Consolidated Net Sales Decline of 6.1%
Core Net Sales Decline of 2.5% From Fiscal 2022; Growth of 43.7%
From Fiscal 2020 GAAP Diluted EPS of $1.02; Core Adjusted
Diluted EPS of $2.41 Core Adjusted Diluted EPS Decline of
27.2% From Fiscal 2022; Growth of 23.6% From Fiscal 2020
Updates Fiscal 2023 Net Sales and Diluted
EPS Outlook: Consolidated Net Sales to $2.150-$2.200
Billion Consolidated Diluted EPS to $6.51-$7.11;
Consolidated Adjusted Diluted EPS to $9.85-$10.35
Helen of Troy Limited (NASDAQ: HELE), designer, developer
and worldwide marketer of consumer brand-name home, outdoor,
health, wellness, and beauty products, today reported results for
the three-month period ended May 31, 2022.
Executive Summary – First Quarter of
Fiscal 2023 Compared to Fiscal 2022, Fiscal 2021 and Fiscal
2020
- Consolidated net sales revenue was $508.1 million, a decrease
of 6.1% from fiscal 2022, an increase of 20.7% from fiscal 2021,
and an increase of 35.0% from fiscal 2020
- Core business net sales decrease of 2.5% from fiscal 2022, an
increase of 27.2% from fiscal 2021, and an increase of 43.7% from
fiscal 2020
- GAAP diluted EPS of $1.02, compared to $2.31 for the same
period last year, $2.37 for fiscal 2021, and $1.61 for fiscal
2020
- Non-GAAP Core adjusted diluted EPS of $2.41, a decrease of
27.2% from fiscal 2022, a decrease of 0.8% from fiscal 2021, and an
increase of 23.6% from fiscal 2020
- Non-GAAP adjusted diluted EPS of $2.41, a decrease of 30.7%
from fiscal 2022, a decrease of 4.7% from fiscal 2021, and an
increase of 23.6% from fiscal 2020
Julien R. Mininberg, Chief Executive Officer, stated: “Our first
quarter results were stronger than expected, with consolidated
sales and adjusted EPS both ahead of our outlook. The sales
comparison is our toughest quarterly compare of the year and
represents strong growth over our pre-covid base of fiscal 2020.
Osprey and Curlsmith performed well and in line with our
expectations. As noted in our April earnings call, we did see
consumer buying patterns begin to change in the quarter, resulting
in a slowdown in demand in some categories, partially offset by
retailer orders intended to replenish prior consumption and/or
raise holdings in anticipation of price increases.”
“Since our April earnings release, the macroeconomic outlook has
changed significantly as consumers shift their buying patterns and
adapt to a number of factors including the impact of inflation and
interest rates rising more rapidly than expected. In response, many
of our major retail customers announced actions to rebalance their
inventory stemming from rapid revisions to their sales forecasts.
We have lowered our sales and EPS outlooks for fiscal 2023,
reflecting our current assessment of the impact of these new
headwinds on our business. The midpoint of our outlook implies
approximately 50% core revenue growth and approximately 40% core
adjusted diluted EPS growth since the beginning of Phase II.”
Mr. Mininberg continued: “Consistent with our track record of
adapting quickly to changing consumer preferences and highly
dynamic operating environments, we are planning several new
initiatives designed to reduce the total cost structure of the
Company and unlock new efficiencies. While we are taking immediate
action, we expect the majority of the benefits of these plans to
fall into fiscal 2024 and are working hard to finish Phase II with
momentum. We expect our efficiency initiatives to feed our flywheel
and set us up to capitalize on long-term growth opportunities for
further value creation in Phase III.”
Three Months Ended May
31,
(in thousands) (unaudited)
Home & Outdoor
Health & Wellness
Beauty
Total
Fiscal 2022 sales revenue, net
$
193,644
$
204,096
$
143,483
$
541,223
Organic business (1)
(8,604
)
(34,379
)
(41,124
)
(84,107
)
Impact of foreign currency
(2,024
)
(776
)
(731
)
(3,531
)
Acquisition (2)
51,247
—
3,246
54,493
Change in sales revenue, net
40,619
(35,155
)
(38,609
)
(33,145
)
Fiscal 2023 sales revenue, net
$
234,263
$
168,941
$
104,874
$
508,078
Total net sales revenue growth
(decline)
21.0
%
(17.2
) %
(26.9
) %
(6.1
) %
Organic business
(4.4
) %
(16.8
) %
(28.7
) %
(15.5
) %
Impact of foreign currency
(1.0
) %
(0.4
) %
(0.5
) %
(0.7
) %
Acquisition
26.5
%
—
%
2.3
%
10.1
%
Operating margin (GAAP)
Fiscal 2023
12.7
%
(3.6
) %
9.8
%
6.7
%
Fiscal 2022
14.0
%
5.5
%
18.4
%
12.0
%
Adjusted operating margin (non-GAAP)
Fiscal 2023
16.1
%
7.0
%
18.9
%
13.6
%
Fiscal 2022
17.2
%
14.6
%
22.3
%
17.5
%
Three Months Ended May
31,
% Change
(in thousands, except per share data)
(unaudited)
2022
2021
2020
2019
FY23/FY22
FY23/FY21
FY23/FY20
Consolidated net sales revenue
$
508,078
$
541,223
$
420,835
$
376,335
(6.1
) %
20.7
%
35.0
%
Core business net sales revenue (3)
508,078
521,104
399,519
353,576
(2.5
) %
27.2
%
43.7
%
Leadership Brand net sales revenue (4)
435,158
429,056
349,030
301,559
1.4
%
24.7
%
44.3
%
Online channel net sales revenue (5)
112,298
121,333
116,530
87,626
(7.4
) %
(3.6
) %
28.2
%
Consolidated Diluted EPS
$
1.02
$
2.31
$
2.37
$
1.61
(55.8
) %
(57.0
) %
(36.6
) %
Consolidated Adjusted Diluted EPS
(non-GAAP) (6)
2.41
3.48
2.53
2.06
(30.7
) %
(4.7
) %
17.0
%
Core Adjusted Diluted EPS (non-GAAP) (3)
(6)
2.41
3.31
2.43
1.95
(27.2
) %
(0.8
) %
23.6
%
During the fourth quarter of fiscal 2020, the Company committed
to a plan to divest certain assets within its Beauty segment's mass
channel personal care business (“Personal Care”). On June 7, 2021,
the Company completed the sale of its North America Personal Care
business and on March 25, 2022, the Company completed the sale of
the Latin America and Caribbean Personal Care business. The Company
defines Core business as strategic business that it expects to be
an ongoing part of its operations, and Non-Core business as
business or net assets (including net assets held for sale) that it
expects to divest within a year of its designation as Non-Core.
Accordingly, sales from the Personal Care business were included in
Non-Core business for all historical periods presented. Subsequent
to these dispositions, the Company no longer has any results of
operations from Non-Core business or any assets or liabilities
classified as held for sale as of the end of its first quarter of
fiscal 2023.
Three Months Ended May
31,
(in thousands) (unaudited)
Home & Outdoor
Health & Wellness
Beauty
Total
Fiscal 2022 sales revenue, net
$
193,644
$
204,096
$
143,483
$
541,223
Core business (3)
40,619
(35,155
)
(18,490
)
(13,026
)
Non-Core business (Personal Care) (3)
—
—
(20,119
)
(20,119
)
Change in sales revenue, net
40,619
(35,155
)
(38,609
)
(33,145
)
Fiscal 2023 sales revenue, net
$
234,263
$
168,941
$
104,874
$
508,078
Total net sales revenue growth
(decline)
21.0
%
(17.2
) %
(26.9
) %
(6.1
) %
Core business
21.0
%
(17.2
) %
(12.9
) %
(2.4
) %
Non-Core business (Personal Care)
—
%
—
%
(14.0
) %
(3.7
) %
Consolidated Results - First Quarter
Fiscal 2023 Compared to First Quarter Fiscal 2022
- Consolidated net sales revenue decreased $33.1 million, or
6.1%, to $508.1 million compared to $541.2 million. The decline was
driven by a decrease from Organic business of $84.1 million, or
15.5%. The Organic business decrease primarily reflects a net sales
revenue decline of $20.1 million in Non-Core business due to the
sale of the Personal Care business, and the unfavorable comparative
impacts of approximately $20 million from retailers that
accelerated orders into the fourth quarter of fiscal 2022 and
approximately $15 million from orders that were not able to be
shipped at the end of the fourth quarter of fiscal 2021 due to the
impact of the late-February winter storm in the U.S. (“Winter Storm
Uri”) that were shipped in the first quarter of fiscal 2022.
Additionally, sales decreased in the Health & Wellness segment
as a result of stronger COVID-19 driven demand for healthcare and
healthy living products, primarily in thermometry and air
filtration, in the comparative prior year period, and in the Beauty
segment hair appliances category and home-related categories in the
Home & Outdoor segment due to lower consumer demand and shifts
in consumer spending patterns. These factors were partially offset
by stronger consumer demand for outdoor-related products in the
Home & Outdoor segment, higher seasonal category sales in the
Health & Wellness segment, higher prestige market personal care
category sales in the Beauty segment, and the impact of customer
price increases related to rising freight and product costs. The
Organic business decline was partially offset by growth from the
acquisitions of Osprey Packs, Inc. (“Osprey”) and Recipe Products
Ltd.(“Curlsmith”) which contributed $51.2 million and $3.2 million,
respectively, or 10.1%, to consolidated net sales revenue.
- Consolidated gross profit margin increased 0.8 percentage
points to 41.6%, compared to 40.8%. The increase in consolidated
gross profit margin was primarily due to a favorable mix of more
Home & Outdoor sales within consolidated net sales revenue,
lower inventory obsolescence expense, a decrease in EPA compliance
costs recognized in cost of goods sold in the Health & Wellness
segment, and a more favorable product mix within the Beauty
segment. These factors were partially offset by the net dilutive
impact of inflationary costs and related customer price increases,
and the unfavorable impact of less Beauty segment sales within
consolidated net sales revenue.
- Consolidated selling, general and administrative expense
(“SG&A”) ratio increased 6.1 percentage points to 34.9%,
compared to 28.8%. The increase in the consolidated SG&A ratio
was primarily due to higher personnel expense, increased marketing
expense, higher distribution expense, an increase in share-based
compensation expense, higher acquisition-related expense in
connection with the Osprey and Curlsmith transactions, EPA
compliance costs, increased amortization expense, and the
unfavorable leverage impact of the decrease in net sales. These
factors were partially offset by the favorable leverage impact of
customer price increases related to inflationary costs, reduced
annual incentive compensation expense, a decrease in outbound
freight costs, and the gain on the sale of the Latin America and
Caribbean Personal Care business.
- Consolidated operating income was $33.9 million, or 6.7% of net
sales revenue, compared to $64.8 million, or 12.0% of net sales
revenue. The 5.3 percentage point decrease in consolidated
operating margin was primarily due to the increase in the SG&A
ratio.
- Interest expense was $4.4 million, compared to $3.0 million.
The increase in interest expense was primarily due to higher
average levels of debt outstanding, including borrowings to fund
the acquisitions of Osprey and Curlsmith as well as construction of
a new distribution center, and higher average interest rates.
- Income tax expense as a percentage of income before income tax
was 17.0% compared to 8.0%, primarily due to lower forecasted
annual income before income taxes, shifts in the mix of income in
various tax jurisdictions, and an increase in tax expense for
discrete items.
- Net income was $24.6 million, compared to $57.0 million.
Diluted EPS was $1.02 compared to $2.31. Diluted EPS decreased
primarily due to an operating loss in the Health & Wellness
segment, lower operating income in the Beauty segment, and higher
interest expense. These factors were partially offset by higher
operating income in the Home & Outdoor segment and lower
weighted average diluted shares outstanding.
- Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization) decreased 25.1% to $75.5 million compared to
$100.8 million.
On an adjusted basis for the first quarters of fiscal 2023 and
2022, 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 $25.6 million, or 27.0%, to
$69.3 million, or 13.6% of net sales revenue, compared to $95.0
million, or 17.5% of net sales revenue. The 3.9 percentage point
decrease in adjusted operating margin is primarily driven by
increased personnel expense, higher marketing expense, higher
distribution expense, a less favorable product mix within the Home
& Outdoor segment due to the acquisition of Osprey, the
unfavorable impact of less Beauty segment sales within consolidated
net sales revenue, the net dilutive impact of inflationary costs
and related customer price increases, and unfavorable operating
leverage. These factors were partially offset by a favorable mix of
more Home & Outdoor sales within consolidated net sales
revenue, lower inventory obsolescence expense, reduced annual
incentive compensation expense, a decrease in outbound freight
costs, and a more favorable product mix within the Beauty
segment.
- Adjusted income decreased $27.6 million, or 32.2%, to $58.2
million, compared to $85.8 million for the same period last year.
Adjusted diluted EPS decreased 30.7% to $2.41 compared to $3.48.
The decrease in adjusted diluted EPS was primarily due to an
operating loss in the Health & Wellness segment, lower
operating income in the Beauty segment, and higher interest
expense. These factors were partially offset by higher operating
income in the Home & Outdoor segment and lower weighted average
diluted shares outstanding.
Segment Results - First Quarter Fiscal
2023 Compared to First Quarter Fiscal 2022
Home & Outdoor net sales revenue increased $40.6 million, or
21.0%, to $234.3 million, compared to $193.6 million, primarily due
to contribution from the acquisition of Osprey of $51.2 million, or
26.5%, to segment net sales revenue growth. This growth comes on
top of a 37.7% increase in the prior year. Growth in the quarter
was partially offset by a decrease from Organic business of $8.6
million, or 4.4%, primarily due to declines in home-related
category sales primarily due to lower consumer demand driven by
shifts in consumer spending patterns and the unfavorable
comparative impacts of retailers that accelerated orders into the
fourth quarter of fiscal 2022 and orders that were not able to be
shipped at the end of the fourth quarter of fiscal 2021 due to the
impact of Winter Storm Uri that were shipped in the first quarter
of fiscal 2022. These factors were partially offset by stronger
consumer demand for outdoor-related products, higher sales in the
closeout channel, and the impact of customer price increases
related to rising freight and product costs. Operating income was
$29.8 million, or 12.7% of segment net sales revenue, compared to
$27.1 million, or 14.0% of segment net sales revenue. The 1.3
percentage point decrease in segment operating margin was primarily
due to the impact of the acquisition of Osprey, which has a lower
operating margin than the rest of the Home & Outdoor segment,
increased personnel expense, an increase in share-based
compensation expense and the net dilutive impact of inflationary
costs and related customer price increases. These factors were
partially offset by favorable operating leverage, lower royalty
expense, and reduced annual incentive compensation expense.
Adjusted operating income increased 13.3% to $37.6 million, or
16.1% of segment net sales revenue, compared to $33.2 million, or
17.2% of segment net sales revenue.
Health & Wellness net sales revenue decreased $35.2 million,
or 17.2%, to $168.9 million, compared to $204.1 million. The
decline was driven by a decrease from Organic business of $34.4
million, or 16.8%, primarily due to a decrease in sales due to
stronger COVID-19 driven demand for healthcare and healthy living
products, primarily in thermometry and air filtration, in the
comparative prior year period, and the unfavorable comparative
impact of orders that were not able to be shipped at the end of the
fourth quarter of fiscal 2021 due to the impact of Winter Storm Uri
that were shipped in the first quarter of fiscal 2022. These
factors were partially offset by an increase in seasonal category
sales and the impact of customer price increases related to rising
freight and product costs. Operating loss was $6.1 million, or
(3.6)% of segment net sales revenue, compared to operating income
of $11.2 million, or 5.5% of segment net sales revenue. The 9.1
percentage point decrease in segment operating margin was primarily
due to unfavorable operating leverage, higher distribution expense,
a less favorable product mix, higher marketing expense, an increase
in share-based compensation expense, the unfavorable comparative
impact of tariff exclusion refunds received in the prior year
period, and an increase in legal fees. These factors were partially
offset by the net impact of inflationary costs and related customer
price increases, a decrease in EPA compliance costs, reduced
outbound freight costs, lower inventory obsolescence expense, and
decreased annual incentive compensation expense. Adjusted operating
income decreased 60.1% to $11.9 million, or 7.0% of segment net
sales revenue, compared to $29.8 million, or 14.6% of segment net
sales revenue.
Beauty net sales revenue decreased $38.6 million, or 26.9%, to
$104.9 million, compared to $143.5 million. This decline compares
to 78.8% growth in the prior year. The decline was driven by a
decrease from Organic business of $41.1 million, or 28.7%. The
Organic business decrease primarily reflects a decline in Non-Core
business net sales revenue due to the sale of the Personal Care
business, the unfavorable comparative impacts of retailers that
accelerated orders into the fourth quarter of fiscal 2022 and
orders that were not able to be shipped at the end of the fourth
quarter of fiscal 2021 due to the impact of Winter Storm Uri that
were shipped in the first quarter of fiscal 2022, reduced hair
appliances category sales due to lower consumer demand and shifts
in consumer spending patterns, and the unfavorable impact of not
being able to ship certain products on a timely basis related to
damage to a third party storage facility caused by a severe weather
event in March 2022. These factors were partially offset by higher
prestige market personal care category sales. The Organic business
decline was partially offset by growth from the acquisition of
Curlsmith of $3.2 million, or 2.3%, to segment net sales revenue.
Operating income was $10.3 million, or 9.8% of segment net sales
revenue, compared to $26.4 million, or 18.4% of segment net sales
revenue. The 8.6 percentage point decrease in segment operating
margin was primarily due to unfavorable operating leverage,
increased personnel expense, an increase in marketing expense,
higher acquisition-related expense, higher share-based compensation
expense, and the net dilutive impact of inflationary costs and
related customer price increases. These factors were partially
offset by lower inventory obsolescence expense, decreased annual
incentive compensation expense, lower outbound freight costs, a
more favorable product mix, and reduced royalty expense. Adjusted
operating income decreased 38.0% to $19.8 million, or 18.9% of
segment net sales revenue, compared to $31.9 million, or 22.3% of
segment net sales revenue.
Balance Sheet and Cash Flow Highlights
- First Quarter Fiscal 2023 Compared to First Quarter Fiscal
2022
- Cash and cash equivalents totaled $49.3 million, compared to
$37.4 million.
- Accounts receivable turnover was 67.6 days, compared to 63.5
days.
- Inventory was $613.6 million, compared to $540.1 million.
Trailing twelve-month inventory turnover was 2.1 times, compared to
3.0 times.
- Total short- and long-term debt was $1,105.6 million, compared
to $511.0 million, primarily due to the acquisitions of Osprey and
Curlsmith as well as investments in construction of a new
distribution center.
- Net cash used by operating activities for the first three
months of the fiscal year was $38.4 million, compared to $63.4
million for the same period last year.
- Net cash used by investing activities of $222.5 million
included investments to acquire Curlsmith for $149.7 million and
capital asset expenditures of $70.2 million for construction of a
new distribution center for the Home & Outdoor segment.
Updated Fiscal 2023 Annual
Outlook
Due to the sale of the Personal Care business, the Company is
not currently expecting any material activity related to Non-Core
business in fiscal 2023. Therefore, the amounts included in its
updated outlook for fiscal 2023 will be shown on a consolidated
basis. However, due to the fact that the fiscal 2022 results
include material activity related to Non-Core business, the
year-over-year growth rates on a consolidated and Core business
basis will be different. Where appropriate, the information
provided in the outlook will reflect growth rates on both a
consolidated and Core business basis. The Company believes that
Core business growth is the most relevant basis as it provides the
best comparability between historical and future periods.
The Company now expects consolidated net sales revenue in the
range of $2.15 billion to $2.20 billion, which implies a decline of
3.3% to 1.0%, and a Core business decline of 1.8% to growth of
0.5%.
The Company’s updated fiscal year net sales outlook reflects the
following expectations by segment:
- Home & Outdoor net sales growth of 9.0% to 11.0%; including
net sales from Osprey of $180 million to $185 million;
- Health & Wellness net sales decline of 10.0% to 8.0%;
and
- Beauty Core business net sales decline of 7.0% to 5.0%;
including net sales from Curlsmith of $30 million to $35
million.
The Company now expects consolidated GAAP diluted EPS of $6.51
to $7.11 and consolidated non-GAAP adjusted diluted EPS in the
range of $9.85 to $10.35, which implies a decrease in consolidated
adjusted diluted EPS in the range of 20.3% to 16.3%, and a decrease
in Core adjusted diluted EPS in the range of 19.2% to 15.1%. This
includes adjusted diluted EPS contribution from Osprey of
approximately $0.40 to $0.45, and $0.15 to $0.20 from
Curlsmith.
The Company’s updated consolidated net sales and EPS outlooks
reflect the following assumptions:
- the assumption that the severity of the cough/cold/flu season
will be in line with pre-COVID historical averages;
- June 2022 foreign currency exchange rates will remain constant
for the remainder of the fiscal year;
- the estimated net favorable impact to net sales of
approximately $10 million and adjusted diluted EPS of approximately
$0.10 related to the EPA matter;
- estimated incremental after-tax inflationary cost pressures in
the range of $60 million to $65 million, or approximately $2.50 to
$2.70 of adjusted diluted EPS;
- expected interest expense in the range of $45 million to $47
million due to the current assumption that the Federal Open Market
Committee will increase interest rates by 350 basis points during
calendar year 2022;
- a reported consolidated GAAP effective tax rate range of 15.5%
to 16.5% for the full fiscal year 2023 and a consolidated adjusted
effective tax rate range of 12.6% to 13.6%; and
- an estimated weighted average diluted shares outstanding of
24.2 million.
The Company now expects capital and intangible asset
expenditures of $180 million to $200 million for the full fiscal
year 2023 including expected expenditures of $155 million to $170
million related to the construction of a previously announced new
distribution facility that is expected to be completed by the end
of fiscal 2023.
Due to the current dynamic market conditions and unique factors
effecting the comparability to the prior year base, the Company is
providing additional quarterly context for its current expectation
of the net sales revenue and adjusted diluted EPS outlook. With
regard to quarterly cadence of the consolidated net sales outlook
for the fiscal year, the Company now expects:
- low double-digit growth in the second quarter due to the second
quarter of fiscal 2022 having the largest adverse impact from the
EPA matter;
- approximately flat sales growth in the third quarter; and
- a low double-digit sales decline in the fourth quarter due to
the high base of the fourth quarter of fiscal 2022, which includes
approximately two months of sales from the Osprey acquisition.
With regard to quarterly cadence of the consolidated adjusted
diluted EPS outlook for the fiscal year, the Company now
expects:
- a mid-teen decline in the second quarter primarily due to lower
adjusted operating margin and higher interest expense;
- a low double-digit decline in the third quarter primarily due
to higher interest expense and a higher adjusted effective tax
rate; and
- a mid-single digit decline in the fourth quarter primarily due
to lower net sales, higher interest expense, and a higher adjusted
effective tax rate.
The likelihood and potential impact of any fiscal 2023
acquisitions and divestitures, future asset impairment charges,
future foreign currency fluctuations, additional interest rate
increases, material long-term distribution losses and/or customer
returns that may arise related to the EPA matter, or further share
repurchases are unknown and cannot be reasonably estimated;
therefore, they are not included in the Company’s updated
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, Thursday, July 7, 2022. Institutional investors
and analysts interested in participating in the call are invited to
dial (877) 407-3982 approximately ten minutes prior to the start of
the call. The conference call will also be webcast live on the
Events & Presentations page at:
http://investor.helenoftroy.com/. A telephone replay of this call
will be available at 12:00 p.m. Eastern Time on July 7, 2022 until
11:59 p.m. Eastern Time on July 14, 2022 and can be accessed by
dialing (844) 512-2921 and entering replay pin number 13730598. 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, Core
Adjusted Effective Tax Rate, Adjusted Income, Adjusted Diluted
Earnings per Share (“EPS”), Core and Non-Core Adjusted Diluted EPS,
EBITDA, Adjusted EBITDA, and Free Cash Flow, which are presented in
accompanying tables to this press release along with a
reconciliation of these financial measures to their corresponding
GAAP-based measures presented in the Company’s condensed
consolidated statements of income and cash flows. For additional
information see Note 6 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 speak
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, 2022, 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 and peak season capacity of certain United
States (“U.S.”) distribution facilities which increase its risk to
disruptions that could affect the Company’s ability to deliver
products in a timely manner, the Company's ability to successfully
manage the demand, supply, and operational challenges associated
with the actual or perceived effects of COVID-19 and any similar
future public health crisis, pandemic or epidemic, 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 future downturn from the effects of COVID-19 or
macroeconomic conditions such as inflation, 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, expectations
regarding recent acquisitions (including Curlsmith and Osprey) and
any future acquisitions or divestitures, including the Company's
ability to realize related synergies along with its ability to
effectively integrate acquired businesses or disaggregate divested
businesses, 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 ability
to continue to avoid classification as a Controlled Foreign
Corporation, 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 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 (2) (Unaudited) (in thousands, except
per share data)
Three Months Ended May
31,
2022
2021
Sales revenue, net
$
508,078
100.0
%
$
541,223
100.0
%
Cost of goods sold
296,907
58.4
%
320,631
59.2
%
Gross profit
211,171
41.6
%
220,592
40.8
%
Selling, general and administrative
expense (“SG&A”)
177,230
34.9
%
155,751
28.8
%
Restructuring charges
2
—
%
6
—
%
Operating income
33,939
6.7
%
64,835
12.0
%
Non-operating income, net
67
—
%
102
—
%
Interest expense
4,373
0.9
%
2,995
0.6
%
Income before income tax
29,633
5.8
%
61,942
11.4
%
Income tax expense
5,038
1.0
%
4,970
0.9
%
Net income
$
24,595
4.8
%
$
56,972
10.5
%
Diluted earnings per share (“EPS”)
$
1.02
$
2.31
Weighted average shares of common stock
used in computing diluted EPS
24,122
24,636
Condensed Consolidated
Statements of Income and Reconciliation of Non-GAAP Financial
Measures – Adjusted Operating Income, Adjusted Income and Adjusted
Diluted EPS (2) (6) (Unaudited) (in thousands, except per
share data)
Three Months Ended May 31,
2022
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
508,078
100.0
%
$
—
$
508,078
100.0
%
Cost of goods sold
296,907
58.4
%
(9,455
)
(7
)
287,452
56.6
%
Gross profit
211,171
41.6
%
9,455
220,626
43.4
%
SG&A
177,230
34.9
%
(2,189
)
(7
)
151,307
29.8
%
(2,754
)
(8
)
(4,361
)
(9
)
(16,619
)
(10
)
Restructuring charges
2
—
%
(2
)
—
—
%
Operating income
33,939
6.7
%
35,380
69,319
13.6
%
Non-operating income, net
67
—
%
—
67
—
%
Interest expense
4,373
0.9
%
—
4,373
0.9
%
Income before income tax
29,633
5.8
%
35,380
65,013
12.8
%
Income tax expense
5,038
1.0
%
1,751
6,789
1.3
%
Net income
$
24,595
4.8
%
$
33,629
$
58,224
11.5
%
Diluted EPS
$
1.02
$
1.39
$
2.41
Weighted average shares of common stock
used in computing diluted EPS
24,122
24,122
Three Months Ended May 31,
2021
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
541,223
100.0
%
$
—
$
541,223
100.0
%
Cost of goods sold
320,631
59.2
%
(13,112
)
(7
)
307,519
56.8
%
Gross profit
220,592
40.8
%
13,112
233,704
43.2
%
SG&A
155,751
28.8
%
(2,983
)
(9
)
138,748
25.6
%
(14,020
)
(10
)
Restructuring charges
6
—
%
(6
)
—
—
%
Operating income
64,835
12.0
%
30,121
94,956
17.5
%
Non-operating income, net
102
—
%
—
102
—
%
Interest expense
2,995
0.6
%
—
2,995
0.6
%
Income before income tax
61,942
11.4
%
30,121
92,063
17.0
%
Income tax expense
4,970
0.9
%
1,264
6,234
1.2
%
Net income
$
56,972
10.5
%
$
28,857
$
85,829
15.9
%
Diluted EPS
$
2.31
$
1.17
$
3.48
Weighted average shares of common stock
used in computing diluted EPS
24,636
24,636
Consolidated and Segment Net
Sales Revenue (Unaudited) (in thousands)
Three Months Ended May
31,
Home & Outdoor
Health & Wellness
Beauty
Total
Fiscal 2022 sales revenue, net
$
193,644
$
204,096
$
143,483
$
541,223
Organic business (1)
(8,604
)
(34,379
)
(41,124
)
(84,107
)
Impact of foreign currency
(2,024
)
(776
)
(731
)
(3,531
)
Acquisition (2)
51,247
—
3,246
54,493
Change in sales revenue, net
40,619
(35,155
)
(38,609
)
(33,145
)
Fiscal 2023 sales revenue, net
$
234,263
$
168,941
$
104,874
$
508,078
Total net sales revenue growth
(decline)
21.0
%
(17.2
) %
(26.9
) %
(6.1
) %
Organic business
(4.4
) %
(16.8
) %
(28.7
) %
(15.5
) %
Impact of foreign currency
(1.0
) %
(0.4
) %
(0.5
) %
(0.7
) %
Acquisition
26.5
%
—
%
2.3
%
10.1
%
Leadership Brand and Other Net
Sales Revenue (2) (Unaudited) (in thousands)
Three Months Ended May
31,
2022
2021
$ Change
% Change
Leadership Brand sales revenue, net
(4)
$
435,158
$
429,056
$
6,102
1.4
%
All other sales revenue, net
72,920
112,167
(39,247
)
(35.0
) %
Total sales revenue, net
$
508,078
$
541,223
$
(33,145
)
(6.1
) %
Consolidated and Segment Net
Sales from Core and Non-Core Business (3) (Unaudited) (in
thousands)
Three Months Ended May
31,
Home & Outdoor
Health & Wellness
Beauty
Total
Fiscal 2022 sales revenue, net
$
193,644
$
204,096
$
143,483
$
541,223
Core business
40,619
(35,155
)
(18,490
)
(13,026
)
Non-Core business (Personal Care)
—
—
(20,119
)
(20,119
)
Change in sales revenue, net
40,619
(35,155
)
(38,609
)
(33,145
)
Fiscal 2023 sales revenue, net
$
234,263
$
168,941
$
104,874
$
508,078
Total net sales revenue growth
(decline)
21.0
%
(17.2
) %
(26.9
) %
(6.1
) %
Core business
21.0
%
(17.2
) %
(12.9
) %
(2.4
) %
Non-Core business (Personal Care)
—
%
—
%
(14.0
) %
(3.7
) %
Consolidated Net Sales by
Geographic Region (Unaudited) (in thousands)
Three Months Ended May
31,
2022
2021
U.S. sales revenue, net
$
372,177
73.3
%
$
404,846
74.8
%
International sales revenue, net
135,901
26.7
%
136,377
25.2
%
Total sales revenue, net
$
508,078
100.0
%
$
541,223
100.0
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Operating Income (Loss) and Operating
Margin to Adjusted Operating Income and Adjusted Operating Margin
(Non-GAAP) (6) (Unaudited) (in thousands)
Three Months Ended May 31,
2022
Home & Outdoor
(2)
Health & Wellness
Beauty (2)
Total
Operating income (loss), as reported
(GAAP)
$
29,793
12.7
%
$
(6,142
)
(3.6
) %
$
10,288
9.8
%
$
33,939
6.7
%
Acquisition-related expenses
78
—
%
—
—
%
2,676
2.6
%
2,754
0.5
%
EPA compliance costs
—
—
%
11,644
6.9
%
—
—
%
11,644
2.3
%
Restructuring charges
—
—
%
—
—
%
2
—
%
2
—
%
Subtotal
29,871
12.8
%
5,502
3.3
%
12,966
12.4
%
48,339
9.5
%
Amortization of intangible assets
1,746
0.7
%
579
0.3
%
2,036
1.9
%
4,361
0.9
%
Non-cash share-based compensation
5,998
2.6
%
5,823
3.4
%
4,798
4.6
%
16,619
3.3
%
Adjusted operating income (non-GAAP)
$
37,615
16.1
%
$
11,904
7.0
%
$
19,800
18.9
%
$
69,319
13.6
%
Three Months Ended May 31,
2021
Home &
Outdoor
Health & Wellness
Beauty
Total
Operating income, as reported (GAAP)
$
27,143
14.0
%
$
11,249
5.5
%
$
26,443
18.4
%
$
64,835
12.0
%
EPA compliance costs
—
—
%
13,112
6.4
%
—
—
%
13,112
2.4
%
Restructuring charges
—
—
%
—
—
%
6
—
%
6
—
%
Subtotal
27,143
14.0
%
24,361
11.9
%
26,449
18.4
%
77,953
14.4
%
Amortization of intangible assets
518
0.3
%
567
0.3
%
1,898
1.3
%
2,983
0.6
%
Non-cash share-based compensation
5,551
2.9
%
4,880
2.4
%
3,589
2.5
%
14,020
2.6
%
Adjusted operating income (non-GAAP)
$
33,212
17.2
%
$
29,808
14.6
%
$
31,936
22.3
%
$
94,956
17.5
%
Reconciliation of Non-GAAP
Financial Measures - EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization) and Adjusted EBITDA (6)
(Unaudited) (in thousands)
Three Months Ended May 31,
2022
Home & Outdoor (2)
Health & Wellness
Beauty (2)
Total
Operating income (loss), as reported
(GAAP)
$
29,793
$
(6,142
)
$
10,288
$
33,939
Depreciation and amortization
4,495
2,812
3,191
10,498
Non-operating income, net
—
—
67
67
EBITDA (non-GAAP)
34,288
(3,330
)
13,546
44,504
Add: Acquisition-related expenses
78
—
2,676
2,754
EPA compliance costs
—
11,644
—
11,644
Restructuring charges
—
—
2
2
Non-cash share-based compensation
5,998
5,823
4,798
16,619
Adjusted EBITDA (non-GAAP)
$
40,364
$
14,137
$
21,022
$
75,523
Three Months Ended May 31,
2021
Home & Outdoor
Health & Wellness
Beauty
Total
Operating income, as reported (GAAP)
$
27,143
$
11,249
$
26,443
$
64,835
Depreciation and amortization
2,548
2,726
3,439
8,713
Non-operating income, net
—
—
102
102
EBITDA (non-GAAP)
29,691
13,975
29,984
73,650
Add: EPA compliance costs
—
13,112
—
13,112
Restructuring charges
—
—
6
6
Non-cash share-based compensation
5,551
4,880
3,589
14,020
Adjusted EBITDA (non-GAAP)
$
35,242
$
31,967
$
33,579
$
100,788
Reconciliation of Non-GAAP
Financial Measures – GAAP Income and Diluted EPS to Adjusted
Income and Adjusted Diluted EPS (Non-GAAP) (6) (Unaudited)
(in thousands, except per share data)
Three Months Ended May 31,
2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
29,633
$
5,038
$
24,595
$
1.23
$
0.21
$
1.02
Acquisition-related expenses
2,754
2
2,752
0.11
—
0.11
EPA compliance costs
11,644
175
11,469
0.48
0.01
0.48
Restructuring charges
2
—
2
—
—
—
Subtotal
44,033
5,215
38,818
1.83
0.22
1.61
Amortization of intangible assets
4,361
490
3,871
0.18
0.02
0.16
Non-cash share-based compensation
16,619
1,084
15,535
0.69
0.04
0.64
Adjusted (non-GAAP)
$
65,013
$
6,789
$
58,224
$
2.70
$
0.28
$
2.41
Weighted average shares of common stock
used in computing diluted EPS
24,122
Three Months Ended May 31,
2021
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
61,942
$
4,970
$
56,972
$
2.51
$
0.20
$
2.31
EPA compliance costs
13,112
197
12,915
0.53
0.01
0.52
Restructuring charges
6
—
6
—
—
—
Subtotal
75,060
5,167
69,893
3.05
0.21
2.84
Amortization of intangible assets
2,983
208
2,775
0.12
0.01
0.11
Non-cash share-based compensation
14,020
859
13,161
0.57
0.03
0.53
Adjusted (non-GAAP)
$
92,063
$
6,234
$
85,829
$
3.74
$
0.25
$
3.48
Weighted average shares of common stock
used in computing diluted EPS
24,636
Reconciliation of Non-GAAP
Financial Measures – GAAP Income and Diluted EPS to Adjusted
Income and Adjusted Diluted EPS (Non-GAAP) (6) (Unaudited)
(in thousands, except per share data)
Three Months Ended May 31,
2020
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
53,369
$
(6,917
)
$
60,286
$
2.10
$
(0.27
)
$
2.37
Restructuring charges
333
2
331
0.01
—
0.01
Tax reform
—
9,357
(9,357
)
—
0.37
(0.37
)
Subtotal
53,702
2,442
51,260
2.11
0.10
2.02
Amortization of intangible assets
4,474
241
4,233
0.18
0.01
0.17
Non-cash share-based compensation
9,291
606
8,685
0.37
0.02
0.34
Adjusted (non-GAAP)
$
67,467
$
3,289
$
64,178
$
2.66
$
0.13
$
2.53
Weighted average shares of common stock
used in computing diluted EPS
25,397
Three Months Ended May 31,
2019
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
44,031
$
3,337
$
40,694
$
1.74
$
0.13
$
1.61
Restructuring charges
619
2
617
0.02
—
0.02
Subtotal
44,650
3,339
41,311
1.77
0.13
1.64
Amortization of intangible assets
3,876
121
3,755
0.15
—
0.15
Non-cash share-based compensation
7,604
576
7,028
0.30
0.02
0.28
Adjusted (non-GAAP)
$
56,130
$
4,036
$
52,094
$
2.22
$
0.16
$
2.06
Weighted average shares of common stock
used in computing diluted EPS
25,245
Consolidated Core and Non-Core
Net Sales and Reconciliation of Non-GAAP Financial Measures
– Core and Non-Core Adjusted Diluted EPS (Non-GAAP) (3) (6)
(Unaudited) (in thousands, except per share data)
Three Months Ended May
31,
2022
2021
$ Change
% Change
Sales revenue, net
Core
$
508,078
$
521,104
$
(13,026
)
(2.5
) %
Non-Core
—
20,119
(20,119
)
(100.0
) %
Total
$
508,078
$
541,223
$
(33,145
)
(6.1
) %
Three Months Ended May
31,
2022
2021
$ Change
% Change
Adjusted Diluted EPS (non-GAAP)
Core
$
2.41
$
3.31
$
(0.90
)
(27.2
) %
Non-Core
—
0.17
(0.17
)
(100.0
) %
Total
$
2.41
$
3.48
$
(1.07
)
(30.7
) %
Three Months Ended May
31,
Core Business:
2022
2021
Diluted EPS, as reported
$
1.02
$
2.15
Acquisition-related expenses, net of
tax
0.11
—
EPA compliance costs, net of tax
0.48
0.52
Restructuring charges, net of tax
—
—
Subtotal
1.61
2.67
Amortization of intangible assets, net of
tax
0.16
0.11
Non-cash share-based compensation, net of
tax
0.64
0.53
Adjusted Diluted EPS (non-GAAP)
$
2.41
$
3.31
Three Months Ended May
31,
Non-Core Business:
2022
2021
Diluted EPS, as reported
$
—
$
0.16
Non-cash share-based compensation, net of
tax
—
—
Adjusted Diluted EPS (non-GAAP)
$
—
$
0.17
Diluted EPS, as reported (GAAP)
$
1.02
$
2.31
Consolidated Core and Non-Core
Net Sales and Reconciliation of Non-GAAP Financial Measures
– Core and Non-Core Adjusted Diluted EPS (Non-GAAP) (3) (6)
(Unaudited) (in thousands, except per share data)
Three Months Ended May
31,
2020
2019
Sales revenue, net
Core
$
399,519
$
353,576
Non-Core
21,316
22,759
Total
$
420,835
$
376,335
Three Months Ended May
31,
2020
2019
Adjusted Diluted EPS (non-GAAP)
Core
$
2.43
$
1.95
Non-Core
0.10
0.11
Total
$
2.53
$
2.06
Three Months Ended May
31,
Core Business:
2020
2019
Diluted EPS, as reported
$
2.27
$
1.52
Restructuring charges, net of tax
0.01
0.02
Tax reform
(0.37
)
—
Subtotal
1.92
1.55
Amortization of intangible assets, net of
tax
0.17
0.13
Non-cash share-based compensation, net of
tax
0.34
0.28
Adjusted Diluted EPS (non-GAAP)
$
2.43
$
1.95
Three Months Ended May
31,
Non-Core Business:
2020
2019
Diluted EPS, as reported
$
0.10
$
0.09
Amortization of intangible assets, net of
tax
—
0.02
Non-cash share-based compensation, net of
tax
—
—
Adjusted Diluted EPS (non-GAAP)
$
0.10
$
0.11
Diluted EPS, as reported (GAAP)
$
2.37
$
1.61
Selected Consolidated Balance
Sheet, Cash Flow and Liquidity Information (Unaudited) (in
thousands)
May 31,
2022
2021
Balance Sheet:
Cash and cash equivalents
$
49,254
$
37,368
Receivables, net
475,904
406,409
Inventory
613,625
540,129
Assets held for sale
—
48,646
Total assets, current
1,176,499
1,056,074
Total assets
3,144,254
2,348,092
Total liabilities, current
603,335
571,735
Total long-term liabilities
1,184,497
574,276
Total debt
1,105,569
510,974
Stockholders' equity
1,356,422
1,202,081
Liquidity:
Working capital
$
573,164
$
484,339
Three Months Ended May
31,
2022
2021
Accounts receivable turnover (days)
(11)
67.6
63.5
Inventory turnover (times) (11)
2.1
3.0
Working capital
$
573,164
$
484,339
Current ratio
1.9:1
1.8:1
Ending debt to ending equity ratio
81.5
%
42.5
%
Return on average equity (11)
14.7
%
20.3
%
Three Months Ended May
31,
2022
2021
Cash Flow:
Depreciation and amortization
$
10,498
$
8,713
Net cash used by operating activities
(38,428
)
(63,385
)
Capital and intangible asset
expenditures
76,202
4,006
Net debt proceeds
292,100
167,100
Payments for repurchases of common
stock
18,224
110,074
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Cash (Used) Provided by Operating
Activities to Free Cash Flow (Non-GAAP) (6) (Unaudited) (in
thousands)
Three Months Ended May
31,
2022
2021
Net cash (used) provided by operating
activities (GAAP)
$
(38,428
)
$
(63,385
)
Less: Capital and intangible asset
expenditures
(76,202
)
(4,006
)
Free cash flow (non-GAAP)
$
(114,630
)
$
(67,391
)
Updated Fiscal 2023 Outlook
for Net Sales Revenue (3) (Unaudited) (in
thousands)
Consolidated:
Fiscal 2022
Updated Outlook for Fiscal
2023
Net sales revenue
$ 2,223,355
$ 2,150,000
—
$ 2,200,000
Net sales revenue decline
(3.3) %
—
(1.0) %
Core Business:
Net sales revenue
$ 2,189,239
$ 2,150,000
—
$ 2,200,000
Net sales revenue (decline) growth
(1.8) %
—
0.5 %
Reconciliation of Non-GAAP
Financial Measures - Updated Fiscal 2023 Outlook for GAAP Diluted
EPS to Adjusted Diluted EPS (Non-GAAP) (3) (6) (Unaudited)
Consolidated & Core
Business
Three Months Ended May 31,
2022
Outlook for the Balance
of the
Fiscal Year (Nine
Months)
Updated Outlook Fiscal
2023
Diluted EPS, as reported (GAAP)
$
1.02
$
5.49
—
$
6.09
$
6.51
—
$
7.11
Acquisition-related expenses, net of
tax
0.11
—
—
—
0.11
—
0.11
EPA compliance costs, net of tax
0.48
0.43
—
0.37
0.91
—
0.85
Restructuring charges, net of tax
—
—
—
—
—
—
—
Subtotal
1.61
5.92
—
6.46
7.53
—
8.07
Amortization of intangible assets, net of
tax
0.16
0.53
—
0.51
0.69
—
0.67
Non-cash share-based compensation, net of
tax
0.64
0.99
—
0.97
1.63
—
1.61
Adjusted diluted EPS (non-GAAP)
$
2.41
$
7.44
—
$
7.94
$
9.85
—
$
10.35
Reconciliation of Non-GAAP
Financial Measures - Updated Fiscal 2023 Outlook for Effective Tax
Rate (GAAP) to Adjusted Effective Tax Rate (Non-GAAP) (3) (6)
(Unaudited)
Consolidated & Core
Business
Three Months Ended May 31,
2022
Outlook for the Balance
of the Fiscal Year (Nine Months)
Updated Outlook Fiscal
2023
Effective tax rate, as reported (GAAP)
17.0 %
15.2 %
—
16.4 %
15.5 %
—
16.5 %
Acquisition-related expenses
(1.0) %
— %
—
— %
(0.2) %
—
(0.2) %
EPA compliance costs
(4.2) %
(0.9) %
—
(0.7) %
(1.5) %
—
(1.4) %
Restructuring charges
— %
— %
—
— %
— %
—
— %
Subtotal
11.8 %
14.3 %
—
15.7 %
13.8 %
—
14.9 %
Amortization of intangible assets
(0.3) %
(0.4) %
—
(0.4) %
(0.4) %
—
(0.4) %
Non-cash share-based compensation
(1.1) %
(0.7) %
—
(0.8) %
(0.8) %
—
(0.9) %
Adjusted effective tax rate (non-GAAP)
10.4 %
13.2 %
—
14.5 %
12.6 %
—
13.6 %
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1)
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.
(2)
Fiscal 2023 includes a full quarter of
operating results from Osprey, acquired on December 29, 2021 and
approximately six weeks of operating results from Curlsmith,
acquired on April 22, 2022.
(3)
The Company defines Core business as
strategic business that it expects to be an ongoing part of its
operations, and Non-Core business as business or net assets
(including net assets held for sale) that it expects to divest
within a year of its designation as Non-Core.
(4)
Leadership Brand net sales consists of
revenue from the OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell,
PUR, Hot Tools and Drybar brands.
(5)
Online channel net sales revenue includes
direct to consumer online net sales, net sales to retail customers
fulfilling end-consumer online orders and net sales to pure-play
online retailers.
(6)
This press release contains non-GAAP
financial measures. Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Effective Tax Rate, Core Adjusted Effective Tax
Rate, Adjusted Income, Adjusted Diluted EPS, Core and Non-Core
Adjusted Diluted EPS, EBITDA, Adjusted EBITDA, and Free Cash Flow
("Non-GAAP Financial Measures") that are discussed in the
accompanying press release or in the preceding tables may be
considered non-GAAP financial information as contemplated by SEC
Regulation G, Rule 100. Accordingly, the Company is providing the
preceding tables that reconcile these measures to their
corresponding GAAP-based measures. The Company believes that these
non-GAAP 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 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 measures is that the non-GAAP measures do not reflect the
full economic impact of the Company’s activities. These non-GAAP
measures are not prepared in accordance with GAAP, are not an
alternative to GAAP financial information, and may be calculated
differently than non-GAAP financial information disclosed by other
companies. Accordingly, undue reliance should not be placed on
non-GAAP information.
(7)
Charges incurred in conjunction with EPA
packaging compliance for certain products in the air filtration,
water filtration and humidification categories within the Health
& Wellness segment.
(8)
Acquisition-related expenses associated
with the definitive agreements to acquire Osprey and Curlsmith
included in SG&A for the three-months ended May 31, 2022.
(9)
Amortization of intangible assets.
(10)
Non-cash share-based compensation.
(11)
Accounts receivable turnover, inventory
turnover and return on average equity computations use 12 month
trailing net sales revenue, cost of goods sold or net income
components as required by the particular measure. The current and
four prior quarters' ending balances of trade accounts receivable,
inventory and equity are used for the purposes of computing the
average balance component as required by the particular
measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220707005026/en/
Investor Contact: Helen of Troy Limited Anne Rakunas,
Director, External Communications (915) 225-4841 ICR, Inc. Allison
Malkin, Partner (203) 682-8200
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