an increasingly
pressured environment. Our consumers are our number one priority.
Our mission is to delight them with quality brands and products
with the right message, in the right place, at the right time. I am
confident that Elevate for Growth represents an important pivot for
the Company, emphasizing relentless consumer obsession in all that
we do, a new portfolio management approach to sharpen our resource
allocation, incremental growth investment in our brands and our
capabilities, and new distribution opportunities. We believe these
new choices position us to deliver our objectives in fiscal 2025
and beyond.”
Three Months Ended Last Day of
February,
(in thousands) (unaudited)
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
211,926
$
272,657
$
484,583
Organic business (4)
10,818
(7,618
)
3,200
Impact of foreign currency
568
850
1,418
Change in sales revenue, net
11,386
(6,768
)
4,618
Fiscal 2024 sales revenue, net
$
223,312
$
265,889
$
489,201
Total net sales revenue growth
(decline)
5.4
%
(2.5
)%
1.0
%
Organic business
5.1
%
(2.8
)%
0.7
%
Impact of foreign currency
0.3
%
0.3
%
0.3
%
Operating margin (GAAP)
Fiscal 2024
15.7
%
11.7
%
13.5
%
Fiscal 2023
14.8
%
8.2
%
11.1
%
Adjusted operating margin (non-GAAP)
(1)
Fiscal 2024
18.7
%
15.6
%
17.0
%
Fiscal 2023
17.1
%
11.2
%
13.8
%
Three Months Ended
Last Day of February,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2024
2023
FY24/FY23
Consolidated net sales revenue
$
489,201
$
484,583
1.0
%
2.5
%
Net income
42,734
36,180
18.1
%
*
Adjusted EBITDA (non-GAAP) (1)
94,308
73,421
28.4
%
12.7
%
Net cash provided by operating
activities
73,608
158,719
(53.6
)%
(18.9
)%
Diluted EPS
$
1.79
$
1.50
19.3
%
*
Adjusted Diluted EPS (non-GAAP) (1)
2.45
2.01
21.9
%
6.8
%
* Calculation is not meaningful.
Fiscal Year Ended
Last Day of February,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2024
2023
FY24/FY23
Consolidated net sales revenue
$
2,005,050
$
2,072,667
(3.3
)%
4.1
%
Net income
168,594
143,273
17.7
%
2.6
%
Adjusted EBITDA (non-GAAP) (1)
336,213
327,519
2.7
%
4.1
%
Net cash provided by operating
activities
306,067
208,242
47.0
%
3.1
%
Diluted EPS
$
7.03
$
5.95
18.2
%
4.0
%
Adjusted Diluted EPS (non-GAAP) (1)
8.91
9.45
(5.7
)%
(1.1
)%
Consolidated Results - Fourth Quarter
Fiscal 2024 Compared to Fourth Quarter Fiscal 2023
- Consolidated net sales revenue increased $4.6 million, or 1.0%,
to $489.2 million, compared to $484.6 million, primarily driven by
an increase from Organic business of $3.2 million, or 0.7%. The
Organic business increase was primarily due to growth in the
consolidated online channel lead by the travel tumbler in Home
& Outdoor and hair appliances in Beauty & Wellness,
international gains driven by thermometry, hair appliances, and
strong demand for travel packs, an increase in the club and
closeout channels in Home & Outdoor, and prestige hair care
growth in Beauty & Wellness. These factors were partially
offset by declines in air purifiers, fans, and heaters primarily
driven by SKU rationalization and softer consumer demand, and a
decline in humidification reflecting a cough/cold/flu season
illness incidence below the prior year and pre-Covid historical
averages.
- Consolidated gross profit margin increased 570 basis points to
49.0%, compared to 43.3%. The increase was primarily due to a
decrease in inventory obsolescence expense, lower inbound freight
and commodity costs, lower overall customer discount and program
expense, and a more favorable product mix within Beauty &
Wellness including the favorable impact of SKU rationalization
efforts. These factors were partially offset by a less favorable
customer and product mix within Home & Outdoor.
- Consolidated selling, general and administrative expense
(“SG&A”) ratio increased 490 basis points to 34.7%, compared to
29.8%. The increase was primarily due to higher share-based
compensation expense, increased marketing investment, higher annual
incentive compensation expense, and an increase in depreciation and
distribution expense primarily due to the scale up of the Company's
new distribution facility in Gallaway, Tennessee. These factors
were partially offset by cost savings from Project Pegasus and the
favorable comparative impact of EPA compliance costs of $1.5
million incurred in the prior year period.
- Consolidated operating income was $66.2 million, or 13.5% of
net sales revenue, compared to $53.7 million, or 11.1% of net sales
revenue. The 240 basis point increase in consolidated operating
margin was primarily due to a decrease in inventory obsolescence
expense, a decrease in restructuring charges of $8.3 million, lower
inbound freight and commodity costs, lower trade discount and
program expense, a more favorable product mix within Beauty &
Wellness including the favorable impact of SKU rationalization
efforts, and the favorable comparative impact of EPA compliance
costs of $1.5 million incurred in the prior year period. These
factors were partially offset by higher share-based compensation
expense, increased marketing investment, higher annual incentive
compensation expense, an increase in depreciation and distribution
expense primarily due to a new distribution facility, and a less
favorable customer and product mix within Home & Outdoor.
- Interest expense was $12.5 million, compared to $14.1 million.
The decrease in interest expense was primarily due to lower average
borrowings outstanding, partially offset by a higher average
effective interest rate compared to the same period last year.
- Income tax expense as a percentage of income before income tax
was 21.9%, compared to 8.9%, primarily due to shifts in the mix of
income in various tax jurisdictions and the unfavorable comparative
impact of changes in estimated income used to calculate the annual
effective tax rate in the same period last year.
- Net income was $42.7 million, compared to $36.2 million.
Diluted EPS was $1.79, compared to $1.50. Diluted EPS increased
primarily due to higher operating income in both Beauty &
Wellness and Home & Outdoor, lower interest expense, an
increase in interest income, and lower weighted average diluted
shares outstanding, partially offset by an increase in the
effective income tax rate.
- Non-GAAP adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) increased 28.4% to $94.3 million,
compared to $73.4 million. Non-GAAP adjusted EBITDA margin improved
to 19.3% compared to 15.2%.
On an adjusted basis (non-GAAP) for the fourth quarters of
fiscal 2024 and 2023, excluding EPA compliance costs, restructuring
charges, amortization of intangible assets, and non-cash
share-based compensation, as applicable:
- Adjusted operating income increased $16.6 million, or 24.9%, to
$83.3 million, or 17.0% of net sales revenue, compared to $66.7
million, or 13.8% of net sales revenue. The 320 basis point
increase in adjusted operating margin was primarily driven by a
decrease in inventory obsolescence expense, lower inbound freight
and commodity costs, lower overall trade discount and program
expense, and a more favorable product mix within Beauty &
Wellness including the favorable impact of SKU rationalization
efforts. These factors were partially offset by increased marketing
investment, higher annual incentive compensation expense, an
increase in depreciation and distribution expense primarily due to
a new distribution facility, and a less favorable customer and
product mix within Home & Outdoor.
- Adjusted income increased $10.1 million, or 20.8%, to $58.6
million, compared to $48.5 million. Adjusted diluted EPS increased
21.9% to $2.45, compared to $2.01. The increase in adjusted diluted
EPS was primarily due to higher adjusted operating income in both
Beauty & Wellness and Home & Outdoor, lower interest
expense, an increase in interest income, and lower weighted average
diluted shares outstanding, partially offset by an increase in the
adjusted effective income tax rate.
Segment Results - Fourth Quarter Fiscal
2024 Compared to Fourth Quarter Fiscal 2023
Home & Outdoor net sales revenue increased $11.4 million, or
5.4%, to $223.3 million, compared to $211.9 million. The increase
was driven by growth from Organic business of $10.8 million, or
5.1%, primarily due to an increase in home category sales in the
brick and mortar and club channels, higher insulated beverageware
sales, primarily driven by the new travel tumbler, and
international growth primarily driven by strong demand for travel
packs. These factors were partially offset by the unfavorable
impact of the Bed, Bath & Beyond bankruptcy and a decrease in
online channel sales in the travel pack and home categories.
Home & Outdoor operating income was $35.0 million, or 15.7%
of segment net sales revenue, compared to $31.3 million, or 14.8%
of segment net sales revenue. The 90 basis point increase in
segment operating margin was primarily due to lower commodity and
inbound freight costs, a decrease in restructuring charges of $2.6
million, lower trade discount and program expense, and a decrease
in inventory obsolescence expense. These factors were partially
offset by an increase in depreciation and distribution expense
primarily due to a new distribution facility, higher share-based
compensation expense, an increase in annual incentive compensation
expense, and a less favorable customer and product mix. Adjusted
operating income increased 15.3% to $41.7 million, or 18.7% of
segment net sales revenue, compared to $36.2 million, or 17.1% of
segment net sales revenue.
Beauty & Wellness net sales revenue decreased $6.8 million,
or 2.5%, to $265.9 million, compared to $272.7 million. The
decrease was driven by a decrease from Organic business of $7.6
million, or 2.8%, primarily due to lower sales of air purifiers,
fans, and heaters, primarily driven by SKU rationalization and
softer consumer demand, and a decline in humidification reflecting
a cough/cold/flu season illness incidence below the prior year and
pre-Covid historical averages. These factors were partially offset
by growth in hair appliances and thermometry, which helped drive
higher overall international sales, and an increase in sales of
prestige hair care products.
Beauty & Wellness operating income was $31.2 million, or
11.7% of segment net sales revenue, compared to $22.4 million, or
8.2% of segment net sales revenue. The 350 basis point increase in
segment operating margin was primarily due to a decrease in
inventory obsolescence expense, a decrease in restructuring charges
of $5.6 million, lower trade discount and program expense,
decreased distribution expense, the favorable comparative impact of
EPA compliance costs of $1.5 million incurred in the prior year
period, reduced inbound freight costs, and a more favorable product
mix including the favorable impact of SKU rationalization efforts.
These factors were partially offset by higher share-based
compensation expense, increased marketing investment, and increased
annual incentive compensation expense. Adjusted operating income
increased 36.2% to $41.5 million, or 15.6% of segment net sales
revenue, compared to $30.5 million, or 11.2% of segment net sales
revenue.
Balance Sheet and Cash Flow - Fiscal
2024 Compared to Fiscal 2023
- Cash and cash equivalents totaled $18.5 million, compared to
$29.1 million.
- Accounts receivable turnover was 66.2 days, compared to 69.4
days.
- Inventory was $396.0 million, compared to $455.5 million.
Inventory turnover was 2.5 times, compared to 2.1 times.
- Total short- and long-term debt was $665.7 million, compared to
$934.4 million as a result of strong cash flow in fiscal 2024.
- Net cash provided by operating activities for fiscal 2024 was
$306.1 million, compared to $208.2 million.
- Free cash flow(1)(2) for fiscal 2024 was $269.4 million,
compared to $33.4 million, which includes $19.3 million and $147
million of capital expenditures for the new Tennessee 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 effectiveness 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 has updated its expectations regarding Project
Pegasus charges and savings. The Company has lowered its total
estimate of one-time pre-tax restructuring charges to approximately
$50 million to $55 million, from a previous estimate of $60 million
to $65 million, over the duration of the plan. The Company
continues to expect these charges to be completed during fiscal
2025. In addition, the Company now has the following expectations
regarding Project Pegasus charges:
- Pre-tax restructuring charges to be comprised of approximately
$15 million to $19 million of severance and employee related costs,
$28 million of professional fees, $3 million to $4 million of
contract termination costs, and $4 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 $16 million to $17 million in Home &
Outdoor and $34 million to $38 million in Beauty &
Wellness.
- Pre-tax restructuring charges represent primarily cash
expenditures, which the Company continues to expect to be
substantially paid by the end of fiscal 2025.
The Company has the following expectations regarding Project
Pegasus savings:
- The Company continues to expect targeted annualized pre-tax
operating profit improvements of approximately $75 million to $85
million, which began in fiscal 2024 and which the Company now
expects to be substantially achieved by the end of fiscal
2027.
- The Company has updated its expectations regarding the
estimated cadence of the recognition of the savings to be
approximately 25% in fiscal 2024, which was achieved, approximately
35% in fiscal 2025, approximately 25% in fiscal 2026, and
approximately 15% in fiscal 2027. The Company previously estimated
recognition of the savings to be approximately 25% in fiscal 2024,
approximately 50% in fiscal 2025 and approximately 25% in
2026.
- The Company continues to expect total profit improvements to be
realized approximately 60% through reduced cost of goods sold and
40% through lower SG&A.
Fiscal 2025 Annual
Outlook
The Company expects consolidated net sales revenue in the range
of $1.965 billion to $2.025 billion, which implies a decline of
2.0% to growth of 1.0%. The sales outlook reflects the Company's
view of lingering inflation and further consumer spending softness,
especially in certain discretionary categories. In the aggregate,
the Company believes retail inventory on hand is at healthy levels
and expects that sell-in will be generally in line with
sell-through during fiscal 2025.
The Company's fiscal year net sales outlook reflects the
following expectations by segment:
- Home & Outdoor net sales growth of 1.0% to 4.0%; and
- Beauty & Wellness net sales decline of 4.5% to 1.5%, which
includes a year-over-year headwind of approximately 1.0% related to
the expiration of an out-license relationship in Wellness.
The Company expects GAAP diluted EPS of $6.68 to $7.45 and
non-GAAP adjusted diluted EPS in the range of $8.70 to $9.20, which
implies an adjusted diluted EPS decline of 2.4% to growth of
3.3%.
The Company expects adjusted EBITDA of $324 million to $331
million, which implies a decline of 3.6% to 1.6%, as benefits from
Project Pegasus and other gross profit improvements are reinvested
for growth. The Company's outlook reflects a year-over-year
increase in growth investment spending of approximately 100 basis
points, a year-over-year headwind of approximately 50 basis points
from the expiration of an out-license relationship in Wellness, and
some margin compression from incremental operating expense related
to enterprise technology initiatives included in the Elevate for
Growth strategic plan that are beginning in fiscal 2025.
The Company expects free cash flow in the range of $255 million
to $275 million and its net leverage ratio(1)(3), as defined in its
credit agreement, to end fiscal 2025 at 1.25x to 1.00x.
In terms of the quarterly cadence of sales, the Company expects
a decline of approximately 7% to 5% in the first quarter of fiscal
2025, and a range of flat to 3% growth for each of the remaining
quarters. The Company expects a slight decline in adjusted diluted
EPS for the first half of fiscal 2025, with a decline of
approximately 15% to 20% in the first quarter and nearly offsetting
growth in the second quarter. The Company expects an adjusted EPS
range of flat to 5% growth in the second half of fiscal 2025.
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;
- April 2024 foreign currency exchange rates will remain constant
for the remainder of the fiscal year;
- expected interest expense in the range of $34.0 million to
$36.0 million;
- a reported GAAP effective tax rate range of 19.0% to 21.0% for
the full fiscal year 2025 and an adjusted effective tax rate range
of 17.2% to 18.3%; and
- an estimated weighted average diluted shares outstanding of
23.7 million for the full year.
The likelihood, timing and potential impact of a significant or
prolonged recession, any fiscal 2025 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, April 24, 2024. 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 1:00 p.m. Eastern Time on April 24, 2024,
until 11:59 p.m. Eastern Time on May 8, 2024, and can be accessed
by dialing (844) 512-2921 and entering replay pin number 13745074.
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 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 29, 2024, 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 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 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
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 events in the U.S. and abroad, 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 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, risks associated with the use of licensed trademarks from
or to third parties, 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
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 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 associated with product recalls, product
liability and other claims against the Company, and associated
financial risks including but not limited to, increased costs of
raw materials, energy and transportation, significant impairment of
the Company's goodwill, indefinite-lived and definite-lived
intangible assets or other long-lived assets, risks associated with
foreign currency exchange rate fluctuations, 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, 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 by 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
Consolidated Statements of
Income (5)
(Unaudited) (in thousands,
except per share data)
Three Months Ended Last Day of
February,
2024
2023
Sales revenue, net
$
489,201
100.0
%
$
484,583
100.0
%
Cost of goods sold
249,606
51.0
%
274,525
56.7
%
Gross profit
239,595
49.0
%
210,058
43.3
%
Selling, general and administrative
expense (“SG&A”)
169,569
34.7
%
144,224
29.8
%
Restructuring charges
3,850
0.8
%
12,121
2.5
%
Operating income
66,176
13.5
%
53,713
11.1
%
Non-operating income, net
1,053
0.2
%
64
—
%
Interest expense
12,500
2.6
%
14,063
2.9
%
Income before income tax
54,729
11.2
%
39,714
8.2
%
Income tax expense
11,995
2.5
%
3,534
0.7
%
Net income
$
42,734
8.7
%
$
36,180
7.5
%
Diluted earnings per share (“EPS”)
$
1.79
$
1.50
Weighted average shares of common stock
used in computing diluted EPS
23,891
24,103
Fiscal Year Ended Last Day of
February,
2024
2023
Sales revenue, net
$
2,005,050
100.0
%
$
2,072,667
100.0
%
Cost of goods sold
1,056,390
52.7
%
1,173,316
56.6
%
Gross profit
948,660
47.3
%
899,351
43.4
%
SG&A
669,359
33.4
%
660,198
31.9
%
Restructuring charges
18,712
0.9
%
27,362
1.3
%
Operating income
260,589
13.0
%
211,791
10.2
%
Non-operating income, net
1,518
0.1
%
249
—
%
Interest expense
53,065
2.6
%
40,751
2.0
%
Income before income tax
209,042
10.4
%
171,289
8.3
%
Income tax expense
40,448
2.0
%
28,016
1.4
%
Net income
$
168,594
8.4
%
$
143,273
6.9
%
Diluted EPS
$
7.03
$
5.95
Weighted average shares of common stock
used in computing diluted EPS
23,970
24,090
Consolidated and Segment Net
Sales Revenue
(Unaudited) (in
thousands)
Three Months Ended Last Day of
February,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
211,926
$
272,657
$
484,583
Organic business (4)
10,818
(7,618
)
3,200
Impact of foreign currency
568
850
1,418
Change in sales revenue, net
11,386
(6,768
)
4,618
Fiscal 2024 sales revenue, net
$
223,312
$
265,889
$
489,201
Total net sales revenue growth
(decline)
5.4
%
(2.5
)%
1.0
%
Organic business
5.1
%
(2.8
)%
0.7
%
Impact of foreign currency
0.3
%
0.3
%
0.3
%
Fiscal Year Ended Last Day of
February,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
915,685
$
1,156,982
$
2,072,667
Organic business (4)
(2,499
)
(78,066
)
(80,565
)
Impact of foreign currency
3,195
3,651
6,846
Acquisition (5)
—
6,102
6,102
Change in sales revenue, net
696
(68,313
)
(67,617
)
Fiscal 2024 sales revenue, net
$
916,381
$
1,088,669
$
2,005,050
Total net sales revenue growth
(decline)
0.1
%
(5.9
)%
(3.3
)%
Organic business
(0.3
)%
(6.7
)%
(3.9
)%
Impact of foreign currency
0.3
%
0.3
%
0.3
%
Acquisition
—
%
0.5
%
0.3
%
Consolidated Net Sales by
Geographic Region
(Unaudited) (in
thousands)
Three Months Ended Last Day of
February,
2024
2023
Domestic sales revenue, net
$
384,066
78.5
%
$
392,723
81.0
%
International sales revenue, net
105,135
21.5
%
91,860
19.0
%
Total sales revenue, net
$
489,201
100.0
%
$
484,583
100.0
%
Fiscal Year Ended Last Day of
February,
2024
2023
Domestic sales revenue, net
$
1,560,256
77.8
%
$
1,647,268
79.5
%
International sales revenue, net
444,794
22.2
%
425,399
20.5
%
Total sales revenue, net
$
2,005,050
100.0
%
$
2,072,667
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 February
29, 2024
Home &
Outdoor
Beauty &
Wellness
Total
Operating income, as reported (GAAP)
$
35,003
15.7
%
$
31,173
11.7
%
$
66,176
13.5
%
Restructuring charges
500
0.2
%
3,350
1.3
%
3,850
0.8
%
Subtotal
35,503
15.9
%
34,523
13.0
%
70,026
14.3
%
Amortization of intangible assets
1,735
0.8
%
2,732
1.0
%
4,467
0.9
%
Non-cash share-based compensation
4,473
2.0
%
4,294
1.6
%
8,767
1.8
%
Adjusted operating income (non-GAAP)
$
41,711
18.7
%
$
41,549
15.6
%
$
83,260
17.0
%
Three Months Ended February
28, 2023
Home &
Outdoor
Beauty &
Wellness
Total
Operating income, as reported (GAAP)
$
31,331
14.8
%
$
22,382
8.2
%
$
53,713
11.1
%
EPA compliance costs (6)
—
—
%
1,472
0.5
%
1,472
0.3
%
Restructuring charges
3,127
1.5
%
8,994
3.3
%
12,121
2.5
%
Subtotal
34,458
16.3
%
32,848
12.0
%
67,306
13.9
%
Amortization of intangible assets
1,765
0.8
%
2,895
1.1
%
4,660
1.0
%
Non-cash share-based compensation
(56
)
—
%
(5,246
)
(1.9
)%
(5,302
)
(1.1
)%
Adjusted operating income (non-GAAP)
$
36,167
17.1
%
$
30,497
11.2
%
$
66,664
13.8
%
Fiscal Year Ended February 29,
2024
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
142,732
15.6
%
$
117,857
10.8
%
$
260,589
13.0
%
Bed, Bath & Beyond bankruptcy (7)
3,087
0.3
%
1,126
0.1
%
4,213
0.2
%
Gain on sale of distribution and office
facilities (8)
(16,175
)
(1.8
)%
(18,015
)
(1.7
)%
(34,190
)
(1.7
)%
Restructuring charges
5,144
0.6
%
13,568
1.2
%
18,712
0.9
%
Subtotal
134,788
14.7
%
114,536
10.5
%
249,324
12.4
%
Amortization of intangible assets
7,057
0.8
%
11,269
1.0
%
18,326
0.9
%
Non-cash share-based compensation
16,319
1.8
%
17,553
1.6
%
33,872
1.7
%
Adjusted operating income (non-GAAP)
$
158,164
17.3
%
$
143,358
13.2
%
$
301,522
15.0
%
Fiscal Year Ended February 28,
2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
134,053
14.6
%
$
77,738
6.7
%
$
211,791
10.2
%
Acquisition-related expenses
117
—
%
2,667
0.2
%
2,784
0.1
%
EPA compliance costs
—
—
%
23,573
2.0
%
23,573
1.1
%
Gain from insurance recoveries (9)
—
—
%
(9,676
)
(0.8
)%
(9,676
)
(0.5
)%
Restructuring charges
8,689
0.9
%
18,673
1.6
%
27,362
1.3
%
Subtotal
142,859
15.6
%
112,975
9.8
%
255,834
12.3
%
Amortization of intangible assets
7,020
0.8
%
11,302
1.0
%
18,322
0.9
%
Non-cash share-based compensation
10,751
1.2
%
16,002
1.4
%
26,753
1.3
%
Adjusted operating income (non-GAAP)
$
160,630
17.5
%
$
140,279
12.1
%
$
300,909
14.5
%
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 Last Day of
February,
2024
2023
Net income, as reported (GAAP)
$
42,734
8.7
%
$
36,180
7.5
%
Interest expense
12,500
2.6
%
14,063
2.9
%
Income tax expense
11,995
2.5
%
3,534
0.7
%
Depreciation and amortization
14,462
3.0
%
11,353
2.3
%
EBITDA (non-GAAP)
81,691
16.7
%
65,130
13.4
%
Add: EPA compliance costs
—
—
%
1,472
0.3
%
Restructuring charges
3,850
0.8
%
12,121
2.5
%
Non-cash share-based compensation
8,767
1.8
%
(5,302
)
(1.1
)%
Adjusted EBITDA (non-GAAP)
$
94,308
19.3
%
$
73,421
15.2
%
Fiscal Year Ended Last Day of
February,
2024
2023
Net income, as reported (GAAP)
$
168,594
8.4
%
$
143,273
6.9
%
Interest expense
53,065
2.6
%
40,751
2.0
%
Income tax expense
40,448
2.0
%
28,016
1.4
%
Depreciation and amortization
51,499
2.6
%
44,683
2.2
%
EBITDA (non-GAAP)
313,606
15.6
%
256,723
12.4
%
Add: Acquisition-related expenses
—
—
%
2,784
0.1
%
Bed, Bath & Beyond bankruptcy
4,213
0.2
%
—
—
%
EPA compliance costs
—
—
%
23,573
1.1
%
Gain from insurance recoveries
—
—
%
(9,676
)
(0.5
)%
Gain on sale of distribution and office
facilities
(34,190
)
(1.7
)%
—
—
%
Restructuring charges
18,712
0.9
%
27,362
1.3
%
Non-cash share-based compensation
33,872
1.7
%
26,753
1.3
%
Adjusted EBITDA (non-GAAP)
$
336,213
16.8
%
$
327,519
15.8
%
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 February
29, 2024
Home &
Outdoor
Beauty &
Wellness
Total
Operating income, as reported (GAAP)
$
35,003
15.7
%
$
31,173
11.7
%
$
66,176
13.5
%
Depreciation and amortization
7,562
3.4
%
6,900
2.6
%
14,462
3.0
%
Non-operating income, net
—
—
%
1,053
0.4
%
1,053
0.2
%
EBITDA (non-GAAP)
42,565
19.1
%
39,126
14.7
%
81,691
16.7
%
Add: Restructuring charges
500
0.2
%
3,350
1.3
%
3,850
0.8
%
Non-cash share-based compensation
4,473
2.0
%
4,294
1.6
%
8,767
1.8
%
Adjusted EBITDA (non-GAAP)
$
47,538
21.3
%
$
46,770
17.6
%
$
94,308
19.3
%
Three Months Ended February
28, 2023
Home &
Outdoor
Beauty &
Wellness
Total
Operating income, as reported (GAAP)
$
31,331
14.8
%
$
22,382
8.2
%
$
53,713
11.1
%
Depreciation and amortization
4,660
2.2
%
6,693
2.5
%
11,353
2.3
%
Non-operating income, net
—
—
%
64
—
%
64
—
%
EBITDA (non-GAAP)
35,991
17.0
%
29,139
10.7
%
65,130
13.4
%
Add: EPA compliance costs
—
—
%
1,472
0.5
%
1,472
0.3
%
Restructuring charges
3,127
1.5
%
8,994
3.3
%
12,121
2.5
%
Non-cash share-based compensation
(56
)
—
%
(5,246
)
(1.9
)%
(5,302
)
(1.1
)%
Adjusted EBITDA (non-GAAP)
$
39,062
18.4
%
$
34,359
12.6
%
$
73,421
15.2
%
Fiscal Year Ended February 29,
2024
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
142,732
15.6
%
$
117,857
10.8
%
$
260,589
13.0
%
Depreciation and amortization
24,595
2.7
%
26,904
2.5
%
51,499
2.6
%
Non-operating income, net
—
—
%
1,518
0.1
%
1,518
0.1
%
EBITDA (non-GAAP)
167,327
18.3
%
146,279
13.4
%
313,606
15.6
%
Add: Bed, Bath & Beyond bankruptcy
3,087
0.3
%
1,126
0.1
%
4,213
0.2
%
Gain on sale of distribution of office
facilities
(16,175
)
(1.8
)%
(18,015
)
(1.7
)%
(34,190
)
(1.7
)%
Restructuring charges
5,144
0.6
%
13,568
1.2
%
18,712
0.9
%
Non-cash share-based compensation
16,319
1.8
%
17,553
1.6
%
33,872
1.7
%
Adjusted EBITDA (non-GAAP)
$
175,702
19.2
%
$
160,511
14.7
%
$
336,213
16.8
%
Fiscal Year Ended February 28,
2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
134,053
14.6
%
$
77,738
6.7
%
$
211,791
10.2
%
Depreciation and amortization
18,364
2.0
%
26,319
2.3
%
44,683
2.2
%
Non-operating income, net
—
—
%
249
—
%
249
—
%
EBITDA (non-GAAP)
152,417
16.6
%
104,306
9.0
%
256,723
12.4
%
Add: Acquisition-related expenses
117
—
%
2,667
0.2
%
2,784
0.1
%
EPA compliance costs
—
—
%
23,573
2.0
%
23,573
1.1
%
Gain on insurance recoveries
—
—
%
(9,676
)
(0.8
)%
(9,676
)
(0.5
)%
Restructuring charges
8,689
0.9
%
18,673
1.6
%
27,362
1.3
%
Non-cash share-based compensation
10,751
1.2
%
16,002
1.4
%
26,753
1.3
%
Adjusted EBITDA (non-GAAP)
$
171,974
18.8
%
$
155,545
13.4
%
$
327,519
15.8
%
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 February
29, 2024
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
54,729
$
11,995
$
42,734
$
2.29
$
0.50
$
1.79
Restructuring charges
3,850
49
3,801
0.16
—
0.16
Subtotal
58,579
12,044
46,535
2.45
0.50
1.95
Amortization of intangible assets
4,467
628
3,839
0.19
0.03
0.16
Non-cash share-based compensation
8,767
552
8,215
0.37
0.02
0.34
Adjusted (non-GAAP)
$
71,813
$
13,224
$
58,589
$
3.01
$
0.55
$
2.45
Weighted average shares of common stock
used in computing diluted EPS
23,891
Three Months Ended February
28, 2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
39,714
$
3,534
$
36,180
$
1.65
$
0.15
$
1.50
EPA compliance costs
1,472
22
1,450
0.06
—
0.06
Restructuring charges
12,121
196
11,925
0.50
0.01
0.49
Subtotal
53,307
3,752
49,555
2.21
0.16
2.06
Amortization of intangible assets
4,660
694
3,966
0.19
0.03
0.16
Non-cash share-based compensation
(5,302
)
(298
)
(5,004
)
(0.22
)
(0.01
)
(0.21
)
Adjusted (non-GAAP)
$
52,665
$
4,148
$
48,517
$
2.18
$
0.17
$
2.01
Weighted average shares of common stock
used in computing diluted EPS
24,103
Fiscal Year Ended February 29,
2024
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
209,042
$
40,448
$
168,594
$
8.72
$
1.69
$
7.03
Bed, Bath & Beyond bankruptcy
4,213
53
4,160
0.18
—
0.17
Gain on sale of distribution and office
facilities
(34,190
)
(8,787
)
(25,403
)
(1.43
)
(0.37
)
(1.06
)
Restructuring charges
18,712
234
18,478
0.78
0.01
0.77
Subtotal
197,777
31,948
165,829
8.25
1.33
6.92
Amortization of intangible assets
18,326
2,447
15,879
0.76
0.10
0.66
Non-cash share-based compensation
33,872
2,110
31,762
1.41
0.09
1.33
Adjusted (non-GAAP)
$
249,975
$
36,505
$
213,470
$
10.43
$
1.52
$
8.91
Weighted average shares of common stock
used in computing diluted EPS
23,970
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)
Fiscal Year Ended February 28,
2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
171,289
$
28,016
$
143,273
$
7.11
$
1.16
$
5.95
Acquisition-related expenses
2,784
2
2,782
0.12
—
0.12
EPA compliance costs
23,573
354
23,219
0.98
0.01
0.96
Gain from insurance recoveries
(9,676
)
(121
)
(9,555
)
(0.40
)
(0.01
)
(0.40
)
Restructuring charges
27,362
388
26,974
1.14
0.02
1.12
Subtotal
215,332
28,639
186,693
8.94
1.19
7.75
Amortization of intangible assets
18,322
2,275
16,047
0.76
0.09
0.67
Non-cash share-based compensation
26,753
1,830
24,923
1.11
0.08
1.03
Adjusted (non-GAAP)
$
260,407
$
32,744
$
227,663
$
10.81
$
1.36
$
9.45
Weighted average shares of common stock
used in computing diluted EPS
24,090
Selected Consolidated Balance
Sheet, Liquidity and Cash Flow Information
(Unaudited) (in
thousands)
Last Day of February,
2024
2023
Balance Sheet:
Cash and cash equivalents
$
18,501
$
29,073
Receivables, net
394,536
377,604
Inventory
395,995
455,485
Total assets, current
843,918
892,041
Total assets
2,838,622
2,913,715
Total liabilities, current
450,811
412,158
Total long-term liabilities
750,369
1,012,746
Total debt
665,671
934,412
Stockholders' equity
1,637,442
1,488,811
Fiscal Years Ended
Last Day of February,
2024
2023
Accounts receivable turnover (days)
(10)
66.2
69.4
Inventory turnover (times) (10)
2.5
2.1
Working capital
$
393,107
$
479,883
Current ratio
1.9:1
2.2:1
Ending debt to ending equity ratio
40.7
%
62.8
%
Return on average equity (10)
10.9
%
10.2
%
Fiscal Years Ended
Last Day of February,
2024
2023
Cash Flow:
Depreciation and amortization
$
51,499
$
44,683
Net cash provided by operating
activities
306,067
208,242
Capital and intangible asset
expenditures
36,644
174,864
Net debt (repayments) proceeds
(269,076
)
120,668
Payments for repurchases of common
stock
55,222
18,365
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Cash Provided by Operating Activities
to Free Cash Flow (Non-GAAP) (1) (2)
(Unaudited) (in
thousands)
Fiscal Years Ended
Last Day of February,
2024
2023
Net cash provided by operating activities
(GAAP)
$
306,067
$
208,242
Less: Capital and intangible asset
expenditures
(36,644
)
(174,864
)
Free cash flow (non-GAAP)
$
269,423
$
33,378
Reconciliation of Non-GAAP
Financial Measures – Net Leverage Ratio (Non-GAAP) (1) (3)
(Unaudited) (in
thousands)
Fiscal Year Ended February 29,
2024
Adjusted EBITDA (non-GAAP) (11)
$
336,213
Bed, Bath & Beyond bankruptcy (7)
(4,213
)
Adjusted EBITDA per the credit
agreement
$
332,000
Total borrowings under the credit
agreement, as reported (GAAP)
$
671,950
Add: Outstanding letters of credit
15,485
Less: Unrestricted cash and cash
equivalents
(23,481
)
Net debt
$
663,954
Net leverage ratio (non-GAAP) (3)
2.00
Fiscal 2025 Outlook for Net
Sales Revenue
(Unaudited) (in
thousands)
Consolidated:
Fiscal 2024
Outlook Fiscal 2025
Net sales revenue
$
2,005,050
$
1,965,000
—
$
2,025,000
Net sales revenue (decline) growth
(2.0
)%
—
1.0
%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2025 Outlook for GAAP Net Income to
EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization)
and Adjusted EBITDA (Non-GAAP)
(1) (Unaudited) (in thousands)
Fiscal Year Ended February 29,
2024
Outlook Fiscal 2025
Net income, as reported (GAAP)
$
168,594
$
158,560
—
$
176,251
Interest expense
53,065
36,000
—
34,000
Income tax expense
40,448
42,109
—
41,437
Depreciation and amortization
51,499
53,500
—
51,510
EBITDA (non-GAAP)
313,606
290,169
—
303,198
Add: Bed, Bath & Beyond bankruptcy
4,213
—
—
—
Gain on sale of distribution and office
facilities
(34,190
)
—
—
—
Restructuring charges
18,712
8,926
—
3,926
Non-cash share-based compensation
33,872
24,905
—
23,876
Adjusted EBITDA (non-GAAP)
$
336,213
$
324,000
—
$
331,000
Adjusted EBITDA (non-GAAP) decline
(3.6
)%
—
(1.6
)%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2025 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)
Fiscal Year Ended February 29,
2024
Outlook Fiscal 2025
Tax Rate Outlook
Fiscal 2025
Diluted EPS, as reported (GAAP)
$
7.03
$
6.68
—
$
7.45
21.0
%
—
19.0
%
Bed, Bath & Beyond bankruptcy
0.18
—
—
—
Gain on sale of distribution and office
facilities
(1.43
)
—
—
—
Restructuring charges
0.78
0.38
—
0.17
Amortization of intangible assets
0.76
0.76
—
0.74
Non-cash share-based compensation
1.41
1.05
—
1.01
Income tax effect of adjustments
0.18
(0.17
)
—
(0.17
)
(2.7
)%
—
(1.8
)%
Adjusted diluted EPS (non-GAAP)
$
8.91
$
8.70
—
$
9.20
18.3
%
—
17.2
%
Adjusted diluted EPS (non-GAAP) (decline)
growth
(2.4
)%
—
3.3
%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2025 Outlook for GAAP Net Cash Provided
by Operating Activities to Free Cash Flow (Non-GAAP) (1)
(2)
(Unaudited) (in
thousands)
Fiscal Year Ended February 29,
2024
Outlook Fiscal 2025
Net cash provided by operating activities
(GAAP)
$
306,067
$
290,000
—
$
305,000
Less: Capital and intangible asset
expenditures
(36,644
)
(35,000
)
—
(30,000
)
Free cash flow (non-GAAP)
$
269,423
$
255,000
—
$
275,000
Free cash flow (non-GAAP) (decline)
growth
(5.4
)%
—
2.1
%
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 were incurred and reflected in
the Company's GAAP financial results. 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 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, including readily marketable obligations issued,
guaranteed or insured by the U.S. with maturities of two years or
less, 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, fiscal 2024 includes a full
year of operating results from Curlsmith and fiscal 2023 includes
approximately forty-five weeks 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)
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.
(7)
Represents a charge for uncollectible
receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed,
Bath & Beyond bankruptcy”).
(8)
Gain on the sale of distribution and
office facilities in El Paso, Texas during the third quarter of
fiscal year 2024.
(9)
Gain from insurance recoveries on damaged
inventory resulting from a severe weather-related incident that
impacted a third-party warehouse facility that the Company used for
the Beauty & Wellness segment.
(10)
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.
(11)
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/20240424283933/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)
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